[Federal Register Volume 74, Number 100 (Wednesday, May 27, 2009)]
[Proposed Rules]
[Pages 25177-25200]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-12155]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE INTERIOR
Minerals Management Service
30 CFR Parts 250, 256, and 260
RIN 1010-AD06
[Docket ID MMS-2007-OMM-0069]
Leasing of Sulphur or Oil and Gas and Bonding Requirements in the
Outer Continental Shelf
AGENCY: Minerals Management Service (MMS), Interior.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The MMS proposes to update and streamline the existing Outer
Continental Shelf leasing regulations, and to clarify implementation of
the Federal Oil and Gas Royalty Simplification and Fairness Act of
1996. The rule would reorganize and reorder leasing requirements to
reflect the leasing process more efficiently, as it has evolved over
the last 26 years. The rule also proposes changes to parts 250 and 260
that relate to the proposed revisions to part 256.
DATES: Submit comments by September 24, 2009. The MMS may not fully
consider comments received after this date. Submit comments to the
Office of Management and Budget on the information collection burden in
this proposed rule by June 26, 2009. This does not affect the deadline
for the public to comment to MMS on the proposed regulations.
ADDRESSES: You may submit comments on the rulemaking by any of the
following methods. Please use the Regulation Identifier Number (RIN)
1010-AD06 as an identifier in your message. See also Public
Availability of Comments under Procedural Matters.
Federal eRulemaking Portal: http://www.regulations.gov.
Under the tab ``More Search Options,'' click ``Advanced Docket
Search,'' then select ``Minerals Management Service'' from the agency
drop-down menu, then click the submit button. In the Docket ID column,
select MMS-2007-OMM-0069 to submit public comments and to view
supporting and related materials available for this rulemaking.
Information on using Regulations.gov, including instructions for
accessing documents, submitting comments, and viewing the docket after
the close of the comment period, is available through the site's ``User
Tips'' link. The MMS will post all comments.
Mail or hand-carry comments to the Department of the
Interior; Minerals Management Service; Attention: Regulations and
Standards Branch (RSB); 381 Elden Street, MS-4024, Herndon, Virginia
20170-4817. Please reference ``Leasing of Sulphur or Oil and Gas and
Bonding Requirements in the Outer Continental Shelf, 1010-AD06'' in
your comments and include your name and return address.
Send comments on the information collection in this
proposed rule to: Interior Desk Officer 1010-AD06, Office of Management
and Budget; 202-395-5806 (fax); e-mail: [email protected].
Please also send a copy to MMS.
FOR FURTHER INFORMATION CONTACT: For comments or questions on
procedural issues, contact Kumkum Ray, Regulations and Standards
Branch, at [email protected], or at (703) 787-1604. For questions on
technical issues, contact Jane Roberts, Leasing Division, at
[email protected], or at (805) 389-7836.
SUPPLEMENTARY INFORMATION: This proposed rule completely rewrites the
existing regulations at 30 CFR part 256, Leasing of Sulphur or Oil and
Gas and Bonding Requirements in the Outer Continental Shelf (OCS). The
major components of part 256 include: (1) The 5-Year Leasing Program
mandated by section 18 of the OCS Lands Act, 43 U.S.C. 1344; (2)
preparing for a lease sale; (3) issuing, maintaining, and ending a
lease; and (4) bonding requirements. The MMS is proposing to reorganize
and reorder the regulations
[[Page 25178]]
last rewritten in 1982 to reflect the leasing process more efficiently,
as it has evolved over the past 26 years. This proposal would eliminate
several sections of existing text as redundant or unnecessary.
Redundant sections include subpart D, Joint Bidding, of 30 CFR part
260. We do not intend these proposed changes to alter existing
requirements concerning joint bidders. Some new sections would
standardize or clarify practices that may not have been uniform in all
three OCS regional offices. A new section (Sec. 256.621) on lease term
pipelines was added using the language in 30 CFR part 250, subpart J,
final rule at Sec. 256.62(g). Other sections clarify processes
required by legislation, enacted since these regulations were last
rewritten, such as the Federal Oil and Gas Royalty Simplification and
Fairness Act of 1996, concerning pro rata liability for monetary
obligations; or by recently promulgated regulations, such as the
Department of the Interior's (DOI) non-procurement debarment rules.
There are also changes that will assist MMS in meeting its stewardship
responsibilities and its role as a regulator. Other changes include:
(1) Stating in the rule at Sec. 256.500(b) that for the purposes of an
area-wide bond, ``area-wide'' refers to the limits of a planning area
as defined and administered by MMS; and (2) information from lessees is
now required to help assess bonding for decommissioning of OCS
facilities and to assess other liabilities associated with
decommissioning.
The MMS published a final rule in the Federal Register on September
12, 2008 (73 FR 52917), to implement section 104(c) of the Gulf of
Mexico Energy Security Act of 2006 (GOMESA), Public Law 109-432. It was
designated subpart N, Sec. Sec. 256.90 through 256.95. We have
redesignated subpart N to subpart I, Sec. Sec. 256.900 through
256.905. We have added GOMESA definitions for Bonus or royalty credit,
Central planning area, Coastline, Desoto Canyon OPD, Destin Dome OPD,
Eastern planning area, and Pensacola OPD. We have included a table in
Sec. 256.401 for ease in determining what evidence MMS requires to
qualify a bidder and/or lessee from various entities, including several
additional business organizational forms that now exist in the offshore
industry.
We propose to retain tables related to bonding for the same reason.
The following derivation tables track the current regulations, section
by section, to the proposed rule sections. Most of the proposed changes
clarify regulatory language. The tables also list other reasons for
changes.
Derivation Table for 30 CFR Part 250--Oil and Gas and Sulphur Operations
in the Outer Continental Shelf
------------------------------------------------------------------------
Proposed rule
Current regulations section section Nature of change
------------------------------------------------------------------------
250.1717(e)...... New requirement for
submission of
expense information
on plugging and
abandonment.
250.1729(d)...... New requirement for
submission of
expense information
on platform removal.
250.1743(b)(8)... New requirement for
submission of
expense information
on site clearance.
------------------------------------------------------------------------
Derivation Table for 30 CFR Part 256--Leasing of Sulphur or Oil and Gas
and Bonding Requirements in the Outer Continental Shelf
------------------------------------------------------------------------
Proposed rule
Current regulations section section Nature of change
------------------------------------------------------------------------
Subpart A--Outer Continental Subpart A-- Redesignated.
Shelf Oil, Gas, and Sulphur General
Management, General. Provisions.
256.0......................... 256.100(a)....... Updated.
256.101.......... New section.
256.1......................... 256.102.......... Simplified.
256.2......................... ................. Eliminated as
unnecessary to state
policy from the Act.
256.4......................... ................. Eliminated as
redundant to the
Act.
256.5......................... 256.103.......... Eliminated
unnecessary terms.
256.7......................... ................. Eliminated as
unnecessary, as any
cross-references are
included in the
appropriate section.
256.8......................... 256.202.......... Simplified language.
256.10(a)..................... 256.100(b)....... Simplified language.
256.10(b) through (d)......... ................. Eliminated as
repetitive with 30
CFR part 252.
256.11........................ 256.630.......... Simplified language
and reorganized.
256.12........................ 256.206.......... Simplified language.
Subpart B--Oil and Gas Leasing Subpart B--Oil Clarified name.
Program. and Gas 5-Year
Leasing Program.
256.16........................ 256.200-202...... Simplified language
and reorganized.
256.17........................ 256.203-205...... Simplified.
256.19........................ 256.201.......... Simplified.
256.20........................ 256.202(c)....... Simplified.
Subpart C--Reports From ................. Eliminated as
Federal Agencies. repetitive with the
Act.
256.22........................
Subpart D--Call for Subpart C-- Reorganized, see
Information and Nominations. Preparing for a below.
Lease Sale.
256.23........................ 256.300.......... Reorganized.
256.25........................ 256.302.......... Simplified.
Subpart E--Area Identification Subpart C-- Reorganized in
and Tract Size. Preparing for a proposed subpart C.
Lease Sale.
[[Page 25179]]
256.26........................ 256.301.......... Reorganized.
256.28........................ 256.306.......... Reorganized.
Subpart F--Lease Sales........ Subpart C-- Reorganized in
Preparing for a proposed subpart C.
Lease Sale.
256.29........................ 256.303.......... Simplified.
256.31........................ 256.304, 305..... Reorganized.
256.32........................ 256.306.......... Simplified language.
256.32(e)..................... ................. Eliminated as
relevant time period
has passed.
Subpart G--Issuance of Leases. Subpart D-- Reorganized, see
Issuance of a below.
Lease..
256.35........................ 256.400.......... Simplified language
and reorganized.
256.35(c)..................... 256.402(b), (c).. Simplified language
and reorganized.
256.402(a), 403.. New sections to
require compliance
with new government-
wide/DOI non-
procurement
debarment rules
covering principals.
256.37(a), (b)................ 256.600,601...... Simplified language,
256.37(c)..................... 256.602,603...... clarified
terminology, and
reorganized. The 5-
year requirement
codifies provision
in Form MMS-2006 (12/
87).
256.38........................ ................. Eliminated as
unnecessary section
title.
256.40........................ ................. Eliminated as
redundant. Any
definitions will be
in Sec. 256.103,
Definitions.
256.41........................ 256.411,412...... Simplified and
eliminated
unnecessary
language,
reorganized.
256.41(d)..................... 256.414.......... Simplified language.
256.43........................ 256.411-413...... Simplified language
and reorganized.
256.43(a)..................... ................. Eliminated
unnecessary
definitions.
256.44........................ 256.402.......... Simplified language.
256.46(a), (b)................ 256.410.......... Simplified language.
256.46(c) through (g)......... 256.401.......... Simplified language,
added detail for
clarity, and
included additional
business
organizational forms
that exist offshore.
256.46(h)..................... 256.402(b)....... Simplified language.
256.402(a), 403.. New sections to
require compliance
with new government-
wide/DOI non-
procurement
debarment rules
covering
transactions at tier
below principals.
256.404.......... New section with
timeframe for
notification of
certain business
changes to keep
lease records
accurate and up-to-
date.
256.47........................ 256.411(c), (d); Simplified language
416; 420. and eliminated some
as unnecessary.
256.47(c)..................... 256.416(c)....... Simplified language
and added two
options with respect
to high bids, if
tied.
256.47(e)(1), (e)(3).......... 256.417.......... Simplified language
and reorganized
delegation of
authority from the
Secretary to the
Director for
reconsideration of
rejected bids.
256.47(f)..................... 256.420(b)....... Clarified that
deferred bonuses
must be paid within
5 years per 43
U.S.C. 1337(a)(2).
256.47(g)..................... 256.420(c)....... Clarified that
successful bidder
may be held liable
for full bid amount
under certain
circumstances.
256.49........................ 256.420.......... Discussion of form
for other minerals
eliminated as
redundant within 30
CFR part 281.
256.50........................ 256.421.......... Simplified.
Subpart H--Rentals and ................. Eliminated as
Royalties [Reserved]. unnecessary as never
used.
Subpart I--Bonding............ Subpart E-- Reorganized, see
Financial below.
Accountability
and Risk
Management.
256.52........................ 256.500.......... The MMS may adjust
the amount of
general bonds in the
future by using the
Implicit Price
Deflator for Gross
Domestic Product.
256.52(e)..................... 256.521.......... Changed period for
providing additional
bond coverage from 6
months to 45 days.
256.52(f), (g)................ 256.502.......... Requires 115 percent
of bond value if
using Treasury
securities to meet
new value
fluctuation
requirements from
Treasury Department.
256.53........................ 256.501.......... Clarified minimum
level of bond for
specific activity.
256.53(d)..................... 256.510.......... Separated provisions
concerning
supplemental bond
from those
concerning bond
level changes due to
leave activity. New
provision to allow
MMS to require
demonstration of
bond sufficiency.
256.54........................ 256.503.......... Specified that the
bond guarantees all
non-monetary lease
obligations.
256.503(b)....... New section to retain
right to require
electronic filing of
bonds after 90-day
notice.
256.504.......... New section clarifies
whose non-monetary
lease obligations
must be covered.
256.505.......... New section clarifies
lessee/operator
bond.
256.55........................ 256.520.......... Simplified.
256.56........................ 256.512.......... Simplified.
256.57........................ 256.511.......... Clarified language
and eliminated
imprecise use of
term, indemnity.
256.58........................ 256.522.......... Clarified and
separated
termination of
period of liability
and cancellation of
a bond.
[[Page 25180]]
256.523..........
256.59........................ 256.524, 525..... Reorganized.
256.59(e) and (g)............. 256.526..........
Subpart J--Assignments, Subpart F-- Reorganized, see
Transfers, and Extension. Maintaining a below.
Lease.
256.605.......... New section to
clarify obligations
of record title
owners.
256.606.......... New section to
clarify obligations
of operating rights
owners.
256.610.......... New section to
iterate statutory
requirement for
approval prior to
sale, exchange,
assignment or
transfer of a lease.
256.62(a)..................... 256.611.......... Simplified language
and clarified that
can disapprove
assignment if
assignor and/or
assignee has
unsatisfied
obligations.
256.62(b)..................... 256.412.......... Included in section
on joint bidding.
256.62(c)..................... 256.617.......... Simplified language.
256.62(d)..................... 256.616.......... Simplified language.
256.62(e)..................... 256.618.......... Simplified language.
256.62(f)..................... 256.616.......... Simplified language.
256.62(g)..................... 256.621.......... New section on lease
term pipelines.
256.63........................ 256.104.......... Redesignated in
Subpart A.
256.64, 256.68................ 256.613.......... Reorganized and
clarified.
256.64(a)..................... 256.612.......... Clarified that
subleases restricted
to 2-depth levels.
256.64(a)(7).................. 256.620(a).......
256.64(a)(8).................. 256.620(b).......
256.64(e) through (h)......... 256.614..........
256.64(i)..................... 256.619..........
256.65........................ 256.612(b)....... Reorganized and
clarified.
256.67........................ 256.614.......... Reorganized and
clarified.
256.68........................ 256.613(a)....... Reorganized and
clarified
256.70........................ 256.601(a)....... Reorganized and
clarified.
256.71........................ 256.601(b)....... Reorganized and
clarified.
256.72........................ 256.601(c)....... Reorganized and
clarified.
256.601(d)....... New section to
clarify effect of
production from a
unitized lease.
256.73........................ 256.601(a)....... Reorganized and
clarified.
Subpart K--Termination of Subpart G--Ending Reorganized, see
Leases. a Lease. below
256.700.......... New section to
clarify what happens
if you do not take
certain actions to
maintain a lease.
256.76........................ 256.701.......... Simplified.
256.77........................ 256.702.......... Simplified.
Subpart L--Section 6 Leases... ................. Eliminated as
unnecessary
repetition of 43
U.S.C. 1335(b).
Leases of other
minerals covered in
30 CFR part 281.
256.79, 256.80
Subpart M--Studies............ ................. Eliminated as
unnecessary
recitation of
internal procedures.
256.82
Subpart H
[RESERVED].
Subpart N--Bonus or Royalty Subpart I--Bonus Redesignated.
Credits for Exchange of or Royalty
Certain Leases. Credits for
Exchange of
Certain Leases.
256.90--256.95................ 256.900--256.905.
Appendix A to part 256--Oil ................. Eliminated as
and Gas Cash Bonus Bid. unnecessary
repetition of bid
form.
------------------------------------------------------------------------
Derivation Table for 30 CFR Part 260--Outer Continental shelf Oil and
Gas Leasing, Subpart D
------------------------------------------------------------------------
Proposed rule
Current regulations section section Nature of change
------------------------------------------------------------------------
Part 260--Outer Continental 256.411.......... Removed subpart D
Shelf Leasing, Subpart D-- from part 260.
Joint Bidding. 260.301-303 Proposed Sec.
256.411 simplified
language and
eliminated
duplicative
provisions of
current Sec. Sec.
256.38-256.44.
------------------------------------------------------------------------
Procedural Matters: Regulatory Planning and Review (Executive Order
(E.O.) 12866)
This proposed rule is not a significant rule as determined by the
Office of Management and Budget (OMB) and is not subject to review
under E.O. 12866. This proposed rule primarily rewrites existing
regulations that govern the offshore Federal leasing process for
sulphur and oil and gas subject to the exclusive jurisdiction of the
United States. The rule is rewritten in simple, clear language, and
reorganized to reflect the steps in the leasing process as they have
evolved. Minor changes are proposed to make certain practices uniform
among the three OCS regional offices.
(1) This proposed rule would not have an effect of $100 million or
more on the economy. It would not adversely affect in a material way
the economy,
[[Page 25181]]
productivity, competition, jobs, the environment, public health or
safety, or State, local, or tribal governments or communities. The
proposed rule would rewrite 30 CFR part 256 in plain language, and
would contain virtually the same reporting and recordkeeping
requirements and attendant costs as the current regulations. A cost-
benefit and economic analysis is not required.
(2) This proposed rule would not create a serious inconsistency or
otherwise interfere with an action taken or planned by another agency.
(3) This proposed rule would not alter the budgetary effects of
entitlements, grants, user fees, or loan programs or the rights or
obligations of their recipients. Nominal user fees are not material in
size or nature. The rule proposes a new fee for recording certain
secondary lease interests, $27; continues existing fees for submitting
non-required documents, $27; and for requesting an approval of the
assignments or transfers of certain lease interests, $186.
(4) This proposed rule would not raise novel legal or policy
issues. The rule largely rewrites existing regulations.
Regulatory Flexibility Act
The Department of the Interior certifies that this proposed rule
would not have a significant economic effect on a substantial number of
small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et
seq.).
This proposed rule would affect lessees and potential lessees, of
which there are approximately 130 different companies. These companies
are generally classified under the North American Industry
Classification System (NAICS) Code 211111, which includes companies
that extract crude petroleum and natural gas. For this NAICS code
classification, a small company is one with fewer than 500 employees.
The MMS estimates that of the 130 lessees and operators that explore
for and produce oil and gas on the OCS, approximately 90 are small
businesses (70 percent).
The primary economic effect of this rule on small businesses would
be the cost associated with information collection (IC) activities. The
rule proposes to rewrite 30 CFR part 256 and would add three new
requirements for 30 CFR part 250, subpart Q. The proposed rule contains
virtually the same burden hour requirements and non-hour cost burdens
as the current regulations. The changes in reporting requirements would
not significantly increase the IC burden on respondents--large or
small. The MMS estimates an annual increase of 2,396 hours in the
paperwork burden from that imposed by the current regulations. There
would also be one new $27 non-hour cost burden for recording certain
secondary lease interests resulting in an annual increase of $18,900
($27 x an estimated 700 filings). A Regulatory Flexibility Analysis is
not required. Accordingly, a Small Entity Compliance Guide is not
required.
Your comments are important. The Small Business and Agriculture
Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards were
established to receive comments from small businesses about Federal
agency enforcement actions. The Ombudsman will annually evaluate the
enforcement activities and rate each agency's responsiveness to small
business. If you wish to comment on the actions of MMS, call 1-888-734-
3247. You may comment to the Small Business Administration without fear
of retaliation. Allegations of discrimination/retaliation filed with
the Small Business Administration will be investigated for appropriate
action.
Small Business Regulatory Enforcement Fairness Act
The proposed rule is not a major rule under 5 U.S.C. 804(2) the
Small Business Regulatory Enforcement Fairness Act. This proposed rule:
a. Would not have an annual effect on the economy of $100 million
or more.
b. Would not cause a major increase in costs or prices for
consumers, individual industries, Federal, State, or local government
agencies, or geographic regions.
c. Would not have significant adverse effects on competition,
employment, investment, productivity, innovation, or the ability of
U.S.-based enterprises to compete with foreign-based enterprises.
Unfunded Mandates Reform Act
This proposed rule would not impose an unfunded mandate on State,
local, or tribal governments or the private sector of more than $100
million per year. The proposed rule would not have a significant or
unique effect on State, local, or tribal governments or the private
sector. A statement containing the information required by Unfunded
Mandates Reform Act (2 U.S.C. 1531 et seq.) is not required.
Takings Implication Assessment (E.O. 12630)
Under the criteria in E.O. 12630, this proposed rule does not have
significant takings implications. The proposed rule is not a
governmental action capable of interference with constitutionally
protected property rights. A Takings Implication Assessment is not
required.
Federalism (E.O. 13132)
Under the criteria in E.O. 13132, this proposed rule does not have
sufficient Federalism implications to warrant the preparation of a
Federalism Assessment. This proposed rule would not substantially and
directly affect the relationship between the Federal and State
governments. To the extent that State and local governments have a role
in OCS activities, this proposed rule would not affect that role. A
Federalism Assessment is not required.
Civil Justice Reform (E.O. 12988)
This rule complies with the requirements of E.O. 12988.
Specifically, this rule:
(a) Meets the criteria of section 3(a) requiring that all
regulations be reviewed to eliminate errors and ambiguity and be
written to minimize litigation; and
(b) Meets the criteria of section 3(b)(2) requiring that all
regulations be written in clear language and contain clear legal
standards.
Consultation With Indian Tribes (E.O. 13175)
Under the criteria in E.O. 13175, we have evaluated this proposed
rule and determined that it has no potential effects on Federally
recognized Indian tribes. There are no Indian or tribal lands in the
OCS.
Paperwork Reduction Act (PRA) of 1995
The proposed rule contains a collection of information that is
being submitted to OMB for review and approval under 44 U.S.C. 3501 et
seq. As part of our continuing effort to reduce paperwork and
respondent burdens, MMS invites the public and other Federal agencies
to comment on any aspect of the reporting and recordkeeping burden. If
you wish to comment on the Information Collection (IC) aspects of
revised 30 CFR parts 250 and 256, you may send your comments directly
to OMB (see the ADDRESSES section of this notice). Please identify your
comments with Docket ID: MMS-2007-OMM-0069 in the subject line. Send a
copy of your comments to the Regulations and Standards Branch (RSB),
Attn: Comments; 381 Elden Street, MS-4024; Herndon, Virginia 20170-
4817. You may obtain a copy of the supporting statement for the IC by
contacting the Bureau's Information Collection Clearance Officer at
(202) 208-7744.
The PRA provides that an agency may not conduct or sponsor, and a
person is not required to respond to, an IC unless it displays a
currently valid OMB
[[Page 25182]]
control number. The OMB is required to make a decision concerning the
IC contained in these proposed regulations between 30 to 60 days after
publication of this document in the Federal Register. Therefore, a
comment to OMB is best assured of having its full effect if OMB
received it by June 26, 2009. This does not affect the deadline for the
public to comment to MMS on the proposed regulations.
The title of the IC for this proposed rule is 30 CFR Part 256,
Leasing of Sulphur or Oil and Gas and Bonding Requirements in the Outer
Continental Shelf, 30 CFR Part 250, Subpart Q, and 30 CFR Part 260,
Outer Continental Shelf Oil and Gas Leasing. The MMS estimates there
are approximately 130 respondents (Federal oil and gas or sulphur
lessees and/or operators). Responses to this IC are required to obtain
or retain a benefit and are mandatory. The frequency of response
varies, but is primarily on occasion. The IC does not include questions
of a sensitive nature. The MMS will protect proprietary information
according to section 26 of the OCS Lands Act; 30 CFR 256.100(b) of the
proposed regulation; the Freedom of Information Act (5 U.S.C. 552), its
implementing regulations at 43 CFR part 2; and 30 CFR 250.197, Data and
information to be made available to the public or for limited
inspection.
This IC is a total rewrite of 30 CFR part 256, Leasing of Sulphur
or Oil and Gas and Bonding Requirements in the Outer Continental Shelf
and adds three new requirements to 30 CFR part 250, subpart Q,
Decommissioning.
The IC required by the current 30 CFR part 250, subpart Q,
Decommissioning, is approved under OMB Control Number 1010-0142. There
are three new proposed requirements that affect subpart Q, for a total
of 820 burden hours. The MMS will use the information collected for
these proposed requirements to help MMS assess the abandonment
liability for each lease. This abandonment liability will be used to
set supplemental bond requirements for each operator, and these
supplemental bonds are used to protect the Federal Government against
defaults should an operator go into bankruptcy. When final regulations
are promulgated, the IC burdens for the 30 CFR part 250, subpart Q
requirements will be incorporated into its respective IC for that
regulation (1010-0142, 17,991 burden hours, expiration 11/30/10).
The IC required by the current 30 CFR part 256 regulations is
approved under OMB Control Number 1010-0006. There are several new
requirements that will impose an additional 1,576 burden hours and
$18,900 in non-hour cost burdens to the already approved hours under
1010-0006 (17,103 burden hours, $603,125 non-hour cost burdens,
expiration 5/31/2010). The MMS will use the information collected under
30 CFR part 256 to determine if applicants are qualified to hold leases
in the OCS. Specifically, MMS uses the information to:
Verify the qualifications of a bidder on an OCS lease
sale. Once the required information is filed with MMS, a qualification
number is assigned to the bidder so that duplicate information is not
required on subsequent filings.
Develop the semiannual List of Restricted Joint Bidders.
This identifies parties ineligible to bid jointly with each other on
OCS lease sales, under limitations established by the Energy Policy and
Conservation Act of 1975.
Ensure the qualification of assignees and track operators
on leaseholds. Once a lease is awarded, the transfer of a lessee's
interest to another qualified party must be approved by an MMS regional
director, regional supervisor, or regional manager (Pacific Region
only). Also, a lessee may designate an operator to act on the lessee's
behalf. This designation must be approved by MMS before the designated
operator may begin operations.
Document that a leasehold or geographical subdivision has
been surrendered by the record title holder.
Keep track of who owns which lease term pipeline since
they are not currently documented on submitted information. Also,
during the decommissioning process, if operators have changed since the
beginning of the lease--decommissioning operations are worked between
the companies. But, after all decommissioning activities are complete,
if a safety hazard still remains, then MMS will need to know that the
responsibility for compliance lies with the original operator.
Update the corporate database that is used to determine
what leases are available for a lease sale and the ownership of all OCS
leases. Non-proprietary information is also publicly available from the
MMS corporate database via the Internet.
The MMS also uses various forms relating to this subpart. The forms
allow lessees to submit the required information in a standardized
format that helps MMS process the data in a more timely and efficient
manner. There are five forms associated with this IC, MMS-150, MMS-151,
MMS-152, MMS-2028, and MMS-2028A. The first three forms are used for
assignment purposes and the last two forms are used to hold the surety
liable for the obligations and liability of the principal/lessee or
operator.
The proposed rule imposes changes to the existing IC hour burdens.
These changes are:
Submit expense information on plugging and abandonment
(+520 hours).
Submit expense information on platform removal (+150
hours).
Submit expense information on site clearance (+150 hours).
Notify MMS if you or your principals are excluded,
disqualified, or convicted of a crime--Federal non-procurement
debarment; request exception (+75 hours).
Provide acceptable bond for payment of a deferred bonus
(+\1/4\ hour).
Submit statement excluding payment obligations of co-
lessee or designated operator (+1 hour).
Submit report to MMS listing remaining lease term
pipelines, including decommissioned pipelines on lease and indicate
which pipelines remain as lease term (+1,500 hours).
When the rule becomes effective, the new collection will replace
the current one for 30 CFR part 256.
On August 25, 2008 (73 FR 49943), we also updated cost recovery
fees. Therefore, non-hour cost burdens have increased by $55,450.
We estimate the total combined (30 CFR parts 250 and 256) annual
burden and non-hour cost burdens for this proposed rule to be 19,499
burden hours and $677,475 non-hour cost burdens. Therefore, the rule
adds a net 2,396 burden hours and $18,900 non-hour cost burdens to the
already approved IC burdens. Except for the items identified as NEW in
the following chart, the burden estimates shown are those that are
estimated for the current 30 CFR part 256 regulations. The public has
had numerous opportunities to comment on the current estimates during
the process to renew the OMB approval of the IC requirements in current
regulations.
The following table details the IC burden for the proposed
rulemaking requirements.
[[Page 25183]]
----------------------------------------------------------------------------------------------------------------
Reporting and
30 CFR part 250, subpart Q recordkeeping Hour burden Average number of Annual burden hours
requirements annual responses
----------------------------------------------------------------------------------------------------------------
NEW 250.1717(e)............... NEW Submit 1................. 520 responses.... 520
expense
information on
plugging and
abandonment.
NEW 250.1729(d)............... NEW Submit 1................. 150 responses.... 150
expense
information on
platform removal.
NEW 250.1743(b)(8)............ NEW Submit 1................. 150 responses.... 150
expense
information on
site clearance.
--------------------------------------------------------------
Total..................... ................. .................. 820 responses.... 820
----------------------------------------------------------------------------------------------------------------
Reporting and
Citation 30 CFR part 256 * recordkeeping Hour burden Average number of Annual burden hours
requirements annual responses
----------------------------------------------------------------------------------------------------------------
Non-Hour Cost Burdens
----------------------------------------------------------------------------------------------------------------
Subparts A and B
----------------------------------------------------------------------------------------------------------------
Subpart A 256.104............. Service Fees..... Fees covered individually throughout 0
subpart.
----------------------------------------------------------------------------------------------------------------
Subpart B: 201; 202; 203; 204. Submit 4................. 1 response....... 4
nominations,
suggestions, and
relevant
information in
response to
request for
comments on
proposed 5-year
leasing program,
including
information from
States & local
governments/
industry/Federal
agencies and
others.
--------------------------------------------------------------
Subtotal.................. ................. .................. 1 response....... 4
----------------------------------------------------------------------------------------------------------------
Subpart C
----------------------------------------------------------------------------------------------------------------
300........................... Submit response 4................. 1 response....... 4
to Calls for
Information and
Nominations on
areas proposed
for leasing in
the 5-year
program,
including
information from
States/local
governments.
304(a)........................ States or local 4................. 10 responses..... 40
governments
submit comments/
recommendations
on size, timing,
or location of
proposed lease
sale.
--------------------------------------------------------------
Subtotal.................. ................. .................. 11 responses..... 44
----------------------------------------------------------------------------------------------------------------
Subpart D
----------------------------------------------------------------------------------------------------------------
400; 401...................... Establish company 2................. 104 responses.... 208
file for
qualification;
submit
qualifications
for lessee/
bidder.
NEW 402(a); 403............... NEW Notify MMS if 1.5............... 50............... 75
you or your
principals are
excluded,
disqualified, or
convicted of a
crime--Federal
non-procurement
debarment and
suspension
system; request
exception.
----------------------------------------------------------------------------------------------------------------
404........................... Notify MMS of all Requirement not considered IC under 5 0
mergers, name CFR 1320.3(h)(1)
changes, or
change of
business.
----------------------------------------------------------------------------------------------------------------
410........................... Submit bids and 5................. 2,000 bids....... 10,000
required
information.
----------------------------------------------------------------------------------------------------------------
410(d); 417................... Request Requirement not considered IC under 5 0
reconsideration CFR 1320.3(h)(9).
of bid decision.
----------------------------------------------------------------------------------------------------------------
411(a)(2); 412................ File statement or 2................. 100 responses.... 200
detailed report
of production.
----------------------------------------------------------------------------------------------------------------
411(b)........................ Submit appeal due Requirement not considered IC under 5 0
to restricted CFR 1320.3(h)(9).
joint bidders
list.
414........................... Request exemption Requirement not considered IC under 5 0
from bidding CFR 1320.3(h)(9).
restrictions;
submit
appropriate
information.
----------------------------------------------------------------------------------------------------------------
416(c)........................ Notify MMS of tie 3.5............... 2 agreements..... 7
bid decision;
file agreement
to accept joint
lease on tie
bids.
420; 421...................... Execute lease 1................. 852 leases....... 852
(includes
submission of
evidence of
authorized agent
and request for
dating of
leases); submit
supporting data.
NEW 420(b).................... NEW Provide 15 mins........... 1 response....... 15 mins.
acceptable bond
for payment of a
deferred bonus.
We do not expect
this to occur,
hence minimal
burden.
--------------------------------------------------------------
[[Page 25184]]
Subtotal.................. ................. .................. 3,109 responses.. 11,342 (rounded) hours
----------------------------------------------------------------------------------------------------------------
Subpart E
----------------------------------------------------------------------------------------------------------------
500(a); 501; 503;............. Submit OCS .25............... 124 forms........ 31
Mineral Lessee's
and Operator's
Bond (Form MMS-
2028), required
information, and
surety
notifications.
501; 505; 510................. Demonstrate 3.5............... 165 submissions.. 578 (rounded)
financial worth/
ability to carry
out present and
future financial
obligations,
request approval
of another form
of security, or
request
reduction in
amount of
supplemental
bond required.
502........................... Provide U.S. 2................. 10 submissions... 20
Treasury
securities or
other types of
security
instruments,
including
authority for
MMS to sell
securities,
relevant
information, and
related or
subsequent
actions.
NEW 504....................... NEW Submit 1................. 1 exclusion 1
statement statement.
excluding
payment
obligations of
co-lessee(s) or
designated
operator(s).
510........................... Submit OCS .25............... 136 forms........ 34
Mineral Lessee's
and Operator's
Supplemental
Plugging and
Abandonment Bond
(Form MMS-2028A)
w/required
information;
upon request,
demonstrate
sufficiency;
request
reduction.
511........................... Provide third- 19................ 45 submissions... 855
party indemnity;
financial
information/
statements;
additional bond
info; executed
guarantor
agreement and
supporting
information/
documentation.
511(c)(6); 522(b); 523........ Notify MMS and \1/2\............. 378 requests..... 189
others, and
request MMS
approval to
terminate period
of liability or
cancel bond or
other form of
security.
----------------------------------------------------------------------------------------------------------------
511(d); 520; 521; 522(b); Furnish replacement bond or provide alternate form of 0
523(a)(2);. security. Burden included above with bond or alternate
forms of security
----------------------------------------------------------------------------------------------------------------
512........................... Request approval 12................ 1 abandonment 12
to withdraw account.
funds from RUE/
ROW
decommissioning
account.
520........................... Notify MMS and 1................. 3 notices........ 3
others of bond
lapse or action
filed alleging
lessee, surety,
or guarantor is
insolvent or
bankrupt.
525(b)........................ Provide 16................ 5 responses...... 80
information to
demonstrate
lease will be
brought into
compliance.
--------------------------------------------------------------
Subtotal.................. ................. .................. 868 responses.... 1,803
----------------------------------------------------------------------------------------------------------------
Subpart F
----------------------------------------------------------------------------------------------------------------
Subparts E and F: 501; 601; Request approval for various operations or submit plans 0
603. or applications. Burden included with other approved
collections for 30 CFR Part 250 (1010-0114/subpart A,
1010-0151/subpart B, 1010-0141/subpart D, 1010-0142/
subpart Q, and 1010-0149/subpart I)
----------------------------------------------------------------------------------------------------------------
Subpart F: 610; 611; 613(a); File application 1 hour............ 2,063 forms...... 2,063
614; 615; 617; 619. and required
information for
assignment of
record title
interest (Form
MMS-150)
(includes sell,
exchange,
transfer);
specify
effective date.
----------------------------------------------------------------------------------------------------------------
$186 fee x 2,063 forms = $383,718
----------------------------------------------------------------------------------------------------------------
611; 612; 613(a); 614; 615; File application 1 hour............ 937 forms........ 937
617; 619. and required
information for
assignment of
operating
interest (Form
MMS-151)
(includes sell,
exchange,
transfer);
specify
effective date.
----------------------------------------------------------------------------------------------------------------
$186 fee x 937 forms = $174,282
----------------------------------------------------------------------------------------------------------------
620(a)........................ File required 1 hour............ 700 filings...... 700
instruments
creating or
transferring
working
interests, etc.,
for record
purposes.
----------------------------------------------------------------------------------------------------------------
NEW FEE....................................NEW $27 fee x 700 filings = $18,900
----------------------------------------------------------------------------------------------------------------
[[Page 25185]]
620(b)........................ Submit ``non- Accepted on behalf of lessees as a 0
required'' service, MMS doesn't require/need.
documents, for
record purposes
that respondents
want MMS to file
with the lease
document.
----------------------------------------------------------------------------------------------------------------
$27 fee x 3,725 filings = $100,575
----------------------------------------------------------------------------------------------------------------
NEW 256.621................... NEW After 1................. 1,500 L/T P/L 1,500
assignment of listing reports.
lease or new
designation of
operator, submit
report to MMS
listing
remaining Lease
Term P/Ls,
including
decommissioned P/
Ls, on lease;
indicate which P/
Ls remain as
Lease Term P/Ls.
--------------------------------------------------------------
Subtotal.................. ................. .................. 5,200 responses.. 5,200
----------------------------------------------------------------------------------------------------------------
$677,475 non-hour cost burdens
----------------------------------------------------------------------------------------------------------------
Subpart G
----------------------------------------------------------------------------------------------------------------
701; 902(a)(5)................ File Form MMS-152 1................. 240 240
to request relinquishment
relinquishment forms.
of lease.
702........................... Comment on lease 1................. 1 submission..... 1
cancellation
(MMS expects 1
in 10 years).
--------------------------------------------------------------
Subtotal.................. ................. .................. 241 responses.... 241
----------------------------------------------------------------------------------------------------------------
Subpart I
----------------------------------------------------------------------------------------------------------------
902(a)........................ Request a bonus 1................. 30............... 30
or royalty
credit and
submit
supporting
documentation.
905........................... Request approval 1................. 15............... 15
to transfer
bonus or credit
to another party
with supporting
information.
--------------------------------------------------------------
Subtotal.................. ................. .................. 45 responses..... 45
--------------------------------------------------------------
Total Burdens............. ................. .................. 10,295 Responses. 19,499
------------------------------------------
$677,475 Non-Hour Cost Burdens
----------------------------------------------------------------------------------------------------------------
*A few sections in 30 CFR part 260 also contain references to IC requirements in 30 CFR part 256 that are
detailed in this table.
The MMS specifically solicits comments on the following questions:
(1) Is the IC useful and necessary for MMS to perform its functions
properly?
(2) Are the estimates of the burden hours of the IC reasonable?
(3) Do you have any suggestions that would enhance the quality,
clarity, or usefulness of the information to be collected?
(4) Is there a way to minimize the IC burden on those who respond,
including the use of appropriate automated electronic, mechanical, or
other forms of information technology?
In addition, the PRA requires agencies to estimate the total annual
reporting and recordkeeping non-hour cost burden resulting from the IC.
With the exception of the two currently approved service fees--record
title and/or operating rights (transfer), and non-required document
filing fees--MMS has identified one new non-hour cost burden for $27,
filing required instruments creating or transferring working interests
(see the burden table). This fee would only be a requirement if
respondents want to submit documents for record purposes to file with
the lease document. We consider this a service to the respondent. We
have identified no other non-hour paperwork cost burdens and we solicit
your comments on this item. For reporting and recordkeeping only, your
response should split the cost estimate into two components: (a) Total
capital and start-up cost component and (b) annual operation,
maintenance, and purchase of services component. Your estimates should
consider the costs to generate, maintain, and disclose or provide the
information. You should describe the methods you use to estimate major
cost factors, including system and technology acquisition, expected
useful life of capital equipment, discount rate(s), and the period over
which you incur costs. Capital and start-up costs include, among other
items, computers and software you purchase to prepare for collecting
information; monitoring, sampling, drilling, and testing equipment; and
record storage facilities. Generally, your estimates should not include
equipment or services purchased: (1) Before October 1, 1995; (2) to
comply with requirements not associated with the IC; (3) for reasons
other than to provide information or keep records for the Government;
or (4) as part of customary and usual business or private practices.
National Environmental Policy Act
This rule does not constitute a major Federal action significantly
affecting the quality of the human environment. The MMS has analyzed
this proposed rule under the criteria of the National Environmental
Policy Act and 516 Departmental Manual 15. This proposed rule meets the
criteria set forth in 516 Departmental Manual 2 (Appendix 1.10) for a
Departmental ``Categorical Exclusion'' in that this proposed rule is
``* * * of an administrative, financial, legal, technical, or
procedural nature and whose environmental effects are too broad,
speculative, or conjectural to lend themselves to meaningful analysis *
* *.'' This proposed rule also meets the criteria set forth in 516
Departmental Manual 15.4(C)(1) for an MMS ``Categorical Exclusion'' in
that its impacts are limited to administration, economic or
technological effects. Further, the MMS has analyzed this
[[Page 25186]]
proposed rule to determine if it meets any of the extraordinary
circumstances that would require an environmental assessment or an
environmental impact statement as set forth in 516 Departmental Manual
2.3, and Appendix 2. The MMS concluded that this rule does not meet any
of the criteria for extraordinary circumstances as set forth in 516
Departmental Manual 2 (Appendix 2).
Data Quality Act
In developing this proposed rule, we did not conduct or use a
study, experiment, or survey requiring peer review under the Data
Quality Act (Pub. L. 106-554, app. C Sec. 515, 114 Stat. 2763, 2763A-
153-154).
Effects on the Energy Supply (E.O. 13211)
This rule is not a significant energy action under the definition
in E.O. 13211. A Statement of Energy Effects is not required.
Clarity of This Regulation
We are required by E.O. 12866, E.O. 12988, and by the Presidential
Memorandum of June 1, 1998, to write all rules in plain language. This
means that each rule we publish must:
(a) Be logically organized;
(b) Use the active voice to address readers directly;
(c) Use clear language rather than jargon;
(d) Be divided into short sections and sentences; and
(e) Use lists and tables wherever possible.
If you feel that we have not met these requirements, send us
comments by one of the methods listed in the ADDRESSES section. To
better help us revise the rule, your comments should be as specific as
possible. For example, you should tell us the numbers of the sections
or paragraphs that you find unclear, which sections or sentences are
too long, the sections where you feel lists or tables would be useful,
etc.
Public Availability of Comments
Before including your address, phone number, e-mail address, or
other personal identifying information in your comment, you should be
aware that your entire comment--including your personal identifying
information--may be made publicly available at any time. While you can
ask us in your comment to withhold your personal identifying
information from public review, we cannot guarantee that we will be
able to do so.
List of Subjects
30 CFR Part 250
Administrative practice and procedure, Continental shelf,
Environmental impact statements, Environmental protection, Pipelines,
Public lands--mineral resources, Public lands--rights-of-way, Reporting
and recordkeeping requirements.
30 CFR Part 256
Administrative practice and procedure, Continental shelf,
Environmental protection, Government contracts, Intergovernmental
relations, Oil and gas exploration, Public lands--mineral resources,
Public lands--rights-of-way, Reporting and recordkeeping requirements,
Surety bonds.
30 CFR Part 260
Continental shelf, Government contracts, Mineral royalties, Oil and
gas exploration, Public lands--mineral resources, Reporting and
recordkeeping requirements.
Dated: May 11, 2009.
Ned Farquhar,
Acting Assistant Secretary--Land and Minerals Management.
For the reasons stated in the preamble, MMS proposes to amend 30
CFR parts 250, 256, and 260 as follows:
PART 250--OIL AND GAS AND SULPHUR OPERATIONS IN THE OUTER
CONTINENTAL SHELF
1. The authority citation for part 250 continues to read as
follows:
Authority: 31 U.S.C. 9701, 43 U.S.C. 1334.
2. Amend Sec. 250.1717 by:
(A) Revising paragraphs (c) and (d), and
(B) Adding paragraph (e) to read as follows:
Sec. 250.1717 After I permanently plug a well, what information must
I submit?
* * * * *
(c) Nature and quantities of material used in the plugs;
(d) If you cut and pull away any casing string, you must submit:
(1) A description of the methods used, including information on
explosives used;
(2) Size and amount of casing removed; and
(3) Casing removed depth.
(e) Expenses of plugging and abandonment with supporting
documentation.
3. Amend Sec. 250.1729 by:
(A) Revising paragraphs (b) and (c), and
(B) Adding paragraph (d) to read as follows:
Sec. 250.1729 After I remove a platform or other facility, what
information must I submit?
* * * * *
(b) A description of any mitigation measures you took;
(c) A statement signed by your authorized representative that
certifies that the types and amount of explosives you used in removing
the platform or other facility were consistent with those set forth in
the approved removal application; and
(d) Expenses of removal of the platform or other approved
decommissioning of the platform with supporting documentation.
3. Amend Sec. 250.1743 by:
(A) Revising paragraphs (b)(6) and (b)(7), and
(B) Adding paragraph (b)(8) to read as follows:
Sec. 250.1743 How do I certify that a site is clear of obstructions?
* * * * *
(b) * * *
(6) The results of the survey, including a list of any debris
removed or a statement from the trawling contractor that no objects
were recovered;
(7) A post-trawling job plot or map showing the trawled area; and
(8) Expenses of site clearance with supporting documentation.
4. Revise part 256 to read as follows:
PART 256--LEASING OF SULPHUR OR OIL AND GAS AND BONDING
REQUIREMENTS IN THE OUTER CONTINENTAL SHELF
Subpart A--General Provisions
Sec.
256.100 Information collection and proprietary information.
256.101 What are the consequences if I provide false information?
256.102 What does this part cover?
256.103 Definitions.
256.104 Service fees.
Subpart B--Oil and Gas 5-Year Leasing Program
256.200 What is the 5-year program?
256.201 Does MMS consult with interested parties while preparing the
5-year program?
256.202 How does MMS start the 5-year program preparation process?
256.203 What does MMS do before publishing a proposed program?
256.204 How do Governments and citizens comment on the proposed
program?
256.205 What does MMS do before approving a final program or a
significant revision?
256.206 Does MMS offer blocks in a sale that is not on the 5-year
program schedule?
[[Page 25187]]
Subpart C--Preparing for a Lease Sale
256.300 What is a call for information?
256.301 What does MMS do with the information from the call?
256.302 What does MMS do if identified areas are within 3 miles of
the seaward boundary of a coastal State?
256.303 What happens with an approved proposed notice of sale?
256.304 What role do affected States have?
256.305 What does MMS do with comments and recommendations received
on the proposed notice?
256.306 How does MMS conduct a lease sale?
Subpart D--Issuance of a Lease
Qualifications
256.400 Who may become a lessee?
256.401 How do I show that I am qualified to be a lessee?
256.402 Who may not become a lessee or acquire an interest in a
lease?
256.403 What do the non-procurement debarment rules require that I
do?
256.404 When must I notify MMS of mergers, name changes, or changes
of business form?
How To Bid
256.410 How do I submit a bid?
Restrictions on Joint Bidding
256.411 Are there restrictions on bidding with others and do they
affect my ability to bid?
256.412 When must I file a statement of production?
256.413 How do I determine my production for purposes of the
restricted joint bidders list?
256.414 Are exemptions from the bidding restrictions possible?
How Does MMS Act on Bids?
256.416 What does MMS do with my bid?
256.417 What may I do if my bid is rejected?
Awarding the Lease
256.420 What happens if I am the successful high bidder?
256.421 When is my lease effective?
Subpart E--Financial Accountability and Risk Management
General Bonds
256.500 What security must I provide when I obtain my lease?
256.501 Do my general bonding requirements change as activities
progress on my lease?
256.502 What instruments other than a surety bond may I use to
provide the required security?
256.503 What general requirements must my bond or other security
meet?
256.504 Must my surety bond cover the payment obligations of my co-
lessees and designated operators?
256.505 What happens if my co-lessees or designated operators
exclude my payment obligations from their bond?
Supplemental Bonds
256.510 Can MMS require that I post a supplemental bond?
256.511 May I use a third-party guaranty to meet the supplemental
bonding requirement?
256.512 May I use a lease, right-of-way (ROW), or right-of-use and
easement (RUE)-specific decommissioning account to meet the
supplemental bonding requirement?
Changes in Bonding or Security
256.520 What do I do if my bond lapses?
256.521 What happens if the value of my bond or other security is
reduced?
256.522 What happens if my surety wants to terminate the period of
liability of my bond?
256.523 What happens if my surety wants to cancel my bond?
256.524 Why might MMS call for forfeiture of my bond?
256.525 How will I know about this forfeiture?
256.526 What if correcting my default requires a change in the
amount of my bond?
Subpart F--Maintaining a Lease
Initial Period of a Lease
256.600 What is the initial period of my oil and gas lease?
256.601 How may I maintain my oil and gas lease beyond the initial
period?
256.602 What is the initial period of my sulphur lease?
256.603. How may I maintain my sulphur lease beyond the initial
period?
Lease Obligations
256.605 What are my obligations as a record title holder?
256.606 What are my rights and obligations as an operating rights
owner?
Transferring Interest in All or Part of a Lease
256.610 May I sell, exchange, assign, or otherwise transfer my
lease?
256.611 May I assign all or part of my lease interest?
256.612 May I assign operating rights?
256.613 How do I seek approval of an assignment?
256.614 How do I transfer the interest of a deceased leaseholder?
256.615 What if I want to assign interests in more than one lease at
the same time?
256.616 What is the effect of an assignment on an assignor's
liability?
256.617 May I specify an effective date of the assignment?
256.618 What is the effect of an assignment on an assignee's
liability?
256.619 As a restricted joint bidder, may I assign interest to
another restricted joint bidder?
256.620 Are there any interests I may assign without MMS approval?
256.621 What reports must I submit for lease term pipelines when MMS
approves a lease assignment?
Helium
256.630 What must a lessee do if MMS elects to extract helium from a
lease?
Subpart G--Ending a Lease
256.700 How does a lease end?
256.701 May I end the lease myself?
256.702 Will MMS end my lease?
Subpart H--[Reserved]
Subpart I--Bonus or Royalty Credits for Exchange of Certain Leases
256.900 Which leases may I exchange for a bonus or royalty credit?
256.901 How much bonus or royalty credit will MMS grant in exchange
for a lease?
256.902 What must I do to obtain a bonus or royalty credit?
256.903 How is the bonus or royalty credit allocated among multiple
lease owners?
256.904 How may I use the bonus or royalty credit?
256.905 How do I transfer a bonus or royalty credit to another
person?
Authority: 31 U.S.C. 9701, 42 U.S.C. 6213, 43 U.S.C. 1334, Pub.
L. 109-432.
Subpart A--General Provisions
Sec. 256.100 Information collection and proprietary information.
(a) Information collection (IC). (1) The Office of Management and
Budget (OMB) approved the collection of information under 44 U.S.C.
3501 et seq., and assigned OMB Control Number 1010-xxxx. The title of
this IC is 30 CFR part 256, Leasing of Sulphur or Oil and Gas and
Bonding Requirements in the Outer Continental Shelf and 30 CFR part
260, Outer Continental Shelf Oil and Gas Leasing. The MMS collects the
information to determine if applicants seeking to obtain a lease on the
Outer Continental Shelf (OCS) are qualified to hold such a lease and
can meet the monetary and non-monetary requirements of a lease.
Responses to this collection are required to obtain or retain a benefit
or are mandatory under 43 U.S.C. 1331 et seq. The MMS will protect
proprietary information collected according to section 26 of the OCS
Lands Act (OCSLA), 43 U.S.C. 1352, and this section.
(2) The Paperwork Reduction Act of 1995 requires us to inform the
public that an agency may not conduct or sponsor, and you are not
required to respond to, a collection of information unless it displays
a currently valid OMB control number.
(3) Send comments regarding any aspect of the collection of
information under this part, including suggestions for reducing the
burden, to the IC Clearance Officer, Minerals Management Service, Mail
Stop 5438, 1849 C Street, NW., Washington, DC 20240.
(b) Proprietary information. Specific indications of interest in an
area by industry received in response to a Call
[[Page 25188]]
for Information issued by the Secretary is proprietary information.
(1) The MMS will handle requests for indications of interest in an
area and any other proprietary or privileged information you submit,
according to the regulations in 43 CFR part 2.
(2) Upon request, MMS will provide relative summary indications of
interest in areas to a Call for Information for a proposed sale.
Sec. 256.101 What are the consequences if I provide false
information?
Under 18 U.S.C. 1001, it is a crime to knowingly and willfully make
any false, fictitious, or fraudulent statements or representations to
any U.S. governmental entity regarding any matter within its
jurisdiction.
Sec. 256.102 What does this part cover?
These regulations establish the procedures the Secretary of the
Interior and MMS will use to administer a leasing program for minerals
on the submerged lands of the OCS, under the OCSLA, 43 U.S.C. 1331 et
seq.
Sec. 256.103 Definitions.
As used in this part, the term:
Act means the OCS Lands Act as amended (43 U.S.C. 1331 et seq.).
Affected State means, with respect to any program, plan, lease
sale, or other activity, proposed, conducted, or approved pursuant to
the provisions of the Act, any State:
(1) The laws of which are, pursuant to section 4(a)(2) of the Act,
43 U.S.C. 1333(a)(2), to be the law of the United States for the
portion of the OCS on which such activity is, or is proposed to be,
conducted;
(2) Which is, or is proposed to be, directly connected by
transportation facilities to any artificial island or structure
referred to in section 4(a)(1) of the Act, 43 U.S.C. 1333(a)(1);
(3) Which is receiving, or in accordance with the proposed activity
will receive, oil for processing, refining, or transshipment which was
extracted from the OCS and transported directly to such State by means
of vessels or by a combination of means including vessels;
(4) Which is designated by the Secretary of the Interior as a State
in which there is a substantial probability of significant impact on or
damage to the coastal, marine, or human environment; or a State in
which there will be significant changes in the social, governmental, or
economic infrastructure, resulting from the exploration, development,
and production of oil and gas anywhere on the OCS; or
(5) In which the Secretary of the Interior finds that because of
such activity, there is, or would be, a significant risk of serious
damage to the marine or coastal environment in the event of any oil
spill, blowout, or release of oil or gas from vessels, pipelines, or
other transshipment facilities due to factors such as prevailing winds
and currents.
Bidding Unit means portions of two or more blocks combined for
bidding purposes that may be bid upon as a single administrative unit
and will become a single lease. The term tract, as defined in this
section, may also be used.
Bonus or royalty credit means a legal instrument or other written
documentation, or an entry in an account managed by the Secretary that
a bidder or lessee may use in lieu of any other monetary payment for--
(1) A bonus due for a lease on the OCS; or
(2) A royalty due on oil or gas production from any lease located
in the Gulf of Mexico.
Central planning area means the Central Gulf of Mexico Planning
Area of the OCS, as designated in the document entitled, ``Draft
Proposed Program Outer Continental Shelf Oil and Gas Leasing Program
2007-2012,'' dated February 2006.
Coastal environment means the physical, atmospheric, and biological
components, conditions, and factors that interactively determine the
state, condition, and quality of the terrestrial ecosystem from the
shoreline inward to the boundaries of the coastal zone.
Coastal zone means the coastal waters (including the lands therein
and thereunder) and the adjacent shorelands (including the water
therein and thereunder), strongly influenced by each other and in
proximity to the shorelines of several coastal States, and includes
islands, transition and intertidal areas, salt marshes, wetlands, and
beaches, whose zone extends seaward to the outer limit of the U.S.
territorial sea and extends inland from the shore lines to the extent
necessary to control shorelands; the uses of which have a direct and
significant impact on the coastal waters, and the inward boundaries of
which may be identified by several coastal States, under section
305(b)(1) of the Coastal Zone Management Act (CZMA) of 1972, 16 U.S.C.
1454(b)(1).
Coastline means the line of ordinary low water along that portion
of the coast in direct contact with the open sea and the line marking
the seaward limit of inland waters.
Desoto Canyon OPD means the official protraction diagram designated
as Desoto Canyon which has a western edge located at the universal
transverse mercator (UTM) X coordinate 1,346,400 in the North American
Datum of 1927 (NAD 27).
Destin Dome OPD means the official protraction diagram designated
as Destin Dome which has a western edge located at the universal
transverse mercator (UTM) X coordinate 1,393,920 in the NAD 27.
Director means the Director of MMS of the U.S. Department of the
Interior, or an official authorized to act on the Director's behalf.
Eastern planning area means the Eastern Gulf of Mexico Planning
Area of the OCS, as designated in the document entitled ``Draft
Proposed Program Outer Continental Shelf Oil and Gas Leasing Program
2007-2012,'' dated February 2006.
General bond means a bond with the amount fixed by regulations. The
amount of the bond required is determined by the level of activity on
the lease, right-of-way, or right-of-use and easement.
Human environment means the physical, social, and economic
components, conditions, and factors that interactively determine the
state, condition, and quality of living conditions, employment, and
health of those affected, directly or indirectly, by activities
occurring on the OCS.
Marine environment means the physical, atmospheric, and biological
components, conditions, and factors which interactively determine the
productivity, state, conditions, and quality of the marine ecosystem,
including the waters of the high seas, the contiguous zone,
transitional and intertidal areas, salt marshes, and wetlands within
the coastal zone and on the OCS.
Mineral means oil, gas, and sulphur; it also includes sand, gravel,
and salt used to facilitate the development and production of oil, gas,
or sulphur.
OCS means the Outer Continental Shelf, as that term is defined in
section 2(a) of the Act, 43 U.S.C. 1331(a).
Pensacola OPD means the official protraction diagram designated as
Pensacola which has a western edge located at the universal transverse
mercator (UTM) X coordinate 1,393,920 in the NAD 27.
Person means, in addition to a natural person, an association, a
State, a political subdivision of a State, or a private, public, or
municipal corporation.
Secretary means the Secretary of the Interior or a designated
employee.
[[Page 25189]]
Supplemental bond means a bond required by MMS based upon potential
lease decommissioning liabilities and/or other lease obligations that
exceed the general bond.
Tract means an area of the OCS that is offered for sale as a single
lease. The area may be a whole block, a portion of a block, or combined
portions from multiple blocks. The term bidding unit, as defined
previously, may also be used.
We, us, and our means the Minerals Management Service (MMS) of the
Department of the Interior.
You means a lessee, the holder or owner of operating rights, a
designated operator or agent of the lessee(s), a right of use and
easement holder, State or Federal, and a pipeline right-of-way holder.
Sec. 256.104 Service fees.
(a) The table in this paragraph shows the fees that you must pay to
MMS for the services listed. The fees will be adjusted periodically
according to the Implicit Price Deflator for Gross Domestic Product by
publication of a document in the Federal Register. If a significant
adjustment is needed to arrive at the new actual cost for any reason
other than inflation, then a proposed rule containing the new fees will
be published in the Federal Register for comment.
Service Fee Table
------------------------------------------------------------------------
30 CFR
Service--processing of the following: Fee amount citation
------------------------------------------------------------------------
(1) Assignment of record title or $186 Sec. 256.613
operating rights (transfer) for MMS
approval...............................
(2) Required document filing for record 27 Sec.
purpose, but not for MMS approval...... 256.620(a)
(3) Non-required document filing for 27 Sec.
record purposes........................ 256.620(b)
------------------------------------------------------------------------
(b) Payment of the fees listed in paragraph (a) of this section
must accompany the submission of the document for approval or filing,
or be sent to an office identified by the Regional Director. Once a fee
is paid, it is nonrefundable, even if your service request is
withdrawn. If your request is returned to you as incomplete, you are
not required to submit a new fee with the amended submission.
Subpart B--Oil and Gas 5-Year Leasing Program
Sec. 256.200 What is the 5-year program?
Section 18(a) of the Act, 43 U.S.C. 1344(a), requires the Secretary
to prepare an oil and gas leasing program that consists of a 5-year
schedule of proposed lease sales to best meet national energy needs,
showing the size, timing, and location of leasing activity as precisely
as possible. The MMS prepares the schedule to obtain the proper balance
between the potential for environmental damage, the potential for
discovery of oil and gas, and the potential for adverse impact on the
coastal zone.
Sec. 256.201 Does MMS consult with interested parties while preparing
the 5-year program?
In preparing the 5-year program, MMS will consult with States and
local governments, industry, and any other interested parties,
primarily through public notice and comment procedures, as described in
the sections that follow.
Sec. 256.202 How does MMS start the 5-year program preparation
process?
To begin preparation of the 5-year leasing program, MMS invites and
considers nominations for any areas to be included or excluded from
leasing, by doing the following:
(a) The MMS prepares and makes public, official protraction
diagrams and leasing maps of OCS areas. Any area properly included on
the official 5-year diagrams and maps may be offered for lease for any
mineral not already leased.
(b) The MMS invites and considers any other suggestions and
relevant information from Governors of affected States, local
Governments, industry, Federal agencies, and other interested parties,
through a publication of a request for information in the Federal
Register. Local Governments must first submit their comments to their
State Governor, before sending them to MMS.
(c) The MMS sends letters to the Governor of each affected State
asking them to identify specific laws, goals, and policies that we
should consider. We ask each State Governor as well as the Department
of Commerce to identify the relationship between any oil and gas
activity and the State coastal zone management program under sections
305 and 306 of the CZMA, 16 U.S.C. 1454 and 1455. The MMS will consider
the coastal zone management program being developed or administered by
an affected State under the CZMA.
(d) The MMS asks the Department of Energy for information on
regional and national energy markets, OCS production goals, and
transportation networks.
Sec. 256.203 What does MMS do before publishing a proposed program?
After considering the solicited comments and information described
in Sec. 256.202, we prepare a proposed leasing program.
(a) At least 60 days before publication of a proposed program, we
send a draft of the proposed program to the Governor of each affected
State, who may solicit comments from local Governments that may be
affected by the proposed program.
(b) The MMS replies in writing to any comment from a Governor that
is received at least 15 days before submission of the proposed program
to Congress and its publication for comment in the Federal Register.
Sec. 256.204 How do Governments and citizens comment on the proposed
program?
The MMS publishes the proposed program in the Federal Register for
comment by the public. At the same time, we send the proposed program
to the Governors of the affected States and to Congress and the
Attorney General for review and comment.
(a) Governors are responsible for providing a copy of the proposed
program to affected local Governments in their State. Local Governments
may comment directly to us, but must also send their comments to the
Governor of their State.
(b) All comments from any party are due within 90 days after
publication in the Federal Register.
Sec. 256.205 What does MMS do before approving a final program or a
significant revision?
At least 60 days before approval, we submit a proposed final
program or significant revision to the President and Congress. The MMS
also submits any comments received and explains the reasons why we did
not accept any specific recommendation of the Attorney General, or of a
State or local Government.
[[Page 25190]]
Sec. 256.206 Does MMS offer blocks in a sale that is not on the 5-
year program schedule?
(a) The MMS may offer blocks within a planning area included in the
5-year program in an otherwise unscheduled sale, if the block either:
(1) Received a bid that was rejected in an earlier sale;
(2) Had a high bid that was forfeited in a scheduled sale; or
(3) Is a development block subject to drainage.
(b) For an unscheduled sale, we may disclose the classification of
the block as a development block. However, blocks in the Central or
Western Gulf of Mexico (GOM) planning areas cannot be offered in a sale
that is not on the schedule.
Subpart C--Preparing for a Lease Sale
Sec. 256.300 What is a call for information?
The MMS issues a call for information on areas proposed for leasing
in the 5-year program, through publication in the Federal Register and
other publications as desired. A call may include more than one
proposed sale. We request comments on:
(a) Industry interest in the areas proposed for leasing;
(b) Geological conditions, including bottom hazards;
(c) Archaeological sites on the seabed or near shore;
(d) Multiple uses of the proposed leasing area including
navigation, recreation, and fisheries;
(e) Other socioeconomic, biological, and environmental information;
and
(f) Industry's nominations or indications of interest in specific
blocks within areas proposed for leasing in the 5-year program for each
sale.
Sec. 256.301 What does MMS do with the information from the call?
In consultation with appropriate Federal agencies, we develop a
proposal to recommend areas to the Secretary for further consideration
for leasing and environmental analysis.
(a) The MMS considers all available environmental information,
conflicts with other uses, resource potential, industry interest, and
other relevant information, including comments received from State and
local Governments and other interested parties in response to the call.
(b) The MMS evaluates the area identified for further consideration
for the potential effects of leasing on the human, marine, and coastal
environments, and to develop measures to mitigate adverse impacts for
all the options to be analyzed. We inform the public of any additions
or deletions from the area proposed for leasing in the 5-year program
that result from the call process.
(c) The MMS prepares appropriate documentation under the National
Environmental Policy Act (NEPA).
Sec. 256.302 What does MMS do if identified areas are within 3 miles
of the seaward boundary of a coastal State?
For areas proposed for leasing that are within 3 geographical miles
seaward of the seaward boundary of a coastal State, as defined in and
governed by section 1337(g)(2) of the Act, we provide the Governor of
the coastal State, pursuant to the confidentiality requirements in part
251 of this chapter, the following:
(a) A schedule for leasing;
(b) All geographical, geological, and ecological characteristics of
the areas proposed for leasing;
(c) An estimate of the oil and gas resources; and
(d) An identification of any field, geological structure, or trap
that lies within 3 miles of the State's seaward boundary.
Sec. 256.303 What happens with an approved proposed notice of sale?
The MMS sends an approved proposed notice of sale to the Governors
of affected States and publishes the notice of its availability in the
Federal Register. The notice includes appropriate stipulations and
conditions to mitigate potential adverse impacts on the environment,
the Director's findings, and all comments and recommendations received
on the proposal.
Sec. 256.304 What role do affected States have?
(a) Within 60 days after receiving the proposed notice of sale,
Governors of affected States may submit comments and recommendations to
MMS regarding the size, timing, and location of the proposed sale.
Local Governments may comment to us directly, but must also send their
comments to the Governor of their State.
(b) The MMS will provide a consistency determination to affected
States that will indicate whether the proposed sale is consistent, to
the maximum extent practicable, with the enforceable policies of the
applicable coastal zone management programs.
Sec. 256.305 What does MMS do with comments and recommendations
received on the proposed notice?
The MMS considers all comments and recommendations received in
response to the proposed notice of sale. We accept comments and
recommendations from States and local Governments if we determine,
after providing opportunity for consultation, that they provide for a
reasonable balance between the national interest and the well being of
the citizens of the State or locality. We send to each Governor written
reasons for rejecting or adopting alternatives on how to address that
Governor's recommendations.
Sec. 256.306 How does MMS conduct a lease sale?
(a) The MMS publishes a final notice of sale in the Federal
Register and in other publications, as appropriate, at least 30 days
before the date of the sale. The notice:
(1) States the place, time, and method for filing bids and the
place, date, and hour for opening bids; and
(2) Contains or references a description of the area offered for
lease and any stipulations, terms, and conditions of the sale.
(b) Tracts are offered for lease by competitive sealed bid in
accordance with the terms and conditions in the final notice of sale
and applicable laws and regulations. Tracts comprise an area not
exceeding 5,760 acres, unless we find that a larger area is necessary
for reasonable economic production.
Subpart D--Issuance of a Lease
Qualifications
Sec. 256.400 Who may become a lessee?
You may become a lessee if you are:
(a) A citizen or national of the U.S.;
(b) An alien lawfully admitted for permanent residence in the U.S.,
as defined in 8 U.S.C. 1101(a)(20);
(c) A private, public, or municipal corporation organized under the
laws of any State of the U.S., the District of Columbia, or any
territory or insular possession subject to U.S. jurisdiction;
(d) An association of such citizens, nationals, resident aliens, or
corporations;
(e) A State; or
(f) A political subdivision of States.
Sec. 256.401 How do I show that I am qualified to be a lessee?
(a) Provide your MMS qualification number if you have qualified
with us, in which case you will not need to provide the information in
paragraph (b) or (c) of this section, unless we require it.
(b) An individual must submit a written statement of citizenship
status attesting to U.S. citizenship. It need not be notarized nor give
the age of the individual. A resident alien must submit an original or
a photocopy of the Immigration and Naturalization Service form
evidencing legal status of the resident alien.
(c) A corporation, association, or other entity must submit
evidence (refer to the
[[Page 25191]]
table in paragraph (d) of this section) acceptable to MMS that:
(1) It is qualified to hold mineral leases under this subpart;
(2) It is authorized to conduct business under the laws of its
State;
(3) It is authorized to hold mineral leases in the OCS under the
operating rules of its business; and
(4) The persons holding the titles listed are authorized to bind
the corporation or association when conducting business with us.
(d) Acceptable evidence under paragraph (c) of this section
includes, but is not limited to:
----------------------------------------------------------------------------------------------------------------
Requirements to qualify as a lessee to
hold leases in the OCS: Corp. Ltd. prtnsp. Gen. prtnsp. LLC Trust
----------------------------------------------------------------------------------------------------------------
(1) Certified statement by Secretary, over XX ............ ............ ............ ............
corporate seal, certifying that the
corporation is authorized to hold OCS
leases...................................
(2) Evidence of authority of titled XX ............ ............ ............ ............
positions to bind corporation, certified
by Secretary, over corporate seal,
including the following:.................
(i) Certified copy of resolution of
the board of directors with titles of
officers authorized to bind
corporation.
(ii) Certified copy of resolutions
granting corporate officer authority
to issue a power of attorney.
(iii) Certified copy of power of
attorney or certified copy of
resolution granting power of
attorney.
(3) Certificate of partnership or ............ XX XX XX ............
organization paperwork registering with
the appropriate State official...........
(4) Copy of articles of partnership or ............ XX XX XX ............
organization evidencing filing with
appropriate Secretary of State, certified
by Secretary of partnership or is a
member or manager of a LLC...............
(5) Certificate evidencing State where ............ XX XX XX ............
partnership or LLC is registered.
Statement of authority to hold OCS
leases, certified by Secretary OR
original paperwork registering with the
appropriate State official...............
(6) Statements from each partner or LLC ............ XX XX XX ............
member indicating the following:.........
(i) If a corporation or partnership,
statement of State of organization
and authorization to hold OCS leases,
certified by Secretary over corporate
seal, if a corporation.
(ii) If an individual, a statement of
citizenship.
(7) Statement from general partner, ............ XX ............ ............ ............
certified by Secretary that:.............
(i) Each individual limited partner is
a U.S. citizen and;
(ii) Each corporate limited partner or
other entity is incorporated or
formed and organized under the laws
of a U.S. State or territory.
(8) Evidence of authority to bind ............ XX XX XX ............
partnership or LLC, if not specified in
partnership agreement, articles of
organization, or LLC regulations, i.e.,
certificates of authority from Secretary
reflecting authority of officers.........
(9) Listing of members of LLC certified by ............ ............ ............ XX ............
Secretary or any member or manager of LLC
(10) Copy of trust agreement or document ............ ............ ............ ............ XX
establishing the trust and all
amendments, properly certified by the
trustee with reference to where the
original documents are filed.............
(11) Statement indicating the law under ............ ............ ............ ............ XX
which the trust is established and that
the trust is authorized to hold OCS
leases...................................
----------------------------------------------------------------------------------------------------------------
Sec. 256.402 Who may not become a lessee or acquire an interest in a
lease?
You may not become a lessee or acquire an interest in a lease if:
(a) You or your principals are excluded or disqualified from
participating in transactions covered by the Federal non-procurement
debarment and suspension system (2 CFR parts 180 and 1400), unless MMS
explicitly has approved an exception for this transaction;
(b) You or your principals fail to meet or exercise due diligence
under section 8(d) of the Act, 43 U.S.C. 1337(d) on any other OCS
lease; or
(c) The MMS determines after notice and opportunity for a hearing
under 30 CFR part 290, subpart A, that your operating performance is
unacceptable under 30 CFR part 250 on any other OCS lease.
Sec. 256.403 What do the non-procurement debarment rules require that
I do?
You must comply with the Department of the Interior's non-
procurement debarment regulations at 2 CFR parts 180 and 1400.
(a) You must notify MMS if you know that you or your principals are
excluded, disqualified, or convicted of crime as described in 2 CFR
part 180 subpart I. You must make this notification before you sign a
lease, assignment of record title interest, or transfer (assignment) of
operating rights interest; or become a lease or unit operator. This
paragraph does not apply if you have previously provided a statement
disclosing this information, and we have received an exception from the
Department of the Interior as described in 2 CFR 180.135.
(b) If you wish to enter into a covered transaction with another
person at the next lower tier, you must first:
(1) Verify that the person is not excluded or disqualified under
the requirements in 2 CFR part 180; and
(2) Require the person to:
(i) Comply with this subpart; and
(ii) Include the obligation to comply with this subpart in their
contracts and other transactions.
(c) After you enter into a covered transaction, you must
immediately notify MMS in writing if you learn that:
(1) You failed to disclose information earlier; or
(2) Due to changed circumstances, you or your principals now meet
any of the criteria in 2 CFR 180.800.
[[Page 25192]]
Sec. 256.404 When must I notify MMS of mergers, name changes, or
changes of business form?
You must immediately notify us of any merger, name change, or
change of business form. The latest you may make this notification is 1
year after the earliest effective date or the date of filing the change
or action with the Secretary of the State or other authorized official
in the State of original registry.
How to Bid
Sec. 256.410 How do I submit a bid?
(a) You must submit a separate sealed bid for each tract or bidding
unit to the address provided and by the time specified in the notice of
sale. You may not bid on less than an entire tract or bidding unit.
(b) You must include a deposit to cover all bids submitted. The
notice of sale specifies the amount and method of payment.
(c) You may not submit a bid on an OCS lease if, after notice and
hearing under 30 CFR part 290, the Secretary finds that you are not
meeting the diligence requirements on any other OCS lease.
(d) If your high bid is rejected, then the decision of the
authorized officer on bids must be the final decision of the
Department, subject only to reconsideration by the Secretary, upon your
written request as set out in Sec. 256.417.
Restrictions on Joint Bidding
Sec. 256.411 Are there restrictions on bidding with others and do
they affect my ability to bid?
The Energy Policy and Conservation Act of 1975, 42 U.S.C. 6213,
prohibits joint bidding by major oil and gas producers under the
following circumstances:
(a) The MMS publishes a restricted joint bidders list twice yearly
in the Federal Register. Persons appearing on this list are limited in
their ability to submit joint bids (see paragraph (c) of this section).
The list:
(1) Consists of the persons chargeable with an average worldwide
daily production in excess of 1.6 million barrels of crude oil,
liquefied petroleum products, or the Btu equivalent in natural gas, for
the prior production period; and
(2) Is based upon the statement of production that you must file as
required by Sec. 256.412.
(b) If we place you on the restricted joint bidders list, we will
send you a copy of the order placing you on the list. You may appeal
this order to the Interior Board of Land Appeals under 30 CFR part 290,
subpart A.
(c) If you are listed in the Federal Register in any group of
restricted bidders, you may not bid:
(1) Jointly with another person in any other group of restricted
bidders for the applicable 6-month bidding period; or
(2) Separately during the 6-month bidding period if you have an
agreement with another restricted bidder that would result in joint
ownership in an OCS lease.
(d) As a bidder, you are prohibited from unlawful combination with,
or intimidation of, bidders under 18 U.S.C. 1860.
Sec. 256.412 When must I file a statement of production?
(a) You must file a statement of production if you had an average
worldwide daily production of over 1.6 million barrels for the prior
production period (determine your production using the method in Sec.
256.413). Your statement must specify that you were chargeable with an
average daily production in excess of 1.6 million barrels for the prior
production period.
(b) The prior production periods are as follows:
------------------------------------------------------------------------
For the bidding period of The prior production period is the preceding
. . . . . .
------------------------------------------------------------------------
(1) May through October, July through December.
(2) November through January through June.
April,
------------------------------------------------------------------------
(c) You must file the statement of production by the following
deadlines:
------------------------------------------------------------------------
For the bidding period of
. . . You must file the statement by . . .
------------------------------------------------------------------------
(1) May through October, March 17.
(2) November through September 17.
April,
------------------------------------------------------------------------
(d) If you file a statement of production, MMS may require you to
submit a detailed report of production.
(1) The detailed report must list crude oil, liquefied petroleum
products, or Btu equivalent in natural gas chargeable for the prior
production period.
(2) You must submit this report within 30 days after receiving the
MMS request.
(3) The MMS may inspect and copy such documents, records of
production, analyses, and other material to verify the accuracy of any
earlier statements of production.
(e) If you submit a statement of production that misrepresents your
chargeable production, we may cancel any of your leases that were
awarded in reliance upon such statement.
Sec. 256.413 How do I determine my production for purposes of the
restricted joint bidders list?
(a) To determine the amount of production chargeable to you, add
together:
(1) Your average daily production in barrels of crude oil,
liquefied petroleum products, or the Btu equivalent in natural gas
worldwide; and
(2) Your proportionate share of the average daily production owned
by any entity which has an interest in you as the reporting person, and
in which you have an interest.
(b) For the purpose of this section, average daily production
includes production owned by:
(1) You;
(2) Every subsidiary of yours;
(3) Every person of which you are a subsidiary; and
(4) Every subsidiary of any person of which you are a subsidiary.
(c) For purposes of this section, interest means at least 5 percent
ownership or control of you or the reporting person and includes any
interest:
(1) From ownership of securities or other evidence of ownership; or
(2) By participation in any contract, agreement, or understanding
regarding control of the person or their production of crude oil,
liquefied petroleum products, or the Btu equivalent in natural gas.
(d) For purposes of this section, entity means a person that meets
both of the following criteria:
(1) The entity is, in addition to a natural person, a corporation,
partnership, association, joint-stock company, trust, fund, or any
receiver, trustee in bankruptcy, or similar official acting for such a
company; and
(2) Fifty (50) percent or more of the entity's stock or other
interest having power to vote for the election of a controlling body,
such as directors or trustees, is directly or indirectly owned,
controlled, or held with the power to vote by another person.
Sec. 256.414 Are exemptions from the bidding restrictions possible?
The MMS may exempt you from the bidding restrictions if, after an
opportunity for a hearing, we find that extremely high costs in an area
would preclude exploration and development without an exemption.
How Does MMS Act on Bids?
Sec. 256.416 What does MMS do with my bid?
(a) The MMS opens the sealed bids at the place, date, and hour
specified in
[[Page 25193]]
the notice of sale for the sole purpose of publicly announcing and
recording the bids. We do not accept or reject any bids at that time.
(b) The MMS accepts or rejects all bids within 90 days, although we
may extend that time if necessary. We reserve the right to reject any
and all bids, regardless of the amount offered. If your bid is
rejected, we will refund any money deposited with your bid plus any
interest accrued.
(c) If the highest bids are tied, MMS will notify the tied bidders.
Within 15 days after notification, the tied bidders may agree to accept
the lease jointly, if not otherwise prohibited from bidding together.
The tied bidders must notify MMS of their decision and submit a copy of
their agreement to accept the lease jointly. Or, they may decide
between themselves which bidder(s) will become the lessee, and notify
MMS of their decision. If there is no such agreement, we will award the
lease to the high bidder selected by lot.
(d) The MMS offers the Attorney General the opportunity to review
the results of the sale before we accept the bids and issue the leases.
Sec. 256.417 What may I do if my bid is rejected?
You may ask MMS in writing for reconsideration within 15 days of
bid rejection. You will receive a written response either affirming or
reversing the rejection.
Awarding the Lease
Sec. 256.420 What happens if I am the successful high bidder?
If you are the successful bidder, you will receive the appropriate
number of copies of the lease on a form approved by MMS.
(a) When you receive the lease copies, within 11-business days
after receipt, you must:
(1) Execute the lease;
(2) Pay the first year's rental;
(3) Pay the balance of the bonus, unless deferred under (b) below;
and
(4) File a bond under subpart E of this part.
(b) If provided for in the notice of sale, we may defer any part of
the bonus payment for up to 5 years after the sale according to a
schedule included in the notice of sale. You must provide a bond
acceptable to us for payment of a deferred bonus.
(c) If you do not execute and return the lease within 11 business
days after receipt, or if you otherwise fail to comply with applicable
regulations, your deposit will be forfeited and MMS may take
appropriate action to collect the full amount bid, if so provided for
in the notice of sale. However, we will return any deposit with
interest if the tract is withdrawn from leasing before you execute the
lease.
(d) If you use an agent to execute the lease, you must include
evidence with the executed copies of the lease form that you authorized
the agent to act for you. After you comply with all requirements in
this section, and after we have executed the lease, we will send you an
executed copy.
Sec. 256.421 When is my lease effective?
Your lease is effective on the first day of the month following the
date that MMS executes the lease. You may request in writing, before we
execute the lease, that your lease be effective as of the first day of
the month in which we execute it.
Subpart E--Financial Accountability and Risk Management
General Bonds
Sec. 256.500 What security must I provide when I obtain my lease?
(a) Before MMS will issue your lease or approve an assignment of an
existing lease, you must provide one of the following general bonds on
Form MMS-2028:
(1) A lease-specific $50,000 general bond that guarantees
compliance with all terms and conditions of the lease; or
(2) An area-wide $300,000 general bond that guarantees compliance
with all terms and conditions of all your leases in the area where your
lease is located; or
(3) A lease-specific or area-wide general bond as required for
exploration or development and production activities as specified in
Sec. 256.501.
(b) For the purpose of an area-wide bond, the areas are each
planning area as administered by MMS.
(c) You have met the bonding requirement under this section if your
designated lease operator provides a lease-specific or area-wide
general bond that guarantees compliance with all terms and conditions
of the lease, as required under Sec. 256.501.
(d) The MMS may adjust the dollar amount of the general bonds
described in this section by using the Implicit Price Deflator for
Gross Domestic Product or a substantially equivalent index.
Sec. 256.501 Do my general bonding requirements change as activities
progress on my lease?
The table in this paragraph contains the general bond requirements
for each stage of activity on your lease. Each bond must guarantee
compliance with all terms and conditions of the lease. You may satisfy
these bond requirements with a new bond or by increasing the amount of
your existing bonds required under Sec. 256.500.
----------------------------------------------------------------------------------------------------------------
Amount of
Stage of activity general bond Deadline for submission Exceptions
----------------------------------------------------------------------------------------------------------------
(a) Before lease exploration $200,000 Earlier of either of the The Regional Director may
activities begin. following: The date you authorize you to submit the
submit an Exploration Plan $200,000 bond after you
(EP) for approval; or the submit an EP, but before we
date you, as an assignee, approve drilling activities
submit a request for under the EP. You need not
approval of assignment of a submit and maintain a
lease with an approved EP $200,000 lease exploration
bond if you furnish and
maintain either:
(1) A $1 million area-wide
bond issued by a certified
surety and conditioned on
compliance with all the
terms and conditions of all
leases in the area; or
(2) A $3 million area-wide
bond under paragraph (b) of
this table.
[[Page 25194]]
(b) Before lease development and $500,000 Earlier of either of the The Regional Director may
production activities begin. following: The date you authorize you to submit the
submit a Development and $500,000 lease development
Production Plan (DPP) or bond after you submit a DPP
Development Operations or DOCD, but before we
Coordination Document approve the installation of
(DOCD) for approval; or the a platform or the
date you, as an assignee, commencement of drilling
submit a request for activities under the DPP or
approval of assignment of a DOCD. You need not submit
lease with an approved DPP and maintain a $500,000
or DOCD lease development bond if
you furnish and maintain a
$3 million area-wide bond
that is issued by a
certified surety and
conditioned on compliance
with all the terms and
conditions of all leases in
the area. We may accept a
bond of less than $500,000
if:
(1) You can demonstrate that
wells and platforms can be
abandoned and removed and
drilling and platform sites
cleared of obstructions for
less than $500,000; and
(2) The bond is at least
equal to the cost of well
abandonment, platform
removal, and site
clearance.
----------------------------------------------------------------------------------------------------------------
Sec. 256.502 What instruments other than a surety bond may I use to
provide the required security?
You may pledge U.S. Department of Treasury securities or other
types of security instruments if MMS determines that such security
protects us to the same extent as the required bond. If you use a
Treasury security:
(a) You must post 115 percent of your bonding amount.
(b) You must daily monitor the collateral value of your security.
If the collateral value of your security, as determined in accordance
with the 31 CFR part 225 Collateral Margins Table (which can be found
at http://www.treasurydirect.gov) falls below the required level of
coverage, you must within 10-business days, pledge additional security
to provide the required amount.
(c) You must include with your pledge, authority for us to sell the
security and use the proceeds if we determine that you have failed to
comply with any of the terms and conditions of your lease, right-of-way
(ROW), or right-of-use and easement (RUE), any subsequent approval or
authorization, or applicable regulations.
Sec. 256.503 What general requirements must my bond or other security
meet?
(a) Any bond or other security that you provide must:
(1) Be payable to MMS upon demand;
(2) Guarantee compliance under the lease and regulations of all of
your non-monetary obligations and those of all lessees, operating
rights owners, and operators on the lease; and
(3) Guarantee all of your monetary obligations.
(b) All surety bonds and Treasury notes must be on an official form
approved by MMS. You may submit a bond on an approved form that you
have reproduced. If the document you submit either advertently or
inadvertently omits any terms and conditions that are included on the
approved form, your bond is deemed to contain the omitted terms and
conditions of the official form.
(c) The MMS reserves the right to require electronic filing with a
90-day notice published in the Federal Register.
(d) Surety bonds must be issued by a surety that the Treasury
certifies as acceptable to provide bonds to Federal agencies by listing
in the current Treasury Circular 570, as required by 31 CFR 223.16. You
may obtain a copy of Circular 570 from the Treasury Web site at http://www.fms.treas.gov.
(e) You and a certified surety must execute your bond. When the
surety is a corporation, an authorized corporate officer must sign the
bond and attest to it over the corporate seal, and include the power of
attorney authorizing said officer to bind the security.
(f) You may not terminate the period of liability of, or cancel
your bond, except as provided in this subpart. Bonds must continue in
full force and effect even though an event has occurred that could
diminish, terminate, or cancel a surety's obligation under State law.
Sec. 256.504 Must my surety bond cover the payment obligations of my
co-lessees and designated operators?
You may exclude from coverage the payment obligations of a co-
lessee or designated operator from your bond by giving MMS a written
statement specifying which co-lessees and designated operators are to
be excluded. The exclusion of payment obligations from coverage does
not exclude the non-payment obligations of the lease.
Sec. 256.505 What happens if my co-lessees or designated operators
exclude my payment obligations from their bond?
You must post a bond at the level specified in this subpart for the
level of activity on the lease. We may require a lesser amount if you
can demonstrate that your payment obligations are less than the bond
amounts required.
Supplemental Bonds
Sec. 256.510 Can MMS require that I post a supplemental bond?
(a) To ensure coverage of potential lease, ROW, or RUE
decommissioning liabilities and/or other obligations, MMS may determine
that you need to provide a supplemental bond as security in addition to
the requirements under Sec. Sec. 256.500 and 256.501 for general
bonds. The Regional Director may require you to demonstrate the
sufficiency of your bond to accomplish your lease obligations. You must
submit supplemental bonds on Form MMS-2028A.
(b) A requirement to post a supplemental bond(s) will be based on
the Regional Director's determination of the cost to meet all accrued
and anticipated obligations of your lease(s), ROW(s), or RUE(s),
including those arising from operating rights interests, and an
evaluation of the probability that you will be able to carry out
present and future financial obligations as demonstrated by:
(1) Financial capacity substantially in excess of existing and
anticipated lease and other obligations, as evidenced by audited
financial statements (including
[[Page 25195]]
auditor's certificate, balance sheet, and profit and loss sheet);
(2) Projected financial strength significantly in excess of
existing and future lease and other obligations based on the estimated
value of your existing OCS lease production;
(3) Business stability based on 5 years of continuous operation and
production of oil and gas or sulphur in the OCS or onshore;
(4) Reliability in meeting obligations based on credit ratings or
trade references, including names and addresses of other lessees,
drilling contractors, and suppliers with whom you have dealt; and
(5) A record of compliance with laws, regulations, and lease, ROW,
or RUE terms.
(c) The MMS determines the amount of supplemental bond required to
guarantee compliance. The Regional Director performs a case-specific
analysis and considers such items as the potential underpayment of
royalties; the cumulative obligations to abandon wells and remove
platforms and facilities; and the requirement to clear the seafloor of
obstructions.
(d) If your cumulative potential obligations and liabilities
increase or decrease, MMS may adjust the amount of the supplemental
bond required.
(1) The MMS will notify you of any proposed adjustment to your bond
amount and give you an opportunity to comment.
(2) If you request a reduction, you must submit evidence to the
Regional Director that the projected amount of royalties due the
Government over the next 12 months, any past due royalties, other
payment obligations, and the estimated costs of your required
decommissioning and cleanup, are less than the required bond amount. If
MMS agrees, we will reduce the amount of the supplemental bond
required.
(e) Your supplemental bond must meet the requirements specified for
general bonds under Sec. 256.503. You may utilize U.S. Department of
the Treasury securities or other types of security instruments that MMS
determines protect us to the same extent as the required bond. If you
use a Treasury security, you must meet the requirements specified for
general bonds in Sec. 256.502.
Sec. 256.511 May I use a third-party guaranty to meet the
supplemental bonding requirement?
(a) You may use a third-party guaranty if the guarantor meets the
criteria prescribed in paragraph (b) of this section and submits an
agreement meeting the criteria prescribed in paragraph (c) of this
section. The agreement must guarantee compliance with the obligations
of all lessees, operating rights owners, and operators on the lease(s),
ROW(s), and RUE(s).
(b) The MMS will consider the following factors in deciding whether
to accept an agreement:
(1) The length of time that your guarantor has been in continuous
operation as a business entity. You may exclude periods of interruption
that are beyond the guarantor's control by demonstrating, to the
satisfaction of the Regional Director, that the interruptions do not
affect the likelihood of your guarantor remaining in business during
exploration, development, production, and decommissioning operations on
your lease(s), ROW(s), and RUE(s) covered by the indemnity agreement.
(2) Financial information available in the public record or
submitted by your guarantor in sufficient detail to show us that your
guarantor meets the criteria stated in paragraph (b)(4) of this
section. Such detail includes:
(i) The current rating for its most recent bond issuance by a
generally recognized bond rating service such as Moody's Investor
Service or Standard and Poor's Corporation;
(ii) Your guarantor's net worth, taking into account liabilities
for compliance with all terms and conditions of your lease,
regulations, and other guarantees;
(iii) Your guarantor's ratio of current assets to current
liabilities, taking into account liabilities for compliance with all
terms and conditions of your lease, regulations, and other guarantees;
and
(iv) Your guarantor's unencumbered domestic fixed assets.
(3) If the information in paragraph (b)(2) of this section is not
publicly available, your guarantor must submit the information in the
following table, to be updated annually within 90 days of the end of
the fiscal year (FY) or as otherwise prescribed.
------------------------------------------------------------------------
Your guarantor must submit . . . That . . .
------------------------------------------------------------------------
(i) Financial statements for the most Include a report by an
recently completed FY independent certified
public accountant
containing the accountant's
audit or review opinion of
the statements. The report
must be prepared in
conformance with generally
accepted accounting
principles and contain no
adverse opinion.
(ii) Financial statement for completed Your guarantor's financial
quarter in the current FY officer certifies to be
correct.
(iii) Additional information related to Your guarantor's financial
bonds, if requested by the Regional officer certifies to be
Director correct.
------------------------------------------------------------------------
(4) Your guarantor's total outstanding and proposed guarantees must
not exceed 25 percent of its unencumbered domestic net worth.
(c) Your guarantor must submit an agreement executed by the
guarantor and all parties bound by the agreement. All parties are bound
jointly and severally and must meet the qualifications set forth in
Sec. Sec. 256.400 and 256.401.
(1) When any party is a corporation, two corporate officers
authorized to execute the indemnity agreement on behalf of the
corporation must sign the agreement.
(2) When any party is a partnership, joint venture, or syndicate,
the indemnity agreement must bind each party who has a beneficial
interest in your guarantor and provide that, upon MMS demand under your
guaranty, each party is jointly and severally liable for compliance
with all terms and conditions of your lease(s), ROW(s), and RUE(s)
covered by the agreement.
(3) When forfeiture of the guaranty is called for, the agreement
must provide that your guarantor will either bring your lease(s),
ROW(s), and RUE(s) into compliance or provide, within 7-calendar days,
sufficient funds to permit MMS to complete corrective action.
(4) The guaranty agreement must contain a confession of judgment,
providing that, if we determine that you are, or your operator or
operating rights owner is, in default, the guarantor must not challenge
the determination and must remedy the default.
(5) If you fail, or your operator or operating rights owner fails,
to comply with any law, term, or regulation, your guarantor must either
take corrective action or provide, within 7-calendar days or other
agreed upon time period, sufficient funds for MMS to complete
corrective action. Such compliance must not reduce your guarantor's
liability.
[[Page 25196]]
(6) If your guarantor wants to terminate the period of liability,
your guarantor must notify you and us at least 90 days before the
proposed termination date, obtain our approval for termination of all
or a specified portion of the guarantee for liabilities arising after
that date, and remain liable for all your work performed during the
period the agreement is in effect.
(7) Each guaranty submitted pursuant to this section is deemed to
contain all the above terms, even if they are not actually in the
agreement.
(d) If your guaranty is to be terminated, you must provide an
acceptable replacement in the form of a bond or other security before
the termination.
Sec. 256.512 May I use a lease, right-of-way (ROW), or right-of-use
and easement (RUE)-specific decommissioning account to meet the
supplemental bonding requirement?
(a) The MMS may authorize you to establish a lease, ROW, or RUE-
specific decommissioning account in a Federally-insured institution in
lieu of a supplemental bond. The funds must not be withdrawn from the
account without written approval by MMS.
(1) The funds must be payable to MMS and pledged to meet your
decommissioning obligations.
(2) You must fully fund the account to cover all costs of
decommissioning, including site clearance within the time we prescribe.
The MMS will estimate the cost of decommissioning and site clearance.
(b) Any interest paid on the account will be treated as account
funds unless MMS authorizes in writing that any interest be paid to the
depositor.
(c) The Regional Director may allow you to pledge Treasury
securities payable to MMS on demand to satisfy your obligation to make
payments into the account. Acceptable Treasury securities and their
collateral value are defined in 31 CFR part 380.
(d) The MMS may require you to create an overriding royalty or
production payment obligation for the benefit of the account. The
obligation may be associated with production from another lease.
Changes in Bonding or Security
Sec. 256.520 What do I do if my bond lapses?
(a) If your surety is decertified by the Treasury, becomes bankrupt
or insolvent, or if your surety's charter or license is suspended or
revoked, you must provide alternate security immediately. You must
promptly inform MMS about the bond lapse and provide a new bond to us
in the amount required under this subpart.
(b) You and your surety must notify MMS within 72 hours after you
learn of any action filed alleging that you are, or your surety or
guarantor is, insolvent or bankrupt, or has been decertified by the
U.S. Treasury.
Sec. 256.521 What happens if the value of my bond or other security
is reduced?
If the value of your bond or other security is reduced because of a
default or any other reason, you must provide additional bond coverage
sufficient to meet the requirements of this subpart within 45 days;
however, MMS may specify a shorter period of time.
Sec. 256.522 What happens if my surety wants to terminate the period
of liability of my bond?
(a) Terminating the period of liability of a bond ends the period
during which obligations continue to accrue, but does not relieve the
surety of the responsibility for obligations and liabilities that
accrued during the period of liability and before the date on which MMS
terminates the period of liability under paragraph (b) of this section.
The liabilities that accrue during a period of liability include:
(1) Obligations that started to accrue prior to the beginning of
the period of liability and had not been met, and
(2) Obligations that began accruing during the period of liability.
(b) Your surety must submit its request to MMS to terminate the
period of liability under its bond and notify you of that request. We
will terminate that period of liability within 90 days after we receive
the request. If you intend to continue operations, or have not met all
end-of-lease obligations, we will require you to provide a replacement
bond of equivalent value.
(c) If the period of liability is terminated but the bond is not
cancelled under Sec. 256.523, the surety that provided the bond must
continue to be liable for accrued obligations until all obligations are
satisfied.
Sec. 256.523 What happens if my surety wants to cancel my bond?
(a) The MMS will cancel or release a bond and relieve the surety
from accrued obligations only if:
(1) The MMS determines that there are no outstanding obligations;
or
(2) You furnish a replacement bond or an alternative form of
security in an amount equal to or greater than the bond to be cancelled
to cover the terminated period of liability and:
(i) Before MMS will cancel a general bond prescribed under
Sec. Sec. 256.500 or 256.501 on the basis of a replacement bond, the
surety issuing the new bond must expressly agree to assume all
outstanding liabilities that accrued during the period of liability
that was terminated.
(ii) Before MMS will cancel a supplemental bond on the basis of a
replacement bond, the surety issuing the new bond must agree to assume
that portion of the outstanding liabilities that accrued during the
terminated period of liability that exceeds the coverage of the bond
prescribed under Sec. Sec. 256.500 or 256.501 and of which you were
notified.
(b) When your lease ends, your surety(s) remain(s) responsible and
MMS will retain any pledged security as shown in the table below:
------------------------------------------------------------------------
The period of Your bond will be
Bond type: liability ends: cancelled:
------------------------------------------------------------------------
(1) General bonds submitted When MMS Seven years after the
under Sec. Sec. 256.500 or determines that lease ends, 6 years
256.501. you have met all after completion of
of your all bonded
obligations obligations, or at
under the lease. the conclusion of
any appeals or
litigation related
to your bonded
obligation,
whichever is the
latest. The MMS will
reduce the amount of
your bond or return
a portion of your
security, if we
determine that you
need less than the
full amount of the
bond to meet any
possible future
obligations.
(2) Supplemental bonds When MMS When you meet your
submitted under this subpart. determines that bonded obligations,
you have met all unless MMS:
your obligations (i) Determines that
covered by the the future potential
supplemental liability resulting
bond. from any undetected
obligations is
greater than the
amount of the base
bond; and
(ii) Notifies the
provider of the bond
that we will wait 7
years before
canceling all or a
part of the bond, or
a longer period as
necessary to
complete any appeals
or judicial
litigation related
to your bond
obligation.
------------------------------------------------------------------------
[[Page 25197]]
Sec. 256.524 Why might MMS call for forfeiture of my bond?
(a) The MMS may call for forfeiture of all or part of the bond or
pledged security or performance by your guarantor if:
(1) After notice and demand for performance by MMS, you refuse or
fail, within the timeframe we prescribe, to comply with any term or
condition of your lease; or
(2) You default on one of the conditions under which we accepted
your bond.
(b) The MMS may pursue forfeiture without first making demands for
performance against any other lessee, operating rights owner, or other
person approved to perform lease obligations.
Sec. 256.525 How will I know about this forfeiture?
(a) The MMS will notify you and your surety or guarantor in writing
of the call for forfeiture and provide the reasons for the forfeiture
and the amount to be forfeited. We will base the amount upon our
estimate of the total cost of corrective action to bring your lease
into compliance.
(b) The MMS would advise you, your guarantor, and any surety that
you may avoid forfeiture if, within 5 business days:
(1) You, or your guarantor, agree(s) to and demonstrate(s) that you
will bring your lease into compliance within the timeframe we
prescribe; or
(2) Your surety agrees to, and demonstrates that, it will bring
your lease into compliance within the timeframe we prescribe, even if
the cost of compliance exceeds the face amount of the bond.
Sec. 256.526 What if correcting my default requires a change in the
amount of my bond?
(a) If MMS demands forfeiture of your bond, we will collect the
forfeited amount and use the funds to bring your lease(s) into
compliance and correct any default.
(b) If the amount collected under your bond is insufficient to pay
the full cost of corrective action, MMS may take or direct action to
obtain full compliance and recover all costs in excess of the forfeited
bond from you, any co-lessee, operating rights owner, or responsible
guarantor.
(c) If the amount collected under your bond exceeds the full cost
of corrective action to bring your lease(s) into compliance, MMS will
return the excess funds to the party from whom they were collected.
Subpart F--Maintaining a Lease
Initial Period of a Lease
Sec. 256.600 What is the initial period of my oil and gas lease?
(a) The initial period of your oil and gas lease may range from 5
to 10 years. The MMS will specify the initial period in the notice of
sale and in the lease instrument.
(b) For leases in water depths of 400 to 799 meters, unless
otherwise provided for in the notice of sale, the initial period will
be 8 years but you must begin an exploratory well within the first 5
years. Your lease will be subject to administrative cancellation after
5 years if you have not begun an exploratory well.
Sec. 256.601 How may I maintain my oil and gas lease beyond the
initial period?
(a) You may maintain your oil and gas lease beyond the initial
period as long as you are producing oil or gas in paying quantities,
you are granted a suspension, or you are conducting approved drilling
or well reworking operations, in accordance with 30 CFR part 250.
(b) You may maintain your oil and gas lease by producing from, or
drilling or reworking approved directional wells under your lease that
originates from the surface of the seabed adjacent to or adjoining your
lease.
(c) You may maintain your oil and gas lease if your lease is being
drained by a well on another lease and you are paying compensatory
royalty.
(d) You may maintain your oil and gas lease if the lease, or part
of the lease, is part of an MMS-approved unit agreement, and there
either is production allocated to your lease, a suspension of unit
operations, or the unit is conducting approved drilling or well-
reworking operations in accordance with 30 CFR part 250.
Sec. 256.602 What is the initial period of my sulphur lease?
Your sulphur lease will have an initial period of not more than 10
years. The MMS will announce the initial period prior to the lease
sale. Your lease will be subject to administrative cancellation after 5
years if you have not begun an exploratory well.
Sec. 256.603 How may I maintain my sulphur lease beyond the initial
period?
You may maintain your sulphur lease after the initial period as
long as you are producing sulphur in paying quantities; granted a
suspension; or conducting drilling, reworking, plant construction, or
other operations necessary to the production of sulphur.
Lease Obligations
Sec. 256.605 What are my obligations as a record title owner?
(a) As a record title owner, you are responsible for all
performance on the lease, including paying any rent and royalty due. If
there is more than one record title or operating rights owner, each of
you are jointly and severally liable for non-monetary lease
obligations, including the obligation to protect the lease from
drainage and to pay compensatory royalty that may be owed. You are also
jointly and severally liable for plugging and abandonment obligations
that accrue while you hold record title interest. For example, this
means that if you own 50 percent record title interest, MMS may hold
you responsible for 100 percent of the non-monetary obligations, if
your joint owner(s) default(s).
(b) For monetary obligations, such as paying rent and royalty, your
obligation is proportionate to your interest. For example, if you own
25 percent of the record title interest, you are liable for only 25
percent of the rent or royalty on production. As a record title owner,
you also are secondarily liable for monetary obligations of any
operating rights holders on the lease.
Sec. 256.606 What are my rights and obligations as an operating
rights owner?
(a) As an operating rights owner, you have the right to enter the
leased area to conduct drilling and related operations including
production according to the lease terms and applicable regulations.
(b) You have the right to authorize another party to conduct
operations on the lease.
(c) You are jointly and severally liable with other record title
owners and operating rights holders in the lease for all non-monetary
lease obligations pertaining to that portion of the lease subject to
your operating rights.
(d) You are liable for monetary obligations pertaining to that
portion of the lease subject to your operating rights with other
operating rights holders in proportion to your share of such operating
rights.
Transferring Interest in All or Part of a Lease
Sec. 256.610 May I sell, exchange, assign, or otherwise transfer my
lease?
No lease issued under this part may be sold, exchanged, assigned,
or otherwise transferred except with the approval of MMS.
Sec. 256.611 May I assign all or part of my lease interest?
You may assign all or part of your lease interest subject to MMS
approval.
[[Page 25198]]
Each instrument that creates or transfers an interest must describe the
entire tract or describe, by officially designated subdivisions, the
interest you propose to create or transfer. Officially designated
subdivisions, or aliquot parts, are a half (\1/2\), a quarter (\1/4\),
a quarter of a quarter (\1/4\\1/4\), and a quarter of a quarter of a
quarter (\1/4\\1/4\\1/4\). We may disapprove an assignment when the
assignor or assignee has outstanding or unsatisfied obligations under
this chapter.
Sec. 256.612 May I assign operating rights?
You may assign your operating rights in all or part of your lease
subject to MMS approval. However, you may create subleases of only two
depth levels per aliquot part. Operating rights must be described by
officially designated subdivisions, or aliquot parts, and limited to
specific depths within those subdivisions.
Sec. 256.613 How do I seek approval of an assignment?
(a) You must request approval of each assignment and submit to MMS
two originals of each instrument that creates or transfers ownership of
record title or operating rights within 90 days after the last party
executes the transfer agreement. You must pay the service fee listed in
Sec. 256.104 with your request.
(1) All assignments must be on the appropriate form approved by
MMS.
(i) Form MMS-150 entitled, Assignment of Record Title Interest in
Federal OCS Oil and Gas Lease.
(ii) Form MMS-151 entitled, Assignment of Operating Rights Interest
in Federal OCS Oil and Gas Lease.
(2) When an assignment is made of 100 percent of the record title
interest in an officially designated subdivision of your lease, that
assignment creates a new lease. Your assignee becomes the leaseholder
of the newly segregated lease that is subject to all the terms and
conditions of your original lease, including the requirement to furnish
a bond in the amount required in subpart E of this part.
(b) Before MMS approves an assignment, we will consult with and
consider the views of the Attorney General.
Sec. 256.614 How do I transfer the interest of a deceased
leaseholder?
(a) If any of the leaseholders are deceased, you as heir or devisee
must provide evidence as to who are the lawful successors in interest.
(b) You as heir or devisee must submit a certified copy of an
appropriate court order or decree; or if no court action is necessary,
a certified copy of the will or the statements of two disinterested
parties with knowledge of the facts.
(c) You as heir or devisee must submit statements that you are the
person named as successor in interest along with evidence of your
qualifications to hold a lease under subpart D of this part.
(d) If you do not qualify to hold a lease under subpart D of this
part, you will be recognized as the successor in interest, but must
divest your interest in the lease within 2 years.
Sec. 256.615 What if I want to assign interests in more than one
lease at the same time?
To assign interests in more than one lease at the same time, you
must file a separate form and two originals of the instrument that
creates or transfers ownership for each lease assigned. However, if all
leases are being transferred to the same entity, you need submit only
one application letter of request for approval.
Sec. 256.616 What is the effect of an assignment on an assignor's
liability?
As assignor, you are liable for all obligations, monetary and non-
monetary, that accrued under your lease before MMS approves your
assignment. Our approval of the assignment does not relieve you of
these accrued obligations if your assignee, or any subsequent assignee,
fails to perform. In addition, MMS may require you to bring the lease
into compliance to the extent the obligation accrued before approval of
your assignment, if your assignee or any subsequent assignee, fails to
perform any obligation under the lease. You remain liable for all
obligations if you create a sublease of operating rights only.
Sec. 256.617 May I specify an effective date of the assignment?
The MMS will record the assignment as effective on the date you
specify. If you do not specify a date, the assignment is effective on
the first day of the month following your request to assign. Regardless
of the effective date, the date that we approve the assignment
determines when the assignor's liabilities cease to accrue.
Sec. 256.618 What is the effect of an assignment on an assignee's
liability?
As assignee, you and any subsequent assignees are liable for all
obligations that have accrued or will accrue after MMS approves the
assignment. As assignee, you must comply with all the terms and
conditions of the lease and regulations issued under the Act, remedy
all existing environmental and operational problems on the lease,
properly abandon all wells, and reclaim the site as required under 30
CFR part 250.
Sec. 256.619 As a restricted joint bidder, may I assign interest to
another restricted joint bidder?
If you are a restricted joint bidder, you may assign all or part of
your interest in a lease to another restricted joint bidder. However,
if you want to assign less than your entire interest to another
restricted joint bidder, you must submit to MMS a copy of any
agreements relating to your acquisition of the lease or interest. The
MMS may ask the Attorney General to review your request.
Sec. 256.620 Are there any interests I may assign without MMS
approval?
(a) You may create or transfer carried working interests,
overriding royalty interests, or payments out of production without MMS
approval. However, you must send us a copy of each instrument creating
or transferring such interests for record purposes. For each lease
affected, you must pay the service fee listed in Sec. 256.104 with
your documents submitted for record.
(b) If you submit documents for record purposes that are not
required by these regulations, for each lease affected, you must pay
the service fee listed in Sec. 256.104 with your document submissions.
The MMS may decline to accept for filing such documents and the service
fee will not be refunded.
Sec. 256.621 What reports must I submit for lease term pipelines when
MMS approves a lease assignment?
Within 30 calendar days after MMS approves an assignment of a
lease, or approves a new designation of operator for a lease under
Sec. 250.143 or Sec. 250.144, you (the new lessee or designated lease
operator) must submit a report to the Regional Supervisor that:
(a) Lists every lease term pipeline (see definition at Sec.
250.105), including decommissioned pipelines on the lease; and
(b) Indicates which pipelines remained as lease term pipelines
after the lease assignment was approved by MMS.
Helium
Sec. 256.630 What must a lessee do if MMS elects to extract helium
from a lease?
(a) The MMS reserves the ownership of, and the right to extract,
helium from all gas produced from your OCS lease. Under section 12(f)
of the Act, 43 U.S.C. 1341(f), upon our request, you must deliver all
or a specified portion of the gas containing helium to us at a point on
the lease or an onshore processing facility that we designate.
(b) The MMS will determine reasonable compensation and pay you for
any loss caused by the extraction of
[[Page 25199]]
helium, except for the value of the helium itself. We may erect,
maintain, and operate on your lease any reduction work and other
equipment necessary for helium extraction. Our extraction of helium
will be conducted in a manner to not cause substantial delays in the
delivery of gas to your purchaser.
Subpart G--Ending a Lease
Sec. 256.700 How does a lease end?
Your lease will expire by its own terms at the end of its initial
period, if you have not taken actions to extend the lease through
production in paying quantities, drilling operations, workover
operations, or a suspension under 30 CFR part 250.
Sec. 256.701 May I end the lease myself?
You may join with all record title owners to relinquish all or any
officially designated subdivision of your lease at any time by filing
three original copies of your request with MMS on Form MMS-152
entitled, Relinquishment of Federal OCS Oil and Gas Lease. The
relinquishment is effective on the date of filing. Relinquishing your
lease does not relieve you of any accrued obligations, either monetary
or non-monetary.
Sec. 256.702 Will MMS end my lease?
(a) The MMS may cancel your lease under section 5(a) of the Act, 43
U.S.C. 1334(a), if we find that continued activity would probably cause
serious harm or damage to life, property, any mineral, National
security or defense, or to the marine, coastal, or human environment;
that the threat or harm or damage will not disappear or decrease to an
acceptable level within a reasonable period of time; and that the
advantages of cancellation outweigh the advantages of continuing the
lease. Refer to 30 CFR part 250, subpart A, for procedures on lease
cancellation and compensation.
(b) The MMS may cancel your non-producing lease if you fail to
comply with any provision of the Act, lease, or applicable regulations,
if the failure continues for 30 days after we send you written notice
of such failure. Cancellation is subject to judicial review under
section 23(b) of the Act, 43 U.S.C. 1349(b).
(c) The MMS may cancel your producing lease if you fail to comply
with any provision of the Act, lease, or applicable regulations, only
after the judicial proceedings required under section 5(d) of the Act,
43 U.S.C. 1334(d).
(d) The MMS may cancel your lease if we find proof that the lease
was obtained by fraud or misrepresentation. You will have notice and an
opportunity to be heard prior to lease cancellation.
Subpart H--[Reserved]
Subpart I--Bonus or Royalty Credits for Exchange of Certain Leases
Sec. 256.900 Which leases may I exchange for a bonus or royalty
credit?
You may exchange a lease for a bonus or royalty credit if it:
(a) Was in effect on December 20, 2006, and
(b) Is located in:
(1) The Eastern planning area and within 125 miles of the coastline
of the State of Florida, or
(2) The Central planning area and within the Desoto Canyon OPD, the
Destin Dome OPD, or the Pensacola OPD and within 100 miles of the
coastline of the State of Florida.
Sec. 256.901 How much bonus or royalty credit will MMS grant in
exchange for a lease?
The amount of the bonus or royalty credit for an exchanged lease
equals the sum of:
(a) The amount of the bonus payment; and
(b) All rental paid for the lease as of the date the lessee submits
the request to exchange the lease under Sec. 256.902 to MMS.
Sec. 256.902 What must I do to obtain a bonus or royalty credit?
(a) To obtain the bonus or royalty credit, all of the record title
interest owners in the lease must submit the following to the MMS
Regional Supervisor for Leasing and Environment for the GOM on or
before October 12, 2010:
(1) A written request to exchange the lease for the bonus or
royalty credit, signed by all record title interest owners in the
lease.
(2) The name and contact information for a person who will act as a
contact for each record title interest owner.
(3) Documentation of each record title interest owner's percentage
share in the lease.
(4) A list of all bonus and rental payments for that lease made by,
or on behalf of, each of the current record title owners.
(5) A written relinquishment of the lease as described in Sec.
256.701. Notwithstanding Sec. 256.701, the relinquishment will become
effective when the credit becomes effective under paragraph (b) of this
section.
(b) The credit becomes effective when MMS issues a certification to
the record title interest owners that the lease has qualified for the
credit.
Sec. 256.903 How is the bonus or royalty credit allocated among
multiple lease owners?
The MMS will allocate the bonus or royalty credit for an exchanged
lease to the current record title interest owners in the same
percentage share as each owner has in the lease as of the date of the
request to exchange the lease.
Sec. 256.904 How may I use the bonus or royalty credit?
(a) You may use a credit issued under this part in lieu of a
monetary payment due under any lease in the Gulf of Mexico not subject
to the revenue distribution provisions of section 8(g)(2) of the OCSLA
(43 U.S.C. 1337(g)(2)) for either:
(1) A bonus for acquisition of an interest in a new lease; or
(2) Royalty due on oil and gas production after October 12, 2010.
(b) You may not use a bonus or royalty credit in lieu of delivering
oil or gas taken as royalty-in-kind.
(c) If you have any credit that remains unused after 5 years from
the date MMS issued the credit, MMS reserves the right to apply the
remaining credit to your ongoing obligations.
Sec. 256.905 How do I transfer a bonus or royalty credit to another
person?
(a) You may transfer your bonus or royalty credit to any other
person by submitting to the MMS Adjudication Unit for the Gulf of
Mexico two originally executed transfer letters of agreement.
(b) Authorized officers of all companies involved in transferring
and receiving the credit must sign the transfer letters of agreement as
indicated on the qualification card filed with MMS.
(c) A transfer letter of agreement must include:
(1) The effective date of the transfer,
(2) The OCS-G number for the lease that originally qualified for
the credit,
(3) The amount of the credit being transferred,
(4) Company names punctuated exactly as filed on the qualification
card at MMS, and
(5) A corporate seal, only if MMS used a corporate seal
qualification process for your corporation.
(d) The transferee of a credit transferred under this section may
use it in accordance with Sec. 256.904 as soon as MMS sends a
confirmation of the transfer to the transferee.
[[Page 25200]]
PART 260--OUTER CONTINENTAL SHELF OIL AND GAS LEASING
5. The authority citation for 30 CFR part 260 is revised to read as
follows:
Authority: 43 U.S.C. 1334.
6. Amend 30 CFR part 260 by removing Subpart D.
[FR Doc. E9-12155 Filed 5-26-09; 8:45 am]
BILLING CODE 4310-MR-P