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Interior’s Rollback Includes Surprise Gift to Oil Industry

(Photo of Deepwater Horizon: U.S. Coast Guard; illustration: CJ Ostrosky / POGO)

The Trump Administration’s long-anticipated, recently completed rollback of offshore drilling safety standards includes a surprise gift to the oil and gas industry—one whose late addition to the regulatory overhaul could be vulnerable to a legal challenge, according to legal scholars.

The Project On Government Oversight previously reported that the Administration was proposing to adopt safety standards written and copyrighted by the American Petroleum Institute (API), a lobbying group for the fossil fuel industry.

The public was deprived of a meaningful opportunity to weigh in on the Interior Department’s adoption of some standards created by a lobbying group for the fossil fuel industry.

However, the final version of the regulatory overhaul unveiled on May 2 incorporates an API document that was not included in the draft issued for public comment last year.

The document, called “API Bulletin 92L,” would enable energy companies to continue drilling in situations where they otherwise would be required to suspend drilling—situations in which they are unable to keep the pressure in the well within a prescribed range known as the safe drilling margin.

The API and several other industry groups last year asked the Interior Department to grant drillers that option. At times, “drilling ahead . . . may be the safest option to restore the integrity of the well rather than suspending drilling operations altogether to remedy the situation,” they wrote in a joint letter.

The public was deprived of a meaningful opportunity to weigh in on the Interior Department’s adoption of the API bulletin, said Nina A. Mendelson, a University of Michigan law professor who does research on administrative law and formerly worked in the Justice Department’s Environment and Natural Resources Division.

A court could set aside the rule in whole or in part. It could also remand the offending portion of the rule to the agency to revise but leave the rule in place in the meantime.

Nina A. Mendelson, Law Professor at the University of Michigan

“I think there are reasonably strong grounds for challenge here,” Mendelson said.

“A court could set aside the rule in whole or in part,” Mendelson said. “It could also remand the offending portion of the rule to the agency to revise but leave the rule in place in the meantime.”

The safe drilling margin was intended to avoid pressure imbalances that can lead to blowouts and other problems. It was part of a federal rule known as the Blowout Preventer Systems and Well Control rule adopted by the Obama Administration in 2016 in response to the 2010 Deepwater Horizon disaster.

The Trump Administration this month finished rewriting that rule, saying it was trying to remove requirements that imposed unnecessary burdens on industry.

The Interior Department’s final rewrite incorporates API Bulletin 92L “by reference,” meaning it gives the bulletin the force of law but does not include the text of it in the federal regulation.

As POGO reported last year, the government’s practice of giving standards written by industry the force of law without publishing the text of those standards for all to see can make it difficult or costly for members of the public to find out what federal regulations actually mean.

If you’re willing to create an online account with API and agree to its conditions, you can view a read-only copy of API Bulletin 92L for free on the API website. API sells printable copies of the bulletin for $70.

The fact that the bulletin was not listed in last year’s notice of proposed rulemaking as one of the industry standards the Interior Department was proposing to adopt could make its inclusion in the final rule vulnerable to a legal challenge, said Peter L. Strauss, an emeritus professor at Columbia Law School who specializes in administrative law.

To prevail, anyone challenging Interior’s use of the bulletin would have to show that the lack of notice impaired their ability to comment on the proposed rule change, Strauss said.

“This whole process is so covert it totally defeats the concept of notice-and-comment rulemaking,” Strauss said.

The Trump Administration has pursued a deregulatory agenda on a variety of fronts involving energy and the environment. However, many of the Administration’s proposed rule changes have been tripped up by lapses in the rulemaking process, including what courts have found were violations of the Administrative Procedure Act.

The Obama Administration’s well control rule said that if drillers could not stay within the safe drilling margin, they were required to suspend drilling and remedy the situation. The Trump Administration’s final rule offers an alternative. It says drillers must either suspend drilling and submit proposed remedies to a federal regulator or notify the regulator “and take further action in accordance with API Bulletin 92L.”

The API bulletin includes decision trees spelling out different courses of action—when drillers should stop drilling, when they should continue normal operations, when they should file a new drilling plan with regulators, and when they should continue drilling for a limited distance such as 300 feet while notifying regulators.

“Depending on the situation operators may have to stop drilling . . . or contact the regulator and drill ahead no more than 300 ft,” the final rule explains.

The bulletin is titled, “Drilling Ahead Safely with Lost Circulation in the Gulf of Mexico.” The term “lost circulation” refers to the migration of fluid from the well into the surrounding geologic formation, a phenomenon that can render a well dangerously unstable. The bulletin says lost circulation “has been safely managed during routine well construction operations for many years in both deepwater and shelf GoM wells.” The acronym GoM refers to the Gulf of Mexico.

The document says its decision trees “depict common scenarios of lost circulation specifically addressing issues for both OCS [Outer Continental Shelf] and Deepwater GoM wells.” The document also says methods used to manage lost circulation are based on well location and geology, among other factors.

Despite the document’s title and the fact that it focuses mainly on geology and drilling experience in the Gulf, the Trump Administration’s rule apparently would have drillers follow it elsewhere.

Meanwhile, the Trump Administration has been planning to expand drilling in the Atlantic and Pacific and off the coast of Alaska.

This whole process is so covert it totally defeats the concept of notice-and-comment rulemaking.

Peter L. Strauss, emeritus professor at Columbia Law School specializing in administrative law

Though the notice of proposed rulemaking the Interior Department published in May 2018 did not say the Department planned to give the API bulletin the force of law, it did indicate that the Department was considering loosening restrictions associated with the safe drilling margin.

For example, it invited public comment on “whether there are situations where drilling can continue prior to receiving” government approval to deviate from the prescribed drilling margin.

Spokespeople for API and the Bureau of Safety and Environmental Enforcement, the Interior Department unit responsible for the regulatory overhaul, did not respond to questions for this story.

When the government incorporates industry documents by reference in federal regulations, the Office of Management and Budget has said it prefers documents developed through a “consensus” process. That’s one that includes openness and an airing of objections by interested parties, much like the government’s own rulemaking process.

API Bulletin 92L does not fit that description, the Interior Department said in the final rule.

The document “is appropriate for incorporation into the regulations, even though it is a non-consensus developed bulletin,” Interior said.