bp
Robert L. Stout, Jr.

BP America, Inc.

Vice Pres id ent & Head of Reg ul atory Af fa irs

1101 New York Ave nu e
7'h Floo r
W as hington, DC 20005

Office of Policy and Strategic Planning
Department of Commerce
H.C. Hoover Building Rm . 5863
1401 Constitution Ave ., NW
Washington, DC 202030

RE: Docket Number 170302221-7221-01
Impact of Federal Regulations on Domestic Manufacturing
82 Fed. Reg. 12786 (March 7, 2017)
Submitted to the Federal eRulemaking Portal (www.requlations.gov)
To Whom It May Concern:
BP America Inc. hereby submits its response to the March 7, 2017 Request for Information (RFI) from
the Department of Commerce .
BP America Inc. and its various corporate subsidiaries and affiliates (collectively "BPA") have been
operating in the US for more than 150 years through our heritage companies. We are America's No. 1
energy investor over the past decade -with $90 billion invested -and we recently announced a new
$9 billion project in the deepwater Gulf of Mexico called Mad ·Dog 2. We directly employ more than
14,000 people in the US, and our operations support an additional130,000 American jobs. We operate
as an integrated business with investments and operations across the entire value chain, from onshore
and offshore oil and gas production to petrochemicals to refining and retail marketing of fuels and
lubricants. We also operate a large integrated supply and trading business and we are the largest
marketer of natura l gas in North America. Finally, we have the largest operated renewable energy
business of any major international oil and gas company, including 13 wind farms in the US.
Given our material energy investments in America, we are acutely aware of and affected by the complex
web of federal permitting processes and regulations applicable across our operations. Thus, we support
the objective of this RFI to improve the "efficiency, transparency and certainty" in the permitting and
rulemaking processes. Improvements in those areas will allow US manufacturers and energy investors
to maximize their contribution to the growth of the US economy without undermining the important
role that federal agencies play. We believe that this goal can be achieved through:
•

More streamlined and efficient permitting that provides greater certainty earlier in the process;
and

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Well-designed regulations that are adopted after a rigorous, transparent process weighing
benefits and cost, narrowly tailored to achieve their policy objectives, and enforced in an evenhanded manner.

1

 bp
Robert L. Stout, Jr.

BP America, Inc.

Vi ce Pres id en t & Hea d of Reg ul ato ry A ffai rs

1101 New Yo rk Avenu e
7 1h Floor
W as hington, DC 20005

In the attached response, we identify some of the most significant challenges that federal permitting
processes and regulations present for our US businesses and, most importantly, offer our specific
suggestions for potential improvements or reforms. In doing so, we note that:
1.

Because permitting and regulatory burdens cannot always be viewed in isolation, but often act
in concert to compound the burdens imposed, our responses on these issues overlap in some
cases.

2.

Energy investments and operations are profoundly affected not only by processes for obtaining
"permits" in the narrowest sense of that term, but also by the equally complex array of
processes for securing federal leases and other authorizations required to develop energy
resources. Thus, to make our response as informative as possible, we have interpreted the RFI
broadly to cover federal leases and other federal authorizations to operate.

3.

We have provided responses for our operations beyond NAICS codes 31-34 because they are
significant businesses that contribute broadly to the US economy and would benefit from the
types of reforms contemplated by the RFI.

4. We have not commented on those major regulations affecting our industry that are the subject
of ongoing review under the Congressional Review Act, notably the BLM Venting & Flaring rule
and the EPA RMP rule . If these rules are not repealed by Congress, we believe they should be
reconsidered or revoked given that, in each case, one federal agency duplicates the work of
another.
Thank you for this opportunity to provide our input on these important issues, and please feel free to
contact me with any questions regarding the attached submission.
Sincerely Yours,

Robert L. Stout, Jr.

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 BP America Response to March 7, 2017 RFI

General Information Requested
1.

NAICS code(s)

For purposes of this response, we are commenting with respect to the following U.S. businesses:
•
Refining of Crude Oil (NAICS code 32}
•
Petrochemicals (NAICS code 32)
•
Pipelines (NAICS code 48)
•
Onshore Lower 48 (L48) oil and gas (NAICS code 21)
•
Alaska oil and gas (NAICS code 21)
•
Gulf of Mexico oil and gas (NAICS code 21)
The RFI explicitly sought information re NAICS code 31-33 related to "Manufacturing" but encouraged
responses on related topics. Thus, we have included information related to all of our U.S. businesses.
All of these businesses engage in domestic U.S. "manufacturing" in a broad sense, contribute
significantly to the U.S. economy and would benefit from permitting and regulatory relief.
We have a number of businesses that are not discussed in this response, including BP Wind Energy, Air
BP, BP Shipping, Castrol and Integrated Supply and Trading. These businesses too would benefit from
reduced federal permitting and regulatory burdens, even though they are outside the scope of this RFI.

2.

What do you manufacture?
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•
•
•
•

3.

Where are your facilities located?
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•
•
•
•
•

4.

Our U.S. refineries process/produce motor gasoline, diesel (including ultra-low-sulfurL jet fuel,
propane, kerosene, asphalt, calcined coke and butane.
Our U.S. petrochemical plants manufacture purified terephthalic acid (PTAL paraxylene (PX) and
metaxylene (MX).
Our U.S. Pipelines business transports crude and refined products.
Our Onshore L48 business explores for and produces natural gas, natural gas liquids, condensate
and oil.
Our Alaska oil and gas business explores for and produces oil and gas.
Our Gulf of Mexico business explores for and produce natural gas, natural gas liquids and oil.

Refineries: Whiting, Indiana; Blaine, Washington; Oregon, Ohio
Petrochemical plants: Wando, South Carolina; Texas City, Texas
Pipelines: Illinois, Oklahoma, Washington, Oregon and the Gulf of Mexico
Onshore Lower 48 oil & gas: Colorado, New Mexico, Oklahoma, Texas and Wyoming
Alaska oil & gas: Anchorage and the North Slope of Alaska
Gulf of Mexico: BP operates four platforms in the outer continental shelf

How many employees?
We have more than 14,000 employees in the U.S.

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 BP America Response to March 7, 2017 RFI

5.

Approximate sales revenue?
The total revenue from our U.S. operations was approximately $69 billion in 2016.

Questions Concerning Manufacturing Permitting Process
1. How many permits from a Federal agency are required to build, expand or operate your
manufacturing facilities? Which Federal agencies require permits and how long does it take to obtain
them?
BP America (BPA) facilities, as well as many individual operating units within them, are required to
procure and maintain a diverse array of permits from federal agencies. The aggregate number of all
such permits is difficult to estimate, but likely runs into the hundreds. Required federal permits affecting
our operations include the following:
•
EPA: Clean Air Act operating ("Title V") and construction permits ("PSD" and "NSR")
EPA: Clean Water Act discharge permits ("NPDES")
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EPA: Nationwide Permits (NWPs) or Section 404 permits for projects that impact waters of the
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United States
•
EPA: Resource Conservation and Recovery Act waste management permits
EPA: Safe Drinking Water Act permits, including Underground Injection Control permits
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EPA: Registration of fuels under 40 CFR Part 79 and the registration of refineries, import
•
facilities, and distribution facilities under 40 CFR Part 80
DoC (NMFS) and DOl (FWS): Incidental Take Permits related to endangered and threatened
•
species and marine mammals
• Army Corps of Engineers: Nationwide Permits
•
DOl: Applications for Permits to Drill (APDs) for oil & gas wells on federal and Indian Lands
•
BOEM: Geophysical and Geotechnical Permits (seismic operations permits)
•
BOEM: Exploration Plan (EP); Development Operations Coordination Document (DOCD)
•
BSEE: Deepwater Operations Plan (DWOP)
The length of the permitting process varies widely but some permits can take years to obtain.

2. Do any of the Federal permits overlap with (or duplicate) other federal permits or those required by
state or local agencies? If the answer is yes, how many permits? From which Federal agencies?
There is considerable overlap, particularly with respect to air and water permits. BPA endorses the
comments submitted by the National Environmental Development Association's Clean Air Project
(NEDA/CAP) on this point. Of particular note, the Clean Air Act permitting programs are often delegated
to the states for implementation but EPA retains oversight. In some circumstances, EPA interferes in the
state permitting decisions and can delay the process and change the permit terms.

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 BP America Response to March 7, 2017 RFI

3. Briefly describe the most onerous part of your permitting process.
4. If you could make one change to the Federal permitting process applicable to your manufacturing
business or facilities, what would it be? How could the permitting process be modified to better
suit your needs?
There are many onerous features of the federal permitting process and we highlight three in particular
here. On each of these three points, we have combined our responses to Questions 3 and 4 into a
detailed response addressing the permitting/leasing processes as well as suggested improvements.

1. Reforming the NEPA Process: Council on Environmental Quality, 40 CFR 1500-1508
The 1970 National Environmental Policy Act (NEPA) broadly requires federal agencies to assess the
environmental impact of-- and alternatives to-- "major federal actions significantly affecting the
environment." NEPA created the Council on Environmental Quality (CEQL which then promulgated
implementing regulations at 40 CFR 1500-1508. For example, if a federal action like a 5 year oil & gas
leasing plan may have an impact that an agency deems "significant/' NEPA would call for an
Environmental Impact Statement (EIS).
BP shares the overall goal of NEPA to ensure that potential environmental impacts are considered, and
reasonable steps are taken to mitigate them, in the planning, development and operation of energy
projects. Indeed, BP works to understand the environments in which we operate and to avoid and
minimize our direct impacts on the environment. Our requirements and global practices are set out in
our group-wide operating management system.
But while the overall intent of NEPA is laudable, its implementation in practice can be highly
bureaucratic, complex and cumbersome, creating substantial uncertainty and delay in the permitting of
projects. In BP's experience, an EIS can take many years to complete and cost millions of dollars to
prepare.
The NEPA and EIS process should be substantially reformed and streamlined so that the environmental
purpose ofthe statute is met while driving toward finality in a reasonable amount oftime, avoiding
adding new requirements late in the process. Delay and uncertainty about project requirements can kill
projects and the jobs that they create. For complex projects that involve multiple federal agencies, a
federal coordinator or ombudsman could help drive the process. This could take the form contemplated
by the Executive Order entitled "Expediting Environmental Reviews and Approvals for High Priority
Infrastructure Projects/' which would assign such a role to CEQ.
Finally, the NEPA and EIS process has been even further complicated by other voluminous guidance
documents that likewise may be well intentioned but in practice create another layer of complexity and
delay. We support the mitigation policy review outlined in Secretarial Order 3349 (issued March 29,
2017). This review presents an opportunity to remove layers of complexity related to mitigation policies
and practices adopted in recent years by DOl. We recommend that the following specific guidance
documents should be reviewed as part of the mitigation policy review:
•
•
•

DOl Guidance on Landscape Scale Mitigation issued on November 3, 2015
FWS Mitigation Policy issued on November 21, 2016
FWS Endangered Species Act Compensatory Mitigation Policy proposed on September 2, 2016

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 BP America Response to March 7, 2017 RFI

2.

Clean Air Act Preconstruction Permits: EPA, 40 CFR Part 52

The process for obtaining Clean Air Act preconstruction permits is lengthy (often 1- to 2-years}, complex,
and costly. These burdens discourage capital investment and drive sub-optimal decisions such as
running existing equipment longer than desired to avoid the permitting burden triggered by replacing
that equipment. We are a member of the National Environmental Development Association's Clean Air
Project (NEDA/CAP} and we endorse their more detailed comments on this general topic.
We would highlight a lesser-known problem with the permitting process that can needlessly prevent the
commencement of construction on major projects, and thus delay the economic and jobs benefits that
these projects create. Specifically, EPA has adopted an unduly restrictive interpretation of when a
construction permit is required under the Clean Air Act to bar even activities that would not create
emissions regulated by the Act. EPA has used this interpretation to issue Notices of Violation for
activities such as installing area lighting, electrical preparations, and site drainage, even though such
construction is not part of the future process unit that would generate regulated emissions. As a result,
companies are forced to delay such activities on pain of enforcement. For facilities in northern areas
with short construction seasons, even a short delay in issuing the permit can mean a loss of a complete
construction season, resulting in months of delay in completion of the project and realization of its
benefits.
Consistent with its authority and the purpose of the Act, EPA should redefine the term "begin actual
construction" in 40 CFR 52.21(b} (11} to allow non-emitting activities (e.g., pouring foundations,
electrical preparations) to begin before the final permit is issued. We believe this would hasten the
commencement of major projects as permit applicants would be willing to assume the risk of stranding
an investment in some of these preparatory, non-emitting activities in order to mitigate the effects of a
potential lost construction season.
3.

Reforming the Gulf of Mexico (GoM) Leasing Program/Practices: DOl (BOEM and BSSE)

The leasing program administered by the Department of Interior (specifically BOEM & BSEE) has not
adjusted to account for the new challenges facing industry as it pursues more complex resources. We
are drilling at greater depths into higher temperature and pressure reservoirs while at the same time
facing stronger competition for scarcer investment dollars in a lower-price environment. The number of
operators in the GaM is shrinking and the level of interest in bidding on new leases is below historic
levels. Overall, for the onshore and offshore, while production of oil and gas on private lands has
increased dramatically in recent years, the production of oil and gas on federal lands has remained flat
or fallen. We believe that reforming the leasing program could unlock further resources in the GaM,
creating additional economic investment and jobs as well as increased royalties to the federal
government.

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 BP America Response to March 7, 2017 RFI

Even without new legislation, DOl has the authority to improve the prospects for GoM development by
taking action in the following areas:

•
•
•
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Lease terms: Make primary lease terms longer for more complex projects.
Suspensions: Use discretion to grant suspensions (which extend a primary lease term) to parties
with proven track records of completing projects.
Restricted Bidders: Explore the means of relaxing the prohibitions on joint bidding by larger
producers.
Royalties: Scale the royalty rate to the complexity/cost of the project.

5. Are there Federal, State, or local agencies that you have worked with on permitting whose
practices should be widely implemented? What is it you like about those practices?
There are a number of agencies that have permitting approaches and practices that should be more
widely implemented. We share the following examples:
First, there are several regional offices in EPA and DOl that are very responsive to permit submittals and
are willing to engage to help resolve ambiguities. These regional offices exhibit a problem-solving
approach that is refreshing and could be replicated more widely. Permitting does not need to be an
adversarial process.
Second, there are permitting programs that avoid most ofthe burdens of site-specific permitting by
spelling out the permit obligations in advance by rulemaking. These "general permits" include standard
environmental requirements and other provisions and take a number of forms that are discussed at a
high level below:
•

•

•

The Texas Commission on Environmental Quality (TCEQ) has a "permit by rule" (PBR) program
that authorizes routine activities without requiring a permit. Some PBR's allow construction to
begin immediately, others only after TCEQ is notified and others only after TCEQ approval.
The Wyoming Department of Environmental Quality (WDEQ) has a program that allows
construction of certain oil or gas wells prior to obtaining an air permit if the facility meets
specified air emission control requirements (known as "presumptive BACT").
The Army Corps of Engineers promulgates nation-wide permits (NWPs) through rulemaking for
certain routine actions that may impact the waters of the U.S. (e.g. maintenance of pipelines).
The NWPs specify the conditions to qualify and avoid site-specific permitting. Some of the
NWPs require pre-construction notifications but others do not.

The forgoing approaches are efficient, transparent and provide certainty to all of the stakeholders.

Questions Concerning Regulatory Burden/Compliance:
1. Please list the top four regulations that you believe are most burdensome for your manufacturing
business. Please identify the agency that issues each one. Specific citation of codes from the Code of
Federal Regulations would be appreciated.
2. How could regulatory compliance be simplified within your industry or sector?
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 BP America Response to March 7, 2017 RFI

3. Please provide any other specific recommendations, not addressed by the questions above, that you
believe would help reduce unnecessary Federal agency regulation of your business.
We address these questions collectively below for four regulations of particular concern to BPA.
1.

Renewable Fuel Standard (RFS): EPA, 40 CFR Part 80, Subpart M

The Renewable Fuel Standard (RFS) was created by Congress in 2005 and requires transportation fuel
sold in the United States to contain a minimum volume of renewable fuels. The RFS is intended to
reduce reliance on foreign oil, reduce greenhouse gases and support rural economic development.
The Blendwall. As biofuel mandates increase, the volume of ethanol required for blending into gasoline
exceeds the 10% "blendwall." Most vehicles and retail infrastructure were designed and approved for
blends that contain up to 10% ethanol but not for greater volumes. EPA should recognize these market
constraints and use its waiver authority to set the annual obligation below the 10% blendwall.
Maintain the Point of Obligation (PoOl. EPA should retain the current PoO under the RFS. Changing the
PoO now would disrupt longstanding compliance plans, investments, and commercial agreements that
were premised on the current structure. Further, moving the PoO would create additional burdensome
compliance and administrative problems that would exacerbate the existing problems. EPA can reduce
the overall regulatory burden by retaining the current PoO and moving forward with the reforms
necessary to improve the efficiency of the entire RFS program.
Other Reforms. BP believes other common sense reforms should include:

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Establishing separate ethanol and diesel standards based on blend ratios, such as 9.7 percent
ethanol and 2 percent biodiesel in the gasoline and diesel pools, respectively. A blend standard
of 9.7% recognizes the practical limitation of the 10% blendwall while accommodating transport
demand for some gasoline with no ethanol.
Supporting the growth of sustainable advanced biofuels within the blend levels described above.

2.

Ozone Ambient Air Quality Standard: EPA, 40 CFR Parts SO and 58

•

BPA, other companies, industry groups, and a bipartisan group of state environmental agency leaders
expressed serious concern about the implementation of the National Ambient Air Quality Standard
(NAAQS) for ozone, which was lowered in 2015 from 75 ppb to 70 ppb. The ozone NAAQS standard
substantially burdens American manufacturers in general and the energy sector in particular. EPA could
materially reduce these burdens, while remaining faithful to the letter and spirit of the Clean Air Act, by
addressing the following issues:
Complying with 2 Standards. EPA should take action to address the currently overlapping and
1
duplicative ozone standards (the new 2015 standard and the older 2008 standard). For example, we
1

We also support Congressional action to change the NAAQS review cycle from 5 years to 10 years. The EPA needs
more time to review the NAAQS and states need more time to implement the NAAQS to bring areas into
compliance before setting a new target.

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 BP America Response to March 7, 2017 RFI

believe that EPA could revoke the 2008 Ozone NAAQS without applying complicated "anti-backsliding"
provisions, since the 2015 Ozone NAAQS is more restrictive than the 2008 Ozone NAAQS.
International Pollution. Background pollution from international sources remains a significant problem.
Although Asia is a major contributor to background emissions, EPA currently interprets the Clean Air Act
to limit its ability to deal with international pollution to emissions from only Mexico and Canada. EPA
should instead adopt an interpretation that accounts for the realities of international transport.
Non-Attainment Designations. When a region is designated as being in non-attainment with the ozone
NAAQS, it confronts a cascade of new burdens such as limitations on the permitting of new projects and
requirements to install expensive new pollution control equipment. It is legally unwarranted, unfair and
unwise to penalize regions by designating them as in non-attainment because of background ozone
levels that are beyond their control. Although it has declined to use it, EPA has the authority and
discretion to avoid this outcome by excluding ozone exceedances principally attributable to background
from determinations of non-attainment. EPA could make this change as part of the current
2
implementation rulemaking for the new NAAQs, or in a separate rulemaking.
The Exceptional Events Rule. EPA also could help address the problem of background ozone by
amending the Exceptional Events Rule (EER) (40 CFR 50.14) finalized in October 2016. Specifically, EPA
could provide that when U.S. human-caused sources (in the aggregate) account for only a small portion
of a non-attainment event, the event will be attributed to ozone background levels and excluded from
the non-attainment determination. This also would relieve the states from the burdensome and
sometimes impossible task of quantifying separately each non-human cause of the event.

3.

Methane Regulation: EPA and BLM

BP recognizes the importance of controlling methane emissions, and we have implemented best
practices- such as green completions and leak detection -to reduce those emissions in our own
operations. We also support well-designed, cost-effective regulations.
Unfortunately, EPA and BLM created a complex web of regulations that are both inconsistent with each
other and duplicative of state regulations. We have several recommendations to reduce this burden.
Repeal the BLM rule. Federal regulation of onshore air emissions should rest with EPA alone.
Fix the EPA rule. We specifically request that EPA amend its latest onshore air emissions regulation {40
CFR Part 60, Subpart OOOOa) as follows:
•
•
•
•

2

Extend by 1 year the effective date for leak detection and repair requirements;
Extend by 1 year the compliance period for pneumatic pumps;
Exempt small volume "stripper wells" from the rule (no more than 15 barrels of oil equivalent
per day over a 12-month period);
Improve the leak detection provisions for approval of alternative monitoring equipment and
methods- pattern the provisions more closely after the approach taken in the Colorado
regulations; and

81 Fed. Reg. 81,276 (Nov. 17, 2016)

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 BP America Response to March 7, 2017 RFI

•

Include provisions that allow compliance with a state program to be deemed compliance with
the federal program.

In the meantime, we will continue our efforts to further reduce BP's methane leakage rate.
4.

Carbon Capture Use and Storage (CCUS): EPA, 40 CFR Part 146

BP believes that the federal government can and should act to remove current regulatory barriers and
increase American leadership in developing and deploying this important emerging technology by:
1. Adopting a comprehensive framework that addresses, among other things, the long-term
liability issues related to the permanent sequestration of carbon. The current Underground
Injection Control rules promulgated by EPA are insufficient and must be reformed in order to
provide the regulatory predictability required for investment in the technology.
2.

Supporting research and development to bring the costs of the technology down to competitive
levels. Specifically, BP supports continued federal funding for R&D programs at the Department
of Energy, including at the National Energy Technology Laboratory and ARPA-E. In addition, BP
will continue its private party efforts to develop the technology as part of the Oil and Gas
Climate Initiative (OGCI}.

For additional context, we commend the December 2016 report released by Governors Bullock (D, MT)
and Mead (R, WY) entitled Putting the Puzzle Together: State & Federal Policy Drivers for Growing
America's Carbon Capture & C02-EOR Industry, which identifies a number of incentives that could be
enacted at the federal level to spur the development of this critical technology.

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