Oil and Gas and Sulfur Operations in the Outer Continental Shelf-Blowout Preventer Systems and Well Control Revisions

DEPARTMENT OF THE INTERIOR

Bureau of Safety and Environmental Enforcement

30 CFR Part 250

[Docket ID: BSEE-2018-0002; 190E1700D2 ET1SF0000.EAQ000 EEEE500000]

RIN 1014-AA39

Oil and Gas and Sulfur Operations in the Outer Continental Shelf—Blowout Preventer Systems and Well Control Revisions

AGENCY:

Bureau of Safety and Environmental Enforcement, Interior.

ACTION:

Final rule.

SUMMARY:

The Bureau of Safety and Environmental Enforcement (BSEE) is revising existing regulations for well control and blowout preventer systems. This final rule revises requirements for well design, well control, casing, cementing, real-time monitoring (RTM), and subsea containment. These revisions modify regulations pertaining to offshore oil and gas drilling, completions, workovers, and decommissioning in accordance with Executive and Secretary of the Interior's Orders to ensure safety and environmental protection, while correcting errors and reducing certain unnecessary regulatory burdens imposed under the existing regulations. Accordingly, after thoroughly reexamining the 2016 Blowout Preventer Systems and Well Control final rule (WCR), experiences from the implementation process, and various BSEE policies (notices to lessees, answers to frequently asked questions, and conditions of approval), BSEE will amend, revise, or remove certain current regulatory provisions that create unnecessary burdens on stakeholders, while still maintaining safety and environmental protection. The final regulations also address various issues and errors that BSEE identified during the implementation of the 2016 WCR.

DATES:

This final rule becomes effective on July 15, 2019. BSEE will defer compliance with certain provisions of the final rule, however, until the times specified in those provisions and as described in Section II of this preamble.

The incorporation by reference of certain publications listed in the rule is approved by the Director of the Federal Register as of July 15, 2019.

FOR FURTHER INFORMATION CONTACT:

For technical questions contact Fred Brink, Gulf of Mexico Region (GOMR) District Operations Support, (504) 736-2400, or by email:

OMM_DFO_DOS@bsee.gov;

for procedural questions contact Kirk Malstrom, Regulations and Standards Branch, (202) 258-1518, or by email:

regs@bsee.gov.

SUPPLEMENTARY INFORMATION:

Executive Summary

In the immediate aftermath of the

Deepwater Horizon

incident in 2010, BSEE adopted several recommendations from multiple investigation teams, and promulgated multiple rulemakings including the Drilling Safety Rule (Oct. 2010), Safety and Environmental Management Systems (SEMS) I (Oct. 2010), and SEMS II (April 2013), in order to improve the safety of offshore operations. Subsequently, BSEE published the Blowout Preventer Systems and Well Control final rule (the WCR) on April 29, 2016. The 2016 WCR consolidated the equipment and operational requirements for well control into one part of BSEE's regulations; enhanced blowout preventer (BOP), well design, and well-control requirements; and incorporated certain industry consensus standards. Most of the 2016 WCR provisions became effective on July 28, 2016. Although the 2016 WCR addressed a significant number of issues that were identified during the analysis of the

Deepwater Horizon

incident, BSEE recognized that BOP equipment and systems continue to improve technologically and well control processes also evolve. In 2017, Congress also encouraged BSEE to:

evaluate information learned from additional stakeholder input and ongoing technical conversations to inform implementation of this rule. To the extent additional information warrants revisions to the rule that require public notice and comment, the Bureau is encouraged to follow that process to ensure that offshore operations promote safety and protect the environment in a technically feasible manner.

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See n. 10, supra.

Additionally, since the WCR became effective in 2016, BSEE has continued to engage with the offshore oil and gas industry, Standards Development Organizations (SDOs), and other stakeholders. During the course of these engagements, BSEE identified areas for regulatory improvement and stakeholders expressed a variety of concerns regarding the implementation of the 2016 WCR. For instance, oil and natural gas operators raised concerns about certain regulatory provisions that they assert impose undue burdens on their industry, but do not significantly enhance worker safety or environmental protection (

e.g.,

how real time monitoring is monitored and utilized onshore; a strictly enforced 0.5 pounds per gallon (ppg) drilling margin; requirements that may be inconsistent with American Petroleum Institute (API) Standard 53; and requirements for certain BSEE approvals during cementing operations that result in unnecessary delay). Other stakeholders suggested that certain regulatory requirements do not properly account for advances or limitations in technology and processes. Further, BSEE received numerous questions regarding the proper interpretation and application of provisions viewed to be unclear or ambiguous, requiring BSEE to provide substantial informal guidance regarding the terms of the 2016 WCR. BSEE posted approximately 100 responses to questions regarding the 2016 WCR provisions on the BSEE web page at

https://www.bsee.gov/guidance-and-regulations/regulations/well-control-rule.

Accordingly, after thoroughly reexamining the 2016 WCR, experiences from the implementation process, and BSEE policy, BSEE is amending, revising, or removing current regulatory provisions that create unnecessary burdens on stakeholders while still maintaining safety and environmental protection. On May 11, 2018, BSEE published in the

Federal Register

a proposed rule to revise certain provisions of the 2016 WCR (83 FR 22128) (the “proposed rule”) and to solicit comments on several additional issues. In response to the proposed rule, BSEE received over 265 sets of comments containing individually submitted comments and multiple similar group form letters, totaling over 118,000 submittals. Comments included submittals from individual entities (

e.g.,

companies, industry organizations, non-governmental organizations, State governments, and private citizens). All relevant comments are posted at the

Federal eRulemaking

portal:

http://www.regulations.gov.

To access the comments at that website, enter BSEE-2018-0002 in the Search box. The final regulatory changes reflect BSEE's consideration of the public comments received on both the 2016 WCR and the proposed rule, and stakeholders' recommendations pertaining to the requirements applicable to offshore oil and gas drilling, completions, workovers, and decommissioning. This rule revises regulatory provisions in 30 CFR part 250, subparts A, B, D, E, F, G, and Q on topics such as, but not limited to:

Notifications and submittals to BSEE;

Drilling margins;

Lift boats;

Real-time monitoring;

BSEE Approved Verification Organizations (BAVOs);

Accumulator systems;

BOP and control station testing;

Coiled tubing; and

Mechanical barriers (packers and bridge plugs).

BSEE utilized the best available data to analyze the economic impacts of the final changes. That analysis indicates that the estimated overall economic impact will benefit the industry over the next 10 years because of the reduction in compliance costs, in addition to increased regulatory certainty. As this rule maintains safety and environmental protection, the entities realizing savings from these changes can deploy them for other, more productive purposes,

e.g.,

additional capital investment. Increased productivity and competiveness of domestic energy projects benefit consumers and the broader U.S. economy.

In keeping with recent Executive and Secretary's Orders, BSEE undertook a review of the 2016 WCR with a view toward the policy direction of encouraging energy exploration and production on the Outer Continental Shelf (OCS) and reducing unnecessary regulatory burdens, while ensuring that any such activity is safe and environmentally responsible. BSEE carefully reviewed all 342 provisions of the 2016 WCR, and determined that this final rule revises or adds to 71 provisions of the 2016 WCR—or approximately 20% of the 2016 WCR provisions. The regulations will still contain the core safety and environmental protective provisions of the 2016 WCR. In the process, BSEE compared each of the changes 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

disaster, and determined that none of the final changes ignores or contradicts any of those recommendations, or alters any provision of the 2016 WCR in a way that would make the result inconsistent with those recommendations. Further, nothing in this final rule alters any elements of other rules promulgated since

Deepwater Horizon,

including the Increased Safety Measures for Energy Development on the OCS (Drilling Safety Rule) (75 FR 63346, October 14, 2010), SEMS I and II (75 FR 63610, October 15, 2010, 78 FR 20423, April 5, 2013). BSEE's review has been thorough, careful, and tailored to the task of reducing unnecessary regulatory burdens, while ensuring that operators conduct OCS activities in a safe and environmentally responsible manner.

Table of Contents

I. Background

A. BSEE Statutory and Regulatory Authority and Responsibilities

B. Purpose and Summary of the Rulemaking

C. Summary of Documents Incorporated by Reference

D. Executive and Secretary's Orders

E. Stakeholder Engagement

II. Discussion of Compliance Dates for the Final Rule

A. April 29, 2021—Alternative Cutting Device No Longer Allowed

B. May 1, 2023—Drill Pipe Positioning Within Shearing Blades

III. Discussion of Final Rule Requirements

A. Summary of Key Regulatory Provisions

B. Summary of Significant Differences Between the Proposed and Final Rules

1. Safe Drilling Margin—§§ 250.414 and 250.427(b)

2. Centering Capabilities While Shearing—§§ 250.732 and 250.734(a)(16)

3. Shearing Combinations—§ 250.734(a)(1)(ii)

4. Subsea Accumulator Capacity—§ 250.734(a)(3)(iii)

5. 21-Day BOP Testing Frequency—§ 250.737

IV. Discussion of Public Comments on the Proposed Rule

A. General Support for the Proposed Rule

B. General Opposition to the Proposed Rule

C. 21-Day BOP Testing Frequency

D. BSEE Approved Verification Organization (BAVO)

E. Legal Comments

F. Economic Comments

G. Environmental Comments

H. Miscellaneous Comments

V. Section-by-Section Summary and Responses to Comments on the Proposed Rule

VI. Procedural Matters

List of Acronyms and References

ANL Argonne National Laboratory

ANPR Advance Notice of Proposed Rulemaking

ANSI American National Standards Institute

APA Administrative Procedure Act

APD Application for Permit To Drill

API American Petroleum Institute

APM Application for Permit to Modify

ASME American Society of Mechanical Engineers

BAST Best Available and Safest Technology

BAVO BSEE Approved Verification Organization

BOEM Bureau of Ocean Energy Management

BOP Blowout Preventer

BSEE Bureau of Safety and Environmental Enforcement

BSR Blind Shear Ram

BTS Bureau of Transportation Statistics

CDWOP Conceptual Deepwater Operations Plan

Department Department of the Interior

DWOP Deepwater Operations Plan

EA Environmental Assessment

ECD Equivalent Circulating Density

EIS Environmental Impact Statement

E.O. Executive Order

EOR End of Operations Report

ESA Endangered Species Act

FOIA Freedom of Information Act

FONSI Finding of No Significant Impact

FRIA Final Regulatory Impact Analysis

FSHR Free Standing Hybrid Riser

GDP Gross Domestic Product

HPHT High Pressure High Temperature

IADC International Association of Drilling Contractors

IBR Incorporated By Reference

IC Information Collection

IEC International Electrotechnical Commission

IOGP International Association of Oil And Gas Producers

IRIA Initial Regulatory Impact Analysis

ISO International Organization For Standardization

JIP Joint Industry Project

LMRP Lower Marine Riser Package

MASP Maximum Anticipated Surface Pressure

MIA Mechanical Integrity Assessment

MODU Mobile Offshore Drilling Unit

MPB Multiple Physical Barrier

NAICS North American Industry Classification System

NEPA National Environmental Policy Act

NPRM Notice of Proposed Rulemaking

NTTAA National Technology Transfer and Advancement Act

OCS Outer Continental Shelf

OCSLA Outer Continental Shelf Lands Act

OEM Original Equipment Manufacturer

OFR Office of the Federal Register

OIRA Office of Information and Regulatory Affairs

OMB Office of Management Budget

OORP Office of Offshore Regulatory Programs

Psi pounds per square inch

Ppg pounds per gallon

PRA Paperwork Reduction Act

PWD Pressure While Drilling

QRA Quantitative Risk Analysis

RCD Regional Containment Demonstration

RFA Regulatory Flexibility Analysis

RIA Regulatory Impact Analysis

ROT Remotely Operated Tools

ROV Remotely Operated Vehicle

RTM Real-Time Monitoring

SBA Small Business Administration

SCCE Source Control and Containment Equipment

SDO Standards Development Organization

Secretary Secretary of the Interior

SEMS Safety and Environmental Management Systems

SPPE Safety and Pollution Prevention Equipment

SRAM System Risk Assessment Management

TBT Technical Barriers to Trade

WAR Well Activity Report

WCP Well Containment Plan

WCR Well Control Rule

WTO World Trade Organization

I. Background

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, authorizing the Secretary of the Interior (Secretary) to lease the OCS for mineral development, and to regulate oil and gas exploration, development, and production operations on the OCS. The Secretary delegated authority to perform certain of these functions to BSEE.

To carry out its responsibilities, BSEE regulates offshore oil and gas operations to enhance the safety of exploration for and development of oil and gas on the OCS, to ensure that those operations protect the environment, and to implement advancements in technology. BSEE also conducts onsite inspections to ensure 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 may be found on BSEE's website at:

https://www.bsee.gov/guidance-and-regulations.

BSEE's regulatory program covers a wide range of facilities and activities, including drilling, completion, workover, production, pipeline, and decommissioning operations. Drilling, completion, workover, and decommissioning operations are types of well operations that offshore operators

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perform throughout the OCS. These well operations are the primary focus of this rulemaking.

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BSEE's regulations at 30 CFR part 250 generally apply to “a lessee, the owner or holder of operating rights, a designated operator or agent of the lessee(s). . . ,” covered by the definition of “you” in § 250.105. For convenience, this preamble will refer to all of the regulated entities as “operators,” unless otherwise indicated.

B. Purpose and Summary of the Rulemaking

This final rule amends and updates certain provisions of the Blowout Preventer Systems and Well Control regulations and updates the regulations to better implement BSEE policy. This final rule will strengthen the Administration's policy of facilitating energy security leading to increased domestic oil and gas production, and reduce unnecessary burdens on stakeholders while still maintaining safety and environmental protection. Since 2010, in order to improve worker safety and environmental protection, BSEE has promulgated a number of rules (

e.g.,

Safety and Environmental Management Systems I and II (75 FR 63610, October 15, 2010; 78 FR 20423, April 5, 2013), the final safety measures rule (77 FR 50856, August 22, 2012), the production safety systems final rule (83 FR 49216, September 28, 2018), and the 2016 WCR (81 FR 25888; April 29, 2016). The 2016 WCR consolidated into one part the equipment and operational requirements pertaining to BOP and well control for offshore oil and gas drilling, completions, workovers, and decommissioning that were previously codified in various parts of BSEE's regulations. More specifically, the 2016 WCR incorporated industry standards; adopted reforms to well design, well control, casing, cementing, real-time well monitoring, and subsea containment requirements; and implemented many of the recommendations arising from various investigations of the

Deepwater Horizon

incident. Most of the provisions of the 2016 WCR became effective on July 28, 2016.

Since the time the 2016 WCR regulations took effect, oil and natural gas operators have raised various concerns, and BSEE has identified issues during the implementation of the rule. The concerns and issues involve certain regulatory provisions that impose undue burdens on oil and natural gas operators, but do not significantly enhance worker safety or environmental protection. BSEE understands the operators' concerns that have been raised, but BSEE also fully recognizes that the BOP and other well-control requirements are critical to ensure safety and environmental protection. Consistent with recent Executive and Secretary's Orders (discussed further in Section I.D below) and congressional direction, BSEE undertook a review of the 2016 WCR. It did so with a view toward the policy direction of encouraging energy exploration and production on the OCS and reducing unnecessary regulatory burdens, while ensuring that any such activity is conducted in a safe and environmentally responsible manner. BSEE carefully analyzed all 342 provisions of the 2016 WCR, and proposed to revise or add to 71 provisions—or approximately 20%—of the 2016 WCR provisions. In the process, BSEE compared each of the changes to the 424 recommendations arising from 26 separate reports from 14 different organizations

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developed in the wake of and response to the

Deepwater Horizon

disaster. This final rule is consistent with the proposed revisions and none of the final changes ignore or contradict any of those recommendations, or alters any provision of the 2016 WCR in a way that would make the result inconsistent with those recommendations. Further, nothing in this final rule alters any elements of other rules promulgated since

Deepwater Horizon,

including the Drilling Safety Rule (Oct. 2010), SEMS I (Oct. 2010), and SEMS II (April 2013). BSEE's review was thorough, careful, and tailored to the task of reducing unnecessary regulatory burdens while ensuring that OCS activity is conducted in a safe and environmentally responsible manner.

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DOI, DOI OCS Safety Oversight Board, DOI OIG, DOI/Department of Homeland Security (DHS) Joint Investigation Team, National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, Chief Counsel for the National Commission, National Academy of Engineering, Joint Industry Subsea Well Control and Containment Task Force, Environmental Law Institute, Ocean Energy Safety Advisory Committee, Chemical Safety Board, Joint Industry Oil Spill Preparedness and Response Task Force, Transportation Research Board, U.S. Government Accountability Office (GAO).

This rule revises current regulations that impact offshore oil and gas drilling, completions, workovers, and decommissioning activities. The final regulations also address various issues that BSEE identified during the implementation of the 2016 WCR, as well as numerous questions that have required substantial informal guidance from BSEE regarding the interpretation and application of the 2016 WCR.

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For example, this final rule:

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BSEE posted approximately 100 responses to questions regarding the 2016 WCR provisions on the BSEE web page

https://www.bsee.gov/guidance-and-regulations/regulations/well-control-rule.

• Clarifies the rig movement reporting requirements.

• Clarifies and revises the requirements for certain submittals to BSEE to eliminate redundant and unnecessary reporting.

• Clarifies the drilling margin requirements in §§ 250.414 and 250.427.

• Revises § 250.723 by removing references to lift boats from the section.

• Removes certain prescriptive requirements for RTM.

• Replaces the use of a BAVO with the use of an independent third party for certain certifications and verifications of BOP systems and components, and removes the requirement to have a BAVO submit a Mechanical Integrity Assessment report for the BOP stack and system.

• Revises the accumulator system requirements and accumulator bottle requirements to better align with API Standard 53.

• Revises the control station and pod testing schedules to ensure component functionality without inadvertently requiring duplicative testing.

• Includes coiled tubing and snubbing requirements in Subpart G.

• Revises the text to ensure consistency and conformity across the applicable sections of the regulations.

• Revises the regulation to include a 21-day BOP testing frequency.

C. Summary of Documents Incorporated by Reference

This rule updates a document currently incorporated by reference to a newer edition, includes an addendum to an already incorporated standard, and adds two new standards for incorporation. A brief summary of the final changes, based on the descriptions in each standard or specification, is provided in the text that follows.

API Standard 53 and Addendum—Blowout Prevention Equipment Systems for Drilling Wells

API Standard 53 (Fourth Edition published November 2012) and addendum (published July 2016) provide requirements for the installation and testing of blowout prevention equipment systems whose primary functions are to confine well fluids to the wellbore, provide means to add fluid to the wellbore, and allow controlled volumes to be removed from the wellbore. BOP equipment systems are comprised of a combination of components that are covered by this document, Including: Installations for surface and subsea BOPs; choke and kill lines; choke manifolds; control systems; and auxiliary equipment. The document also addresses equipment arrangements. The Addendum contains clarifications to API Standard 53, 4th Edition.

This standard also provides industry best practices related to the use of dual shear rams, maintenance and testing requirements, and failure reporting. The standard does not address diverters, shut-in devices, and rotating head systems (rotating control devices), whose primary purpose is to safely divert or direct flow, rather than to confine fluids to the wellbore. It also does not include procedures and techniques for well control and extreme temperature operations.

API Bulletin 92L—Drilling Ahead Safely With Lost Circulation in the Gulf of Mexico

API Bulletin 92L, First Edition, was published in August 2015. API Bulletin 92L addresses drilling margins and drilling ahead with lost circulation in wells drilled in the OCS environments. The drilling margin is the difference between the maximum pore pressure and minimum fracture pressure of a formation. Lost circulation is the flow of drilling fluid into the formation instead of returning up the annulus. If uncontrolled, lost circulation can lead to consequences potentially as severe as a blowout. This bulletin identifies items that should be considered to safely address lost circulation challenges when equivalent circulation density (ECD) exceeds the fracture gradient of a formation. It also provides guidance regarding appropriate responses when lost circulation is experienced with either surface or subsea BOP stack operations (excluding diverter operations). Lastly, the bulletin recommends four decision tree flow charts for common lost circulation scenarios in the OCS: (1) Drilling Exploration Wells with Lost Circulation; (2) Drilling Ahead Below Salt with Lost Circulation; (3) Drilling Depleted Zones with Lost Circulation; and (4) Managed Pressure Drilling with Lost Circulation. Although similar, each flow chart is unique and specific to the circumstances surrounding the lost circulation event. The flow charts serve as an aid for operators to use when deciding how best to safely drill ahead when lost circulation occurs.

API Standard 65—Part 2, Isolating Potential Flow Zones During Well Construction

This standard, which API issued in December 2010 (reaffirmed November 2016), outlines the process for isolating potential flow zones during well construction. The new Standard 65—part 2 enhances the description and classification of well-control barriers, and defines testing requirements for cement to be considered a barrier.

API Recommended Practice 17H—Remotely Operated Tools and Interfaces on Subsea Production Systems

The final rule updates the incorporated version of this document from the First Edition (July 2004, reaffirmed January 2009) to the Second Edition (June 2013) and Errata (January 2014). This recommended practice provides general recommendations and overall guidance for the design and operation of remotely operated tools (ROT) and remotely operated vehicle (ROV) tooling used on offshore subsea systems. ROT and ROV performance is critical to ensuring safe and reliable deepwater operations and this document provides general performance guidelines for this and associated equipment. One of the main differences between the first edition and second edition of this recommended practice is that the second edition includes provisions on high flow Type D hot stabs.

International Organization for Standardization (ISO)/IEC (International Electrotechnical Commission) 17021-1—Conformity assessment—Requirements for Bodies Providing Audit and Certification of Management Systems—Part 1: Requirements.

The final rule incorporates into the regulations a reference to ISO/IEC 1702-1, First Edition, June 15, 2015, for purposes of the quality management system certification requirements of § 250.730(d). This standard contains principles and requirements to ensure the competence, consistency, and impartiality of bodies providing audit and certification of all types of management systems. It provides general requirements for such bodies performing audit and certification in the fields of quality, the environment, and other types of management systems. Incorporation of this standard will provide clarity and consistency surrounding the critical qualifications of entities responsible for certifying quality management systems for the manufacture of BOP stacks.

How To View the Documents Incorporated by Reference

When a copyrighted publication is incorporated by reference into BSEE regulations, BSEE is obligated to observe and protect that copyright. BSEE is working with the standards organizations to provide free online viewing for standards incorporated by reference. Many such organizations already make relevant standards publicly available free of charge. BSEE provides members of the public with website addresses where these standards may be accessed for viewing—sometimes for free and sometimes for a fee. Standards development organizations 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. All API standards that are safety-related and that are incorporated into Federal regulations, or that are considered for incorporation, are available to the public for free viewing online in the Incorporation by Reference Reading Room on API's website at:

http://publications.api.org.

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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:

https://www.api.org/products-and-services/standards/purchase.

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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” or “IBR Documents Under

Consideration”) for the standard(s) you wish to review.

The International Organization for Standardization (ISO) creates documents that provide requirements, specifications, guidelines, or characteristics that can be used consistently to ensure that materials, products, processes, and services are fit for their purposes. All ISO International Standards are available at the ISO Store for purchase at:

https://www.iso.org/store.html.

For the convenience of members of the viewing public who may not wish to purchase copies or view these incorporated documents online, they may be inspected at BSEE's office in Houston, at 1919 Smith Street, Suite 14042, Houston, Texas 77002. To make an appointment to inspect incorporated material at the Houston BSEE office, call 1-844-259-4779. BSEE may also make the standards available at its other offices located in: Washington, DC; Sterling, Virginia; New Orleans, Louisiana; Camarillo, California; and Anchorage, Alaska. Individuals wishing to view standards at a BSEE office may make arrangements by sending an email to:

regs@bsee.gov.

D. Executive and Secretary's Orders

On March 28, 2017, the President issued Executive Order (E.O.) 13783—Promoting Energy Independence and Economic Growth (82 FR 16093). The E.O. directed Federal agencies to review all existing regulations and other agency actions with a goal toward “avoiding regulatory burdens that unnecessarily encumber energy production, constrain economic growth, and prevent job creation.” It instructs agencies to “review existing regulations that potentially burden the development or use of domestically produced energy resources and appropriately suspend, revise, or rescind those that unduly 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—Implementing an America-First Offshore Energy Strategy (82 FR 20815), which directed the Secretary to review the 2016 WCR for consistency with the 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” and to “publish for notice and comment a proposed rule revising that rule, if appropriate and as consistent with law.” It further directed the Secretary of the Interior to “take all appropriate action to lawfully revise any related rules and guidance for consistency with the policy set forth in section 2 of this order. Additionally, the Secretary of the Interior shall review BSEE's regulatory regime for offshore operators to determine the extent to which additional regulation is necessary.”

To further implement E.O. 13795, the Secretary issued Secretary's Order No. 3350 on May 1, 2017, directing BSEE to review the 2016 WCR for consistency with E.O. 13795 and prepare a report “providing recommendations on whether to suspend, revise, or rescind the rule” in response to concerns raised by stakeholders that the 2016 WCR “unnecessarily include[s] prescriptive measures that are not needed to ensure safe and responsible development of our OCS resources.”

Based on E.O.s 13783 and 13795, congressional guidance, and Secretary's Order No. 3350, and in light of the requests received for clarification and revision of various provisions, BSEE reviewed the regulations promulgated through the 2016 WCR and is making revisions to those regulations that will reduce unnecessary burdens on industry without affecting key 2016 WCR provisions that have a significant impact on improving safety and equipment reliability.

On September 28, 2018, the Department of the Interior (Department) issued Secretary's Order No. 3369 (S.O. 3369), “Promoting Open Science.” S.O. 3369 directs bureaus within the Department to ensure that their use of science in decision-making is open and transparent to facilitate public awareness, and to ensure that, when decisions are based on scientific data or literature, bureaus utilize the “best available science.” As previously discussed, BSEE used a number of sources of information to inform decisions related to these revisions, including comments received through a “Request for comments” on the DOI's regulatory reform initiatives, published in the

Federal Register

on June 22, 2017 (82 FR 28429), and experience gained during the implementation of the 2016 WCR and the policies developed in response to those experiences. In addition, BSEE solicited input from interested parties to identify potential revisions to the regulations, including through the public forum held on September 20, 2017, in Houston, Texas. Further, BSEE gained valuable insights from comments received in response to the proposed rule. BSEE regulatory staff used information from these sources and worked directly with BSEE regional subject matter experts to assess the current requirements for well control and blowout preventers in order to determine which provisions could potentially be revised, while leaving critical safety provisions intact to maintain safety and environmental protection. BSEE also reviewed publically available lists of alternate procedures and departures that BSEE granted through permits, and reviewed past incident data, specifically concerning information on equipment failure after a successful seal of the well.

E. Stakeholder Engagement

Implementation of the 2016 WCR—BSEE Qs and As

The Department promulgated the original “Blowout Preventer Systems and Well Control” final rule (WCR) (81 FR 25888, April 29, 2016). Subsequently, during the implementation of the regulations, BSEE received numerous questions from stakeholders seeking clarification and guidance concerning the 2016 WCR's provisions. The questions covered a vast array of issues and spanned multiple subparts of the regulations.

BSEE reviewed each question it received and decided whether the question presented an issue that was appropriate for Bureau guidance. To the extent that a question required guidance or clarification, BSEE provided a response to clarify any potentially confusing language. In addition to deciding on the appropriateness of a question for guidance, BSEE determined whether the question was of sufficient public interest to merit broader publication of a response. After finalizing regulatory guidance in response to a stakeholder's question, BSEE typically publishes both the question and BSEE's answer on its web page. The information, which reflects BSEE's guidance on the current regulations, may be found at:

https://www.bsee.gov/guidance-and-regulations/regulations/well-control-rule.

BSEE posted approximately 100 responses to questions regarding the 2016 WCR provisions on the web page.

BSEE reexamined the questions and answers pertaining to the 2016 WCR.

After carefully considering all relevant information in the questions and answers, BSEE determined that it is appropriate to revise certain of the regulations promulgated through the 2016 WCR to support the goals of the regulatory reform initiative, while still maintaining safety and environmental protection. Additionally, the revisions will help clarify any ambiguity in the regulatory language, eliminate redundancies in the provisions, and align specific requirements more closely with relevant technical standards.

BSEE public forum on well control and blowout preventer rule:

To ensure a complete and thorough review of the 2016 WCR, prior to this rulemaking, BSEE solicited input from interested parties to identify potential revisions to the regulations promulgated through the 2016 WCR that would reduce regulatory burdens while maintaining safety and environmental protection on the OCS. BSEE held a public forum on September 20, 2017, in Houston, Texas. More than 110 participants attended and provided comments and suggestions. Participants included representatives from:

• Federal agencies;

• Media;

• Oil and gas companies;

• Classification societies;

• Trade associations;

• Environmental groups; and

• Equipment manufacturers.

Additionally, there were eight presentations made at the forum. These presentations are available at:

https://www.bsee.gov/guidance-and-regulations/regulations/well-control-rule/public%20forum.

II. Discussion of Compliance Dates for the Final Rule

BSEE considered the public comments on the proposed rule, as well as relevant information gained during, among other activities, BSEE's interactions with stakeholders, involvement in development of industry standards, and evaluation of current technology. Based on its analysis, BSEE is setting an effective date of 60 days following publication of the final rule, by which time operators will be required to comply with most of the final rule's provisions. BSEE determined, however, that it is appropriate to identify alternative compliance dates, subsequent to the effective date of the final rule, for certain provisions identified below. Detailed explanations for the requirements associated with these compliance dates are provided in Sections IV and V of this preamble.

A. April 29, 2021—Alternative Cutting Device No Longer Allowed

Current regulations require, at § 250.733(a)(1), that operators use an alternative cutting device capable of shearing any electric-, wire-, or slick-line before closing the BOP if, prior to April 29, 2021, an operator's blind shear rams (BSR) are unable to cut such lines under maximum anticipated surface pressure (MASP) and seal the wellbore. After April 29, 2021, BSEE will no longer allow the use of an alternative cutting device, and the BSR in the surface stack will be required to shear any electric-, wire-, or slick-line under MASP and seal the wellbore. BSEE is aware that some current BSR technology is available to shear electric-, wire-, or slick-line. BSEE established this extended timeframe to allow operators to acquire and install equipment to meet the requirements and to discontinue the use of the alternative cutting device. Current regulations at § 250.733(b)(1) require that new surface BOPs installed on floating production facilities after April 29, 2019, comply with the BOP requirements of § 250.734(a)(1). This final rule extends that compliance date to April 29, 2021, in order to eliminate any confusion between applicable compliance dates for §§ 250.733(b)(1) and 250.734(a)(1). The dual shear ram requirements for both surface and subsea BOPs will now have the same compliance date of April 29, 2021.

B. May 1, 2023—Drill Pipe Positioning Within Shearing Blades

Current regulations at § 250.734(a)(16)(i) require operators to have the capability to position the drill pipe completely within the area of the shearing blades during shearing operations no later than May 1, 2023. This final rule retains that compliance date from the 2016 WCR.

III. Discussion of Final Rule Requirements

A. Summary of Key Regulatory Provisions

After review of all the public comments received in response to the proposed rule, BSEE determined that it will include the following proposed revisions in this final rule. This final rule includes most of the provisions in the proposed rule without change, although the final rule revises several of the proposed provisions in response to comments, as explained in sections IV and V of this preamble.

Documents incorporated by reference

6

—The final rule:

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To view online read-only API documents visit:

http://publications.api.org/AccessToDocuments.aspx.

• Requires compliance with the industry standards contained in API Standard 53.

• Requires compliance with API RP 17H to standardize ROV hot stab activities. This will allow certain functions of the BOP to be activated remotely and within specified timeframes.

• Requires compliance with the cementing guidelines of API Standard 65—Part 2 to help achieve a successful cement job.

• Requires compliance with ISO/IEC 17021-1, which provides requirements of an entity that certifies quality management systems for BOP stack manufacturing.

• Requires compliance with API Bulletin 92L, which provides guidance regarding how to safely address lost circulation challenges.

Safe drilling practices

—The final rule:

• Requires operators to maintain safe drilling margins, provides details on when operators may request BSEE approval of the safe drilling margins, and specifies actions the operator must take if a safe drilling margin cannot be maintained.

• Includes requirements related to downhole equipment that operators use to help reduce the likelihood of a major well-control event and ensure the overall integrity of the well.

• Requires real-time monitoring when conducting well operations with a subsea BOP or with a surface BOP on a floating facility, or when operating in a high pressure high temperature (HPHT) environment. Also requires operators to develop and implement a real-time monitoring plan. This will allow operators to anticipate and identify issues in a timely manner and to utilize resources to assist in addressing critical issues.

Failure reporting and analysis

—The final rule:

• Requires that operators report any significant problems with BOP or well-control equipment to BSEE or BSEE's designated third party, so BSEE can help analyze failure trends and determine whether information should be provided, in a timely manner, to OCS operators and, if appropriate, to international offshore regulators and operators.

• Requires that operators conduct an investigation and failure analysis within a designated timeframe to help ensure that the causes of failures are identified and addressed.

Equipment requirements

—The final rule:

• Requires access to and utilization of well intervention equipment for certain subsea completed wells with a tree installed. This will allow the necessary equipment to be maintained and available to perform intervention operations when necessary.

• Requires the BOP accumulator capacity to provide fast closure of the BOP components for autoshear/deadman in accordance with API Standard 53.

Operational requirements

—The final rule:

• Requires retesting protocols for when the BOP or lower marine riser package (LMRP) are unlatched and then relatched. These requirements provide clarity for the testing required when an operator returns to a well location and relatches the BOP or LMRP to the well. These tests help confirm that the BOP or LMRP is properly functional prior to resuming operations after being removed.

• Requires high and low pressure testing procedures for certain BOP components. The testing requirements codify BSEE policy and provide clarity and consistency for permitting.

• Requires the development of an alternate testing schedule for control stations and pods for subsea BOPs. The intended result of an alternating testing schedule is to ensure that operators can use each control station, and each pod for subsea, to properly function all required BOP components, while reducing unnecessary duplicative testing and risk of component wear.

B. Summary of Significant Differences Between the Proposed and Final Rules

After consideration of all relevant and significant comments, BSEE made a number of revisions from the proposed rule to the final rule. We are highlighting several of these changes here because they are significant and because numerous comments addressed these topics. Discussions of the relevant and significant comments and BSEE's responses are found in sections IV and V of this preamble. The significant revisions made in response to comments include:

1. Safe Drilling Margin—§§ 250.414 and 250.427(b)

When drilling a well, operators use the hydrostatic pressure from a mud column to keep sufficient pressure on the formation to prevent gas or oil from flowing into the wellbore (

i.e.,

a “kick”). If the hydrostatic pressure from the mud column is too high, however, the formation may fracture and result in a significant number of operational issues, one of which is “lost returns.” Lost returns, or lost circulation, occur when drilling fluids escape from the well into the formation. A drilling margin is the difference between the pore pressure of the formation, with the mud weight taken into consideration, and the fracture pressure of the formation. The 2016 WCR established a default minimum drilling margin of 0.5 ppg, but also provided avenues for operators to obtain approval of lower margins through the permitting process (81 FR 25894). Since the effective date of the 2016 WCR, BSEE has approved many Applications for Permit to Drill (APDs) with a drilling margin less than 0.5 ppg.

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BSEE did not propose changes to the 0.5 ppg safe drilling margin requirements; however, BSEE solicited comments on possible revisions to, or options regarding, the 0.5 ppg drilling margin issue.

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Between August 1, 2016 and March 22, 2018, “BSEE's records show that there have been 305 wells drilled. Of those wells, BSEE approved operators' use of drilling margins that are less than 0.5 ppg for 32 wells.” 83 FR 22128, 22133 (May 11, 2018).

Multiple commenters recommended replacing the current requirement with a performance-based standard under which an approved safe drilling margin would be established on a case-by-case basis, based on data and analysis specific to a particular well. They suggested that this is a safer and better alternative that would provide a risk-based approach that ensures safety and provides investment certainty to the industry. Multiple commenters also submitted comments on § 250.427 and recommended that, in instances where an operator encounters a lost circulation zone, the operator should have options for safely addressing the situation. In particular, many commenters asserted that suspending operations in certain circumstances may negatively impact safety and that drilling ahead to get through a lost circulation zone may be the safest option to restore the integrity of the well. For example, a commenter asserted that suspending drilling while in the weak zone to set casing (or otherwise remedy the situation) may simply transfer risk to a deeper hole section, where conditions may be even more challenging. Commenters suggested that it is appropriate for operators to specify in the Deepwater Operations Plan (DWOP) or APD how they will remedy an anticipated loss of circulation on bottom. They suggested using API Bulletin 92L as the standard for responding to such situations. A significant number of commenters also strongly opposed any changes to the 0.5 ppg drilling margin requirements in the current regulations.

In this final rule, BSEE is not revising the 0.5 ppg default drilling margin requirement or the requirements for justifying any alternative equivalent downhole mud weight. However, based on comments received, BSEE is revising § 250.414(c)(2) to allow operators the option to submit the required justification for BSEE approval at an earlier date rather than waiting to submit with the APD. The proposed rule indicated that BSEE was considering “whether it should adhere to its practice of identifying a specific drilling margin with an avenue for allowing operators to submit adequate documentation justifying the use of a different drilling margin . . . .” (83 FR 22133). The relevant comments informed BSEE's decision to revise § 250.414(c)(2) to permit submission of the alternative drilling margin justification prior to submitting an APD. Also, based on comments received, BSEE is revising § 250.427(b) to allow an operator to respond to lost circulation events in accordance with API Bulletin 92L and to require notification to the BSEE District Manager documenting the operator's use of API Bulletin 92L.

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In conjunction with the use of API Bulletin 92L, BSEE is requiring that an operator submit a revised permit documenting any remedial actions. BSEE is also clarifying that the District Manager must review and approve proposed remedial actions in an APD. BSEE recognizes that API Bulletin 92L may not be a consensus document. According to API policy,

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documents that are classified as “bulletins” may be developed without following a consensus process, which is the preferred process for documents incorporated by reference in government regulations according to the guidance in OMB Circular A-119. However, OMB Circular A-119 does not preclude the use of standards that are developed without following a voluntary consensus process. API Bulletin 92L addresses specific technical issues, such as lost circulation while drilling, to help operators diagnose well stability issues and remedy the situation. BSEE determined that this document is consistent with BSEE policy in the approaches used to

address these issues, appropriate for meeting the agency's regulatory needs, and preferable to an agency-developed standard. Therefore, API Bulletin 92L is appropriate for incorporation into the regulations, even though it is a non-consensus developed bulletin. BSEE has evaluated API Bulletin 92L and determined that compliance with it would not reduce safety. The content of the bulletin includes flow charts that can be used as an aid for operators to use in deciding how best to safely drill ahead when lost circulation occurs and the required criteria and procedures are met.

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API Bulletin 92L provides operators with flow charts to help evaluate what is happening in the well during lost circulation events and to respond accordingly. (

e.g.,

Depending on the situation operators may have to stop drilling and run casing, or contact the regulator and drill ahead no more than 300 ft.)

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The Organization and Procedures for the CSOEM: Policy Document 2017 (S1) and the Procedures for Standards Development 2016 (Procedures for Standards Development).

2. Centering Capabilities While Shearing—§§ 250.732 and 250.734(a)(16)

Current regulations at §§ 250.732 and 250.734 require the use of a shear ram positioning mechanism to ensure that pipe is centered within the area of the shearing blade. Since the publication of the 2016 WCR, many of the shear ram designs have improved the shearing capabilities to help ensure shearing is conducted on the appropriate shearing area of the shear blades. This is commonly done by shaping the shear ram cutting blades in a “V” or “W” pattern to help center the pipe as it shears, as well as to increase the blade face surface area to ensure there are no areas that cannot shear the pipe in the well. Accordingly, BSEE proposed to remove the centering mechanism requirements in both §§ 250.732 and 250.734. However, in the proposed rule preamble, BSEE solicited comments about the effectiveness of requiring shear rams to center pipe or wire while shearing, or requiring shear rams to have the capability to shear any pipe or wire in the hole without a separate centering mechanism. BSEE also discussed the option of retaining the centering mechanism requirements, but expressly provided that the shear rams with these capabilities satisfy the requirements.

Based on comments, BSEE recognizes that the technology exists to help ensure the pipe is positioned within the shear surface to optimize shearing capabilities. BSEE agrees that even though this technology exists, the rule as proposed would not have specifically required the use of such technology. In this final rule, BSEE is now retaining the existing requirement to maintain the capability to position the pipe within the shearing blade, however BSEE will not require this to be achieved using a separate mechanism and will allow this capability to be accomplished with the shear ram itself. As encouraged by Congress

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to ensure that offshore operations promote safety and protect the environment in a technically feasible manner, BSEE does not want to limit the use of improved technological advancements in shear blade designs.

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Explanatory Statement to Accompany Div G. of Consolidated Appropriations Act, 2017 (Interior, Environment, and Related Agencies), Public Law 115-31 (May 5, 2017). (“Blowout Preventer Systems and Well Control Rule.—The Committees encourage the Bureau to evaluate information learned from additional stakeholder input and ongoing technical conversations to inform implementation of this rule. To the extent additional information warrants revisions to the rule that require public notice and comment, the Bureau is encouraged to follow that process to ensure that offshore operations promote safety and protect the environment in a technically feasible manner.”). 163 Cong. Rec. H 3327, 3880 (May 3, 2017).

3. Shearing Combinations—§ 250.734(a)(1)(ii)

In the 2016 WCR, BSEE established that both shear rams must have the capability to shear the specified equipment. During the development of the 2016 WCR, BSEE did not receive comments specific to the “both shear rams” provision.

BSEE proposed to revise § 250.734(a)(1)(ii) by clarifying that a “combination of the” shear rams must be capable of shearing all the items specified in the paragraph. BSEE is aware that certain casing shears still have difficulty shearing electric-, wire-, or slick-line, while certain BSRs have difficulties shearing larger casing sizes. As stated in the proposed rule, the proposed revision would have provided the operators flexibility for how they utilize the BOP system and components for operations, while still ensuring all critical shearing capabilities.

Multiple commenters generally agreed with the proposed language; however, other commenters opposed any changes to existing requirements. Commenters expressed concerns about the proposed removal of the requirement to have two fully redundant shear rams and suggested that such a change would not account for the possibility of one shear ram malfunctioning. The benefit of having two, fully capable shear rams is a fully redundant back up. Under the proposed revisions, if one shear ram were to fail and the remaining shear ram could not independently shear the necessary equipment, well control might not have been achieved.

Based on comments received, BSEE is keeping the language in existing § 250.734(a)(1)(ii) that requires “both shear rams to be capable of shearing” the specified equipment in the hole. BSEE principally bases this decision on comments BSEE received concerning the importance of shearing redundancy and a recognition that the proposed language's reliance on a “combination” of shear rams potentially interjected some ambiguity regarding the number of rams subject to this shearing requirement.

BSEE is not revising the dual shear ram requirements or the associated compliance date of April 29, 2021, found in existing § 250.734(a)(1).

4. Subsea Accumulator Capacity—§ 250.734(a)(3)(iii)

The purpose of the accumulator system and applicable accumulator capacity requirements is to ensure that there is sufficient volume and pressure in the accumulator bottles to properly operate BOP components in a specified timeframe regardless of the location of the accumulator bottles.

In the proposed rule, BSEE proposed to remove the reference to the subsea location of the accumulator capacity. BSEE understands that the accumulator system works together with the surface and subsea accumulator capacity to achieve full functionality and BSEE determined that it was unnecessary to specifically identify only subsea requirements when API Standard 53 covers the entire system.

BSEE received multiple comments supporting the proposed revisions; however, BSEE also received comments asserting that BSEE had not explained how removing the reference to the subsea location of accumulator capacity would ensure that the accumulator system can adequately function if there is a loss of the power fluid connection to the surface. Based on these comments, BSEE has decided to keep the clarification that certain accumulator capacity must be located subsea in order to avoid confusion about how the autoshear and deadman systems utilize accumulator capacity. The autoshear and deadman systems do not use accumulator capacity from the surface accumulators. The conditions to function these emergency systems involve the loss of electrical/hydraulic communication or connection between the BOP stack and the rig. Therefore, it is necessary to require that the autoshear and deadman emergency systems' accumulator capacity must be able to function properly without connection or communication with the surface and therefore the accumulator capacity must be located subsea.

In this final rule, BSEE is clarifying that the accumulator bottles for the autoshear/deadman systems need to be located subsea. The autoshear/deadman systems are not controlled by surface personnel and are essentially considered failsafe. Consistent with the

existing regulations, the accumulator bottles that operate these systems need to be located subsea to ensure there is enough fluid and pressure to operate the associated functions. This is a clarification to ensure there is no confusion about where the required fluid and pressure must reside to operate the autoshear/deadman emergency functions.

5. 21-Day BOP Testing Frequency—§ 250.737

In the proposed rule, BSEE requested comments on whether the BOP testing interval should be 7 days, 14 days, or 21 days for all operations (

i.e.,

drilling, completions, workovers, and decommissioning). BSEE also requested comments on the specific cost and operational implications of each testing interval to further its consideration of the issue. Current regulations (multiple citations throughout § 250.737) require pressure and function testing of specific BOP components for drilling, completions, workovers, and decommissioning operations every 14 days. Although BSEE did not present revisions to the testing frequency regulatory text in the proposed rule, BSEE raised the option of 21-day BOP testing in the preamble.

The industry and BSEE currently rely on function and hydrostatic tests to verify the performance of BOP equipment in the field. These tests have traditionally been the primary method of verifying the capability of in-service equipment. In recent years, the industry has raised concerns related to the benefits of pressure and function testing of subsea BOPs when compared to the costs and potential operational issues associated with such testing, including wear and tear.

BSEE received multiple comments supporting a 21-day BOP testing frequency. These comments provided some data to justify a 21-day BOP testing frequency. However, BSEE also received many comments opposing any changes to the BOP testing frequency and a commenter even stated that the BOP testing frequency should be increased to every 7 days.

BSEE analyzed the justifications provided in the 2016 WCR for the decision to adopt a 14-day rather than a 21-day testing frequency. The relevant analysis offered little by way of data-driven conclusions, so BSEE has, through this rulemaking, undertaken a thorough analysis of the information available. In the final rule, based on comments received, BSEE is revising § 250.737 to allow the use of a 21-day BOP testing frequency if an operator meets certain criteria and if BSEE approves an operator's 21-day BOP testing frequency request. BSEE is requiring operators to demonstrate, in the 21-day BOP testing frequency request, that they have developed a BOP health monitoring plan that includes certain system capabilities. BSEE is requiring the BOP health monitoring plan to include condition monitoring tools that are able to provide continuous surveillance of sensor readings from the BOP control system, real-time condition analysis and displays, functional pressure signal analysis, and trending capabilities of the sensor data. The condition monitoring tools also must include failure propagation analysis and a failure tracking and resolution system to identify recurring problems. BSEE is also requiring operators to submit quarterly reports of the data collected to the BSEE Regional Supervisor, District Field Operations. BSEE will review this data to help ensure compliance with the requirements of the regulations and help support its continual analysis of the 21-day BOP testing frequency.

This approach offers a path for operators to avoid the identified cost and operational concerns associated with more frequent testing, while at the same time requiring that adequate and proven tools for ensuring safety and environmental protection are in place before testing frequency is changed to a 21-day interval.

IV. Discussion of Public Comments on the Proposed Rule

In response to the proposed rule, BSEE received over 265 sets of comments containing individually submitted comments and multiple similar group form letters, totaling over 118,000 submittals. Comments included submittals from individual entities (

e.g.,

companies, industry organizations, non-governmental organizations, State governments, and private citizens). Some entities submitted comments multiple times and a majority of the individual commenters submitted nearly identical comments (similar to a form letter). Over 117,000 of the comments submitted follow a type of form letter and contain similar comments. All relevant comments are posted at the

Federal eRulemaking

portal:

http://www.regulations.gov.

To access the comments at that website, enter BSEE-2018-0002 in the Search box. BSEE reviewed all comments submitted, and this section and section V of this preamble contain brief summaries of the relevant comments as well as of BSEE's responses.

A. General Support for the Proposed Rule

BSEE received hundreds of comments expressing general support for the proposed rule. The public comments expressing or suggesting general support for the proposed rule as a whole or for some of its major provisions comprise a few hundred of the total number of comments received. BSEE received supporting comments from, but not limited to, oil and gas companies, contractors, industry trade groups, equipment manufacturers, class societies, private citizens, and legal firms. Some of the commenters expressing general support for the proposed rule also provided specific detailed comments, addressed further infra.

The comments submitted by industry trade groups, operators, and service companies generally supported the proposed alleviation of administrative burdens and reduction of prescriptive regulations. As rationale for their support of the proposed rule, those commenters often identified concerns about how the current regulations increase operational risks and impose unnecessary cost burdens but provide no commensurate safety improvements or environmental protection. However, while the commenters voiced support broadly for the proposed changes, some of them also cited additional regulatory provisions that they asserted impose unnecessary regulatory burdens that the proposed revisions would not go far enough to relieve, as discussed in this section and section V of this preamble.

B. General Opposition to the Proposed Rule

A majority of entities and individuals that commented on the proposed revisions expressed general opposition to the proposed rule and many of its major proposals. A majority of those comments were submitted by non-governmental organizations, environmental groups, multiple State Attorneys General, lawmakers from the U.S. House of Representatives and U.S. Senate, public, and academia.

A large majority of the approximately 118,000 comments that BSEE received voiced significant concerns about the proposed changes. The rationale for the commenters' opposition to the proposed revisions to the existing regulations generally fell into two main categories. First, many commenters asserted that BSEE does not have sufficient evidence to support many of the proposed revisions to the existing regulations. However, many of the commenters did not provide additional information/data

to support assertions. Comments in this first group highlighted the fact that BSEE adopted the WCR in 2016 and thus asserted that it has not had enough time to gather the data necessary to support any changes.

Second, some commenters cited the findings from the investigations and reports arising out of

Deepwater Horizon

to support their general contention that oversight of the oil and gas industry in the form of regulations is vitally important and necessary. Among these comments, opposition to the proposed rule was apparently premised on the belief that any “rollback” of the existing regulations will adversely impact safety and environmental protection.

For a discussion of the substantive comments in opposition to specific provisions and BSEE's responses, refer to later parts of this section and Section V of this preamble.

C. 21-Day BOP Testing Frequency

In the proposed rule, BSEE did not propose any specific regulatory text changes to the existing requirement for the minimum 14-day testing frequency for BOP systems. However, BSEE solicited comments in the proposed rule on whether the BOP testing frequency should be 7 days, 14 days, or 21 days for all types of operations. BSEE also requested comments on the adequacy of the current function and pressure test requirements for BOP systems in predicting the performance of this equipment in subsequent drilling operations. Furthermore, BSEE requested comments about what circumstances or environments might justify an increase or decrease to the required testing frequency.

In addition, BSEE is aware of potential technologies that may improve the operability and reliability of BOP systems and thus may affect the need for and appropriate frequency of BOP testing. Accordingly, BSEE also solicited comments on whether there are additional technologies, processes, or procedures that can be used to supplement existing requirements and provide additional assurances related to the performance of this equipment. BSEE asked commenters to provide justifications and data to support their comments.

Summary of Comments—21-Day BOP Testing Frequency

BSEE received comments both supporting a 21-day BOP testing frequency and opposing such a change. Numerous commenters proposed aligning the regulatory requirement for BOP testing frequency with the 21-day testing frequency found in API Standard 53; some of those commenters cited the fact that Texas regulations for onshore operations have successfully used 21-day testing for many years. These commenters cited studies indicating that a 21-day testing frequency: Provides for a safe and reliable BOP system; aligns with global practices and technological capabilities; and prevents extensive pressure testing that can cause premature system wear. Some commenters also asserted that function tests provide more reliable indications of BOP performance. Commenters also suggested a pilot program that would implement 21-day testing to gather data to assess the difference in BOP performance between 14 and 21-day testing frequency. Another commenter provided some data comparing the results of 14-day and 21-day BOP testing worldwide. Another commenter suggested that a 21-day testing interval is appropriate if there are tools, systems, and data collection to ensure that the 21-day testing keeps operational risk and process safety performance equivalent to the 14-day testing interval.

Commenters who did not support the change to the 21-day testing frequency noted that BSEE considered a 21-day BOP testing interval in the context of the 2016 WCR, but rejected that testing interval because the agency did not receive data to support it. The commenters further asserted that BSEE is again proposing a 21-day BOP testing interval, despite not having any new data to support the change. Another commenter proposed a 7-day interval for BOP testing, along with a recommendation that BSEE undertake a technical risk analysis of BOP failure rates for 7-, 14-, and 21-day BOP test intervals. One commenter suggested that BSEE postpone a revision to the BOP testing frequency and solicit input from an advisory committee regarding what a reasonable and prudent standard should be. A commenter requested that BSEE show the impact of the proposed change on all system risks and asserted that BSEE should not rely on industry comments as a basis for the change.

•

Response:

After considering all comments regarding this potential change, BSEE agrees with many of the commenters' recommendations to allow a 21-day test frequency, under limited circumstances when an operator meets appropriate qualifications. Therefore, BSEE is revising § 250.737 in the final rule to maintain the 14-day test frequency as the default requirement, but to allow operators to request special approval to use a 21-day BOP testing frequency in lieu of a 14-day BOP testing frequency if the operator meets certain criteria and receives BSEE approval. To address the concerns raised by commenters regarding the availability of data that demonstrates the impact on reliability due to testing frequency, the final rule requires any operator seeking to change testing frequency to develop a BOP health monitoring plan that includes condition monitoring tools that provide continuous surveillance of sensor readings from the BOP control system, real-time condition analysis and displays, functional pressure signal analysis, and trending capabilities of the sensor data. The condition monitoring tools also must include failure propagation analysis and a failure tracking and resolution system to identify recurring problems. BSEE is also requiring operators to submit quarterly reports of the data collected to the BSEE Regional Supervisor, District Field Operations. The BOP health monitoring plan will provide BSEE with relevant data on how the BOP equipment operates throughout the equipment lifecycle and additional assurance of the successful functioning and oversight of the BOP equipment. BSEE will review this data to help ensure compliance with the requirements of the regulations and help support its continual analysis of the 21-day testing frequency.

These efforts are consistent with BSEE's implementation of E.O.s 13783 and 13795, congressional guidance, and Secretary's Order No. 3350 (described in Section I.D above).

BSEE analyzed the justifications provided in the 2016 WCR for the decision to adopt a 14-day rather than a 21-day testing frequency, which offered little by way of data-driven conclusions. Following closure of the comment period, BSEE undertook a thorough review of available data, existing regulations, and all comments related to the evaluation of 7-, 14-, and 21-day BOP testing interval requirements. As part of its analysis, BSEE considered the BOP equipment failure reporting data captured in the U.S. Department of Transportation Bureau of Transportation Statistics (BTS) 2017 SafeOCS report titled

Blowout Prevention Safety System—2017 Annual Report.

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The report analyzed 1129 events and found that there were 1044 notifications for subsea BOPs and 85 notifications for surface BOPs. Of the total events, 946 reported events were found while the BOPs were not in operation. That report observes on page 28 that “[w]ear and tear was the most frequently reported root cause of

failures (53.6 percent).” This data helps BSEE establish a baseline of operating events for the 14-day BOP testing frequency. That report also indicates that various forms of monitoring were responsible for detecting at least as many reported “in-operation” BOP equipment failures as the equipment failures detected through additional testing during 2017. These data suggest that monitoring plays an important role in the detection of BOP equipment failures, in conjunction with regular testing. Health monitoring systems allow operators to detect and remediate potential failures before they occur, and to understand potential failures and their impact on overall BOP system reliability, potentially contributing to downward failure trends. Accordingly, BSEE determined that operators who desire to reduce the frequency of their regular testing should be required to adopt more robust BOP health monitoring capabilities to ensure that oversight of BOP operability is not compromised. Adopting a 21-day testing frequency would align BSEE requirements with the BOP testing provisions of API Standard 53 that are widely utilized and accepted internationally. A 21-day testing frequency would also align with widely adopted BOP testing standards followed by the international offshore oil and gas industry. BSEE contacted many international regulators

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responsible for overseeing offshore operations and requested information on whether those regulators allow the use of a 21-day BOP testing frequency. BSEE was informed that, among others, Brazil, Denmark, the United Kingdom,

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and the Netherlands allow a 21-day BOP testing frequency. BSEE recognizes the successful international use of the 21-day testing frequency and relied, in part, on that experience to support its decision that a 21-day testing frequency may be appropriate for OCS operations under certain conditions.

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https://www.safeocs.gov/2017_WCR_Annual_Report_v4.pdf.

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Canada-Nova Scotia Offshore Petroleum Board (CNSOPB), Canada-Newfoundland and Labrador Offshore Petroleum Board, Danish Offshore Oil and Gas, United Kingdom, Brazil ANP (National Agency of Petroleum, Natural Gas and Biofuels), Norway PSA (Petroleum Safety Authority), and Australia National Offshore Petroleum Safety and Environmental Management Authority.

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http://www.hse.gov.uk/offshore/ed-well-control.pdf.

BSEE also requires additional specified function testing of certain BOP components. For example, existing § 250.737(d)(9) requires BOP function testing of annular and pipe/variable bore rams every 7 days. This function testing would continue to confirm important aspects of BOP functionality at more frequent intervals if pressure testing is conducted at a 21-day frequency.

In addition, one commenter submitted an analysis of field pressure testing data across two rigs with similar BOP equipment—one subject to 14-day testing under requirements applicable in the Gulf of Mexico and the other on a 21-day testing cycle overseas. The commenter's analysis indicates that no reduction in BOP reliability was found in connection with the international 21-day testing standards. BSEE reviewed the commenter's data and agrees that the commenter's analysis demonstrates successful use of 21-day BOP testing.

Summary of Comments—21-Day BOP Testing Frequency in the Economic and Environmental Analyses

Multiple commenters questioned the validity of BSEE's cost and environmental analyses and asserted that BSEE did not provide any concrete data or analysis to support a change to the BOP testing frequency in the regulations.

•

Response:

BSEE disagrees with the commenters' assertion that the draft economic and environmental analyses released with the proposed rule were invalid. BSEE reviewed all relevant comments related to these analyses and updated or revised them, as appropriate, for the final rule (see discussions of the 21-day testing provisions in the environmental assessment and Regulatory Impact Analysis).

D. BSEE Approved Verification Organization (BAVO)

The 2016 WCR established criteria and associated requirements related to the use of BAVOs. Pursuant to the regulations promulgated through the 2016 WCR, a BAVO is an entity that submits qualifications to BSEE and receives BSEE approval in order to perform certain independent engineering reviews and provides reasonable assurances that certain equipment would perform as designed under the operating conditions relevant to the particular well where the equipment will be used. The 2016 WCR regulations at §§ 250.731, 250.732, 250.734, 250.738, and 250.739 covered BAVO requirements. The 2016 WCR established that the BAVO requirements would not take effect until one year after BSEE published a list of BAVOs. BSEE has not yet published a BAVO list; accordingly, the BAVO requirements are not currently effective. However, the 2016 WCR also required that operators use independent third-parties to perform certain of the certifications, verifications, and reporting functions pending implementation of the BAVO requirements.

In the proposed rule, BSEE proposed to remove all references to BAVOs and to replace them with references to an independent third party in §§ 250.731, 250.732, 250.734, 250.738, and 250.739. BSEE received many comments supporting these proposed changes. This section includes a summary of the general BAVO-related comments and BSEE responses. For additional discussions of comments associated with BAVO-specific provisions and BSEE responses, refer to section V of this final rule preamble.

Summary of comments:

Multiple commenters expressed concerns that changing BAVO requirements in the new rule would negatively affect safety and accountability. Multiple comments requested keeping the requirement for BSEE to certify BAVOs, as described in the 2016 WCR. Those commenters desired assurance that the third-party will be well-qualified for the extremely important work that is required, which includes verifying and documenting the proper functioning of the BOP. A commenter requested that BSEE explain how it will ensure that third-party reviewers are truly independent, qualified, and consistent in their execution of inspections and establish a process to evaluate the independent third parties. Another commenter recommended that BSEE not surrender the authority to approve the third-party organizations. A different commenter asserted that BSEE cannot avoid the responsibilities it has to ensure drilling safety by allowing inspections by organizations that may not have the expertise or capacity to determine whether blowout preventers are being correctly operated and maintained. Another commenter asserted that this change would reduce oversight, suggesting that if BSEE does not have a role in approving the inspectors, the operators would be able to choose who inspects their BOPs, and that such inspectors would not even be required to be present during inspection. One commenter asserted that reports prepared by a third-party that is not present during the actual inspection would be of minimal value and be too late to affect real change/improvement.

•

Response:

BSEE does agree that the independent third-parties need to be qualified to perform the required work. The independent third-party must have the qualifications listed under § 250.732(b), which requires the independent third-party to be a technical classification society, or a licensed professional engineering firm, or a registered professional engineer

capable of providing the required certifications and verifications. As BSEE described in the preambles to the 2016 WCR and the proposed rule, BSEE expected most of the companies or individuals that would be approved as BAVOs to be drawn from the group currently being used as independent third-parties. BSEE determined that, under these circumstances, submittal to become a BAVO would be unnecessary and would not provide significant meaningful improvements to safety or environmental protection. BSEE has increased its interaction with the independent third-parties to better understand how they operate and carry out certifications and verifications. For example, BSEE engineers and inspectors are regularly on a rig or at a testing facility concurrently with independent third-parties during BOP testing. BSEE utilizes these opportunities to observe the independent third-parties and discuss the required verifications for the associated operations with them. If BSEE becomes aware of any concerns with the required independent third-party certifications or verifications, there are still options for BSEE to address the issues through the operator (

e.g.,

verifications through the permitting process).

BSEE disagrees with the assertions that BSEE is surrendering authority to approve third parties, that BSEE is avoiding responsibilities for ensuring safety, or that the changes reduce oversight. The regulatory revision that eliminates the BAVO process will continue to meet the objectives BSEE stated in 2015: “The objective is to have this equipment monitored during its entire lifecycle by an independent third-party to verify compliance with BSEE requirements, OEM recommendations, and recognized engineering practices. The BSEE believes that the importance and complexity of BOP systems and the fact that they might be operated at various worldwide locations throughout their service life warrants a thorough and regular assessment of the systems and verification that design, installation, maintenance, inspection, and repair activities are documented and traceable.” (Proposed WCR, 80 FR 21504).

Although the regulations allow operators to select the independent third party who performs the inspection, there are multiple paths by which BSEE can directly verify the adequacy of independent third party performance. For example, BSEE will continue to review the verifications and certifications submitted by independent third parties and confirm that they provide a sufficient level of detail to ensure compliance with the regulations. Since 2015, BSEE has consistently articulated the importance of independent third-party verification and documentation. This regulatory amendment does not eliminate or reduce the role of such verification and documentation. While the regulations do not require the independent third party to be present at the major inspections, they require the independent third party to review the documentation of the inspections to help ensure that the appropriate entities accurately and appropriately complete the inspection and maintenance. The independent third party document review also allows the comparison of the design data to the current status of the equipment. The intent of the major inspection is to verify that the well control system components are fit for service and within design tolerances to be utilized for specific well conditions, which can be verified through a data review and does not require a physical presence.

Summary of comments:

Commenters suggested that BSEE should take steps to ensure that any third-party is acting in good faith before it verifies rig safety measures and that BSEE should provide additional explanation and justification to support the proposed change.

•

Response:

BSEE agrees with the commenters that the independent third-parties must act in good faith and be capable and competent when conducting the required verifications and certifications. The qualification requirements set forth in final § 250.732(b) are designed, in part, to ensure such professional standards. If BSEE becomes aware of any concerns with certifications or verifications that are performed by an independent third-party as required by the regulations, BSEE retains options to address these potential issues through its regulation of the operator (

e.g.,

verifications through the permitting process).

Summary of comments:

A commenter asserted that the proposed definition of independent third-party is too broad and would allow organizations or individuals to perform verification activities without having the proper expertise. The commenter recommends retaining and applying the current BAVO requirements found in previous § 250.732(a)(3)(i) through (vi) to potential independent third-parties.

•

Response:

BSEE disagrees with the commenter's suggestion to include the identified BAVO requirements in this final rule. Final § 250.732 paragraph (b) references the independent third party qualifications. The existing regulations do not require a BAVO to be a technical classification society, a licensed professional engineering firm, or a registered professional engineer capable of performing the required actions; however, for an individual or company to become an independent third-party that performs the required certifications and verification under this final rule, it must continue to meet the qualifications currently set forth in § 250.732(a)(2) and being retained in the final rule at § 250.732(b). These standards ensure a level of professional competence and independence comparable to that required of BAVOs in the existing regulations.

E. Legal Comments

General Comments on Legal Aspects of the Rulemaking Process

Summary of comments:

BSEE received a number of comments regarding the rulemaking process. Some commenters raised specific concerns about the process. For example, a commenter asserted that BSEE engaged in an inadequate information-gathering process. Several others claimed the public comment period was too short, and did not involve enough participation from stakeholders. Other commenters expressed support for the rulemaking process, asserting that this rule would address perceived deficits in the previous rule.

•

Response:

BSEE disagrees with the assertion that the bureau provided an unreasonably short public comment and that BSEE engaged in an inadequate information gathering process. As previously discussed, BSEE held a public forum on September 20, 2017, in Houston, Texas, prior to initiating the rulemaking process, to solicit input on the development of the proposed rule. In addition, BSEE accepted comments through a “Request for comments” on the Department of the Interior's regulatory reform initiatives, published in the

Federal Register

on June 22, 2017 (82 FR 28429), with no deadline for comments. BSEE received 19 comments relevant to this rulemaking from interested parties as a result of this request for comments. BSEE published the proposed rule with a 60-day comment period that was scheduled to close on July 10, 2018, and extended that comment period by 27 days to August 6, 2018. BSEE determined that this 87 day comment period on the proposed rule was reasonably sufficient because it afforded interested parties a meaningful opportunity to participate in the rulemaking process.

Compliance With the Administrative Procedure Act (APA)

Summary of comments:

A commenter asserted that if BSEE chooses to publish a final rule, then it must first provide analysis and data upon which the proposed rule is based, in compliance with the fair notice requirements of the Administrative Procedure Act (APA), asserting that the APA requires BSEE to provide specific revisions with data and analysis supporting those proposals and to request further public comments on those specific proposed revisions, rather than simply ask for comments on a broad range of topics. The commenter asserted that there are several places in the proposed rule where BSEE solicits comments for amending certain existing provisions but provides no specific plans for how it intends to amend those provisions and asserted that without a defined course of action, the public cannot intelligently critique the proposed rule. The commenter asserted that BSEE did not include the analysis or data on which other proposed revisions are based, thus precluding meaningful public criticism.

•

Response:

BSEE disagrees. The APA's notice and comment provision (5 U.S.C. 553(b)) requires that an agency test its regulation through exposure to diverse public comment and give affected parties an opportunity to develop evidence in the record to support their positions regarding the rulemaking, thereby enhancing the quality of agency decisionmaking.

14

As evidenced by BSEE's receipt of diverse, extensive public comments, the proposed rule fairly apprised interested parties about the rule's detailed subjects and the range of alternatives the bureau w as considering. BSEE's evaluation of the comments it received permitted the bureau to test these final regulatory provisions. Through this rulemaking process, BSEE provided ample and adequate notice of the potential for each regulatory change implemented through this final rule and ensured that the rulemaking record included adequate justification for each such change.

14

Prometheus Radio Project

v.

F.C.C.,

652 F.3d 431, 449 (3d Cir. 2011), certiorari denied 567 U.S. 951 (2012).

With regard to revisions to the BOP system testing requirements, BSEE solicited comments in the proposed rule “on whether the BOP testing interval should be 7 days, 14 days, or 21 days for all types of operations including drilling, completions, workovers, and decommissioning,” as well as comments “on the specific cost and operational implications of each testing interval.”

15

Contrary to the commenter's assertion, BSEE specifically discussed industry's and BSEE's current reliance on function and hydrostatic tests and industry's concerns “related to the benefits of pressure and functional testing of subsea BOPs when compared to the costs and potential operational issues.”

16

BSEE requested comments on these specific tests and intervals, including “[u]nder what circumstances or environments . . . the testing frequency [should] be increased or decreased,” and what “technologies, processes, or procedures can be used to supplement existing requirements and provide additional assurances related to the performance of this equipment.” BSEE did not propose the regulatory text adopted in the final rule regarding BOP testing frequency. However, BSEE discussed all of the final rule elements in the proposed rule, and a reasonable commenter could have anticipated the adopted changes and the text of the final rule BOP testing frequency provisions was a logical outgrowth of the proposed rule. BSEE specifically requested comments on whether the BOP testing interval should be 21 days for all types of operations, including associated costs and operational considerations, and highlighted questions surrounding the benefits of current testing requirements compared to known concerns. 83 FR 22143. BSEE specifically requested comments on circumstances in which testing frequency might be decreased and alternative approaches to ensuring the operability and reliability of BOP systems.

Id.

BSEE derived the final regulatory changes from comments received pursuant to the solicitations in the proposed rule. The final rule's BOP testing interval constitutes a logical outgrowth from the proposed rule because interested parties should have anticipated that this change was possible and, in fact, filed relevant comments.

17

15

83 FR 22143 (May 11, 2018).

16

Ibid.

17

“A rule is deemed a logical outgrowth if interested parties `should have anticipated' that the change was possible, and thus reasonably should have filed their comments on the subject during the notice-and-comment period.”

NE Maryland Waste Disposal Auth.

v.

E.P.A.,

358 F.3d 936, 952 (D.C. Cir. 2004) (internal cites omitted).

See also, CSX Transp., Inc.

v.

Surface Transp. Bd.,

584 F.3d 1076, 1081 (D.C. Cir. 2009) (“[A] final rule represents a logical outgrowth where the NPRM expressly asked for comments on a particular issue or otherwise made clear that the agency was contemplating a particular change.”).

Enforcement of Compliance With Documents Incorporated by Reference

Summary of comments:

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 technical standards by reference in accordance with the requirements of the National Technology Transfer and Advancement Act (NTTAA)

18

and implementing Office of Management and Budget (OMB) guidance, the Office of the Federal Register (OFR) regulations (1 CFR part 51), and BSEE's own procedures for incorporation (§ 250.115,

What are the procedures for, and effects of, incorporation of documents by reference in this part?

). These processes include thorough evaluation of the pertinent standards for appropriateness and adequacy as regulatory requirements. The effect of incorporation by reference of an industry standard into the regulations is that the incorporated document becomes a regulatory requirement,

see

§ 250.115(c), and, thus, becomes subject to BSEE oversight and enforcement in the same manner as other regulatory requirements. BSEE incorporates standards developed by SDOs with a preference for those standards that are developed using a consensus process. Furthermore, BSEE may incorporate portions of SDO standards, limit their applicability to specified sections of BSEE's regulations, and impose other limitations such as providing that where a provision of an incorporated standard conflicts with BSEE regulatory provisions, those regulatory provisions prevail. If an SDO later revises a standard that BSEE has previously incorporated in a final rule, 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 that standard is incorporated in BSEE's regulations. Nor is industry authorized to oversee or enforce compliance with standards once incorporated into regulation. Once incorporated, BSEE enforces these standards as any other regulatory requirement.

18

National Technology Transfer and Advancement Act, 15 U.S.C. 370

et seq.

Correcting Issues From the 2016 Rulemaking Process

Summary of comments:

A commenter asserted that this proposed rule corrected a failure in the 2016 WCR to provide a Statement of Energy Effects, as required by E.O. 13211. According to

the commenter, E.O. 13211 required BSEE to publish for public comment a detailed statement relating to (1) “any adverse effects on energy supply” and (2) “reasonable alternatives to the action.” A commenter claimed that the proposed rule makes adjustments to the 2016 rule to provide “economically feasible” regulations as required by OCSLA.

19

A commenter asserted that a detailed evaluation of “reasonable alternatives” to the 2016 WCR “would necessarily have included use of consensus standards.” According to this same commenter, BSEE's recent cost impact assessment of the 2016 WCR found needless waste under certain provisions of the rule, leading to “idled rigs, unnecessary new equipment, unnecessary reporting, non-productive time, and lost production opportunities, all of which have no offsetting benefit to safety or environmental protection.” This commenter contended that the proposed rule included adjustments to the 2016 WCR that provide economically feasible avenues for reaching the safety and environmental goals required by OCSLA. One commenter asserted that E.O. 13211 is unconstitutional, so any reliance on it is unlawful.

19

The commenter cited 43 U.S.C. 1347(b) as the basis for its assertion. BSEE-2018-0002-0050 Attch. 1 (p. 3).

•

Response:

BSEE's articulation of its 2016 position with respect to the applicability of E.O. 13211 to the 2016 WCR constitutes the best evidence of the bureau's position.

20

The OCSLA provision cited by the commenter addresses economic feasibility with respect to the use of certain technologies during OCS operations, not with respect to the economic feasibility of regulatory updates.

21

This rulemaking does not make a determination regarding the economic feasibility of any technology under 43 U.S.C. 1347(b). As explained in more detail in section I of this final rule preamble, E.O.s 12866 and 13563 direct BSEE to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select a regulatory approach that maximizes net benefits (accounting for the potential economic, environmental, public health, and safety effects). As a general matter, BSEE informs its decision-making with respect to rulemaking through fulfillment of the requirements of the APA and associated regulations and guidance.

20

81 FR 25888, 26013 (April 29, 2016).

21

43 U.S.C. 1347(b) states, in part: “[The Secretary] shall require, on all new drilling and production operations and, wherever practicable, on existing operations, the use of the best available and safest technologies which the Secretary determines to be economically feasible . . . .”

Comments on Other Legal Issues

Summary of comments:

A commenter asserts that the agency cannot adopt new revisions in the final rule based on solicited comments when the agency did not propose those revisions in the proposed rule nor provide an opportunity for public comment on those revisions.

•

Response:

BSEE disagrees. BSEE decision-making regarding regulatory revisions is governed by the requirements of the APA and associated regulations and guidance. BSEE has complied with the notice and comment requirements of applicable law with respect to all provisions of the final rule. Any provisions not specifically proposed in the proposed rule reflect existing requirements and/or are logical outgrowths from the proposed rule.

Summary of comments:

A commenter asserted that BSEE must perform a Quantitative Risk Analysis (QRA) before BSEE can realistically conclude that the changes ensure safe operations. In addition, the commenter asserted that BSEE must evaluate the significant environmental impacts of the rulemaking by preparing an Environmental Impact Statement (EIS). The commenter based this assertion on the requirement under the National Environmental Policy Act (NEPA) to take a “hard look” at the cumulative impacts the rulemaking would have on water resources, wildlife, coastal habitats, marine species, air quality, and sociocultural and economic systems, including direct and indirect impacts. The commenter also asserted that the rulemaking requires BSEE to undertake Endangered Species Act (ESA) consultations because removing certain regulatory provisions regarding environmental and worker protections may affect listed species and critical habitat.

•

Response:

BSEE disagrees with the claim that a QRA is the only way for BSEE to conclude that these changes ensure safe operations. As more fully discussed in the final Environmental Assessment (EA), NEPA requires that BSEE take a “hard look” at the potential impacts of a rulemaking, however it does not specifically require a QRA. BSEE took its “hard look” through the final EA, and reached a Finding of No Significant Impact (FONSI), demonstrating that an EIS is not required. Further, before any actual operations can be conducted on the OCS, there are a number of additional stages (

e.g.,

leasing program, lease sales, planning, permitting) at which additional analyses of potential impacts are and will be performed. In addition, guidance in OMB Circular A4 regarding the preparation of a regulatory impact analysis (RIA) for significant rulemakings states that agencies “should seek to use more rigorous approaches with higher consequence rules.” BSEE evaluated the recommendations from the stakeholders and commenters, considering a number of factors including risk, benefits, and cost. As previously discussed, consistent with congressional encouragement, BSEE solicited input from stakeholders early in this rulemaking process to identify those provisions of the existing regulations that BSEE could amend, revise, or remove to reduce unnecessary burdens on stakeholders while still maintaining safety and environmental protection. BSEE generally focused on those provisions in the existing regulations that did not significantly enhance worker safety or environmental protection.

With respect to ESA consultation, BSEE considered the ongoing Section 7 ESA consultations with the U.S. Fish and Wildlife Service, and whether this rule would affect any listed species or habitat. The National Marine Fisheries Service expressly excluded this rule making from the ongoing programmatic consultation. The final rule would not give rise to any additional or modified activities that would affect listed species or designated critical habitat. BSEE has determined that the final rule will have “no effect” on listed species or designated critical habitat. BSEE has determined that ESA consultation is therefore not required for this rule.

Comments on Best Available and Safest Technology (BAST) Requirement in OCSLA

Summary of comments:

A commenter emphasized that OCSLA requires BSEE to ensure that operators use “the best available and safest” technology (BAST) possible, unless BSEE determines that the narrow impracticability exception applies. The commenter asserted that BSEE failed to ensure or otherwise determine that the proposed rule meets these requirements. This commenter asserted that before BSEE may rescind and revise technological requirements that were determined to meet the requirements of BAST, BSEE is obligated to demonstrate compliance with BAST by ensuring that those revisions are as good as the original requirements. The commenter maintained that BSEE may not adopt the proposed revisions without a determination that the benefits of the

original provisions are clearly insufficient to justify the incremental costs of implementing these technologies. This commenter asserted that BSEE must provide information demonstrating that the rulemaking will meet the BAST requirements of OCSLA.

A commenter urged BSEE to expeditiously finalize its consideration of the potential revisions to § 250.107.

•

Response:

The Conference Report regarding OCSLA's BAST provision

22

explains that that this provision requires the Secretary to make a “determination as to what are the best available and safest technologies economically feasible . . . .”

23

Neither the 2016 WCR nor this rule made or makes any such determination with respect to any specific technology. Therefore, in this rule, the Secretary has not undertaken any BAST evaluation of economic feasibility of any specific technology, nor did the Secretary do so in the context of the 2016 WCR (

see, e.g.,

81 FR 25901; 25911; and 25929). Thus, the BAST statutory requirement does not apply here because this rulemaking makes no BAST determinations, nor does it alter any existing BAST determinations. The BAST statutory requirement is independent from OCSLA's provisions establishing the Secretary's authority to promulgate regulations to govern OCS operations.

24

22

43 U.S.C. 1347(b).

23

Conf. Rpt. 95-1091 (Aug. 10, 1978) (p. 109).

24

43 U.S.C. 1334(a) states, in part: “The Secretary shall . . . prescribe . . . regulations as may be necessary to carry out [OCSLA]. The Secretary may at any time prescribe and amend such . . . regulations as may be necessary and proper in order to provide for the prevention of waste and conservation of the natural resources of the [OCS], and the protection of correlative rights therein . . . .”

Comments on Grounds for Decisions

Summary of comments:

A commenter asserted that BSEE failed to meet the APA's legal standards and argued that BSEE must provide “the grounds of its decision and the essential facts upon which the administrative decision was based,” and “good reasons” for the proposed changes in policy, explaining the reasons why BSEE disregarded the “facts and circumstances that underlay or were engendered by” the prior rule. The commenter asserted that BSEE needs to provide a more detailed justification, providing “reasoned explanation.” The commenter also asserted that it is arbitrary and capricious for BSEE to assume that the proposal to repeal regulations, that two years ago BSEE found would provide significant societal benefits, will not have an effect on societal costs and benefits.

•

Response:

BSEE disagrees. The APA's provisions regarding notice and comment (5 U.S.C. 553(b) and (c)) require that an agency test its regulation through exposure to diverse public comment and give affected parties an opportunity to develop evidence in the record to support their positions regarding the rulemaking, thereby enhancing the quality of agency decisionmaking.

25

BSEE provided thorough and reasoned explanations for its proposed regulatory actions and submitted them to public comment. BSEE's evaluation of the comments it received permitted the bureau to test these final regulatory provisions. Through this rulemaking process, BSEE provided ample and adequate notice of each regulatory change implemented through this final rule and ensured that the rulemaking record included adequate justification for each such change. Further, BSEE undertook its review of the provisions of existing regulations as promulgated through the 2016 WCR pursuant to the direction of multiple Executive Orders and Secretary's Orders, as well as congressional direction. Thus, BSEE faithfully implements OCSLA and fully complied with procedural legal requirements, including those applicable to this rulemaking.

25

Prometheus Radio Project

v.

F.C.C.

, 652 F.3d 431, 449 (3d Cir. 2011), certiorari denied 567 U.S. 951 (2012).

Comments on Weakening of Requirements

Summary of comments:

One commenter strongly opposed the proposed rule, asserting that the proposal to weaken the existing well control regulations, just two years after they were promulgated, and before some provisions of the regulations are effective, would increase the likelihood of another

Deepwater Horizon

disaster. The commenter observed that the previous rulemaking was specifically designed to prevent another scenario similar to the

Deepwater Horizon

event. The commenter stressed that this action would “epitomize an arbitrary and capricious reversal of position.”

•

Response:

The APA requires that BSEE give a “general statement of [the regulations'] basis and purpose.” (5 U.S.C. 553(c)). As previously described, BSEE broadly based this rulemaking on congressional guidance, interaction with stakeholders, BSEE's experience implementing the 2016 WCR, BSEE's recognition of technological advancements, and directions contained in Executive and Secretary's Orders issued subsequent to the 2016 WCR. Pursuant to those Orders, BSEE evaluated existing regulatory provisions to identify unnecessary regulatory burdens, but always within the bounds of maintaining safety and environmental protection. BSEE believes that its process accomplished these goals without “weaken[ing]” existing regulation or failing to maintain safety and environmental protection. BSEE's articulation of these sound reasons for its regulatory decisions demonstrates that it is not acting arbitrarily or capriciously.

26

BSEE disagrees with the commenter's assertion that this rule would increase the likelihood of an event similar to DWH. As discussed in section I.D of this preamble, this rulemaking reduces regulatory burden while maintaining safety and environmental protection.

26

See,

Natl. Indus. Sand Ass'n

v.

Marshall

, 601 F.2d 689, 717 (3d Cir. 1979).

F. Economic Comments

Comments on Cost and Benefits

Summary of comments:

Some commenters made assertions regarding the cost/benefit aspects of the proposed rule as presented in the initial regulatory impact analysis (IRIA). These comments were varied in scope and in position. Some commenters supported the overall conclusion of the IRIA, that BSEE is alleviating unnecessary regulatory burdens on industry with no foregone benefit to the public. Many commenters challenged this conclusion, both for the rule as a whole and with respect to some of the individual provisions. Commenters often supported their claims with descriptions in the 2016 WCR or by highlighting statements from the multiple investigative and engineering studies following the

Deepwater Horizon

incident in 2010.

Most comments did not challenge the IRIA's methodology or the compliance cost or savings estimates. Commenters that noted these did so generally, usually in the context of added risks or foregone benefits to the public. In other words, commenters mostly accepted the compliance savings estimates in the IRIA, but asserted that it was incomplete and that BSEE essentially ignored the “benefit” part of a cost-benefit analysis. On this basis, one commenter challenged BSEE's “neutral” designation for safety and environment impacts, claiming it treats foregone benefits as having zero value. The commenter further asserted, “BSEE must analyze and monetize the forgone societal benefits from [the proposed rule] that it analyzed and monetized in

2016, including the risk reduction benefits.” In the absence of such an analysis, a separate commenter asserts that, “BSEE provides no evidence that the existing rule

is

actually a burden or that removing safeguards will ensure adequate protections remain in place.” Further comments suggest the savings estimates presented in the IRIA are insignificant in comparison to the billions in gross domestic product (GDP) generated by the coastal communities placed at greater risk if this rule is finalized—a risk, commenters note, BSEE did not evaluate. Variations of these claims are found in multiple comments.

•

Response:

The 2016 WCR did not make specific claims regarding the reduced risk created by the provisions in that rulemaking. A breakeven analysis of the rule's total compliance costs claimed only that BSEE believed the risk reduction was greater than one percent. This final rule does not modify or change the overwhelming majority of the provisions codified in the previous rulemaking. Further, BSEE identified the changes being made specifically because they maintain safety and environmental protection, and the societal benefits associated therewith. The revisions made through this rulemaking exemplify that there are multiple approaches to maintaining safety and environmental protection, and the associated societal benefits. As discussed in the “Section-by-Section Summary” discussions in this preamble, this final rule leaves in place several of the provisions proposed for revision in the proposed rule. The final rule focuses only on those provisions that are expected to reduce unnecessary burdens on operators, while still maintaining safety and environmental protection. Accordingly, BSEE has adequately incorporated those benefits into its formulation of this final rule.

Comments on Compliance Costs or Savings Estimates

Summary of comments:

BSEE received few comments on compliance cost or savings estimations in the IRIA. One commenter resubmitted a cost analysis prepared for the 2016 WCR to support the position that BSEE should revise additional provisions not included in the proposed rule. Similarly, a separate commenter highlighted an unspecified cost burden related to the retention period of real-time monitoring data as defined by a provision not proposed for revision in the proposed rule.

•

Response:

BSEE's rulemaking process revises only the provisions identified in the proposed rule and changes that would be considered a “logical outgrowth” of the proposed rule. These comments suggested that BSEE should revise provisions that it did not propose for modification in the Notice of Proposed Rulemaking (NPRM) and that it did not analyze in the IRIA. BSEE considers the suggestions made in these comments to be outside the scope of this rulemaking.

Comments on the Elimination of BAVO Requirements

Summary of comments:

Regarding elimination of the BAVO framework, a commenter asserted that, based on the supporting RIA for the 2016 WCR, “BSEE estimated that the BAVO system would result in a mere $10,000 in annual costs to operators and verification organizations. BSEE has provided no evidence that such a small annual cost outweighs the critical benefits of the BAVO system.”

•

Response:

As discussed previously, BSEE concluded that the use of independent third parties will provide the same level of safety as the BAVO framework. Implementation of the BAVO framework would also impose meaningful costs and burdens on BSEE. BSEE considers any compliance cost that does not contribute to safety or environmental protection burdensome and therefore believes it is appropriate that the regulatory impact analysis reflect a compliance savings and no foregone public benefit.

Comments on Lack of a Risk Analysis or Risk Assessment and Financial Analysis

Summary of comments:

Several comments asserted that the proposed rule lacks sufficient risk analysis and asserted that additional analyses are required, while other commenters stated they were satisfied with the proposed risk assessment.

One commenter asserted that BSEE claimed the proposed rule would not cause a major increase in costs or prices for: Consumers; individual industries; Federal, State, Tribal, or local governments; or regions of the nation. The commenter then asserted that these conclusions do not consider the risk of another spill like

Deepwater Horizon

or consider the impacts of that event related to the shutdown of fishing and tourism businesses for months or longer. The same commenter noted that according to BSEE, the proposed changes would reduce regulatory costs over a 10-year period at a rate less than $1 billion total, which the commenter asserted is a relatively small amount when compared to the damage of one oil spill.

Another commenter made a similar assertion regarding BSEE's position that the rule would not cause major increases in cost or prices, and asserted that this position does not address important risk factors. The commenter asserted that the proposed rule failed to account for foregone benefits along with the avoided costs. The commenter asserted that because the proposed revisions “would have a positive annual effect on the economy of $100 million or more,” this rulemaking is subject to the cost-benefit analysis requirements under E.O.s 12866 and 13563, as well as OMB Circular A-4. The commenter asserted that BSEE claimed it has conducted the required analysis, but argued that while BSEE's analysis quantifies industry's anticipated reduction in compliance costs, it does not address the foregone benefits of protections against the types of spills that have cost billions of dollars to remediate. The commenter further asserted that BSEE simply stated that, “[t]he proposed amendments would not negatively impact worker safety or the environment.” The commenter observed that the economic analysis conducted for the 2016 WCR “quantified and monetized the potential benefits of the rule, including time savings, reductions in oil spills, and reductions in fatalities.”

One commenter asserted that the rulemaking is consistent with the Executive and Secretary's Orders, in that the rulemaking would remove undue burdens on operators. The commenter supported BSEE's assertion that the proposed rule would increase the competitiveness of America's offshore energy industry.

Another commenter asserted that the proposed rule would hold risk to an acceptable level and that the risk-based standards and procedures as currently used by operators are sufficient to maintain well control. The commenter asserted that operators can maintain well control and manage events safely when: Wells are designed for the range of anticipated risk; equipment and safeguards have the required redundancy and are properly maintained and tested; personnel are trained; tests and drills are conducted; and established procedures are followed. The commenter emphasized the importance of highly skilled and trained personnel on location who are able to provide timely and effective well control and safety decision making. The commenter also recommended that BSEE consider these general operating practices when finalizing this and other regulations.

•

Response:

BSEE disagrees with the commenters' assertion that BSEE did not consider risk in the development of the proposed and final rule. BSEE evaluated operational considerations, equipment design and specifications, and relevant public input and comments to identify appropriate revisions. As previously discussed in this preamble, BSEE carefully considered potential changes to these regulations, under direction to identify possible revisions that would reduce unnecessary regulatory burdens on stakeholders, while still maintaining safety and environmental protection. As discussed qualitatively in the RIA, BSEE determined that the selected revisions are likely to maintain the same worker safety and environmental protection as the 2016 final rule, therefore BSEE did not evaluate the costs related to a potential increase in spills or safety issues. BSEE recognizes that pursuant to OMB guidance (OMB circular A-4),

27

agencies are encouraged to “seek to use more rigorous [economic analysis] approaches with higher consequence rules,”

i.e.,

those rulemakings that are expected to have annual benefits and/or costs in the range from $100 million to $1 billion. BSEE recognizes that there is a potential relationship between a decrease in regulatory requirements and an increase in risks. However, during the rulemaking process, BSEE considered the potential impacts of contemplated revisions to safety and environmental risks to identify those revisions that would reduce burdens on operators while maintaining safety and environmental protection. While BSEE did not develop a specific risk analysis for this rulemaking, BSEE considered potential risks as part of the process of developing this rule and RIA. BSEE has a number of completed and ongoing efforts related to evaluating risk in OCS operations. BSEE considered information from these efforts when evaluating the requirements of the current well control regulations to identify requirements that could be revised while still maintaining safety and protection of the environment. Among the ongoing efforts considered by BSEE that address well control-related risk issues, are:

27

https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf.

(1) The SafeOCS failure reporting program, and the “Blowout Preventions System Events and Equipment Component Failures” 2016 Annual Report and “Blowout Preventions System Safety” 2017 Annual Report on failures, by BTS. These reports include summaries and analysis of the data received through the SafeOCS program on BOP equipment component failures on the OCS and other key information, such as failure causes, operational impacts, and opportunities to improve data quality. More information on the SafeOCS reporting system and copies of the 2016 and 2017 BTS reports are available at:

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

(2) Argonne National Laboratory (ANL) 2017 report and updated 2018 report on

Risk-Based Evaluation of Offshore Oil and Gas Operations Using a Multiple Physical Barrier Approach.

This project was designed to assist BSEE in developing a multiple physical barrier (MPB) model of risk analysis. The project resulted in a risk-analysis technique, developed by ANL, that focuses on the use of physical barriers to prevent hydrocarbon release. BSEE has used a multiple barrier approach as part of its approach to regulations for many years. This project supports that approach through the development of a formalized methodology for evaluating process safety, to ensure that

success paths

(

e.g.,

systems, components, and human actions needed to ensure the success (of a barrier)) are in place and are capable of performing their functions in all expected conditions and circumstances. The initial (2016) ANL project resulted in a joint industry project (JIP), a case study on plug and abandonment barriers. More information on this project and the two ANL reports is available at:

https://www.bsee.gov/research-record/risk-based-evaluation-of-offshore-oil-and-gas-operations-using-a-multiple-physical.

Regarding the comments on BSEE's determination that the proposed rule would not cause a major increase in costs or prices, the revisions to the regulatory requirements in this final rule are expected to reduce unnecessary burdens, while still maintaining safety and environmental protection. The 2016 WCR did not make specific claims regarding the risk reduction created by the provisions in that rulemaking. A breakeven analysis of the rule's compliance costs claimed only that BSEE had concluded that the risk reduction was greater than one percent (81 FR 25987). This final rule does not modify or change the overwhelming majority of the provisions codified in the 2016 WCR. BSEE determined that the selected revisions are likely to maintain safety and environmental protection.

This final rule does not codify some provisions of the proposed rule. One example is the proposed revision to existing § 250.734(a)(1)(ii), which requires “both shear rams to be capable of shearing” the specified equipment run in the hole. BSEE proposed to change this provision to require only that a “combination of the shear rams must be capable of shearing” the specified equipment run in the hole. As previously stated, BSEE based the decision not to make that change in this final rule on consideration of the public comments on the proposed rule, the importance of shearing redundancy, and the potential ambiguity the change would create regarding the number of rams subject to this shearing requirement. For more information on specific proposed provisions that are not being codified in this final rule, refer to section V of this preamble.

Concerning the comment that recommended that BSEE consider these general operating practices when finalizing these and other regulations; BSEE agrees and does this routinely as part of developing regulations and policies. The incorporation by reference of industry developed standards in the regulations is one approach BSEE uses to address general operating practices used by the industry. Since these documents are developed by industry, they reflect common industry practices. BSEE also considered input from industry to identify those provisions from the existing regulations that were unduly burdensome, although this was not the only input that BSEE considered in determining how to revise these regulations.

Comments on Potential Safety Impacts of Proposed RTM Rrevisions

Summary of comments:

One commenter asserted that BSEE must ascertain whether removing certain provisions, such as RTM requirements, would increase the risk of human error, or remove a check on human error, regarding the need for an operator's offshore and onshore teams to come to consensus on how to proceed. The commenter also asserted that BSEE must provide quantitative risk analyses to support the proposed rule provisions, stating that such an analysis is critical to understanding whether BSEE's proposal to rescind such built-in safety checks would impermissibly undermine safety. The commenter also cited System Risk Assessment and Management (SRAM) as an approach that works effectively in other countries.

•

Response:

The final rule revises part of the existing RTM requirements, but does not entirely remove them. Section 250.724 paragraph (a) of the final rule continues to require RTM when operators conduct “well operations with a subsea BOP or with a

surface BOP on a floating facility, or when operating in a high pressure high temperature (HPHT) environment.” The operator must “gather and monitor real-time well data using an independent, automatic, and continuous monitoring system capable of recording, storing, and transmitting data.” This includes data regarding the BOP control system, the well's active fluid circulating system, and the downhole conditions with bottom hole assembly tools.

The final rule continues to require operators to transmit such data as they are gathered in accordance with a real-time monitoring plan. The final rule requires that operators have the capability to monitor the data using qualified personnel. In addition, BSEE requires the operator to develop and maintain a real-time monitoring plan that meets certain specified criteria.

The final rule removes the language in existing § 250.724(b) discussing contact between onshore and offshore personnel and stating that, after completing operations, the operator must preserve and store these data for recordkeeping purposes as required in §§ 250.740 and 250.741, and must provide BSEE with access to the designated real-time monitoring data onshore upon request. The final rule also removes the requirement from § 250.724 that the operators include certifications that they have a real-time monitoring plan in their APD. These provisions are prescriptive, but unnecessary. The regulations still require the operator's RTM plan to describe how the data will be transmitted and monitored by qualified personnel, procedures for, and methods of, communication between rig personnel and monitoring personnel, and actions to be taken in the event of loss of communications. Further, the existing regulations (§§ 250.740 and 250.741) already specify recordkeeping requirements for all of Subpart G. BSEE also has the authority to request these records from the operators. Removal of these redundant or unnecessary requirements for storage of RTM data from § 250.724 do not remove the obligation for the operator to develop and implement an RTM plan, which includes a description of how the data will be stored; therefore, the change in risk is minimal and a quantitative risk analysis, as suggested by the commenter is not needed.

Regarding the commenter's mention of the SRAM, BSEE recognizes that there are numerous ways to approach risk assessments and may consider other approaches for future policies or regulations.

Comments on Financial Assurance

Summary of comments:

A commenter asserted that operators should provide evidence of financial ability to plug wells and cover lost income, including the loss of income to those who rely on а clean ocean for their livelihoods.

•

Response:

BSEE assumes that this comment is related to financial assurance (bonding) issues. BSEE does not regulate financial assurance for the offshore oil and gas industry; the Bureau of Ocean Energy Management's (BOEM's) regulations at 30 CFR parts 553,

Oil Spill Financial Responsibility for Offshore Facilities

and 556,

Leasing of Sulfur or Oil and Gas and Bonding Requirements in the Outer Continental Shelf

address that responsibility.

G. Environmental Comments

Comments on the OCS Leasing Program

Summary of comments: A number of commenters addressed elements of the BOEM draft proposed 2019-2024 National OCS Leasing Program (Leasing Program). These commenters focused on the potential impacts of the proposed regulations in conjunction with the potential for oil and gas exploration and development in areas that could be opened for leasing under BOEM's proposed Leasing Program. One commenter asserted that BOEM's proposed expansion of leasing would entail the issuance of leases at a pace that exceeds the pace of recent leasing activities. The commenter further asserted that this would lead to an increase in the risk of spills, blowouts, and other consequences, and that the leases would be issued in areas where there is currently no oil and gas production and little or no production of oil and natural gas has taken place. The commenter asserted that the proposed rule would weaken the precautions in place to prevent these consequences just as offshore drilling would begin in areas that are not prepared to respond to spills.

Some comments asserted 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 in this rulemaking. Some commenters asserted that BSEE must consider the impacts that the proposed rule would have under the expanded Leasing Program proposed by BOEM.

•

Response:

BSEE is aware of BOEM's Leasing Program. The proposed Leasing Program is a separate action by BOEM, which is a separate bureau from BSEE within the Department. 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 Leasing Program is subject to its own separate public comment processes and is beyond the scope of this rulemaking. While certain regulations apply exclusively to certain regions, the bulk of BSEE's regulations apply to the entire OCS regardless of location. As analyzed throughout, BSEE disagrees with the commenters' assertion that this rulemaking weakens the precautions to prevent spills and incidents. Accordingly, the impacts of this rule are not pertinent to commenters' concerns, and any concerns related to the expansion of operations into new areas should be directed toward BOEM's proposed Leasing Program, as that is not a subject of this rulemaking. Regardless of the BOEM leasing pace, BSEE permits operations on an individual well-by-well basis taking into account site-specific environmental and operational conditions to help ensure safety and environmental protection.

BSEE disagrees that the regulations are being weakened and it selected the revisions implemented through this rule based in part on the fact that they are likely to maintain the same level of safety and environmental protection for OCS activities as established by the 2016 final regulations. This rulemaking does not revise or reduce the oil spill response plan requirements.

General Comments on Environmental Impacts

Summary of comments:

Multiple commenters were concerned that the proposed rule would increase environmental impacts of drilling and other well operations, thus negatively affecting the environment. One commenter asserted that the penalties imposed for failures are insufficient to motivate operators to comply with the regulations. The commenter asserted that the 2016 WCR was overly conservative in its estimations of its environmental benefits. The commenter also asserted that BSEE admitted that it understated the environmental benefits when BSEE assumed that the rule would reduce oil spill risk by only one percent per year. The commenter asserted that this mistake is further compounded by the fact that BSEE relies on this erroneous one percent reduction of risk assessment in its costs reduction analysis for the proposed revisions to the regulations promulgated through the 2016 WCR. The commenter also asserted that a significant monetary imbalance exists between current civil penalties and operating costs; asserting

that the penalties are too small to deter risk-taking and provide a financial incentive to disregard regulatory compliance. The commenter, however, acknowledged that BSEE cannot address this problem through regulations, and that Congress needs to mandate penalties that will discourage this behavior.

A different commenter expressed concern regarding how the proposed rule would negatively affect the environment. The commenter expressed opposition to any provisions of the proposed rule that would weaken requirements for decommissioning, such as possibly excluding decommissioning from RTM requirements. The commenter referenced a 2010 article by the Associated Press asserting that there are more than 27,000 sealed and abandoned oil and gas wells in the Gulf of Mexico, with more than 3,200 wells classified as active that have no cement plugging. The commenters asserted that these 3,200 wells pose a significant risk to the health of the Gulf and coastal communities because the factors that could lead to leaks are not being monitored. The commenter noted that in recent years, millions of dollars from

Deepwater Horizon

recovery and restoration funds were provided to state programs to safely plug abandoned wells. The commenter asserted that BSEE should strengthen requirements for decommissioning activities to prevent the risk of future leaks.

•

Response:

BSEE disagrees with the commenters' assertions that the selected regulatory revisions would negatively affect the environment. BSEE has determined that this rulemaking does not alter the baseline (2016 level) risk profile of the 2016 WCR, for the reasons specified in the rule and RIA. There are no benefits (forgone or otherwise) to quantify because the baseline risk profile is unchanged. Therefore, those forgone benefits are ultimately quantified at zero. In the EA, BSEE evaluated the revisions in this rulemaking to focus the impact analyses on those revisions that could potentially change operators' responsibilities for how they conduct their operations. The impact analysis focuses on the likely impacts associated with a possible loss of well control, discharges of hydrocarbons to the environment, and air pollution emissions associated with testing activities. BSEE evaluated the impacts of the final rule provisions and determined that none of the provisions will significantly impact the quality of the human environment under NEPA (refer to the final EA and FONSI).

BSEE generally agrees with the commenters' assertions about the importance of civil penalties. However, those considerations are beyond the scope of this rulemaking. BSEE also agrees that the sufficiency of the maximum civil penalties allowable under OCSLA is a question that would need to be addressed by Congress. BSEE also generally agrees with the commenters' assertions about the importance of decommissioning. However, this aspect of decommissioning operations is also beyond the scope of this rulemaking.

Comments on the Need for an EIS

Summary of comments:

Multiple commenters recommended that BSEE should prepare an EIS. These commenters asserted that the environmental impacts discussed in the draft EA are significant in scope and intensity and that the impacts of a catastrophic discharge would be severe. The commenters also asserted that the proposed rule would increase the risk of significant impacts; therefore, BSEE should prepare an EIS for this rulemaking. Another commenter asserted that the standard for triggering an EIS is low and that an EIS should be prepared when substantial questions are raised about whether a project may have a significant impact on the environment. A commenter also asserted that agencies must identify their methodologies, indicate when information is incomplete or unavailable, acknowledge scientific disagreement and data gaps, and evaluate indeterminate adverse impacts based on approaches or methods “generally accepted in the scientific community.” Some commenters asserted that BSEE's utilization of an environmental assessment is unsupportable because of the potential effects from a possible catastrophic oil spill, like the Deepwater Horizon incident, and BOEM's plans to dramatically expand the scope of offshore drilling through the National OCS Program under development.

•

Response:

BSEE disagrees that the potential impacts of the rule are significant. BSEE used the best available scientific information to conduct a comprehensive review of the potential environmental impacts of the provisions of the proposed rule. More specifically, BSEE reviewed and incorporated the impact analyses from multiple existing environmental documents into the draft EA and determined that there were no significant environmental impacts associated with any of the NEPA alternatives considered, and, most importantly, with the provisions in this final rule. Furthermore, BSEE disagrees that the proposed rule would increase the risk of significant impacts. As previously mentioned, BSEE considered potential risks while developing the final rule. In particular, we concluded that the risk of a catastrophic oil spill is not increased by the regulatory revisions of this rule. These considerations included the public's input on the proposed rule and information from a number of BSEE efforts related to evaluating risk in OCS operations—such as BSEE's SafeOCS failure reporting program and the ANL report on

Risk-Based Evaluation of Offshore Oil and Gas Operations Using a Multiple Physical Barrier Approach.

These various sources of information led BSEE to identify changes to the regulations implemented through the 2016 WCR that would reduce regulatory burden while maintaining safety and environmental protection on the OCS. For example, the final rule does not include certain changes initially mentioned in the proposed rule that would have eliminated the requirement for both shear rams in a BOP to be capable of shearing specific equipment run in the hole and eliminated requirements related to pipe positioning for shear rams. Inasmuch as the impacts of the rule are either neutral or positive, the potential for expansion of the geographic area subject to leasing does not increase the risks to a level approaching significance. General statements of dissatisfaction with the draft EA's analyses or general statements regarding NEPA legal standards, do not assist BSEE in providing any supplemental analysis that could assist the public in understanding the potential environmental impacts of the final rule.

Comments on the Adequacy of Impacts Analysis

Summary of comments:

A number of comments asserted that BSEE's analyses of impacts on environmental resources are inadequate. One comment asserted that BSEE's one-sided evaluation of economic impacts violates NEPA and that the analysis fails to address the “crippling economic consequences of failing to prevent an oil spill that could have been prevented under the 2016 well control rule.” Another comment asserted that the draft EA fails to disclose and analyze impacts to water resources, wildlife on nearby habitats, air quality, sociocultural systems, commercial and recreational fisheries, tourism, and recreation, as well as cumulative impacts. The commenter also disapproved of BSEE's determination that consultation for threatened and endangered species is

not necessary at this time. The commenter asserted that BSEE's conclusions are not supported by any qualitative or quantitative analysis and therefore fail to satisfy the hard look requirement of NEPA.

•

Response:

BSEE stands by the conclusions provided in the EA, while noting that BSEE used the best available scientific information to conduct a comprehensive review of the potential environmental impacts. This information includes multiple existing environmental analysis documents, listed in the next paragraph, as well as information received through public comment on the proposed rule and a number of BSEE efforts (

e.g.,

ANL studies) related to evaluating risk in OCS operations. As previously mentioned, the changes to the regulations promulgated through the 2016 WCR are limited only to those that would reduce regulatory burden while maintaining safety and environmental protection on the OCS. Those comments that express general dissatisfaction with the analyses do not provide any supplemental analysis that could assist the public in understanding the potential environmental impacts of the rule.

The project area evaluated in the EA is fully described in Chapter 3 of the EA,

Affected Environment.

The EA incorporates by reference baseline information regarding resources that are relevant to the operations conducted under the revised regulations from the Final Programmatic Environmental Impact Statement; Outer Continental Shelf Oil and Gas Leasing Program: 2017-2022; Final Environmental Impact Statement; Gulf of Mexico OCS Oil and Gas Lease Sales: 2017-2022; Gulf of Mexico Lease Sales 249, 250, 251, 252, 253, 254, 256, 257, 259, and 261; Final Programmatic Environmental Assessment of the Use of Well Stimulation Treatments on the Pacific Outer Continental Shelf: May 2016; and the Final Environmental Assessment; Oil and Gas and Sulfur Operations on the Outer Continental Shelf—Blowout Preventer Systems and Well Control: April 2016. BSEE rigorously evaluated and discussed in Chapter 4 of the EA,

Environmental Consequences,

the analyses of impacts on water resources, wildlife on nearby habitats, air quality, sociocultural systems, commercial and recreational fisheries, tourism, and recreation, as well as cumulative impacts, while noting that many of the quantitative and qualitative analyses are supported in the documents incorporated by reference.

In the EA, BSEE identified the scope of reasonably foreseeable activities that may be attributed to this rulemaking in order to estimate its environmental effects. BSEE acknowledges that there is some level of risk associated with offshore oil and gas activities; however the scope of this EA is limited to this rulemaking, which adopted changes to the current regulations that reduce regulatory burdens while maintaining safety and environmental protection.

The cumulative impacts analysis considered the baseline data included in Chapter 3, Affected Environment, which describes current conditions and past and ongoing impacts on the resources that could potentially be affected by the activities included under each alternative, as well as reasonably foreseeable future activities that should be taken into account. The EA appropriately describes and analyzes all of the current and reasonably foreseeable future impacts from other activities described in the Cumulative Effects section 4.5 of the EA based on the estimated negligible to small impacts attributed to promulgating the final regulations in this rulemaking under Alternative 4, and the small contribution to total cumulative impacts.

BSEE considered the ongoing Section 7 ESA consultations with the U.S. Fish and Wildlife Service and National Marine Fisheries Service, and whether this rule would affect any listed species or habitat. The final rule would not give rise to any additional or modified activities that would affect listed species or designated critical habitat. BSEE has determined that the final rule will have “no effect” on listed species or designated critical habitat. BSEE has determined that ESA consultation is therefore not required for this rule.

H. Miscellaneous Comments

Comments on General Safety Issues

A number of comments discussed overall safety issues purportedly implicated by the rulemaking, not related to a specific proposed revision. Some commenters stated that they perceived that the proposed rule would improve the overall safety of operations, while others raised concerns that the proposed rule would decrease overall safety.

Summary of comments:

Multiple commenters expressed support for the proposed rule's reliance on best management practices, innovation to increase safety and reliability, optimization of risk reduction, support for the nation's efforts to increase energy independence, and incorporation of API Standard 53. One commenter asserted that adoption of API Standard 53 would improve safety by aligning the regulations with actual industry practices; by incorporating the standard it would apply to operators, suppliers, and contractors; and that the standard would provide for timely introduction and management of new technology.

A commenter asserted that the economic production of crude oil and natural gas in the Gulf of Mexico is vital to the U.S. economy and American consumers. The commenter emphasized the importance of ensuring that any regulations BSEE adopts optimize risk reduction without making development and production uneconomic or unsafe.

A commenter asserted that new technologies can provide industry with operational information. The commenter asserted that the industry and BSEE recognize that technologies already exist, or are in development, that can provide operators with data regarding the equipment's performance. The commenter asserted that use of these and other emerging technologies, along with API Standard 53 failure reporting, may lead to advances that further improve safety and reliability.

•

Response:

BSEE agrees with the comments generally supporting the selected revisions. BSEE has reviewed all comments submitted and is revising the proposed rule as appropriate. BSEE responds directly to comments on specific provisions and discusses the final rule provisions in section V of this preamble.

Summary of comments:

Several commenters asserted that the proposed rule failed to adequately demonstrate how it will protect safety. Another commenter asserted that the proposed rule allows operators to govern their own safety. The commenter asserted that the proposed revisions would allow a substantial degree of self-governance to the operators and that this is an industry that has demonstrated an inability to obtain oil in a safe, responsible way. The commenter referred to a recent series of surprise inspections of drilling rigs that revealed a number of major safety violations and asserted that several of the companies pushing hardest against the regulations were cited for violations more often than the industry average. A different commenter asserted that the proposed rule lacked adequate evidence that it would protect safety. This commenter asserted that BSEE must evaluate safety with respect to the different geographical environments where the oil and gas operations will occur. The commenter noted that different ocean environments present different constraints, challenges, and operational risks; and asserted that BSEE must

evaluate whether the proposed revisions would ensure safety in all environments. The commenter further asserted that BSEE did not provide evidence that the existing regulations are actually a burden or that removing safeguards will ensure adequate protections remain in place. The commenter also asserted that the proposed rule did not provide sufficient analysis on how it would safeguard workers and protect the environment, but focused on assertions about reducing regulatory burdens for industry and burdensome paperwork for regulators. The commenter asserted that the proposed rule lacked any studies, investigations, reports, or public solicitations for information.

A commenter contended that the reduced oversight contemplated by the proposed rule would make losses of well control and oil spills more likely to occur. The commenter claimed that weakening safety regulations designed to prevent blowouts would further contribute to the already routine oil spills that will occur in the Atlantic if the Administration finalizes its plan to allow oil and gas development in that area. The commenter asserted that, if offshore drilling increases, the level of safety and prudence must also increase.

•

Response:

BSEE reviewed all comments submitted and is revising the proposed rule as appropriate. BSEE does not agree with the commenters' assumption that this rulemaking will allow the operators to govern their own safety. The use of various regulatory approaches in this rulemaking—including the incorporation of standards; performance-based requirements; independent third parties instead of BAVOs—increases the responsibilities on operators, but does not reduce BSEE's oversight responsibilities. BSEE continues to review and approve permit applications for specific activities and to inspect all OCS facilities for compliance with applicable law, regulation, plans, permits, and lease terms. Operator applications must contain appropriate information to demonstrate compliance with BSEE regulations, including any documents incorporated by reference. The incorporation by reference of industry standards does not mean the industry is self-regulating. BSEE participates in the development of many of the standards incorporated by reference. In addition, BSEE reviews and analyzes any standards incorporated in the regulations to ensure the documents provide for safety and environmental protection and are consistent with BSEE's authorities and policies. BSEE may supplement standards with specific regulatory provisions, if there are any places where the standards are lacking. Most importantly, once incorporated by reference, such standards are enforceable as any other regulatory requirement, and BSEE is responsible for oversight of compliance and enforcement—it is not left to industry. Further, if industry modifies an incorporated standard, those modifications do not impact the regulatory requirements unless and until BSEE incorporates those modifications through a separate rulemaking.

The commenter referred to a recent series of surprise inspections of drilling rigs that revealed a number of major safety violations and asserted that several of the companies pushing hardest against the regulations were cited for violations more often than the industry average. BSEE regularly conducts unscheduled or “surprise” inspections of facilities on the OCS. BSEE is not certain whether this comment is referring to the regular unplanned inspections or a specific increased inspection effort. Regardless, BSEE normally inspects mobile offshore drilling units (MODUs) at least once every 30 days when they are in operation on the OCS. BSEE does not agree with the assertion that the companies most vigorously opposing the regulations were cited for violations more often than the industry average. BSEE did not consider the number of violations issued to specific operators when developing this rulemaking.

Regarding the concern that BSEE must evaluate safety with respect to the different geographic environments where the oil and gas operations will occur, BSEE agrees that differences in geographic environment can impact the nature of operations. This is reflected in the fact that certain of BSEE's regulatory requirements are specifically tailored to particular geographic environments, such as the Arctic or frontier areas. Prior to receiving approval from BSEE to begin drilling operations on the OCS, an operator must submit an exploration or development plan to BOEM for approval. The exploration or development plan addresses operational considerations relevant to the specific location and operating environment (for more information on the content of exploration and development plans, go to:

https://www.boem.gov/Submitting-Complete-Exploration-and-Development-Plans/

). As part of the review of the APD, BSEE confirms whether the APD is consistent with the approved exploration or development plan, as well as consistent with the additional requirements applicable to such submissions, under the circumstances presented.

Concerning the commenter's assertion that the development of the proposed rule did not include studies, investigations, reports, or public solicitations for information, BSEE disagrees. As previously discussed, BSEE considered questions that arose during the implementation of the 2016 WCR and the policies developed in response to those questions. In addition, BSEE solicited input from interested parties to identify potential revisions to the regulations; including the public forum held on September 20, 2017, in Houston, Texas. Further, BSEE received and considered a substantial amount of information from commenters through the APA notice and comment process. BSEE's approach to this regulatory reform was to consider input from a variety of sources to make proposals that would carefully remove unnecessary burdens while leaving critical safety provisions intact.

Summary of comments:

One commenter asserted that implementation of the proposed rule and adoption of a related procedure for checking well pressures as a standard industry practice would potentially have prevented a number of fatalities. This commenter recommended that BSEE incorporate a specific safety procedure in the regulations, so it would become a standard industry practice.

•

Response:

BSEE received and assessed the comment and is not incorporating the commenter's suggested procedure into the regulations at this time. BSEE disagrees that it would be appropriate to require the commenters' identified specific procedures on all wells and rigs, and doing so would be beyond the scope of this rulemaking. BSEE may evaluate the procedures for possible inclusion in future rulemakings, if appropriate.

Comments on Energy Independence

Summary of comments:

Some commenters expressed concern that BSEE is promoting increased drilling and energy independence at the expense of its obligations to protect the environment. One commenter asserted that BSEE's function is to promote safety and protect the environment. The commenter referenced BSEE's explanation in the proposed rule that the intention of this rulemaking is to fortify the Administration's position toward facilitating energy security leading to increased domestic oil and gas production and to reduce unnecessary burdens on stakeholders.

However, the commenter asserted that it is not BSEE's duty to increase production of oil or gas. The commenter noted BSEE's mission statement that says its mission is to “promote safety, protect the environment, and conserve resources offshore through vigorous regulatory oversight and enforcement.” The commenter asserted that it is inappropriate for BSEE to sacrifice its public trust obligations in favor of enhancing industry profits.

•

Response:

BSEE disagrees with the commenters' assertions that this rulemaking is promoting increased drilling and energy independence at the expense of BSEE's obligations to protect safety and the environment. BSEE recognizes its obligations to protect safety and the environment under OCSLA; however, as stated in § 250.101(b), and pursuant to 43 U.S.C. 1332(3). BSEE is also obligated to follow sound conservation practices to make OCS resources available for development to meet the Nation's energy needs. Applying sound conservation practices includes ensuring that the requirements in the regulations do not unduly burden responsible development and production of oil and natural gas resources, while maintaining safety and environmental protection. BSEE's responsibilities go beyond safety and environmental protection and extend to numerous aspects of the proper management of OCS oil and gas operations. In addition, as previously discussed, this rulemaking executes the mandates from the President and the Secretary, as set forth in E.O. 13783—Promoting Energy Independence and Economic Growth; E.O. 13795—Implementing an America-First Offshore Energy Strategy; and Secretary's Order No. 3350. BSEE disagrees that this rule fails to maintain safety and environmental protection and stands by its determination that every change made in this rule meets that standard.

Comments on Conflicts of Interest

Summary of comments:

Some commenters took issue with the fact that BSEE incorporated input from interested parties in the proposed rule. The commenters claimed that the proposed rule would allow operators to provide their own oversight, while not acknowledging API's role as a lobbyist for the oil and gas industry. These commenters asserted that this creates a conflict of interest for these parties and for BSEE and that this would make losses of well control and catastrophic oil spills more likely. One of these commenters asserted that adopting standards developed by API creates a conflict of interest, because API is a major oil and gas industry trade association and lobbying firm. The other commenter views the performance-based standards in the proposed rule as poorly defined, claiming they should be clearly established before the final rule's publication. The commenter asserts that a number of provisions in the proposed rule regarding performance-based standards are extremely vague. This commenter opined that BSEE should have published an Advance Notice of Proposed Rulemaking (ANPR) to gather the information necessary to prepare a better defined proposed rule, if BSEE did not know which proposed standards to include.

Response:

BSEE disagrees with the suggestion that BSEE should have published an ANPR before publishing the proposed rule. As previously discussed, when BSEE initiated its review of these regulations, BSEE held a public forum in Houston, Texas, which was attended by more than 110 interested parties. The participants of the public forum provided comments and suggestions before BSEE began the process of developing the proposed rule. BSEE likewise obtained useful input into the development of this rulemaking through the Department's “request for comment” on its overall regulatory reform initiatives. The proposed rule also served as an opportunity for BSEE to secure public comment and input.

As discussed previously, this rulemaking does not allow operators to operate without oversight. BSEE continues to serve in an oversight and enforcement capacity, even where regulatory requirements are tied to industry standards. BSEE also disagrees with the commenters' assertion that there is a conflict of interest inherent in using industry standards. Federal law in fact requires 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.” NTTAA; OMB Circular A-119 at p. 13. BSEE follows the requirements of the NTTAA and the relevant guidance in OMB Circular A-119 when incorporating standards into its regulations. Membership in an API standard development committee is not limited to industry representatives

28

and may include non-industry members, such as government personnel, consumer advocates, and academics.

28

http://mycommittees.api.org/standards/Reference/API%20Procedures%20for%20Standards%20Development-2016.pdf.

BSEE disagrees with the assertion that the performance-based standards incorporated by reference in this rulemaking are poorly defined and vague and need to be more “clearly established” before they can be adopted in a final rule. Performance-based standards establish expectations for safe operations that allow for more flexibility to determine the appropriate approach to meeting the expectations based on specific operating conditions. This approach is not a design flaw that must be corrected, but rather an important feature of such standards. BSEE's regulations include a mix of prescriptive and performance-based regulatory standards, and both approaches offer a variety of strengths and benefits.

Comments on Production Safety Systems

Summary of comments:

A commenter discussed the removal of the requirement for third-party certification for safety and pollution prevention equipment (SPPE). This commenter asserte

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