Pipeline Safety: Regulations Implementing Memorandum of Understanding With the Department of the Interior

DEPARTMENT OF TRANSPORTATION

Research and Special Programs Administration

49 CFR Parts 191, 192 and 195

[Docket No. RSPA 97-2096; Amdt Nos. 191-12; 192-81; 195-59]

RIN 2137-AC99

Pipeline Safety: Regulations Implementing Memorandum of

Understanding With the Department of the Interior

AGENCY: Research and Special Programs Administration (RSPA), DOT.

ACTION: Direct final rule.

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SUMMARY: This direct final rule (DFR) would implement a provision of a

December 10, 1996, Memorandum of Understanding (MOU) between the

Department of the Interior (DOI) and the Department of Transportation

(DOT) regarding Outer Continental Shelf (OCS) pipelines by

redesignating the point at which an OCS pipeline is subject to RSPA

regulations. Under this rule, RSPA would establish and enforce design,

construction, operation, and maintenance regulations and investigate

certain accidents for all pipelines located downstream of the point at

which operating responsibility for the pipelines transfers from a

producing operator to a transporting operator.

DATES: This direct final rule takes effect March 19, 1998. If RSPA does

not receive any adverse comment or notice of intent to file an adverse

comment by January 20, 1998 the rule will become effective on the date

specified. RSPA will issue a subsequent notice in the Federal Register

by February 17, 1998, after the close of the comment period, to confirm

that fact and reiterate the effective date. If an adverse comment or

notice of intent to file an adverse comment is received, RSPA will

issue a timely notice in the Federal Register to confirm that fact and

to withdraw the DFR in whole or in part. RSPA may then incorporate the

adverse comment into a subsequent DFR or may publish a notice of

proposed rulemaking.

ADDRESSES: Written comments on the subject of this DFR may be submitted

to the Dockets Facility, U.S. Department of Transportation, 400 Seventh

Street, SW, Plaza 401, Washington, DC 20590-0001. Comments should

identify the docket number of this DFR, RSPA-97-2096. Persons should

submit the original and one copy. Persons wishing to receive

confirmation of receipt of their comments must include a stamped, self-

addressed postcard. Alternatively, comments may be submitted via e-mail

to [email protected]. The Dockets facility is open from 10:00

a.m. to 5:00 p.m., Monday through Friday, except on Federal holidays.

FOR FURTHER INFORMATION CONTACT: L.E. Herrick, (202) 366-5523 or e-mail

[email protected] regarding the subject matter of this DFR, or

the Dockets Facility, (202) 366-5046, regarding copies of this DFR or

other information in the docket.

SUPPLEMENTARY INFORMATION:

Background

Under an MOU dated May 6, 1976, RSPA regulated hazardous liquid,

carbon dioxide, and natural gas pipelines located downstream of the

outlet flange of each facility where hydrocarbons are first produced or

where produced hydrocarbons are first separated, dehydrated, or

otherwise processed, whichever facility is farther downstream. DOI

regulated those pipelines located upstream of this point. The

Departments agreed to change this regulatory boundary with the signing

of the December 10, 1996, MOU. The 1996 MOU was the result of

negotiations that began in the summer of 1993, which included a high

degree of participation from the regulated industry. RSPA and DOI's

Minerals Management Service (MMS) solicited public comments on a draft

MOU through a joint Federal Register notice (60 FR 27546; May 24,

1995). The notice also announced a public meeting at the MMS Gulf of

Mexico regional office in New Orleans, Louisiana, on August 1, 1995, to

discuss the proposal. Over 70 people attended the meeting, which

generated over 100 pages of comments from natural gas and petroleum

trade organizations; natural gas and oil exploration and production

companies; transmission companies; offshore construction companies; and

industry consultants. Twenty-three individuals and organizations

submitted written comments on the Federal Register notice. A transcript

of this meeting and copies of the comments are available in Docket No.

RSPA-97-2096.

In May 1996, RSPA and MMS met with an industry workgroup

representing OCS oil and natural gas producers and transmission

pipeline

[[Page 61693]]

operators. The workgroup proposed that the agencies allow individual

operators of production and transportation facilities to define the

boundaries of their respective facilities. They suggested that

producers and transporters can best make such decisions based on the

unique operating characteristics of each facility. Under this rule,

RSPA would establish and enforce design, construction, operation, and

maintenance regulations and investigate certain accidents for all OCS

transportation pipelines beginning downstream of the point at which

operating responsibility transfers from a producing operator to a

transporting operator. Producing operators are companies which are

engaged in the extraction and processing of hydrocarbons on the OCS.

Transporting operators are companies which are engaged in the

transportation of those hydrocarbons.

Intent of the Rule

The intent of this rule is to require OCS production and

transportation pipeline operators to designate the specific points on

their pipelines where operating responsibility transfers from a

producing operator to an adjoining transporting operator. The rule

would amend 49 CFR parts 191, 192 and 195. Generally, operators will

have 60 days after the date the rule becomes final to durably mark the

specific points at which operating responsibility transfers. In most

cases, the specific transfer points will be easily identifiable because

of specific valves or flanges where the adjoining operations connect,

or because of differences in paint used by adjoining operators to

protect and maintain pipeline coatings or surfaces. For those instances

in which the transfer points are not identifiable by a durable marking,

each operator will have 180 days after the final rule becomes effective

to identify the transfer points on a schematic. The 180-day period will

give operators time to identify the transfer points during routine

maintenance. If it is not practicable to durably mark a transfer point,

and the transfer point is located above water, then the operator must

depict the transfer point on a schematic maintained near the transfer

point. Some transfer points may be located underwater. In such cases,

the operator must identify the transfer point on a schematic which must

be maintained at the nearest upstream facility and provided to RSPA

upon request.

For those instances in which adjoining operators do not or can not

agree on a transfer point, RSPA's Office of Pipeline Safety (OPS) and

MMS will make a joint determination of the boundary.

The OPS and MMS may, through their enforcement agencies and in

consultation with the affected parties, agree to exceptions to the

general boundary description (operations transfer point) on a facility-

by-facility or area-by-area basis. Operators may also petition OPS and

MMS for exceptions to the general boundary description.

Conversion to service: A pipeline previously used in service and

not subject to DOT regulations which comes under these regulations as a

result of this rulemaking qualifies for use under the DOT regulations

if the operator prepares and follows a written procedure to carry out

the requirements of 49 CFR 192.14 or 195.5 (Conversion to service

subject to this part). Pipeline segments designed and constructed under

DOT regulations before March 19, 1998 may continue to operate under DOT

design and construction requirements until significant modifications or

repairs are made to those segments. After March 19, 1998 DOI

operational and maintenance requirements will apply to those segments.

Rulemaking Analysis

The December 1996 MOU redefined the DOT/DOI regulatory boundary

definition from the OCS facility where hydrocarbons are ``first

produced, separated, dehydrated, or otherwise processed'' to the point

at which ``operating responsibility for the pipelines transfers from a

producing operator to a transporting operator''. The MOU places, to the

greatest extent practicable, producer-operated pipelines under DOI

regulation and transporter-operated pipelines under DOT regulation. The

changes in this rule would substantially reduce the regulatory burdens

currently caused by the overlapping Federal regulatory responsibilities

and the inconsistencies between the requirements. The changes will

substantially increase the efficiency of governmental resources on the

OCS without compromising safety.

Executive Order (E.O.) 12866

RSPA 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 not asked to review this rule under E.O. 12866.

Regulatory Flexibility Act

Oil and gas and production and transportation companies are

classified under Standard Industrial Codes (SIC's) by the Census

Bureau. The Small Business Administration further classifies ``small

businesses'' in the various offshore sectors as follows: (1) Oil and

gas producers that have fewer than 500 employees, (2) liquid pipeline

companies than have fewer than 1,500 employees; (3) natural gas

pipeline companies that have gross annual receipts of $25 million or

less; and (4) offshore oil and gas field exploration service or

production service companies that have gross annual receipts of $5

million or less. There are many companies on the OCS that are ``small

businesses'' by these definitions. However, the technology necessary

for conducting offshore oil and gas exploration and development

activities is very complex and costly, and most entities that engage in

offshore activities have considerable financial resources well beyond

what would normally be considered ``small business.'' These entities

customarily conduct their operations by contracting with offshore

drilling or service companies and therefore tend to have relatively few

employees compared to the considerable financial resources of their

operations.

This rule would affect a substantial number of ``small entities;''

however, the economic effects of the rule would not be significant. The

economic effects on the oil and gas production and transportation

companies directly affected by the rule would be insignificant because

of the minimal costs that operators incur during the first year that

the rule is implemented. (In that year, offshore producers would have

to identify all points on their pipelines at which operating

responsibility transfers from a producer to a transporter. In

succeeding years there would be virtually no economic impact resulting

from the rule.) The offshore service companies would be indirectly

affected by the rule through their contractual relationships with the

primary producing and transporting companies--they would not be

directly regulated in any way. This rule would not impose any new

restrictions on small pipeline service companies or manufacturers, nor

will it cause their business practices to change. To the extent that

this rule might eventually cause some of the relatively larger OCS

operators to make modifications to their pipelines, it may have a minor

beneficial effect of increasing demand for the services and equipment

of smaller service companies and manufacturers.

Paperwork Reduction Act

This rule contains a collection of information which RSPA is

submitting

[[Page 61694]]

to the Office of Management and Budget (OMB) for review and approval

under section 3507(d) of the Paperwork Reduction Act of 1995. As part

of RSPA's continuing effort to reduce paperwork and respondent burdens,

RSPA invites the public and other Federal agencies to comment on any

aspect of the reporting burden in 49 CFR 192 and 195 as amended by this

DFR. Submit your comments to the Office of Information and Regulatory

Affairs; OMB; Attention: Desk Officer for the Department of

Transportation (Docket No. RSPA 97-2096); Washington, D.C. 20503. Send

a copy of your comments to L.E. Herrick, Room 2335, 400 Seventh Street,

Washington, DC 20590-0001. You may obtain a copy of the supporting

statement for the collection of information by contacting the Dockets

Facility.

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, RSPA will consider all comments

received during the comment period for this direct final rule.

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 ``49 CFR 191, 192

and 195 Pipeline Safety: Regulations Implementing Memorandum of

Understanding with the Department of the Interior.''

The collection of information in the DFR and for each transporter

operating a pipeline consists of: (1) Reviewing existing pipeline maps,

(2) conferring and agreeing with operators of adjoining production

pipeline segments concerning the locations of specific transfer points,

and (3) either marking directly on each pipeline or depicting on a

schematic the specific point on each pipeline where operating

responsibility transfers from the producing operator to a transporting

operator. As stated above under the ``Intent of the Rule'' section,

specific transfer points will be easily identifiable in most cases,

either because of specific valves or flanges where the adjoining

operations connect, or because of differences in paint that adjoining

operators use to protect and maintain pipeline coatings or surfaces.

Generally operators will have until 60 days after the date the rule

becomes final to durably mark the points at which operating

responsibility transfers. For those relatively few instances where the

transfer points are not identifiable by durable marking, operators will

have 180 days after the date the rule becomes final to identify, on a

schematic, the transfer points. The requirement to identify the

boundary is mandatory. The RSPA will use the information to determine

the demarcation where DOT will establish and enforce design,

construction, operation, and maintenance regulations and investigate

certain accidents, as distinguished from MMS responsibilities.

In calculating the burden, RSPA assumed that respondents perform

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

their activities, such as painting their pipelines and maintaining

valves and flanges. RSPA considers these to be usual and customary

practices 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 RSPA what are the burden hours and

costs imposed by this collection of information (i.e., marking of

transfer points).

The regulated community consists of approximately 160 Federal OCS

oil and gas producers and 70 transportation pipeline operators. There

are approximately 3,000 points where operating responsibility for

pipelines transfers from a producer to a transporter. The RSPA assumes

from discussions with MMS and the operators that about 2,400

(representing 80 percent) of these transfer points are already marked.

Therefore, this rulemaking would require a one-time identification and

marking of about 600 points where operating responsibility for

pipelines transfers from a producer to a transporter. For the 2,400

transfer points that are clearly marked, there would be no information

burden. The 600 unmarked transfer points, on the other hand, would

require widely-varying times for identification depending on whether a

painted line or a schematic was used to identify the transfer point.

The public reporting burden for this information collection

requirement is estimated to average 5 hours per response for each

transfer point. This includes the time for reviewing instructions,

searching existing data sources, gathering and maintaining the data

needed, and completing the required marking. Based on 600 unmarked

transfer points, RSPA estimates that the total one-time burden of this

collection of information to be 3,000 hours total. The average

annualized burden over a 3-year period would be 1,000 hours. Based on

$35 per hour, the total burden hour cost to respondents is estimated to

be $35,000 annually.

Takings Implication Assessment

The DOT certifies that the rule does not represent a governmental

action capable of interference with constitutionally protected property

rights. Thus, a Takings Implication Assessment need not be prepared

pursuant to E.O. 12630, Government Action and Interference with

Constitutionally Protected Property Rights.

Unfunded Mandates Reform Act of 1995

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

or tribal governments, nor would it impose significant regulatory costs

on the private sector. Anticipated costs to the private sector will be

far below the $100 million annual threshold that was established by the

Unfunded Mandates Reform Act.

E.O. 12988

The DOT has certified to OMB that this regulation meets the

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

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

National Environmental Policy Act

The DOT 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

49 CFR Part 191

Gas, Pipeline safety, Reporting and recordkeeping requirements.

49 CFR Part 192

Pipeline safety, Reporting and recordkeeping requirements.

49 CFR Part 195

Anhydrous ammonia, Carbon dioxide, Petroleum, Pipeline safety,

Reporting and recordkeeping requirements.

For the reasons set out in the preamble, RSPA amends 49 CFR parts

191, 192 and 195 as follows:

PART 191--[AMENDED]

1. The authority citation for part 191 continues to read as

follows:

Authority: 49 U.S.C. 5121, 60102, 60103, 60104, 60108, 60117,

60118, and 60124; and 49 CFR 1.53.

[[Page 61695]]

2. Section 191.1 is amended by adding paragraph (b)(3) to read as

follows:

Sec. 191.1 Scope.

* * * * *

(b) * * *

(3) On the Outer Continental Shelf upstream of the point at which

operating responsibility transfers from a producing operator to a

transporting operator.

3. Section 191.3 is amended by adding a definition in alphabetical

order to read as follows:

Sec. 191.3 Definitions.

* * * * *

Outer Continental Shelf means all submerged lands lying seaward and

outside the area of lands beneath navigable waters as defined in

Section 2 of the Submerged Lands Act (43 U.S.C. 1301) and of which the

subsoil and seabed appertain to the United States and are subject to

its jurisdiction and control.

* * * * *

PART 192--[AMENDED]

1. The authority citation for part 192 continues to read as

follows:

Authority: 49 U.S.C. 5103, 60102, 60104, 60108, 60109, 60110,

60113, and 60118; 49 CFR 1.53.

2. Section 192.1 is amended by adding paragraph (b)(5) to read as

follows:

Sec. 192.1 Scope of part.

* * * * *

(b) * * *

(5) On the Outer Continental Shelf upstream of the point at which

operating responsibility transfers from a producing operator to a

transporting operator.

3. Section 192.3 is amended by adding a definition in alphabetical

order to read as follows:

Sec. 192.3 Definitions.

* * * * *

Outer Continental Shelf means all submerged lands lying seaward and

outside the area of lands beneath navigable waters as defined in

Section 2 of the Submerged Lands Act (43 U.S.C. 1301) and of which the

subsoil and seabed appertain to the United States and are subject to

its jurisdiction and control.

* * * * *

4. Section 192.10 is added to read as follows:

Sec. 192.10 Outer continental shelf pipelines.

Operators of transportation pipelines on the Outer Continental

Shelf (as defined in the Outer Continental Shelf Lands Act; 43 U.S.C.

1331) must identify on all their respective pipelines the specific

points at which operating responsibility transfers to a producing

operator. For those instances in which the transfer points are not

identifiable by a durable marking, each operator will have until

September 15, 1998 to identify the transfer points. If it is not

practicable to durably mark a transfer point and the transfer point is

located above water, the operator must depict the transfer point on a

schematic located near the transfer point. If a transfer point is

located subsea, then the operator must identify the transfer point on a

schematic which must be maintained at the nearest upstream facility and

provided to RSPA upon request. For those cases in which adjoining

operators have not agreed on a transfer point by September 15, 1998 the

Regional Director and the MMS Regional Supervisor will make a joint

determination of the transfer point.

PART 195--[AMENDED]

1. The authority citation for part 195 continues to read as

follows:

Authority: 49 U.S.C. 5103, 60102, 60104, 60108, 60109, 60118;

and 49 CFR 1.53.

2. Section 195.1 is amended by adding a new paragraph (b)(6) and

redesignating paragraphs (b)(6) through (b)(8) as paragraphs (b)(7)

through (b)(9) to read as follows:

Sec. 195.1 Applicability.

* * * * *

(b) * * *

(6) Transportation of hazardous liquid or carbon dioxide in Outer

Continental Shelf pipelines which are located upstream of the point at

which operating responsibility transfers from a producing operator to a

transporting operator.

* * * * *

3. Section 195.2 is amended by adding a definition in alphabetical

order to read as follows:

Sec. 195.2 Definitions.

* * * * *

Outer Continental Shelf means all submerged lands lying seaward and

outside the area of lands beneath navigable waters as defined in

Section 2 of the Submerged Lands Act (43 U.S.C. 1301) and of which the

subsoil and seabed appertain to the United States and are subject to

its jurisdiction and control.

* * * * *

4. Section 195.9 is added to read as follows:

Sec. 195.9 Outer continental shelf pipelines.

Operators of transportation pipelines on the Outer Continental

Shelf must identify on all their respective pipelines the specific

points at which operating responsibility transfers to a producing

operator. For those instances in which the transfer points are not

identifiable by a durable marking, each operator will have until

September 15, 1998 to identify the transfer points. If it is not

practicable to durably mark a transfer point and the transfer point is

located above water, the operator must depict the transfer point on a

schematic maintained near the transfer point. If a transfer point is

located subsea, the operator must identify the transfer point on a

schematic which must be maintained at the nearest upstream facility and

provided to RSPA upon request. For those cases in which adjoining

operators have not agreed on a transfer point by September 15, 1998 the

Regional Director and the MMS Regional Supervisor will make a joint

determination of the transfer point.

Issued in Washington D.C. on November 12, 1997.

Richard B. Felder,

Associate Administrator for Pipeline Safety.

[FR Doc. 97-30216 Filed 11-18-97; 8:45 am]

BILLING CODE 4910-60-P