Improving the Safety of Marine Pipelines (1994)

The primary federal jurisdiction over the safety of offshore oil and gas pipelines is shared by two agencies: the Office of Pipeline Safety (OPS) of the U.S. Department of Transportation (DOT) and the Minerals Management Service (MMS) of the U.S. Department of the Interior (DOI). OPS's authority is derived from its status as the agency responsible for pipeline safety, both offshore and onshore, under the Natural Gas Pipeline Safety Act of 1968 (49 U.S.C. 1671 et seq.) and the Hazardous Liquids Pipeline Safety Act of 1979 (49 U.S.C. 2001 et seq.). MMS regulates all aspects of mineral development, including oil and gas production, on the outer continental shelf (OCS), under the Outer Continental Shelf Lands Act of 1978 (OCSLA; 43 U.S.C. 1331). OPS's basic charter is to protect the public, property, and the environment. To those aims MMS adds a mandate to prevent waste and conserve OCS natural resources, taking into account all users and potential users of these natural resources. Under this authority, MMS issues permits for OCS platforms as well as for all OCS pipeline rights-of-way and easements.

State agencies also share in the safety regulation of offshore pipelines. They have direct responsibility for the safety of production platforms and associated production pipelines in state waters. They also may be certified by OPS to inspect for and enforce OPS regulations on federally regulated intrastate transmission pipelines, as described later in this chapter.

This sharing of safety responsibilities has resulted in some jurisdictional confusion and overlap. In addition, the involvement of multiple agencies has increased difficulty of coordinating in safety planning and data gathering, as discussed in Chapter 2.

Other agencies, at all levels of government, become involved in specific areas. The U.S. Army Corps of Engineers issues permits for pipeline crossings of navigable waterways, shorelines, and navigation fairways. It routinely informs other federal agencies of applications for such permits, and furnishes copies of permits to the National Ocean Service of the National Oceanic and Atmospheric Administration for referencing and charting. The U.S. Coast Guard regulates marine navigation generally, and may declare as hazards to navigation exposed pipeline segments or other subsurface obstructions. Finally, the Coast Guard, under the Port and Tanker Safety Act, conducts annual safety inspections of port facilities, including pressure-tests of dock loading lines, and may shut

down facilities that fail to meet its standards (personal communication, Gary Chappelle, U.S. Coast Guard, Port Safety and Security Division, January 14, 1993).

While this chapter focuses on the roles of OPS and MMS, it also takes note of the interactions of other regulatory bodies.

Marine pipelines fall into two general categories for purposes of safety regulation: those that originate on or are located within the outer continental shelf (OCS), and those instate waters nearer to shore. On the OCS as of late 1992, MMS had jurisdiction over 3,934 miles of so-called production pipelines (those closely associated with production activities), and OPS over about 12,711 miles of transmission pipelines. In state waters, OPS has jurisdiction over transmission pipelines and the states over production platforms and related pipelines. OPS may certify a state agency to carry out inspection and enforcement of OPS regulations on intrastate transmission pipelines in the waters of that state, if state regulations are consistent with federal regulations; state agencies in Louisiana, Texas, Alabama, and California are certified for this purpose. A certified state agency may have additional or more stringent requirements as long as they are compatible with OPS requirements.

MMS regulation is carried out through a permitting program for all OCS pipelines (Pearcy, 1991). The agency issues permits for the installation, modification, or abandonment of pipelines throughout the OCS, under the Outer Continental Shelf Lands Act (43 U.S.C. 1334). (The only exception is a few miles of pipeline permitted by the Department of Transportation under the Deepwater Port Act of 1974 [33 U.S.C. 1501], which applies solely to the Louisiana Offshore Oil Port.¹) The agency, in granting rights of way, is to ensure “maximum environmental protection by utilization of the best available and safest technologies, including the safest practices for pipeline burial” and “taking into account, among other things, conservation and the prevention of waste.” MMS is responsible for ensuring that pipelines are maintained and operated in compliance with their permits, and conducts annual inspections of all offshore facilities under its permit jurisdiction (30 CFR Part 250, Subpart A). Using this permitting authority, MMS Regional Supervisors may impose requirements beyond those set out specifically in the federal regulations. If a pipeline originating on the OCS traverses state waters, MMS verifies that state agencies have reviewed the permit application (Joint Task Force on Pipeline Safety, 1990), but it does not inspect pipelines in state waters.

To prevent undue duplication of regulatory efforts on the OCS, the two agencies signed a memorandum of understanding (MOU) in 1976, setting out the following division of responsibilities (Federal Register, 1976):

The DOT will establish and enforce design, construction, operation and maintenance regulations for those pipelines extending to the shore from the outlet flange at—(1)each facility where hydrocarbons are produced, or (2) each facility where produced hydrocarbons are first separated, dehydrated, or otherwise processed—whichever facility is further downstream, including on-line transmission equipment but not including any subsequent production equipment. The DOI will establish and enforce design, construction, operation, and maintenance regulations for offshore pipelines extending upstream from the outlet flange described earlier (under DOT responsibilities) into each production well on the OCS.

The intent of this MOU was to allow MMS to regulate those pipelines closely associated with oil and gas production (“production lines ”) on the OCS, while allowing OPS to regulate those pipelines associated with oil and gas transmission (“transmission lines”).

Problems in determining jurisdictional boundaries in practice, and disagreements about regulatory priorities, have led the two agencies to review the MOU (Joint Task Force on Offshore Pipelines, 1990). As of August 1993, negotiations were still underway (personal communication, Carl Anderson, Minerals Management Service, August 3, 1993).

Some duplication of regulatory responsibilities certainly exists, owing mainly to MMS's broad permitting authority. The permits may, in turn, place operational or other requirements on OPS-regulated pipelines in addition to those imposed by OPS. In addition, there is some redundancy in the agency inspection process. MMS inspection activities for permit holders often bring to inspectors' attention violations of OPS, as well as MMS, regulations. Opinions from the Department of the Interior's (DOI) Solicitor's office, however, make it clear that DOI inspectors may not enforce DOT regulations (personal communication, Carl Anderson, Minerals Management Service, January 29, 1993).

In addition, OPS jurisdiction under the MOU extends to some field gathering lines more appropriately considered production lines (MMS 's responsibility); producers in these cases must maintain parallel relations with both regulatory agencies.

The potential for duplication and conflict will grow as MMS assumes its new authority under the Oil Pollution Act of 1990 (P.L. 101-380). MMS authority under OCSLA applies only in waters of the outer continental shelf (OCS). However, under the Oil Pollution Act, as implemented by President Bush's Executive Order 12777, MMS is responsible for overseeing oil spill prevention and response activities for all offshore pipelines, in both state and federal waters.

MMS responsibility for oil spill prevention and response is expanding. The Oil Pollution Act of 1990 (OPA 90), as implemented by Presidential Executive Order 12777, October 1991, gave the agency regulatory responsibility for ensuring spill prevention and response capability for all offshore pipelines, including pipelines in state waters.

OPA 90 amended and expanded the oil spill prevention and response requirements of the Federal Water Pollution Control Act (FWPCA), and transferred regulatory responsibility for oil spill prevention and response at offshore facilities from EPA to MMS and the states. MMS is preparing regulations to implement these acts, mainly through cooperative agreements with OPS and the states.²

Among other things, OPA 90 requires certification of the “financial responsibility” of offshore operators to the amount of $150 million, to meet potential pollution liability. The U.S. Coast Guard (USCG) in the past certified the financial responsibility of OCS facilities in federal waters, pursuant to the OCS Lands Act. That function has been transferred to MMS under OPA 90 and its implementing Executive Order.

MMS already enforces requirements for pipeline and platform spill prevention measures and oil spill response plans on the OCS. Under OPA 90 these requirements are being revised to meet the “worst case ” discharge provisions of the law and are being extended to cover facilities and pipelines in both federal and state waters (other than the Louisiana Offshore Oil Port). The agency is seeking cooperative agreements with coastal states to ensure effective implementation of the new requirements, and is coordinating its rulemaking on oil spill prevention, oil spill response plans (OSRP), and financial responsibility with states to minimize administrative burdens on government and industry (Alvarado et al., 1992). It is also working with the states to determine the total mileage of pipelines in state waters that are affected by the new OPA and FWPCA requirements (Alvarado et al., 1992). Ultimately, MMS plans to add pipelines in state waters to its current map of all pipelines on the OCS (personal communication, Alexander Alvarado, Minerals Management Service, February 3, 1993).

A complicating factor under OPA is that state regulations for offshore pipelines are not preempted by federal oil prevention and spill response regulations. States may impose their own, more stringent requirements for liability limits, financial responsibility requirements, inspection and reporting requirements, and approval of response plans, and may establish their own spill response trust funds. In Texas, the Oil Spill Prevention and Response Act of 1991 imposes roughly the same requirements as the federal law (and, importantly, accepts federally approved response plans). In Louisiana, the Oil Spill Prevention and Response Act also followed the federal example in these respects. Neither Alabama nor Mississippi has passed any significant legislation covering offshore oil pollution. California passed a comprehensive law, the Lempert-Keene-Seastrand Oil Spill Prevention and Response Act, two weeks after OPA 90 went into effect; the State Lands Commission and the new Oil Spill Prevention and Response office are in the process of issuing regulations to implement the act (Stolls, 1993). These state laws, like OPA 90, govern spills from tankers as well as pipelines.

State jurisdiction over pipelines in offshore waters stems from a variety of authorities granted to states, in addition to the authority granted by OPS certification for pipeline safety regulation.

The multiplicity of state and federal agencies with authority over offshore pipeline safety holds the potential for inconsistencies in requirements, disparities in safety goals, differences in priorities, and redundancy of efforts. It also offers many areas of both mutual and parallel interest. State and federal cooperation and consistency are enhanced by formal cooperative mechanisms such as the OPS certification program already in place. Further coordination would be desirable.

States have sole regulatory jurisdiction over production facilities and associated production pipelines in state waters (inshore of the boundary of the federal OCS, 3 miles—

or, in Texas, 3 marine leagues [about 10 miles]—from shore). These facilities, being in state waters, are not under the federal safety jurisdiction of MMS. Some states agencies, certified to enforce OPS regulations for transmission pipelines, simply apply the same regulations to the production pipelines under their jurisdiction. These regulations, however, were developed for transmission pipeline systems, and are frequently inappropriate to production pipelines, which tend to be smaller in diameter, to vary more in flow, and to carry more corrosive untreated fluids.

States would be well advised to consider adopting regulations for these production facilities based on the appropriate MMS practices. (There is no formal MMS-state relationship, comparable to the OPS-state certification relationship, to ensure compatible safety goals and regulations.) Formal agreements between MMS and state agencies could be adopted, to ensure the necessary protection. As noted elsewhere in this chapter, MMS and states are already developing agreements to enforce the Oil Pollution Act of 1990, and should build on these agreements in the area of pipeline safety. Such cooperation would ensure consistent interpretation and application of compatible regulations in OCS and state waters.

The primary intent of formal agreements between the MMS and states would be to induce the states to establish pollution prevention and safety standards that are at least equivalent to federal standards. Coordination between the MMS and participating states would occur during formulation of standards and preparation of agreements. Enforcement would be the responsibility of the states. At present, the Oil Pollution Act of 1990 provides authority for the establishment of memoranda of understanding between MMS and the states for oil spill prevention and response, as well as related aspects of operational safety. The act does not cover gas pipelines; new legislation would be required for the establishment of formal agreements for such pipelines.

One benefit of federal and state regulatory cooperation could be to establish a pipeline failure and accident data system, including common data formats and reporting process with a clear means of accessing data.

States also have the authority, under the Oil Pollution Act of 1990, to apply pollution prevention and spill response and clean-up standards more stringent than those of MMS. MMS is seeking cooperative agreements with responsible state agencies so that states may administer prevention programs (personal communication, Alexander Alvarado, Minerals Management Service, May 13, 1993).

States administer Coastal Zone Management Plans (under the federal Coastal Zone Management Act) to mediate among competing uses of the waters and shore. Pipeline operators must therefore obtain state permits in addition to those from MMS (and for pipelines crossing navigable waterways or coastlines, the U.S. Army Corps of Engineers and the U.S. Fish and Wildlife Service). Any activity affecting the coastal zone, including dredging or filling or resource extraction, must obtain a permit from the competent state agency (e.g., the Louisiana Department of Natural Resources). The permit process can be complex, with detailed descriptions of the activity and its purpose and specific plans for dredging and disposal of dredged materials. Additional permits may be required

from fisheries agencies, state health departments, and state environmental quality agencies.

Because various agencies may be selected to administer the above authorities, several state agencies typically have jurisdiction over some aspect of marine pipeline safety within a given state.Table 6-1 gives some examples of the primary state agencies involved, and associated federal responsibilities.

Underlying the differences between MMS and OPS regulatory requirements, documented in several chapters of this report, are radically different approaches to enforcement. OPS leaves the inspection and maintenance of pipelines largely to the operators, enforcing its safety requirements with periodic audits of company records to ensure that

operators meet OPS standards. These inspections are necessarily rather infrequent; OPS, for example, has the resources to assign only two full-time inspectors in the Gulf of Mexico, to cover nearly 13,000 miles of pipelines, under the management of more than 160 different operators (personal communication, James Thomas, Office of Pipeline Safety, Southwestern Region, February 4, 1993).

MMS inspectors, on the other hand, make periodic on-site inspections of pipeline maintenance and safety systems during annual inspections of offshore facilities, and spot inspections of construction and repair activities. During these inspections, all boarding, crossing, or departing pipelines are reviewed to ensure compliance with the terms of the MMS-issued permits (Alvarado et al., 1992). Regional Supervisors are responsible for scheduling these inspections. MMS has 70 inspectors in the Gulf OCS Region, albeit with the more complex task of assessing the safety of platforms along with that of regulated pipelines. (Alvarado et. al., 1992). Comparison of the inspection checklists used by the two agencies provides a partial explanation for this disparity. The OPS list contains 300 to 400 items, all pertaining to pipelines themselves. The MMS list contains about 700 items, only 30 of them pertaining to pipelines, suggesting that the vast majority of the MMS inspection focus is on nonpipeline matters such as production and processing operations, drilling and well workover operations, and fluid measurement.

OPS enforcement efforts and resources are focused mainly on onshore pipeline systems, and especially on those that present risks to public safety or unusual risks to the environment. MMS, in contrast, devotes its enforcement efforts and resources entirely to offshore operations.

Offshore, it should be remembered, the pipeline systems regulated by the two agencies present quite different management and safety issues. Production pipelines, regulated by MMS, are generally smaller than transmission pipelines, and they normally carry untreated, hence corrosive, fluids; their economic lives, set by the lives of the producing fields, are generally shorter than those of transmission lines. Transmission lines carry treated fluids from production processing platforms to shore; they operate at higher volumes and often must serve for periods of decades. Despite these differences, the disparity in enforcement effort between the two agencies is apparent.

OPS's enforcement emphasis for marine pipelines could be increased by either increasing the agency's offshore inspection resources or by giving another agency the task of carrying out OPS enforcement, through an interagency agreement. Assigning this role to MMS, which is already active in OCS pipeline safety regulation, would have benefits of logistical efficiency and the effective use of trained inspectors.

Pipelines regulated by the two agencies are physically and operationally connected. Logistically, an agency inspecting a facility under MMS jurisdiction may be able to inspect an OPS facility during the same visit. In addition, because the facilities are operationally connected, integrated inspections by a single agency would produce better evaluations of overall system integrity and safety.

Such an expansion of MMS's responsibilities would also be consistent with the Oil Pollution Act of 1990, which extends MMS authority beyond production operations on the OCS—the agency's traditional regulatory sphere—to cover all offshore oil and gas pipelines. Federal preemption by OPS would prevent this authority from displacing existing OPS regulations, but MMS's pollution prevention authority under the act could be exercised through MMS's integrated enforcement role for all offshore waters. MMS would thus enforce MMS regulations on MMS facilities and OPS regulations on OPS facilities.

An interagency agreement of this kind would include a process for jointly identifying

and resolving concerns, investigating incidents, suggesting and discussing improvements in regulations, discussing safety objectives, and collecting and disseminating marine pipeline safety data.

A memorandum of understanding between MMS and OPS would be the most flexible and expeditious alternative for extending MMS's authority in the OCS. The alternative of amending public law through acts of Congress would be extremely cumbersome, involving at least four acts and several committees of the House and Senate.

The varying missions, resources, and regulatory approaches of the federal and state agencies charged with ensuring the safety of offshore pipelines have led to both duplication and gaps in enforcement, and to a lack of coordinated safety planning and record keeping. Better coordination would offer both efficiency and better safety assurance.

The jurisdictional MOU between MMS and OPS, established in 1976, has not eliminated duplication and overlap of federal regulatory effort. A variety of specific regulatory requirements, discussed in other chapters of this report, remain unresolved. Better coordination is needed.

OPS cannot effectively oversee more than 160 pipeline companies, operating nearly 17,000 miles of offshore pipeline, with its present complement of only two full-time inspectors for the entire Gulf of Mexico. Unless the necessary resources are provided, other means of enforcement—presumably through an interagency agreement with the MMS—would be more effective.

State agencies, with regulatory jurisdiction over intrastate production pipelines, sometimes apply OPS regulations—devised for transmission pipelines, rather than regulations more appropriate to production pipelines.

Alvarado, A., C. Anderson, and P. Schneider. 1992. A Minerals Management Service perspective on detection of leaks in offshore pipelines. Unpublished paper, available from U.S. Department of the Interior, Minerals Management Service. New Orleans, Louisiana. August 5

Federal Register . 1976. 14(114): 23746. June 11.

Joint Task Force on Offshore Pipelines. U.S. Department of Transportation. 1990. Joint Task Force Report on Offshore Pipelines. Washington, D.C.: U.S. Department of Transportation, Research and Special Programs Administration.

Pearcy, Roger. 1991. Perspectives on offshore pipeline operations. Keynote address I. Proceedings of the International Workshop on Offshore Pipeline Safety. New Orleans, Louisiana. December 4–6.

Stolls, A. M. 1993. Oil spill legislation in the coastal United States since the Oil Pollution Act of 1990. Proceedings of the 1993 International Oil Spill Conference. Washington, D.C.: American Petroleum Institute.