MMS improves G&G rule

The U.S. Minerals Management Service deserves credit for trying to accommodate industry concerns in its final rule on geological and geophysical (G&G) exploration on the Outer Continental Shelf. Whether it has succeeded in achieving its regulatory goals without disrupting marine seismic activity, especially in the Gulf of Mexico, remains to be seen.

The difference between the G&G rule proposed last February and the final rule published Dec. 24 shows that the MMS heard and heeded strong objections raised by a number of geophysical contractors, operators, and trade groups. The International Association of Geophysical Contractors warned that the rule, as proposed, would especially hurt speculative seismic surveys in the gulf and require major changes to license agreements.

Confidentiality concerns

While MMS didn't change its stance on the biggest issue, government access to data licensed from G&G permit-holders, it did add a section to the G&G rule that tries to relieve industry concerns about confidentiality.

Industry representatives had worried about the proposal's assertions that licensing represents a transfer of data making the receiving party liable for disclosure requirements that apply to holders of G&G permits. And the proposal seemed to indicate that the government wanted notification, and possibly disclosure, at every step in seismic processing and interpretation.

An operator applying a proprietary interpretation technique to data licensed from a seismic contractor thus might have to divulge commercial secrets to satisfy the disclosure requirements, the industry feared. And public disclosure of a company's licensing G&G data for a specific area would of course hurt it in competition for leases.

The final rule tries to ease the problems. MMS makes clear that it needs interpreted data, sometimes available only from third parties, to rule on adequacy of OCS lease bids. And it insists that disclosure requirements have always spread to third parties under license agreements. "License agreements should therefore have always reflected the possibility of submittal of data and information to MMS by third parties," the service says.

Unlike the proposal, the final rule contains a provision under which the MMS commits to treat as confidential the identity of third-party recipients of data and agrees not to provide data it acquires from third parties to anyone else. Confidentiality periods under this provision are 10 years for geological data and information, 50 years for geophysical data, and 25 years for geophysical information (data after analysis, processing, or interpretation).

Third-party business interests, strategies, and privileged and proprietary information "(have) been protected in the past by MMS," the final rule says, "and we are reaffirming through these regulations that such information would continue to be protected by MMS as trade secrets or confidential business information."

The rule also changed wording from the proposal to make clear that permit-holders don't have to provide continual notification of every analysis, processing, and interpretation step. Contractors had worried that the requirement would impose an impossible administrative load. Among other changes accommodating industry worries, MMS allowed contractors to continue making oral notification of program changes while surveys are in progress, followed by written notice after surveys are complete.

Attention to concerns

MMS certainly didn't surrender to the industry attack on its proposal. But it has tried to ease the industry's biggest worries. The fine print may still hold trouble. After sorting through the legalities, the industry may yet find that the MMS adjustments don't solve all the confidentiality problems.

But the oil and gas industry can work with agencies that pay attention to its often complex concerns. In this case, MMS has done just so.