In recent years, there has been an increase in the number of denials of applications to decommission offshore pipelines in place in a departure from the Bureau of Safety and Environmental Enforcement’s (“BSEE”) longstanding practices.  The denials are accompanied by an order from BSEE to decommission the pipelines by removal, with reference to Notice to Lessees (“NTL”) 2009-G04 and/or “significant sediment resource areas” (“SSRA”) in the vicinity of the pipeline.  BSEE is also issuing orders to companies to remove pipelines located in SSRAs that were previously decommissioned in place.

Some identify by lease block the SSRA that would allegedly be impacted by leaving the pipeline in place; others do not.  Often, the subject of the order may have no knowledge that the area in which its pipeline was located had been designated as a SSRA.  And rarely, if ever, will the order identify a specific project involving the use of the SSRA at issue.  Indeed, BSEE has ordered pipelines to be removed from lease blocks in which there is no current or proposed project for the SSRA.

These orders have the potential to result in exponentially higher decommissioning expenses and, consequently, have led to several pending appeals to the Interior Board of Land Appeals.

Prior to 2015, BSEE routinely granted applications to decommission pipelines in place pursuant to 30 C.F.R. § 250.1750, which provides that a pipeline may be decommissioned in place if it “does not constitutes a hazard (obstruction) to navigation and commercial fishing operations, unduly interfere with other uses of the OCS, or have adverse environmental effects.”  A pipeline previously decommissioned in place may be ordered removed if BSEE “determines that the pipeline is an obstruction.”  30 C.F.R. § 250.1754.  BSEE’s regulations define “obstructions” as “structures, equipment, or objects that were used in oil, gas, or sulphur operations . . . that, if left in place, would hinder other users of the OCS.”  30 C.F.R. § 250.1700(b).  Seemingly in contrast to its own regulations, BSEE is now ordering the removal of pipelines that apparently do not “obstruct” or “interfere” with other OCS uses; but based only on their location in an SSRA, without regard to whether a project for use of that SSRA’s sediment is anticipated.

The origin of NTL 2009-G04 and SSRAs dates to 2008, when, in response to a request from Louisiana Department of Natural Resources (“LDNR”) and under the authority of 30 C.F.R. § 550.101, the Minerals Management Services (“MMS”) began designating certain Outer Continental Shelf (“OCS”) lease blocks as SSRAs to be used in future coastal restoration, beach nourishment, and levee reconstruction projects.  In 2009, MMS issued NTL 2009-G04 to “provide[] guidance for the avoidance and protection of significant OCS sediment resources.”  The NTL set forth a policy “to help safeguard the most significant OCS sediment resources, reduce multiple use conflicts, and minimize interference with oil and gas operations under existing leases or pipeline ROWs.”  The NTL provides that “[i]f it is determined that significant OCS sediment resources may be impacted by a proposed activity, [BSEE] may require you to undertake measures deemed economically, environmentally, and technically feasible to protect the resources to the maximum extent practicable.”  Regarding pipelines, the NTL provides that “[f]uture requests for in-place decommissioning of pipelines in these designated areas are discouraged” and that “[i]f it is deemed necessary, [BSEE] may require pipelines previously decommissioned in place to be removed to minimize conflict with other uses of the OCS.”

Following the reorganization of MMS into BSEE, the Bureau of Ocean Energy Management (“BOEM”), and the Office of Natural Resources Revenue in 2011, the use of OCS sediment resources is now implemented and managed through BOEM’s Marine Minerals Program (“MMP”).  Through MMP, and pursuant to the authority granted by 43 U.S.C. § 1337(k)(2), BOEM can convey the rights to OCS sand for use in projects for “shore protection, beach restoration, or coastal wetlands restoration undertaken by a Federal, State, or local government agency” or “a construction project . . . that is funded in whole or in part by or authorized by the Federal Government.”

SSRAs are identified by their OCS lease block name and number and are listed on the BOEM MMP website, https://www.boem.gov/marine-minerals/managing-multiple-uses-gulf-mexico.  The number of offshore lease blocks in the Gulf of Mexico designated as SSRAs doubled from 337 in 2014 to 686 today.  However, because the designations are not issued via, for example, NTLs, new designations can go unnoticed by the regulated industry absent monitoring of BOEM’s website (which does not indicate whether it has been or the date that it was updated).

Since 2015, BOEM has executed fifty-eight MMP leases for use of 164 million cubic yards of sand.  Forty-six of those projects have already been completed, four have expired, and eight are still active.  Another seven have been proposed.  The majority of the restoration projects are located in Florida, while Louisiana has been allocated the most amount of sand (62.9 million cubic yards).  In the Gulf of Mexico, approximately 21 offshore lease blocks have been the site of completed, active, or expired leases.

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Photo of Jana Grauberger Jana Grauberger

Jana Grauberger is an oil and gas lawyer with more than 20 years experience. Clients turn to her as a trusted advisor in connection with their contract negotiations, regulatory advice and appeals, litigation, and arbitration related to onshore and federal offshore upstream and…

Jana Grauberger is an oil and gas lawyer with more than 20 years experience. Clients turn to her as a trusted advisor in connection with their contract negotiations, regulatory advice and appeals, litigation, and arbitration related to onshore and federal offshore upstream and midstream projects and facilities. Jana has represented clients in negotiating a wide variety of onshore and offshore contracts, including purchase and sale agreements, farmouts, participation agreements, joint operating agreements, production handling agreements, platform use agreements, gathering agreements, connection agreements, construction contracts, transportation contracts, and decommissioning agreements. She also represents clients in connection with regulatory matters involving Department of Interior agencies, including the Bureau of Ocean Energy Management (BOEM), the Bureau of Safety and Environmental Enforcement (BSEE), and the Office of Natural Resources Revenue (ONRR).

Photo of Jillian Marullo Jillian Marullo

Jillian Marullo handles an array of civil litigation matters as both plaintiff and defense counsel, representing clients in many sectors, including the oil and gas, communications infrastructure, and commercial property industries.  She has a diverse commercial litigation practice, with experience in general contractual…

Jillian Marullo handles an array of civil litigation matters as both plaintiff and defense counsel, representing clients in many sectors, including the oil and gas, communications infrastructure, and commercial property industries.  She has a diverse commercial litigation practice, with experience in general contractual disputes, insurance and indemnity matters, and disputes arising under mineral leases, farmout agreements, joint operating agreements, and commercial leases.  This practice includes significant experience in oil and gas lease disputes, including lease maintenance and termination, royalty, implied covenants, offset well/drainage clauses, and other lease disputes.  She also handles toxic tort and environmental litigation, including suits arising under the Clean Air Act, as well as cases involving property damage, trespass, and conversion.