Environmental Regulations in UNITED STATES OF AMERICA Offshore Oil and Gas Industry

National Profile

This profile has been produced with the assistance of Robert LaBelle, Marcia Oliver, Elmer Danenberger, Larry Roberts and Richard Widermann of the Minerals Management Section, USA and Mr. Mark Rubin of the American Petroleum Institute.

Summary of United States of America offshore regulatory measures

• Emphasis on using legislation to regulate industry and programs to improve industry performance

• MMS implements the offshore natural energy policy

• MMS shares some regulatory responsibility with the EPA and Coastguard

• Regulations are not strongly influenced by international agreements

• Voluntary efforts based on performance measures are in place

• Though EMS and ISO 14001 are not legal requirements, there is a report available providing a review of EMS and ISO14001 standards in the oil and gas offshore industry. http://www.mms.gov/eppd/env/new.htm

• Environmental reporting is in place from both government and industry

• Economic incentives not widely used

The regulatory picture in the USA is made up of three closely inter-linked components with a deliberate move towards joint approaches with industry, a visible inspectorial presence underpinned by a strong legislative basis. With over 4000 offshore facilities and offshore production expected to double in the near future, the US believes they have a good safety and environmental record. The intent is to create a partnership with industry as demonstrated by SEMP and use the successful case studies to further stimulate industry to perform to higher standards. Prescriptive requirements based on best industry standards are in place to support this.

The model works to create continuous improvement in environmental performance from industry.

Contact Information:

Robert LaBelle, Chief, Environment Division, Minerals Management Service, USA
Email: Robert.LaBelle@mms.gov

Marcia Oliver,
Technology Information Specialist, Engin
Minerals Management Service,
381 Elden Street, MS- 4020,
Herndon, Virginia, 20170-4817 USA
email: marcia.oliver@mms.gov

Website: The Minerals Management Service website outlines MMS programs and is located at
http://www. mms.gov/

Other contact persons for further details:

Mr. Mark Rubin,
email: mrubin@spe.org

Related Websites:
American Petroleum Institute (API) website holds a number of research and issues papers related to regulatory reform and outlines the Petroleum Industry Environmental Performance Report.
It is located at http://www.api.org/

The Independent Petroleum Association of America is a national, association representing 8000 independent crude oil and natural gas explorer and producers in the US.
The website is located at http://www.ipaa.org/default.shtm

The Environment Protection Agency (EPA) website is located at http://www.epa.gov

The procedures for applying the National Environmental Protection Act , administered by the Council on Environmental Quality, are located at http://www.whitehouse.gov/ceq/

The US Coastguard is responsible for directing oil spill response efforts, navigational aides and many safety measures. The website is located at http://www.uscg.mil/

The US Department of Energy (DOE) through the Office of Fossil Energy plays a national policy role and sponsors research in resource recovery and locating new resource bases. Relevant websites are located at http://www.fe.doe.gov/programs_oilgas.html with more general information on the DOE located at http://www.energy.gov/

1. Major bodies that exercise regulatory control over environmental aspects of offshore operations, either directly or indirectly

• U.S. Minerals Management Service (MMS)

• U.S. Environmental Protection Agency (EPA)

• U.S. Fish and Wildlife Service (FWS)

• U.S. Coast Guard (USCG)

• U.S. Army Corps of Engineers(USACE)

• National Marine Fisheries Service (NMFS)

• National Oceanic and Atmospheric Administration(NOAA)

The US offshore leasing program is quite complex and has many facets that intertwine with other federal agencies and industry associations. The Minerals Management Service (MMS) is an agency within the Department of the Interior (DOI) and is the primary natural resource agency. There are several other federal agencies that work with MMS on their leasing program either with an advisory or approval role. MMS is responsible for implementing the offshore portion of the national energy policy, including the operation of offshore exploration and minerals exploitation, sharing some regulatory responsibility with the Environmental Protection Agency (EPA).

The EPA also regulates air and water quality, while the MMS regulates drilling and production operations and equipment. The MMS manages the Offshore Minerals Management Program and Royalty Management Program. The MMS lease offshore federal lands for mineral exploration with onshore leasing handled by the Bureau of Land Management.The Royalty Management Program manages payments to the government for land rental and royalties on mineral production. This is the only aspect of MMS that deals with onshore leasing.The EPA is an independent agency within the government, responsible for enforcement of air and water quality standards. The EPA establishes and enforces limits on the disposal of chemicals in offshore waters and sets standards for the quality of air which may flow from offshore areas into urban areas. The EPA has two major areas of offshore responsibility including:

• air quality in all areas except the central and western Gulf of Mexico where MMS has responsibility

• compliance with discharge standards for muds, cuttings and produced waters that are generated by the drilling process.

2. Major industry associations with instruments for environmental performance of offshore oil and gas activities

• The American Petroleum Institute (API)

• National Ocean Industries Association (NOIA)

• Independent Petroleum Association of America (IPAA)

• The Offshore Operator’s Committee (Gulf of Mexico) (OOC)

• International Association of Drilling Contractors (IADC)

3. National Regulatory Frameworks

i. Major environment legislation applying directly to offshore operations

Offshore oil and gas leasing and operating activities are subject to the requirements of the following Federal environmental laws:

The Outer Continental Shelf (OCS) Lands Act establishes a framework for leasing offshore lands for mineral development, and for promulgating and enforcing safety and pollution- prevention requirements. The Secretary of DOI has assigned administrative responsibilities under the Act to MMS.

The National Environmental Policy Act (NEPA) of 1969 establishes requirements for preparing environmental assessments and environmental impact statements for major Federal actions that could significantly affect the quality of the human, marine, or the socioeconomic environment. The MMS insures industry compliance with the OCS Lands Act and NEPA, as well as a host of other laws in regard to protecting the environment and offshore mineral activities.

The NEPA is applied (without discretion) to all major U.S. federal actions including offshore oil and gas exploration and development. An Environmental Impact Statement (EIS) is prepared for each lease sale held by the MMS. Every agency with jurisdiction for a major federal action significantly affecting the human environment, is responsible for the production of an EIS to cover that action.

The Marine Mammal Protection Act of 1972 provides for the protection of marine mammals. It also allows for the incidental, but not intentional, taking of marine mammals. The incidental taking of marine mammals is permitted by U.S. citizens under a Letter of Authorization from the appropriate trust agency—the NMFS or the FWS.

The Coastal Zone Management Act provides for State review of Outer Continental Shelf (OCS) lease sales, exploration, development and production plans. This Act requires consistency of Federal activities with federally approved coastal zone management plans.

The Endangered Species Act of 1973 requires Federal agencies to ensure that their actions are not likely to jeopardize the continued existence of any threatened or endangered species.

The Federal Water Pollution Control Act (commonly known as the Clean Water Act) requires that pollutants generated by OCS operations and discharged into U.S. waters comply with the limitations and restrictions included in the National Pollutant Discharge Elimination System permit.

The Oil Pollution Act of 1990 expanded MMS's authority to impose penalties for regulatory violations, raised the level of financial responsibility for offshore facilities and established new response planning requirements.

The National Historic Preservation Act requires that the MMS take into account the effects of its leasing and permitting actions on any district, site, building, structure, or object that is included in or eligible for inclusion in the National Register of Historic Places. This Act also requires that the Advisory Council on Historic Preservation be given a reasonable opportunity to comment on these undertakings.

The Clean Air Act Amendments of 1990 establish jurisdiction of air quality. The MMS regulates the OCS in the Western and Central Gulf of Mexico and the EPA regulates the remaining OCS areas.

The Ports and Waterways Safety Act protects navigational safety. The regulatory process is supported by a strong inspection presence managed by MMS. All offshore sites are inspected annually with a move towards focussing inspections on under performing operators.

Permits
Permits are issued by MMS to operators at various stages of the exploration and production cycle. Once a site has been leased and before exploration can commence, operators must submit an exploration plan to indicate where and how drilling will take place, as well as environmental details of the activity. An application permit is then required for each well and a further modification permit if modifications to the original drilling plan are intended. At the completion of exploration, an abandonment plan must be submitted for approval.Before site production commences, a development and production plan is submitted and includes environmental details of the operation. A further application to drill is required for each well. When production is completed a decommissioning proposal for removal is required.

ii. National environmental regulations which indirectly apply to offshore operations

• Occupational Safety and Health Act

• Resource Conservation and Recovery Act (Waste)

• Clean Air Act

iii. Negotiated agreements on environment between industry and government

An alternative approach to traditional ‘control and command’ regulation for worker safety and environmental protection on offshore platforms is under investigation involving the DOI, the API and the OOC with DOE. The scheme involves industry taking responsibility for identifying potential hazards in the design, construction and operation of offshore platforms and for developing specific processes to improve safety and environmental protection. It is intended that this project acts as a model for independent operators. See website http://www.fe.doe.gov/fresearch.html for more details.

iv. Management instruments incorporated into national legislation

ISO 14001 – This has not been incorporated into the United States environmental regulatory scheme. Recently, the EPA stated, "At this time, EPA (or any other Federal agency) is not basing any regulatory incentives solely on the use of EMSs, or certification to ISO 14001." The view held is that many of the goals reached by these environmental standards are being accomplished by the regulatory process already in place.
Environmental Auditing – Environmental auditing is initiated by the operating companies and government participation is at the request of the operators.
Environmental Reporting- The MMS submits Congress every three years, an assessment of the cumulative effects on human, marine and coastal environments of the activities of the OCS Program. The most recent report is located at http:www.mms.gov/eppd/reports/20e.htm
The MMS also maintains comprehensive data on oil spills and other environmental incidents.

4. International agreements applied to offshore operations via national regulations

Day to day operation is not strongly influenced by international agreements. The London Convention (LC) does not apply to wastes resulting from the normal operations of offshore oil and gas platforms. However, once decommissioned, offshore installations that are to be disposed of at sea are subject to the permitting and reporting procedures described in Annex III of the LC, and in Annex II of the 1996 Protocol to the LC.MARPOL, Annex 6, establishes certain requirements to reduce air pollution from ships and platforms. The Annex was signed in the fall of 1997, but it is not expected to enter into force for several more years. The MMS will most likely have the responsibility for enforcing the provisions of MARPOL on platforms.

5. Major economic instruments applying directly to offshore environmental performance

Economic incentives are not widely used. Punitive measures are in place throughout the industry for non compliance.

6. Voluntary environment measures adopted by the national oil industry

The Safety and Environmental Management Program (SEMP) is a process for coordinating OCS oil and gas operations focusing on worker safety and pollution control. SEMP combines a variety of offshore operating programs into a single, integrated, flexible and improvement oriented management scheme. It complements the MMS compliance operating regulations. The MMS has worked closely with OCS operators to voluntarily incorporate SEMP into their operations.

Recent surveys indicated that 95% of operators were developing a SEMP plan or had one in place. Information on the program is located at http://www.mms.gov/semp/index.htm MMS, in cooperation with industry, has in place a series of performance measures and collects data to determine the overall effectiveness of OCS safety and environment programme implementation. The API releases annually the "Petroleum Industry Environmental Performance Report" to demonstrate its environmental, health and safety performance and outlines measures such as refinery releases of chemicals, refinery recycling of residual waste and number of oil spills. In addition it outlines the health and safety record of petroleum industry workers.

The latest report is located at http://www.api.org/step/98piep_summary/sixthpiep.htm API also produces and maintains 500 voluntary standards on improved environmental, safety and health performance. These include, for example, standards for pipeline safety and reducing environmental risks associated with offshore drilling and production. Industry works with federal agencies to measure the implementation of these voluntary programs.

Other instruments in place
Cooperative Research and Environmental Studies Program: The MMS performs cooperative environmental studies, safety and pollution research and technology assessments. Partners include industry, other Government agencies, universities, foreign governments and trade associations. Its website is located at http://www.mms.gov/eppd/sciences/esp/index.html

For information about MMS oil spill response and pollution prevention research, go to http://www.mms.gov/eod/tarhome.htm

While the National Petroleum Council (NPC), a federally charted and privately funded advisory committee is in place to advise the Secretary of Energy with respect to any matter relating to oil and natural gas, it doesn’t play a major role in the regulatory process.
Its website is located at http://www.npc.org/

Environmental Regulations for US Oil and Gas Industry-
Which instrument is used to deal with selected environmental issue. 

INSTRUMENTS