Oil and Gas and Sulphur Operations in the Outer Continental Shelf

DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR Part 250

RIN 1010-AC12

Oil and Gas and Sulphur Operations in the Outer Continental Shelf

AGENCY: Minerals Management Service (MMS), Interior.

ACTION: Proposed rule.

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SUMMARY: The MMS proposes to amend the regulations governing quality

assurance (QA) of safety and pollution prevention equipment (SPPE). The

SPPE QA requirements currently fond in the regulations need refining to

lessen the paperwork burden on MMS and industry and to ensure that

Outer Continental Shelf operators continue to use the best available

and safest equipment.

DATES: MMS will consider all comments we receive by February 18, 1997.

We will begin reviewing comments then and may not fully consider

comments we receive after February 18, 1997.

ADDRESSES: Mail or hand-carry comments to the Department of the

Interior; Minerals Management Service; Mail Stop 4700; 381 Elden

Street; Herndon, Virginia 22070-4817; Attention: Chief, Engineering and

Standards Branch.

FOR FURTHER INFORMATION CONTACT: Bill Hauser, Engineering and Standards

Branch, telephone (703)787-1600.

SUPPLEMENTARY INFORMATION:

Background

SPPE include the following equipment:

Surface and underwater safety valves and their actuators,

Subsurface safety valves and associated safety valve locks

and landing nipples.

The current SPPE regulations, found at 30 CFR 250.126, require that

lessees use SPPE certified by the manufacturer as having been produced

under a QA program MMS recognizes. MMS currently recognizes two QA

standards:

(1) American Society of Mechanical Engineers/American National

Standards Institute Quality Assurance and Certification of Safety and

Pollution Prevention Equipment Used in Offshore Oil and Gas Operations

(ASME/ANSI SPPE-1).

(2) American Petroleum Institute (API) Specification for Quality

Programs (Spec Q1).

MMS incorporated the QA requirements into the regulations in April

1988 when the offshore operating rules governing oil, gas, and sulphur

exploration, development, and production on the OCS were consolidated.

MMS required lessees to submit a list of all certified and noncertified

SPPE in their inventory as of April 1, 1988, and to notify MMS when

listed SPPE were removed from service for failure, malfunction, or

remanufacture.

On July 6, 1988 (53 FR 25349), MMS proposed to recognize API's QA

standard as an acceptable alternate or optional QA standard for the

manufacture of SPPE. The API standard required manufacturers to meet

API Spec Q1 in combination with API Specification for Subsurface Safety

Valve Safety Equipment (Spec 14A) and API Specification for Surface

Safety Valves and Underwater Safety Valves (Spec 14D). MMS evaluated

the comments regarding the proposed rulemaking and determined that the

API QA standard was an acceptable program. The API standard was

recognized in a final rule dated March 22, 1990 (55 FR 10614).

References to both API's and ASME/ANSI's QA standards were updated to

incorporate the latest editions into the regulations on September 13,

1990 (55 FR 37709).

Regulatory Review

During a review of regulations, MMS evaluated the merit of

continuing the SPPE QA requirements. The MMS examined the scope and

effect of these requirements and determined that they were effective

but needed revisions.

In January 1994, MMS decided to pursue a negotiated rulemaking to

develop a proposed rule governing SPPE QA regulations. The preliminary

steps of this effort included contacting interested parties (valve

manufacturers, lessees, standards organizations, and environmental

groups) to educate them on negotiated rulemaking and to determine their

willingness to participate in the rulemaking effort. In April 1994, the

``convener'' held initial formal interviews with the interested

parties. Over the next few months it became evident that, while MMS

needed to revise the regulations, a negotiated rulemaking was not

necessary.

This negotiated rulemaking exercise did succeed in getting the

parties involved in the SPPE QA program to communicate.

Misunderstandings between the parties were cleared up, and the

consensus emerged that the SPPE QA program should continue for MMS and

industry to ensure that the best available and safest technology and

equipment are being used on the OCS.

[[Page 66640]]

However, the parties also felt that MMS needed to change the current

regulations to reduce the paperwork burden on SPPE manufacturers,

lessees, and the MMS.

Intent of the Proposed Rule

The intent of this proposed rule is to eliminate some paperwork

involved in complying with the SPPE QA regulations and to ensure that

lessees use high quality SPPE on the OCS. MMS proposes to eliminate the

need for companies to update their lists of noncertified SPPE and to

require that all SPPE installed on OCS wells after April 1, 1998 must

be QA certified. Lessees can continue to use non-QA certified SPPE that

were in service before April 1, 1998. However, the lessee must replace

the noncertified SPPE with certified SPPE when the SPPE:

(1) Fail during normal operations,

(2) Fail during testing, or

(3) Are removed from service for any other reason.

The justification for proposing this rulemaking option comes from

many areas. In repeated contacts with lessees, valve manufacturers, and

standards organizations, the overwhelming consensus is that the QA

program has succeeded in improving the overall quality of SPPE used on

the OCS. In other words, the perception is that certified SPPE are

better than noncertified SPPE. Also, lessees will have had 10 years

from the date MMS codified the QA requirements to deplete their

inventory of noncertified SPPE. MMS feels that 10 years is ample time

for lessees to deplete their inventory of noncertified SPPE and that

there are not enough noncertified SPPE left in inventories to cause the

overall industry any undue hardship. So, MMS has decided that

eliminating the use of SPPE designed and manufactured over 10 years ago

will ensure that lessees use the best available and safest technology

and equipment.

Other Changes to the Regulations

As part of changing the SPPE QA regulations, MMS proposes to update

30 CFR 250.1, Documents Incorporated by Reference. Specifically, MMS

proposes to reference the following documents:

(1) ANSI/ASME SPPE-1-1994, Quality Assurance and Certification of

Safety and Pollution Prevention Equipment Used in Offshore Oil and Gas

Operations, and

(2) API Spec Q1, Specification for Quality Programs, Fifth Edition,

December 1994. These documents are updates of previous editions that

MMS incorporated by reference.

Executive Order (E.O.) 12866

The Department of the Interior (DOI) reviewed this rule under E.O.

12866 and determined that this is not an economically significant rule.

The Office of Management and Budget (OMB) has reviewed this rule at

OMB's request.

Regulatory Flexibility Act

The DOI has also determined that this proposed rule will not have a

significant economic effect on a substantial number of small entities.

Most entities that engage in offshore activities as operators are not

small because of the technical complexities and financial resources

necessary to conduct such activities safely. Small entities are more

likely to operate onshore or in State waters--areas not covered by this

proposed rule. Small entities are more likely to work as contractors to

larger entities on the OCS, or, in the case of SPPE, they may work at

repairing SPPE. This proposed rule will not have any effect on small

SPPE repair shops or manufacturers since it does not impose any new

restrictions on them. This proposed rule should not cause the business

practices of SPPE repair and manufacturing entities to change. Under

the current rule, a lessee may not re-install an uncertified SSSV on

the OCS after it fails or malfunctions. As uncertified SSV or USV may

not be re-installed on the OCS after the lessee removes it for

remanufacturing. Therefore, this proposed rule should not cause the

business practices of SPPE repair and manufacturing entities to change.

Paperwork Reduction Act

This rule eliminates the information collection requirement

contained in Sec. 250.126(b)(2) which reduces the information

collection inventory by 1,000 hours. The OMB approved the information

collection requirements remaining in Sec. 250, Subpart H, under OMB

control number 1010-0059. However, as part of our continuing effort to

reduce paperwork and respondent burden, MMS invites the public and

other Federal agencies to comment on any aspect of the reporting burden

in Subpart H. Submit your comments to the Office of Information and

Regulatory Affairs, OMB, Attention Desk Officer for the Department of

the Interior (OMB control number 1010-0059), Washington, DC 20503. Send

a copy of your comments to the Chief, Engineering and Standards Branch;

Mail Stop 4700; Minerals Management Service; 381 Elden Street; Herndon,

Virginia 20170-4817. You may obtain a copy of the collection of

information by contacting the Bureau's Information Collection Clearance

Officer at (703) 787-1242.

OMB may make a decision to approve or disapprove this collection of

information after 30 days from receipt of our request. Therefore, your

comments are best assured of being considered by OMB if OMB receives

them within that time period. However, MMS will consider all comments

received during the comment period for this notice of proposed

rulemaking.

The Paperwork Reduction Act of 1995 provides that an agency may not

conduct or sponsor, and a person is not required to respond to, a

collection of information unless it displays a currently valid OMB

control number.

The title of this collection of information is ``30 CFR 250,

Subpart H, Oil and Gas Production Safety Systems.

The collection of information consists of applications and approval

for design, installation, and operation of subsurface safety devices

and surface production-safety systems and related requirements;

notifying MMS prior to production and conduct of preproduction tests

and inspections; approval of quality assurance programs covering

manufacture of SPPE; and related recordkeeping requirements. The

requirement to respond is mandatory. MMS uses the information to

evaluate equipment and/or procedures lessees propose to use during

production operations and to verify compliance with minimum safety

requirements.

Respondents are approximately 130 Federal OCS oil, gas, and sulphur

lessees. The frequency of submission varies. The public reporting

burden for this information is estimated to average 1.25 hours per

response, including the time for reviewing instructions, searching

existing data sources, gathering and maintaining the data needed, and

completing and reviewing the information collection. MMS estimates the

total annual burden of this collection of information to be 352

reporting hours and 2,548 recordkeeping hours. Based on $35 per hour,

the total burden hour cost to respondents is estimated to be $101,500.

In calculating the burden, MMS assumed that respondents perform

some of the requirements and maintain records in the normal course of

their activities. MMS considers these to be usual and customary and did

not include them in the burden estimates. Commenters are invited to

provide information if they disagree with this assumption and they

should tell us what are the burden hours and costs imposed by this

collection of information.

[[Page 66641]]

The MMS will summarize written responses to this notice and address

them in the final rule. All comments will become a matter of public

record.

1. MMS specifically solicits comments on the following questions:

(a) Is the proposed collection of information necessary for the

proper performance of MMS's functions, and will it be useful?

(b) Are the estimates of the burden hours of the proposed

collection reasonable?

(c) Do you have any suggestions that would enhance the quality,

clarity, or usefulness of the information to be collected?

(d) Is there a way to minimize the information collection burden on

those who are to respond, including through the use of appropriate

automated electronic, mechanical, or other forms of information

technology?

2. In addition, the Paperwork Reduction Act of 1995 requires

agencies to estimate the total annual cost burden to respondents or

recordkeepers resulting from the collection of information. MMS needs

your comments on this item. Your response should split the cost

estimate into two components: (a) total capital and startup cost, and

(b) annual operation, maintenance, and purchase of services. Your

estimates should consider the costs to generate, maintain, and disclose

or provide the information. You should describe the methods you use to

estimate major cost factors, including system and technology

acquisition, expected useful life of capital equipment, discount

rate(s), and the period over which you incur costs. Capital and startup

costs include, among other items, computers and software you purchase

to prepare for collecting information; monitoring, sampling, drilling,

and testing equipment; and record storage facilities. Generally, your

estimates should not include equipment or services purchased: before

October 1, 1995; to comply with requirements not associated with the

information collection; for reasons other than to provide information

or keep records for the Government; or as part of customary and usual

business or private practices.

Takings Implication Assessment

The DOI certifies that the proposed rule does not represent a

governmental action capable of interference with constitutionally

protected property rights. Thus, a Taking Implication Assessment need

not be prepared pursuant to E.O. 12630, Government Action and

Interference with Constitutionally Protected Property Rights.

Unfunded Mandate Reform Act of 1995

This rule does not contain any unfunded mandates to State, local,

or tribal governments or the private sector.

E.O. 12988

The DOI has certified to OMB that this proposed regulation meets

the applicable civil justice reform standards provided in Sections 3(a)

and 3(b)(2) of E.O. 12988.

National Environmental Policy Act

The DOI has determined that this action does not constitute a major

Federal action significantly affecting the quality of the human

environment; therefore, preparation of an Environmental Impact

Statement is not required.

List of Subjects in 30 CFR Part 250

Continental shelf, Environmental impact statements, Environmental

protection, Government contracts, Incorporation by reference,

Investigations, Mineral royalties, Oil and gas development and

production, Oil and gas exploration, Oil and gas reserves, Penalties,

Pipelines, Public lands--mineral resources, Public lands--rights-of-

way, Reporting and recordkeeping requirements, Sulphur development and

production, Sulphur exploration, Surety bonds.

Dated: September 30, 1996.

Sylvia V. Baca,

Assistant Secretary, Land and Minerals Management.

For the reasons set out in the preamble, MMS proposes to amend 30

CFR part 250 as follows:

PART 250--OIL AND GAS AND SULFUR OPERATIONS IN THE OUTER

CONTINENTAL SHELF

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

follows:

Authority: U.S.C. 1334.

2. Section 250.1 is amended by revising paragraphs (c)(5), (d)(1),

(d)(4) and (d)(5) to read as follows:

Sec. 250.1 Documents incorporated by reference.

* * * * *

(c) * * *

(5) ANSI/ASME SPPE-1-1994, Quality Assurance and Certification of

Safety and Pollution Prevention Equipment Used in Offshore Oil and Gas

Operations, Incorporated by Reference at: Sec. 250.126(a)(2)(A).

* * * * *

(d) * * *

(1) API Spec Q1, Specification for Quality Programs, Fifth Edition,

December 1994, API Stock No. 811-00001, Incorporated by Reference at:

Sec. 250.126(a)(2)(B).

* * * * *

(4) API Spec 6A, Specification for Valves and Wellhead Equipment,

Seventeenth Edition, February 1, 1996, API Stock No. G06A17,

Incorporated by Reference at: Secs. 250.126(a)(3) and 250.152 (b)(1)

and (b)(2).

(5) API Spec 6AV1, Specification for Verification Test of Wellhead

Surface Safety Valves and Underwater Safety Valves for Offshore

Service, First Edition, February 1, 1996, API Stock No. G06AV1,

Incorporated by Reference at: Sec. 250.126(a)(3).

* * * * *

3. MMS is revising Sec. 250.126 to read as follows:

Sec. 250.126 Safety and pollution prevention equipment quality

assurance requirements.

(a) General requirements. (1) A lessee may only install certified

safety and pollution prevention equipment (SPPE) in wells located on

the OCS. SPPE include the following:

(i) Surface safety valves (SSV) and actuators;

(ii) Underwater safety valves (USV) and actuators; and

(iii) Subsurface safety valves (SSSV) and associated safety valve

locks and landing nipples.

(2) Certified SPPE are those the manufacturer certifies as having

been manufactured under a quality assurance program MMS recognizes. MMS

considers all other SPPE noncertified. MMS currently recognizes two

quality assurance programs:

(i) ANSI/ASME SPPE-1, Quality Assurance and Certification of Safety

and Pollution-Prevention Equipment Used in Offshore Oil and Gas

Operations; and

(ii) API Spec Q1, Specification for Quality Programs.

(3) All SSV's and USV's must meet the technical specifications of

API Spec 14D or API Spec 6A and 6AV1. All SSSV's must meet the

technical specifications of API Spec 14A.

(b) Use of noncertified SPPE. Before April 1, 1998, you may

continue to use or install noncertified SPPE if the noncertified SPPE

were in your inventory as of April 1, 1988, and were included in a list

of nonconcertified SPPE submitted to MMS prior to August 29, 1988.

After April 1, 1998, you must replace noncertified SPPE with certified

SPPE when the noncertified SPPE:

(1) Fail during normal operations,

(2) Fail during testing, or

[[Page 66642]]

(3) Are removed from service for any other reason.

(c) Recognizing other quality assurance programs. The MMS will

consider approving other quality assurance programs covering the

manufacture of SPPE. If you want MMS to evaluate other quality

assurance programs, submit relevant information about the program and

reasons for MMS approval to the Deputy Associate Director for

Operations and Safety Management; Minerals Management Service; Mail

Stop 4600; 381 Elden Street; Herndon, Virginia 20170-4817.

[FR Doc. 96-32041 Filed 12-17-96; 8:45 am]

BILLING CODE 4310-MR-M