30 Cfr 556

jstallworth on DSKBBY8HB2PROD with CFR

Ocean Energy Management, Interior

Pt. 556

Bay Coquette; Bay Courant; Bay Dosgris;
Bay Ronquille; Bay Tambour; Bayou Blanc;
Bayou Lucien; Belle Isle; Belle Pass; Big
Constance Lake; Black Bay North; Black
Bay South; Breton Islands; Breton Islands
SE; Buras; Burrwood Bayou East; Burwood
Bayou West; Calumet Island; Cameron;
Caminada Pass; Cat Island; Cat Island Pass;
Central Isles Dernieres; Chandeleur Light;
Chef Mentur; Cheniere Au Tigre; Cocodrie;
Coquille
Point;
Cow
Island;
Creole;
Cypremort Point; Deep Lake; Dixon Bay;
Dog Lake; Door Point; East Bay Junop;
Eastern Isles; Dernieres; Ellerslie; Empire;
English Lookout; False Mouth Bayou;
Fearman Lake; Floating Turf Bayou;
Fourleague Bay; Franklin; Freemason Island; Garden Island Pass; Grand Bayou;
Grand Bayou du Large; Grand Chenier;
Grand Gosier Islands; Grand Isle; Hackberry
Beach; Hammock Lake; Happy Jack; Hebert
Lake; Hell Hole Bayou; Hog Bayou; Holly
Beach; Intercoastal City; Isle Au Pitre;
Jacko Bay; Johnson Bayou; Kemper; Lake
Athanasio; Lake Cuatro Caballo; Lake Eloi;
Lake Eugene; Lake Felicity; Lake La
Graisse; Lake Merchant; Lake Point; Lake
Salve; Lake Tambour; Leeville; Lena Lagoon; Lost Lake; Main Pass; Malheureux
Point; Marone Point; Martello Castle; Mink
Bayou; Mitchell Key; Morgan City SW; Morgan Harbor; Mound Point; Mulberry Island
East; Mulberry Island West; New Harbor Islands; North Islands; Oak Mound Bayou; Oyster Bayou; Pass A Loutre East; Pass A
Loutre West; Pass du Bois; Pass Tante
Phine; Pecan Island; Pelican Pass; Peveto
Beach; Pilottown; Plumb Bayou; Point Au
Fer; Point Au Fer NE; Point Chevreuil;
Point Chicot; Port Arthur South; Port Sulphur; Pte. Aux Marchuttes; Proctor Point;
Pumpkin Islands; Redfish Point; Rollover
Lake; Sabine Pass; Saint Joe Pass; Smith
Bayou; South of South Pass; South Pass;
Stake Islands; Taylor Pass; Texas Point;
Three Mile Bay; Tigre Lagoon; Timbalier Island; Triumph; Venice; Weeks; West of Johnson
Bayou;
Western
Isles
Dernieres;
Wilkinson Bay; Yscloskey.
Mississippi (1:24,000 scale): Bay Saint Louis;
Biloxi; Cat Island; Chandeleur Light; Deer Island; Dog Keys Pass; English Lookout;
Gautier North; Gautier South; Grand Bay
SW; Gulfport North; Gulfport NW; Gulfport
South; Horn Island East; Horn Island West;
Isle Au Pitre; Kreole; Ocean Springs;
Pascagoula North; Pascagoula South; Pass
Christian; Petit Bois Island; Saint Joe Pass;
Ship Island; Waveland.
Texas (1:24,000 scale): Allyns Bright; Anahuac; Aransas Pass; Austwell; Bacliff;
Bayside; Big Hill Bayou; Brown Cedar Cut;
Caplen; Carancahua Pass; Cedar Lakes East;
Cedar Lakes West; Cedar Lane NE; Christmas Point; Clam Lake; Corpus Christi; Cove;
Crane Islands NW; Crane Islands SW; Decros
Point; Dressing Point; Estes; Flake; Free-

port; Frozen Point; Galveston; Green Island;
Hawk Island; High Island; Hitchcock; Hoskins Mound; Jones Creek; Keller Bay;
Kleberg Point; La Comal; La Leona; La
Parra Ranch NE; Laguna Vista; Lake Austin;
Lake Como; Lake Stephenson; Lamar; Long
Island; Los Amigos; Windmill; Maria Estella
Well; Matagorda; Matagorda SW; Mesquite
Bay; Mission Bay; Morgans Point; Mosquito
Point; Mouth of Rio Grande; Mud Lake;
North of Port Isabel NW; North of Port Isabel SW; Oak Island; Olivia; Oso Creek NE;
Oyster Creek; Palacios; Palacios NE;
Palacios Point; Palacios SE; Panther Point;
Panther Point NE; Pass Cavallo SW; Pita Island; Point Comfort; Point of Rocks; Port
Aransas; Port Arthur South; Port Bolivar;
Port Ingleside; Port Isabel; Port Isabel NW;
Port Lavaca East; Port Mansfield; Port
O’Connor;
Portland;
Potrero
Cortado;
Potrero Lopeno NW; Potrero Lopeno SE;
Potrero Lopeno SW; Rockport; Sabine Pass;
San Luis Pass; Sargent; Sea Isle; Seadrift;
Seadrift NE; Smith Point; South Bird Island;
South Bird Island NW; South Bird Island SE;
South of Palacios Point; South of Potrero
Lopeno NE; South of Potrero Lopeno NW;
South of Potrero Lopeno SE; South of Star
Lake; St. Charles Bay; St. Charles Bay SE;
St. Charles Bay SW; Star Lake; Texas City;
Texas Point; The Jetties; Three Islands; Tivoli SE; Turtle Bay; Umbrella Point; Virginia
Point; West of Johnson Bayou; Whites
Ranch; Yarborough Pass.

PART 556—LEASING OF SULFUR OR
OIL AND GAS AND BONDING
REQUIREMENTS IN THE OUTER
CONTINENTAL SHELF
Subpart A—General Provisions
Sec.
556.100 Statement of policy.
556.101 Purpose.
556.102 Authority.
556.103 Cross references.
556.104 Information collection and proprietary information.
556.105 Acronyms and definitions.
556.106 Service fees.
556.107 Corporate seal requirements.

Subpart B—Oil and Gas Five Year Leasing
Program
556.200 What is the Five Year leasing program?
556.201 Does BOEM consider multiple uses
of the OCS?
556.202 How does BOEM start the Five Year
program preparation process?
556.203 What does BOEM do before publishing a proposed Five Year program?

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30 CFR Ch. V (7–1–18 Edition)

556.204 How do Governments and citizens
comment on a proposed Five Year program?
556.205 What does BOEM do before approving a proposed final Five Year program
or a significant revision of a previouslyapproved Five Year program?

Subpart C—Planning and Holding a Lease
Sale
556.300 What reports may BOEM and other
Federal agencies prepare before a lease
sale?
556.301 What is a Call for Information and
Nominations?
556.302 What does BOEM do with the information from the Call?
556.303 What does BOEM do if an area proposed for leasing is within three nautical
miles of the seaward boundary of a coastal State?
556.304 How is a proposed notice of sale prepared?
556.305 How does BOEM coordinate and consult with States regarding a proposed notice of sale?
556.306 What if a potentially oil or gas bearing area underlies both the OCS and
lands subject to State jurisdiction?
556.307 What does BOEM do with comments
and recommendations received on the
proposed notice of sale?
556.308 How does BOEM conduct a lease
sale?
556.309 Does BOEM offer blocks in a sale
that is not on the Five Year program
schedule (called a Supplemental Sale)?

Subpart D—Qualifications
556.400 When must I demonstrate that I am
qualified to hold a lease on the OCS?
556.401 What do I need to show to become
qualified to hold a lease on the OCS and
obtain a qualification number?
556.402 How do I make the necessary showing to qualify and obtain a qualification
number?
556.403 Under what circumstances may I be
disqualified from holding a lease on the
OCS?
556.404 What do the non-procurement debarment rules require that I do?
556.405 When must I notify BOEM of mergers, name changes, or changes of business
form?

Subpart E—Issuance of a Lease
jstallworth on DSKBBY8HB2PROD with CFR

HOW TO BID
556.500 Once qualified, how do I submit a
bid?
556.501 What information do I need to submit with my bid?

RESTRICTIONS ON JOINT BIDDING
556.511 Are there restrictions on bidding
with others and do those restrictions affect my ability to bid?
556.512 What bids may be disqualified?
556.513 When must I file a statement of production?
556.514 How do I determine my production
for purposes of the restricted joint bidders list?
556.515 May a person be exempted from joint
bidding restrictions?
HOW DOES BOEM ACT ON BIDS?
556.516 What does BOEM do with my bid?
556.517 What may I do if my bid is rejected?
AWARDING THE LEASE
556.520 What happens if I am the successful
high bidder and BOEM accepts my bid?
556.521 When is my lease effective?
556.522 What are the terms and conditions
of the lease and when are they published?

Subpart F—Lease Terms and Obligations
LENGTH OF LEASE
556.600 What is the primary term of my oil
and gas lease?
556.601 How may I maintain my oil and gas
lease beyond the primary term?
556.602 What is the primary term of my sulfur lease?
556.603 How may I maintain my sulfur lease
beyond the primary term?
LEASE OBLIGATIONS
56.604 What are my rights and obligations
as a record title owner?
556.605 What are my rights and obligations
as an operating rights owner?
HELIUM
556.606 What must a lessee do if BOEM
elects to extract helium from a lease?

Subpart G—Transferring All or Part of the
Record Title Interest in a Lease
556.700 May I assign or sublease all or any
part of the record title interest in my
lease?
556.701 How do I seek approval of an assignment of the record title interest in my
lease, or a severance of operating rights
from that record title interest?
556.702 When will my assignment result in a
segregated lease?
556.703 What is the effect of the approval of
the assignment of 100 percent of the
record title in a particular aliquot(s) of
my lease and the resulting lease segregation?

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556.704 When would BOEM disapprove an assignment or sublease of an interest in my
lease?
556.705 How do I transfer the interest of a
deceased natural person who was a lessee?
556.706 What if I want to transfer record
title interests in more than one lease at
the same time, but to different parties?
556.707 What if I want to transfer different
types of lease interests (not only record
title interests) in the same lease to different parties?
556.708 What if I want to transfer my record
title interests in more than one lease to
the same party?
556.709 What if I want to transfer my record
title interest in one lease to multiple
parties?
556.710 What is the effect of an assignment
of a lease on an assignor’s liability under
the lease?
556.711 What is the effect of a record title
holder’s sublease of operating rights on
the record title holder’s liability?
556.712 What is the effective date of a transfer?
556.713 What is the effect of an assignment
of a lease on an assignee’s liability under
the lease?
556.714 As a restricted joint bidder, may I
transfer an interest to another restricted
joint bidder?
556.715 Are there any interests I may transfer or record without BOEM approval?
556.716 What must I do with respect to the
designation of operator on a lease when a
transfer of record title is submitted?

jstallworth on DSKBBY8HB2PROD with CFR

Subpart H—Transferring Operating Rights in
All or Part of a Lease
556.800 As an operating rights owner, may I
assign all or part of my operating rights
interest?
556.801 How do I seek approval of an assignment of my operating rights?
556.802 When would BOEM disapprove the
assignment of all or part of my operating
rights interest?
556.803 What if I want to assign operating
rights interests in more than one lease at
the same time, but to different parties?
556.804 What if I want to assign my operating rights interest in a lease to multiple parties?
556.805 What is the effect of an operating
rights owner’s assignment of operating
rights on the assignor’s liability?
556.806 What is the effective date of an assignment of operating rights?
556.807 What is the effect of an assignment
of operating rights on an assignee’s liability?
556.808 As an operating rights owner, are
there any interests I may assign without
BOEM approval?

556.809 [Reserved]
556.810 What must I do with respect to the
designation of operator on a lease when a
transfer of operating rights ownership is
submitted?

Subpart I—Bonding or Other Financial
Assurance
556.900 Bond requirements for an oil and gas
or sulfur lease.
556.901 Additional bonds.
556.902 General requirements for bonds.
556.903 Lapse of bond.
556.904 Lease-specific
abandonment
accounts.
556.905 Using a third-party guarantee instead of a bond.
556.906 Termination of the period of liability and cancellation of a bond.
556.907 Forfeiture of bonds and/or other securities.

Subpart J—Bonus or Royalty Credits for
Exchange of Certain Leases
556.1000 Leases formerly eligible for a bonus
or royalty credit.

Subpart K—Ending a Lease
556.1100 How does a lease expire?
556.1101 May I relinquish my lease or an aliquot part thereof?
556.1102 Under what circumstances will
BOEM cancel my lease?

Subpart L—Leases Maintained Under
Section 6 of OCSLA
556.1200 Effect of regulations on lease.
556.1201 Section 6(a) leases and leases other
than those for oil, gas, or sulfur.

Subpart M—Environmental Studies
556.1300

Environmental studies.

AUTHORITY: 30 U.S.C. 1701 note, 30 U.S.C.
1711, 31 U.S.C. 9701, 42 U.S.C. 6213, 43 U.S.C.
1331 note, 43 U.S.C. 1334, 43 U.SC. 1801–1802.
SOURCE: 81 FR 18152, Mar. 30, 2016, unless
otherwise noted.

Subpart A—General Provisions
§ 556.100

Statement of policy.

The management of Outer Continental Shelf (OCS) resources is to be
conducted in accordance with the findings, purposes, and policy directions
provided by the Outer Continental
Shelf Lands Act Amendments of 1978
(OCSLA or the Act) (43 U.S.C. 1332,

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§ 556.101

30 CFR Ch. V (7–1–18 Edition)

1801, 1802), and other executive, legislative, judicial and departmental guidance. The Secretary of the Interior (the
Secretary) will consider available environmental information in making decisions affecting OCS resources.
§ 556.101

Purpose.

The purpose of the regulations in this
part is to establish the procedures
under which the Secretary will exercise
the authority to administer a leasing
program for oil and gas, and sulfur.
The regulations pertaining to the procedures under which the Secretary will
exercise the authority to administer a
program to grant rights-of-use and
easements are found in part 550 of this
chapter.

jstallworth on DSKBBY8HB2PROD with CFR

§ 556.102

Authority.

(a) The Outer Continental Shelf
Lands Act (OCSLA) (43 U.S.C. 1334) authorizes the Secretary of the Interior
to issue, on a competitive basis, leases
for oil and gas, and sulfur, in submerged lands of the OCS. The Act authorizes the Secretary to grant rightsof-way and easements through the submerged lands of the OCS.
(b) The Federal Oil and Gas Royalty
Management Act of 1982 (FOGRMA) (30
U.S.C. 1711) governs oil and gas royalty
management and requires the development of enforcement practices to ensure the prompt and proper collection
of oil and gas revenues owed to the
U.S.
(c) The Independent Offices Appropriations Act of 1952 (IOAA) (31 U.S.C.
9701) authorizes fees and charges for
Federal government services.
(d) The Energy Policy and Conservation Act of 1975 (42 U.S.C. 6213) prohibits joint bidding by major oil and
gas producers.
(e) The Gulf of Mexico Energy Security Act of 2006 (GOMESA) (Pub. L. 109–
432, 43 U.S.C. 1331 note):
(1) Shares leasing revenues with Gulf
producing states and the Land & Water
Conservation Fund for coastal restoration projects; and
(2) Allows companies to exchange
certain existing leases in moratorium
areas for bonus and royalty credits to
be used on other Gulf of Mexico leases.

§ 556.103 Cross references.
The following includes some of the
major regulations relevant to offshore
oil and gas development:
(a) For other applicable Bureau of
Ocean Energy Management (BOEM) oil
and gas regulations, see 30 CFR parts
550 through 560.
(b) For Bureau of Safety and Environmental Enforcement (BSEE) regulations governing exploration, development and production, and oil spill response, see 30 CFR chapter II.
(c) For Office of Natural Resources
Revenue (ONRR) regulations related to
rentals, royalties, and fees, see 30 CFR
chapter XII.
(d) For BOEM regulations governing
the appeal of an order or decision
issued under the regulations in this
part, see 30 CFR part 590.
(e) For regulations on the National
Environmental Policy Act (NEPA), see
40 CFR 1500–1508 and 43 CFR part 46.
(f) For ocean dumping sites, see the
U.S. Environmental Protection Agency
(USEPA) listing—40 CFR part 228.
(g) For air quality, see USEPA regulations at 40 CFR part 55 and BOEM
regulations at 30 CFR part 550 subparts
B and C.
(h) For related National Oceanic and
Atmospheric Administration (NOAA)
programs, see:
(1) Marine Sanctuary regulations, 15
CFR part 922;
(2) Fishermen’s Contingency Fund, 50
CFR part 296;
(3) Coastal Zone Management Act
(CZMA), 15 CFR part 930;
(4) Essential Fish Habitat, 50 CFR
600.90.
(i) For U.S. Coast Guard (USCG) regulations on the oil spill liability of vessels and operators, see 33 CFR parts
132, 135, and 136.
(j) For USCG regulations on port access routes, see 33 CFR part 164.
(k) For Department of Transportation regulations on offshore pipeline
facilities, see 49 CFR part 195.
(1) For Department of Defense regulations on military activities on offshore areas, see 32 CFR part 252.
§ 556.104 Information collection and
proprietary information.
(a) Information collection. (1) The Office of Management and Budget (OMB)

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Ocean Energy Management, Interior

§ 556.105

approved the collection of information
under 44 U.S.C. 3501–3521), and assigned
OMB Control Number 1010–0006. The
title of this collection of information is
‘‘Leasing of Sulfur or Oil and Gas in
the Outer Continental Shelf (30 CFR
part 550, part 556, and part 560).’’
(2) BOEM collects this information to
determine if an applicant seeking to
obtain a lease or right-of-use and easement (RUE) on the OCS is qualified to
hold such a lease or RUE and to determine whether any such applicant can
meet the monetary and non-monetary
requirements associated with a lease or
RUE. Responses to this information
collection are either required to obtain
or retain a benefit or are mandatory
under OCSLA (43 U.S.C. 1331–1356a).
BOEM will protect proprietary information collected according to section
26 of OCSLA (43 U.S.C. 1352), and this
section.
(3) The Paperwork Reduction Act of
1995 (44 U.S.C. 3501–3521) requires us to
inform the public that an agency may
not conduct or sponsor, and that no
one is required to respond to, a collection of information unless it displays a
current and valid OMB control number.
(4) Send comments regarding any aspect of the collection of information
under this part, including suggestions
for reducing the burden, to the Information Collection Clearance Officer,
Bureau of Ocean Energy Management,
by mail at 45600 Woodland Road, Sterling, VA 20166 or by email to
regulation1@boem.gov, or by phone at
(703) 787–1025.
(b) Proprietary information. (1) Any
proprietary information maintained by
BOEM will be subject to the requirements of 43 CFR part 2.
(2) No proprietary information received by BOEM under 43 U.S.C. 1352(c)
will be transmitted to any affected
State unless the lessee, to whom such
information applies, or the permittee
and all persons, to whom such permittee has sold such information under
promise of confidentiality, agree to
such transmittal.
(c) Proprietary information in response to a Call for Information and
Nominations (Call).
(1) A specific indication of interest in
an area received in response to a Call

issued by the Secretary is proprietary
information.
(2) Notwithstanding paragraph (c)(1)
of this section, BOEM may provide a
summary of indications of interest in
areas received in response to a Call for
a proposed sale.
§ 556.105 Acronyms and definitions.
(a) Acronyms and terms used in this
part have the following meanings:
ASTM American Society for Testing and
Materials
BAST Best Available and Safest Technology
BOEM Bureau of Ocean Energy Management
BSEE Bureau of Safety and Environmental
Enforcement
CFR Code of Federal Regulations
CPA Central Planning Area of the GOM
CZMA Coastal Zone Management Act
DOI Department of the Interior
DOCD Development Operations Coordination Document
DOO Designation of Operator
DPP Development and Production Plan
EIA Environmental Impact Analysis
EP Exploration Plan
EPA Eastern Planning Area of the GOM
EPAct Energy Policy Act of 2005
FNOS Final Notice of Sale
FOGRMA Federal Oil and Gas Royalty
Management Act of 1982
G&G Geological and Geophysical
GDIS Geophysical Data and Information
Statement
GOM Gulf of Mexico
GOMESA Gulf of Mexico Energy Security
Act of 2006
IOAA Independent Offices Appropriations
Act of 1952
LLC Limited Liability Company
MBB Mapping and Boundary Branch
NAD North American Datum
NEPA National Environmental Policy Act
of 1969
NGPA Natural Gas Processors Association
NOAA National Oceanic and Atmospheric
Administration
NTL Notice to Lessees
OCS Outer Continental Shelf
OCSLA Outer Continental Shelf Lands Act
OMB Office of Management and Budget
ONRR Office of Natural Resources Revenue
OPD Official Protraction Diagram
PNOS Proposed Notice of Sale
PRA Paperwork Reduction Act
ROW Right of way
RSV Royalty Suspension Volume
RUE Right of Use and Easement
SLA Submerged Lands Act of 1953
U.S. United States
U.S.C. United States Code
USCG U.S. Coast Guard

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USEPA U.S.
Environmental
Protection
Agency
UTM Universal Transverse Mercator coordinate system
WPA Western Planning Area of the GOM

(b) As used in this part, each of the
terms and phrases listed below has the
meaning given in the Act or as defined
in this section.
Act means the Outer Continental
Shelf Lands Act, as amended (OCSLA)
(43 U.S.C. 1331–1356a).
Affected State means, with respect to
any program, plan, lease sale, or other
activity proposed, conducted, or approved pursuant to the provisions of
OCSLA, any State:
(i) The laws of which are declared,
pursuant to section 4(a)(2) of OCSLA
(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;
(ii) 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
OCSLA (43 U.S.C. 1333(a)(1));
(iii) Which is receiving, or in accordance with the proposed activity will receive, oil for processing, refining, or
transshipment that was extracted from
the OCS and transported directly to
that State by means of one or more
vessels or by a combination of means,
including a vessel;
(iv) Which is designated by the Secretary 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
(v) In which the Secretary finds that
because of such activity, there is, or
will be, a significant risk of serious
damage, due to factors such as prevailing winds and currents, to the marine or coastal environment in the
event of any oil spill, blowout, or release of oil or gas from one or more
vessels, pipelines, or other transshipment facilities.
Aliquot or Aliquot part means an officially designated subdivision of a

lease’s area, which can be a half of a
lease (1⁄2), a quarter of a lease (1⁄4), a
quarter of a quarter of a lease (1⁄4 1⁄4), or
a quarter of a quarter of a quarter of a
lease (1⁄4 1⁄4 1⁄4).
Authorized officer means any person
authorized by law or by delegation of
authority to or within BOEM to perform the duties described in this part.
Average daily production means the
total of all production in an applicable
production period that is chargeable
under § 556.514 divided by the exact
number of calendar days in the applicable production period.
Barrel means 42 U.S. gallons. All
measurements of crude oil and natural
gas liquids under this section must be
at 60 °F.
(i) For purposes of computing production and reporting of natural gas, 5,626
cubic feet of natural gas at 14.73 pounds
per square inch equals one barrel.
(ii) For purposes of computing production and reporting of natural gas
liquids, 1.454 barrels of natural gas liquids at 60 °F equals one barrel of crude
oil.
Bidding unit means one or more OCS
blocks, or any portion thereof, 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 be used interchangeably with the term ‘‘bidding unit.’’
BOEM means Bureau of Ocean Energy Management of the U.S. Department of the Interior.
Bonus or royalty credit means a legal
instrument or other written documentation approved by BOEM, 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 a bonus or a royalty due on
oil or gas production from certain
leases, as specified in, and permitted
by, the Gulf of Mexico Energy Security
Act of 2006, Pub. L. 109–432 (Div. C,
Title 1), 120 Stat. 3000 (2006), codified at
43 U.S.C. 1331, note.
BSEE means Bureau of Safety and
Environmental Enforcement of the
U.S. Department of the Interior.
Central Planning Area (CPA) means
that portion of the Gulf of Mexico that
lies southerly of Louisiana, Mississippi,
and Alabama. Precise boundary information is available from the BOEM

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Leasing Division, Mapping and Boundary Branch (MBB).
Coastal environment means the physical, atmospheric, and biological components, conditions, and factors that
interactively determine the productivity, state, condition, and quality of
the terrestrial ecosystem from the
shoreline inland 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 one or more of the 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 United States 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 inland boundaries of which may be identified by the
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 mean 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.
Crude oil means a mixture of liquid
hydrocarbons, including condensate
that exists in natural underground reservoirs and remains liquid at atmospheric pressure after passing through
surface separating facilities, but does
not include liquid hydrocarbons produced from tar sand, gilsonite, oil
shale, or coal.
Designated operator means a person
authorized to act on your behalf and
fulfill your obligations under the Act,
the lease, and the regulations, who has
been designated as an operator by all
record title holders and all operating
rights owners that own an operating
rights interest in the aliquot/depths in
which the designated operator, to
which the Designation of Operator
form applies, will be operating, and
who has been approved by BOEM to act
as designated operator.

Desoto Canyon OPD means the Official Protraction Diagram (OPD) designated as Desoto Canyon that has a
western edge located at the universal
transverse mercator (UTM) X coordinate 1,346,400 in the North American
Datum of 1927 (NAD27).
Destin Dome OPD means the Official
Protraction Diagram (OPD) designated
as Destin Dome that has a western
edge located at the Universal Transverse Mercator (UTM) X coordinate
1,393,920 in the NAD27.
Development block means a block, including a block susceptible to drainage, which is located on the same general geologic structure as an existing
lease having a well with indicated hydrocarbons; a reservoir may or may not
be interpreted to extend on to the
block.
Director means the Director of the
BOEM of the U.S. Department of the
Interior, or an official authorized to
act on the Director’s behalf.
Eastern Planning Area (EPA) means
that portion of the Gulf of Mexico that
lies southerly and westerly of Florida.
Precise boundary information is available from the BOEM Leasing Division,
Mapping and Boundary Branch.
Economic interest means any right to,
or any right dependent upon, production of crude oil, natural gas, or natural gas liquids and includes, but is not
limited to: a royalty interest; an overriding royalty interest, whether payable in cash or kind; a working interest
that does not include a record title interest or an operating rights interest; a
carried working interest; a net profits
interest; or a production payment.
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.
Initial period or primary term means
the initial period referred to in 43
U.S.C. 1337(b)(2).
Joint bid means a bid submitted by
two or more persons for an oil and gas
lease under section 8(a) of the Act.
Lease means an agreement that is
issued under section 8 or maintained

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§ 556.105

30 CFR Ch. V (7–1–18 Edition)

under section 6 of the Act and that authorizes exploration for, and development and production of, minerals on
the OCS. The term also means the area
covered by that agreement, whichever
the context requires.
Lease interest means one or more of
the following ownership interests in an
OCS oil and gas or sulfur lease: a
record title interest, an operating
rights interest, or an economic interest.
Lessee means a person who has entered into a lease with the United
States to explore for, develop, and
produce the leased minerals and is
therefore a record title owner of the
lease, or the BOEM-approved assigneeowner of a record title interest. The
term lessee also includes the BOEM-approved sublessee- or assignee-owner of
an operating rights interest in a lease.
Marine environment means the physical, atmospheric, and biological components, conditions, and factors that
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 sulfur; it
also includes sand, gravel, and salt
used to facilitate the development and
production of oil, gas, and sulfur.
Natural gas means a mixture of hydrocarbons and varying quantities of
non-hydrocarbons that exist in the gaseous phase.
Natural gas liquids means liquefied petroleum products produced from reservoir gas and liquefied at surface separators, field facilities, or gas processing plants worldwide, including any
of the following:
(i) Condensate—natural gas liquids
recovered from gas well gas (associated
and non-associated) in separators or
field facilities; or
(ii) Gas plant products—natural gas
liquids recovered from natural gas in
gas processing plants and from field facilities. Gas plant products include the
following, as classified according to the
standards of the Natural Gas Processors Association (NGPA) or the
American Society for Testing and Materials (ASTM):

(A) Ethane—C2H6
(B) Propane—C3H8
(C) Butane—C4H10, including all products covered by NGPA specifications
for commercial butane, including
isobutane, normal butane, and other
butanes—all butanes not included as
isobutane or normal butane;
(D) Butane-Propane Mixtures—All
products covered by NGPA specifications for butane-propane mixtures;
(E) Natural Gasoline—A mixture of
hydrocarbons extracted from natural
gas, that meets vapor pressure, end
point, and other specifications for natural gasoline set by NGPA;
(F) Plant Condensate—A natural gas
plant product recovered and separated
as a liquid at gas inlet separators or
scrubbers in processing plants or field
facilities; and
(G) Other Natural Gas plant products
meeting refined product standards (i.e.,
gasoline, kerosene, distillate, etc.).
Operating rights means an interest
created by sublease out of the record
title interest in an oil and gas lease,
authorizing the owner to explore for,
develop, and/or produce the oil and gas
contained within a specified area and
depth of the lease (i.e., operating rights
tract).
Operating rights owner means the
holder of operating rights.
Operating rights tract means the area
within the lease from which the operating rights have been severed on an
aliquot basis from the record title interest, defined by a beginning and ending depth.
Operator means the person designated
as having control or management of
operations on the leased area or a portion thereof. An operator may be a lessee, the operating rights owner, or a
designated agent of the lessee or the
operating rights owner.
Outer Continental Shelf (OCS) means
all submerged lands lying seaward and
outside of the area of lands beneath
navigable waters as defined in the Submerged Lands Act (43 U.S.C. 1301–1315)
and of which the subsoil and seabed appertain to the United States and are
subject to its jurisdiction and control.
Outer Continental Shelf Lands Act
(OCSLA) means the Outer Continental
Shelf Lands Act (43 U.S.C. 1331–1356a),
as amended.

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Ocean Energy Management, Interior

§ 556.105

Owned, as used in the context of restricted joint bidding or a statement of
production, means:
(i) With respect to crude oil—having
either an economic interest in or a
power of disposition over the production of crude oil;
(ii) With respect to natural gas—having either an economic interest in or a
power of disposition over the production of natural gas; and
(iii) With respect to natural gas liquids—having either an economic interest in or a power of disposition over
any natural gas liquids at the time of
completion of the liquefaction process.
Pensacola OPD means the Official
Protraction Diagram (OPD) designated
as Pensacola that has a western edge
located at the UTM X coordinate
1,393,920 in the NAD27.
Person means a natural person, where
so designated, or an entity, such as a
partnership, association, State, political subdivision of a State or territory,
or a private, public, or municipal corporation.
Planning area means a large portion
of the OCS, consisting of contiguous
OCS blocks, defined for administrative
planning purposes.
Primary term or initial period means
the initial period referred to in 43
U.S.C. 1337(b)(2).
Regional Director means the BOEM officer with responsibility and authority
for a Region within BOEM.
Regional Supervisor means the BOEM
officer with responsibility and authority for leasing or other designated program functions within a BOEM Region.
Right-of-Use and Easement (RUE)
means a right to use a portion of the
seabed at an OCS site other than on a
lease you own, for the construction
and/or use of artificial islands, facilities, installations, and other devices,
established to support the exploration,
development or production of oil and
gas, mineral, or energy resources from
an OCS or State submerged lands lease.
Right-of-Way (ROW) means an authorization issued by BSEE under the
authority of section 5(e) of the OCSLA
(43 U.S.C. 1334(e)) for the use of submerged lands of the Outer Continental
Shelf for pipeline purposes.
Secretary means the Secretary of the
Interior or an official or a designated

employee authorized to act on the Secretary’s behalf.
Security or securities means any note,
stock, treasury stock, bond, debenture,
evidence of indebtedness, certificate of
interest or participation in any profitsharing agreement; collateral-trust
certificate; pre-organization certificate
or subscription; transferable share; investment contract; voting-trust certificate; certificate of deposit for a security; fractional undivided interest in
oil, gas, or other mineral rights; or, in
general, any interest or instrument
commonly known as a ‘‘security’’ or
any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or
warrant or right to subscribe to or purchase any of the foregoing.
Single bid means a bid submitted by
one person for an oil and gas lease
under section 8(a) of the Act.
Six-month bidding period means the 6month period of time:
(i) From May 1 through October 31;
or
(ii) from November 1 through April
30.
Statement of production means, in the
context of joint restricted bidders, the
following production during the applicable prior production period:
(i) The average daily production in
barrels of crude oil, natural gas, and
natural gas liquids which it owned
worldwide;
(ii) The average daily production in
barrels of crude oil, natural gas, and
natural gas liquids owned worldwide by
every subsidiary of the reporting person;
(iii) The average daily production in
barrels of crude oil, natural gas, and
natural gas liquids owned worldwide by
any person or persons of which the reporting person is a subsidiary; and
(iv) The average daily production in
barrels of crude oil, natural gas, and
natural gas liquids owned worldwide by
any subsidiary, other than the reporting person, of any person or persons of
which the reporting person is a subsidiary.
Tract means one or more OCS blocks,
or any leasable portion thereof, that
will be part of a single oil and gas
lease. The term tract may be used

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§ 556.106

30 CFR Ch. V (7–1–18 Edition)

interchangeably with the term ‘‘bidding unit.’’
We, us, and our mean BOEM or the
Department of the Interior, depending
on the context in which the word is
used.
Western Planning Area (WPA) means
that portion of the Gulf of Mexico that
lies south and east of Texas. Precise
boundary information is available from
the Leasing Division, Mapping and
Boundary Branch.
You, depending on the context of the
regulations, means a bidder, a prospective bidder, a lessee (record title
owner), an operating rights owner, an
applicant seeking to become an assignee of record title or operating
rights, a designated operator or agent
of the lessee, a predecessor lessee, a

RUE holder for a State or Federal
lease, or a pipeline ROW holder.
[81 FR 18152, Mar. 30, 2016, as amended at 81
FR 70358, Oct. 12, 2016]

§ 556.106

Service fees.

(a) The table in this paragraph shows
the fees you must pay to BOEM for the
services listed. BOEM will adjust the
fees periodically according to the Implicit Price Deflator for Gross Domestic Product and publish a document
showing the adjustment in the FEDERAL REGISTER. If a significant adjustment is needed to arrive at a new fee
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
Service—processing of the following:

Fee amount

(1) Assignment of record title interest in Federal oil and gas lease(s) for BOEM approval. ............................................................................................................................
(2) Sublease or Assignment of operating rights interest in Federal oil and gas lease(s)
for BOEM approval. .......................................................................................................
(3) Required document filing for record purpose, but not for BOEM approval. ...............

$198

§ 556.701(a)

198
29

§ 556.801(a)
§ 556.715(a)
§ 556.808(a)
§ 556.715(b)
§ 556.808(b)

(4) Non-required document filing for record purposes. .....................................................

jstallworth on DSKBBY8HB2PROD with CFR

(b) Evidence of payment via pay.gov
of the fees listed in paragraph (a) of
this section must accompany the submission of a document for approval or
filing, or be sent to an office identified
by the Regional Director.
(c) Once a fee is paid, it is nonrefundable, even if your service request is
withdrawn.
(d) If your request is returned to you
as incomplete, you are not required to
submit a new fee with the amended
submission.
(e) The pay.gov Web site is accessible
at
https://www.pay.gov/paygov/
or
through the BOEM Web site at http://
www.boem.gov/Fees-for-Services.
(f) The fees listed in the table above
apply equally to any document or information submitted electronically
pursuant to part 560, subpart E, of this
chapter.
§ 556.107 Corporate seal requirements.
(a) If you electronically submit to
BOEM any document or information
referenced in § 560.500 of this chapter,

30 CFR Citation

29

any requirement to use a corporate
seal under this chapter will be satisfied, and you will not need to affix your
corporate seal to such document or information, if:
(1) You properly file with BOEM a
paper, with a corporate seal and the
signature of the authorized person(s),
stating that electronic submissions
made by you will be legally binding, as
set forth in § 560.502 of this chapter; and
(2) You make electronic submissions
to BOEM through a secure electronic
filing system that conforms to the requirements of § 560.500; or,
(b) You may file with BOEM a nonelectronic document, containing a corporate seal and the signature of an authorized person(s), attesting that future documents and information filed
by you by electronic or non-electronic
means will be legally binding without
an affixed corporate seal. If you file
such a non-electronic attestation document with BOEM, any requirement for
use of a corporate seal under the regulations of this chapter will be satisfied,

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Ocean Energy Management, Interior

§ 556.203

and you will not need to affix your corporate seal to submissions where they
would have been otherwise required.
(c) If the State or territory in which
you are incorporated does not issue or
require corporate seals, the document
referred to in paragraphs (a) and (b) of
this section need not contain a corporate seal, but must still contain the
signature of the authorized person(s), a
statement that the State in which you
are incorporated does not issue or require corporate seals, and a statement
that submissions made by you will be
legally binding.
(d) Any document, or information
submitted without corporate seal must
still contain the signature of an individual qualified to sign who has the
requisite authority to act on your behalf.
(e) Any document or information
submitted pursuant to this section is
submitted subject to the penalties of 18
U.S.C. 1001, as amended by the False
Statements Accountability Act of 1996.

Subpart B—Oil and Gas Five Year
Leasing Program

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§ 556.200 What is the Five Year leasing
program?
Section 18(a) of OCSLA (43 U.S.C.
1344(a)), requires the Secretary to prepare an oil and gas leasing program
that consists of a five-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. BOEM prepares
the five year schedule of proposed lease
sales consistent with the principles set
out in section 18(a)(1) and (2)(A)-(H) of
OCSLA (43 U.S.C. 1344(a)(1) and (2)(A)(H)) to obtain a proper balance among
the potential for environmental damage, the potential for the discovery of
oil and gas, and the potential for adverse impact on the coastal zone, as required by OCSLA section 18(a)(3) (43
U.S.C. 1344(a)(3)).
§ 556.201 Does BOEM consider multiple uses of the OCS?
BOEM gathers information about
multiple uses of the OCS in order to assist the Secretary in making decisions
on the 5-year program pursuant to provisions of 43 U.S.C. 1344. For this pur-

pose, BOEM invites and considers suggestions from States and local governments, industry, and any other interested parties, primarily through public
notice and comment procedures. BOEM
also invites and considers suggestions
from Federal agencies.
§ 556.202 How does BOEM start the
Five Year program preparation
process?
To begin preparation of the Five
Year program, BOEM invites and considers nominations for any areas to be
included or excluded from leasing, by
doing the following:
(a) BOEM prepares and makes public
official protraction diagrams and leasing maps of OCS areas. In any area
properly included in the official Five
Year diagrams and maps, any area not
already leased for oil and gas may be
offered for lease.
(b) BOEM invites and considers suggestions and relevant information from
governors of States, local governments,
industry, Federal agencies, and other
interested parties, through a publication of a request for information in the
FEDERAL REGISTER. Any local government must first submit its comments
on the request for information to its
State governor before sending the comments to BOEM.
(c) BOEM sends a letter to the governor of each affected State asking the
governor to identify specific laws,
goals, and policies that should be considered. Each State governor, as well
as the Department of Commerce, is requested to identify the relationship between any oil and gas activity and the
State under sections 305 and 306 of the
CZMA, 16 U.S.C. 1454 and 1455.
(d) BOEM asks the Department of
Energy for information on regional and
national energy markets and transportation networks.
§ 556.203 What does BOEM do before
publishing a proposed Five Year
program?
After considering the comments and
information described in § 556.202,
BOEM will prepare a draft proposed
Five Year program.
(a) At least 60 days before publication
of a proposed program, BOEM will send

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§ 556.204

30 CFR Ch. V (7–1–18 Edition)

a letter, together with the draft proposed program, to the governor of each
affected State, inviting the governor to
comment on the draft proposed program.
(b) A governor, whether for purposes
of preparing that State’s comments or
otherwise, may solicit comments from
local governments that he determines
may be affected by an oil and gas leasing program.
(c) If a governor’s comments on the
draft proposed program are received by
BOEM at least 15 days before submission of the proposed program to Congress and its publication for comment
in the FEDERAL REGISTER, BOEM will
reply to the governor in writing.
§ 556.204 How do governments and
citizens comment on a proposed
Five Year program?
BOEM publishes the proposed program in the FEDERAL REGISTER for
comment by the public. At the same
time, BOEM sends the proposed program to the governors of the affected
States and to Congress and the Attorney General of the United States for
review and comment.
(a) Governors are responsible for providing a copy of the proposed program
to affected local governments in their
States. Local governments may comment directly to BOEM, 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 of
the request for comments in the FEDERAL REGISTER.

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§ 556.205 What does BOEM do before
approving a proposed final Five
Year program or a significant revision of a previously-approved Five
Year program?
At least 60 days before the Secretary
may approve a proposed final Five Year
program or a significant revision to a
previously approved final Five Year
program, BOEM will submit a proposed
final program or proposed significant
revision to the President and Congress.
BOEM will also submit comments received and indicate the reasons why
BOEM did or did not accept any specific recommendation of the Attorney
General of the United States, the gov-

ernor of a State, or the executive of a
local government.

Subpart C—Planning and Holding
a Lease Sale
§ 556.300 What reports may BOEM and
other Federal agencies prepare before a lease sale?
For an oil and gas lease sale in a Five
Year program, and as the need arises
for other mineral leasing pursuant to
part 581 of this chapter, BOEM will prepare a report describing the general geology and potential mineral resources
of the area under consideration. The
Director may request other interested
Federal agencies to prepare reports describing, to the extent known, any
other valuable resources contained
within the general area and the potential effect of mineral operations upon
the resources or upon the total environment or other uses of the area.
§ 556.301 What is a Call for Information and Nominations?
BOEM issues a Call for Information
and Nominations (‘‘Call’’) on an area
proposed for leasing in the Five Year
program through publication in the
FEDERAL REGISTER and other publications. A Call may include more than
one proposed sale. Comments are requested from industry and the public
on:
(a) Industry interest in the area proposed for leasing, including nominations or indications of interest in specific blocks within the area;
(b) Geological conditions, including
bottom hazards;
(c) Archaeological sites on the seabed
or near shore;
(d) Potential multiple uses of the
proposed leasing area, including navigation, recreation, and fisheries;
(e) Areas that should receive special
concern and analysis; and
(f) Other socioeconomic, biological,
and environmental information.
§ 556.302 What does BOEM do with the
information from the Call?
(a) Based upon information and
nominations received in response to
the Call, and in consultation with appropriate Federal agencies, the Director will develop a recommendation of

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Ocean Energy Management, Interior

§ 556.304

areas proposed for leasing for the Secretary for further consideration for
leasing and/or environmental analysis.
(1) In developing the recommendation, the Director will consider available information concerning the environment, 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.
(2) The Director, on his/her own motion, may include in the recommendation areas in which interest has not
been indicated in response to a Call. In
making a recommendation, the Director will consider all available environmental information.
(3) Upon approval by the Secretary,
the Director will announce the area
identified in the FEDERAL REGISTER.
(b) BOEM will evaluate the area(s)
identified for further consideration for
the potential effects of leasing on the
human, marine, and coastal environments, and may develop measures to
mitigate adverse impacts, including
lease stipulations, for the options to be
analyzed. The Director may hold public
hearings on the environmental analysis
after an appropriate notice.
(c) BOEM will seek to inform the
public, as soon as possible, of changes
from the area(s) proposed for leasing
that occur after the Call process.
(d) Upon request, the Director will
provide relative indications of interest
in areas, as well as any comments filed
in response to a Call for a proposed
sale. However, no information transmitted will identify any particular
area with the name of any particular
party so as not to compromise the
competitive position of any participants in the process of indicating interest.
(e) For supplemental sales provided
for by § 556.308, the Director’s recommendation will be replaced by a
statement describing the results of the
Director’s consideration of the factors
specified above in this section.

§ 556.303 What does BOEM do if an
area proposed for leasing is within
three nautical miles of the seaward
boundary of a coastal State?
For an area proposed for leasing that
is within three nautical miles of the
seaward boundary of a coastal State, as
governed by section 8(g)(1) of OCSLA
(43 U.S.C. 1337(g)(1)):
(a) BOEM provides the governor of
the coastal State, subject to the confidentiality requirements in this chapter:
(1) A schedule for leasing; and
(2) An estimate of the potential oil
and gas resources.
(b) At the request of the governor of
a coastal State, BOEM will provide to
that governor, subject to the confidentiality requirements in this chapter:
(1) Information concerning geographical, geological, and ecological
characteristics; and
(2) An identification of any field, geological structure, or trap, or portion
thereof, that lies within three nautical
miles of the State’s boundary.
§ 556.304 How is a proposed notice of
sale prepared?
(a) The Director will, in consultation
with appropriate Federal agencies, develop measures, including lease stipulations and conditions, to mitigate adverse impacts on the environment,
which will be contained, or referenced,
in the proposed notice of sale.
(b) A proposed notice of sale will be
submitted to the Secretary for approval.
All
comments
and
recommendations received and the Director’s findings or actions thereon, will
also be forwarded to the Secretary.
(c) Upon approval by the Secretary,
BOEM will send a proposed notice of
sale to the governors of affected States
and publish the notice of its availability in the FEDERAL REGISTER. The
proposed notice of sale references or
provides a link to the lease form, and
contains a description of the area proposed for leasing, the proposed lease
terms and conditions of sale, and proposed stipulations to mitigate potential adverse impacts on the environment.

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30 CFR Ch. V (7–1–18 Edition)

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§ 556.305 How does BOEM coordinate
and consult with States regarding a
proposed notice of sale?
(a) Within 60 days after receiving the
proposed notice of sale, governors of affected States may submit comments
and recommendations to BOEM regarding the size, timing, and location of the
proposed sale. Local governments may
comment to BOEM directly, but must
also send their comments to the governor of their State.
(b) BOEM will provide a consistency
determination under the Coastal Zone
Management Act (CZMA) (16 U.S.C.
1456) to each State with an approved
coastal zone management program
that will determine whether the proposed sale is consistent, to the maximum extent practicable, with the enforceable policies of the State’s approved coastal zone management program.
§ 556.306 What if a potentially oil- or
gas-bearing area underlies both the
OCS and lands subject to State jurisdiction?
(a) Whenever the Director or the governor of a coastal State determines
that a common potentially hydrocarbon-bearing area may underlie the
Federal OCS and State submerged
lands, the Director or the governor will
notify the other party in writing of the
determination.
(b) Thereafter the Director will provide to the governor of the coastal
State, subject to the confidentiality requirements in this chapter:
(1) An identification of the areas proposed for leasing and a schedule for,
leasing; and
(2) An estimate of the oil and gas resources.
(c) At the request of the governor of
the coastal State, the Director will
provide to such governor, subject to
the confidentiality requirements in
this chapter:
(1) All geographical, geological, and
ecological characteristics of the areas
proposed for leasing; and
(2) An identification of any field, geological structure, or trap that lies
within 3 miles of the State’s seaward
boundary.
(d) If BOEM intends to lease such
blocks or tracts, the Director and the

governor of the coastal State may
enter into an agreement for the equitable disposition of the revenues from
production of any common potentially
hydrocarbon-bearing area, pursuant to
OCSLA section 8(g)(3) (43 U.S.C.
1337(g)(3)). Any revenues received by
the United States under such an agreement are subject to the requirements
of OSCLA section 8(g)(2) (43 U.S.C.
1337(g)(2)).
(e) If the Director and the governor
do not enter into an agreement under
paragraph (d) of this section within 90
days, BOEM may nevertheless proceed
with the leasing of the tracts, in which
case all revenues will be deposited in a
separate account in the Treasury of the
United States, pending disposition of
27% (twenty-seven percent) of the revenues to the relevant coastal state(s),
pursuant to the requirements of
OCSLA section 8(g)(2). (43 U.S.C.
1337(g)(2)).
§ 556.307 What does BOEM do with
comments and recommendations received on the proposed notice of
sale?
(a) BOEM will consider all comments
and recommendations received in response to the proposed notice of sale.
(b) If the Secretary determines, after
providing opportunity for consultation,
that a governor’s comments, and those
of any affected local government, provide a reasonable balance between the
national interest and the well-being of
the citizens of the State, the Secretary
will accept the recommendations of a
State and/or local government(s). Any
such determination of the national interest will be based on the findings,
purposes and policies of the Act set
forth in 43 U.S.C. 1332 and 43 U.S.C.
1801.
(c) BOEM will send to each governor
written reasons for its determination
to accept or reject each governor’s recommendation, and/or to implement any
alternative means to provide for a reasonable balance between the national
interest and the interests of the citizens of the State.
§ 556.308 How does BOEM conduct a
lease sale?
(a) BOEM publishes a final notice of
sale in the FEDERAL REGISTER and in

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other publications, as appropriate, at
least 30 days before the date of the
sale. The final 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 areas offered for lease, the
lease terms and conditions of sale, and
stipulations to mitigate potential adverse impacts on the environment.
(b) Oil and gas 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.
(c) Unless BOEM finds that a larger
area is necessary for reasonable economic production, no individual tract
for oil and gas leasing will exceed 5,760
acres in area. If BOEM finds that an
area larger than 5,760 acres is necessary in any particular area, the size
of any such tract will be specified in
the final notice of sale.
(d) The final notice of sale references,
or provides a link to, the OCS lease
form which will be issued to successful
bidders.
§ 556.309 Does BOEM offer blocks in a
sale that is not on the Five Year
program schedule (called a Supplemental Sale)?

jstallworth on DSKBBY8HB2PROD with CFR

(a) Except as provided in paragraph
(c) of this section, BOEM may offer a
block within a planning area included
in the Five Year program in an otherwise unscheduled sale, if the block:
(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, BOEM
may disclose the classification of the
block as a development block.
(c) Blocks in the Central or Western
Gulf of Mexico Planning Areas cannot
be offered in a sale that is not on the
schedule.

Subpart D—Qualifications
§ 556.400 When must I demonstrate
that I am qualified to hold a lease
on the OCS?
In order to bid on, own, hold, or operate a lease on the OCS, bidders, record
title holders, and operating rights owners must first obtain a qualification
number from BOEM.
§ 556.401 What do I need to show to become qualified to hold a lease on
the OCS and obtain a qualification
number?
(a) You may become qualified to hold
a lease on the OCS and obtain a qualification number in accordance with
§ 556.402, if you submit evidence demonstrating that you are:
(1) A natural person who is a citizen
or national of the United States;
(2) A natural person who is an alien
lawfully admitted for permanent residence in the United States, as defined
in 8 U.S.C. 1101(a)(20);
(3) A private, public, or municipal
corporation or Limited Liability Company or Limited Liability Corporation
(either/both sometimes herein referred
to as ‘‘LLC’’) organized under the laws
of any State of the United States, the
District of Columbia, or any territory
or insular possession subject to United
States jurisdiction;
(4) An association of such citizens,
nationals, resident aliens, or corporations;
(5) A State, the District of Columbia,
or any territory or insular possession
subject to United States jurisdiction;
(6) A political subdivision of a State,
the District of Columbia, or any territory or insular possession subject to
United States jurisdiction; or
(7) A Trust organized under the laws
of any State of the United States, the
District of Columbia, or any territory
or insular possession subject to United
States jurisdiction;
(b) Statements and evidence submitted to demonstrate qualification
under paragraphs (a)(1) through (6) of
this section are subject to the penalties
of 18 U.S.C. 1001.
(b) BOEM may issue you a qualification number after you have provided
evidence acceptable to BOEM.

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30 CFR Ch. V (7–1–18 Edition)

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§ 556.402 How do I make the necessary
showing to qualify and obtain a
qualification number?
(a) If BOEM has already issued you a
qualification number, you may present
that number to BOEM. If not, in order
to become qualified, you must provide
the information in paragraph (b) or (c)
of this section before BOEM will issue
you a BOEM qualification number.
(b) A natural person must be a citizen or national of the United States,
or a resident alien, to qualify. A United
States citizen or national must submit
written evidence acceptable to BOEM
attesting to United States citizenship
or national status. A resident alien
must submit an original or a photocopy of the United States Citizenship
and Immigration Services form evidencing legal status as a resident alien.
(c) A person who is not a natural person must submit evidence (refer to
paragraph (d) of this section) acceptable to BOEM that:
(1) It is authorized to conduct business under the laws of a State, the District of Columbia, or any territory or
insular possession subject to United
States jurisdiction under which it is
organized;
(2) Under the operating rules of its
business, it is authorized to hold OCS
leases; and
(3) Includes an up-to-date list of persons, and their titles, who are authorized to bind the corporation, association or other entity when conducting
business on the OCS. It is up to you, in
accordance with your organizational
structure or rules, to identify the individual, or group of individuals, who has
actual authority to bind your organization, and the title(s) they will use when
they sign documents to bind the organization. You must maintain and regularly update the information as to who
has the authority to bind the organization
whenever
that
information
changes.
(d) Acceptable evidence under paragraph (c) of this section includes, but is
not limited to:
(1) For a corporation,
(i) A statement by the Secretary of
the corporation, over corporate seal,
certifying that the corporation is authorized to hold OCS leases; and

(ii) Evidence of authority of holders
of positions entitled to bind the corporation, certified by Secretary of the
corporation, over corporate seal, such
as:
(A) Certified copy of resolution of the
board of directors with titles of officers
authorized to bind corporation;
(B) Certified copy of resolutions
granting corporate officer authority to
issue a power of attorney; or
(C) Certified copy of power of attorney or certified copy of resolution
granting power of attorney.
(2) For a Limited or General Partnership,
(i) A statement by an authorized
party certifying that the partnership is
authorized to hold OCS leases;
(ii) A copy of your signed partnership
formation documents, including a partnership agreement;
(iii) A statement from each partner
indicating, as appropriate, U.S. citizenship or incorporation or organization
under the laws of a State, the District
of Columbia, or any territory or insular possession subject to U.S. jurisdiction; and
(iv) Documentation evidencing the
existence of the partnership and that it
was properly created, either from the
Secretary of State of the State in
which the partnership is registered or
by an equivalent State or governmental office.
(3) For a Limited Liability Company
or Limited Liability Corporation,
(i) A certificate of formation of the
LLC;
(ii) A statement by an individual authorized to bind the LLC, as listed
under (c)(4) above, certifying that the
LLC is authorized to hold OCS leases;
(iii) A statement from each member
indicating, as appropriate, U.S. citizenship, or incorporation or organization
under the laws of a State, the District
of Columbia, or any territory or insular possession subject to U.S. jurisdiction; and
(iv) Evidence of authority of holders
of positions entitled to bind the LLC,
certified by an individual authorized to
bind the LLC.
(4) For a Trust,
(i) A copy of the trust agreement or
document establishing the trust and all

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amendments, properly certified by the
trustee; and
(ii) A statement indicating the law
under which the trust is established
and that the trust is authorized to hold
OCS leases.
(e) In the event that a person may be
eligible to hold OCS leases, but that
type of person is not listed in paragraphs (c) or (d) of this section, evidence of such eligibility will be submitted and certified by the highest
level of management of the person authorized to do so pursuant to its operating agreement or governance documents.
(f) Any person who obtains a qualification number from BOEM is responsible to ensure that it is not using the
qualification number approved by
BOEM for any purpose that its operating rules do not allow.
(g) Any evidence submitted in response to paragraphs (c), (d), or (e) of
this section is submitted subject to 18
U.S.C. 1001.
(h) A person may not hold leases on
the OCS until the evidence requested in
this section has been accepted and approved by BOEM and BOEM has issued
a qualification number to that person.
(i) If use of a corporate seal is required by this section, you may meet
the requirement as specified in § 556.107.

jstallworth on DSKBBY8HB2PROD with CFR

§ 556.403 Under what circumstances
may I be disqualified from acquiring a lease or an interest in a lease
on the OCS?
You may be disqualified from acquiring a lease or an interest in a lease on
the OCS if:
(a) You or your principals are excluded or disqualified from participating in a transaction covered by Federal non-procurement debarment and
suspension (2 CFR parts 180 and 1400),
unless the Department explicitly approves an exception for a transaction
pursuant to the regulations in those
parts;
(b) The Secretary finds, after notice
and hearing, that you or your principals (including in the meaning of
‘‘you,’’ for purposes of this subparagraph, a bidder or prospective bidder)
fail to meet due diligence requirements
or to exercise due diligence under sec-

tion 8(d) of OCSLA (43 U.S.C. 1337(d))
on any OCS lease; or
(c) BOEM disqualifies you from acquiring a lease or an interest in a lease
on the OCS based on your unacceptable
operating performance. BOEM will give
you adequate notice and opportunity
for a hearing before imposing a disqualification, unless BSEE has already
provided such notice and opportunity
for a hearing.
[81 FR 34275, May 31, 2016]

§ 556.404 What do the non-procurement debarment rules require that
I do?
You must comply with the Department’s non-procurement debarment
regulations at 2 CFR parts 180 and 1400.
(a) You must notify BOEM if you
know that you or your principals are
excluded, disqualified, have been convicted or are indicted of a crime as described in 2 CFR part 180, subpart C.
You must make this notification before
you sign a lease, sublease, or an assignment of record title interest or 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 you have received an exception from the Department, as described in 2 CFR 180.135 and 2 CFR
1400.137.
(b) If you wish to enter into a covered
transaction with another person at a
lower tier, as described in 2 CFR
180.200, you must first:
(1) Verify that the person is not excluded or disqualified under 2 CFR part
180; and
(2) Require the person to:
(i) Comply with 2 CFR part 180, subpart C; and
(ii) Include the obligation to comply
with 2 CFR part 180, subpart C in its
contracts and other transactions.
(c) After you enter into a covered
transaction, you must immediately notify BOEM in writing if you learn that:
(1) You failed to disclose pertinent
information earlier; or
(2) Due to changed circumstances,
you or your principals now meet any of
the criteria in 2 CFR 180.800.

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30 CFR Ch. V (7–1–18 Edition)

§ 556.405 When must I notify BOEM of
mergers, name changes, or changes
of business form?
You must notify BOEM of any merger, name change, or change of business
form as soon as practicable, but in no
case later than one year after the earlier of the effective date or the date of
filing the change or action with the
Secretary of State or other authorized
official in the State of original registry.

Subpart E—Issuance of a Lease
HOW TO BID

jstallworth on DSKBBY8HB2PROD with CFR

§ 556.500 Once qualified, 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 final notice of
sale. You may not bid on less than an
entire tract or bidding unit.
(b) BOEM requires a deposit for each
bid. The final notice of sale will specify
the amount and method of payment.
(c) Unless otherwise specified in the
final notice of sale, the bid deposit
amount will be 20 percent of the
amount of the bid for any given tract
or bidding unit.
(d) You may not submit a bid on an
OCS tract if, after notice and hearing
under section 8(d) of OCSLA (43 U.S.C.
1337(d)), the Secretary finds that you
are not meeting the diligence requirements on any OCS lease.
(e) If the authorized officer within
BOEM rejects your high bid, the decision is final for the Department, subject only to reconsideration upon your
written request as set out in § 556.517.
§ 556.501 What information do I need
to submit with my bid?
In accordance with OCSLA section
18(a)(4) (43 U.S.C. 1344(a)(4)), BOEM
must evaluate every bid to ensure that
the federal government receives fair
market value for every lease. Section
26(a)(1)(A)
of
OCSLA
(43
U.S.C.
1352(a)(1)(A)) provides that, in accordance with regulations prescribed by the
Secretary, any lessee or permittee conducting any exploration for, or development or production of, oil or gas
must provide the Secretary access to

all data and information (including
processed, analyzed, and interpreted information) obtained from that activity
and must provide copies of that data
and information as the Secretary may
request.
(a) As part of the lease sale process,
every bidder submitting a bid on a
tract, or participating as a joint bidder
in such a bid, may at the time of bid be
required to submit various information, including a Geophysical Data and
Information Statement (GDIS) corresponding to that tract, as well as the
bidder’s
exclusive/proprietary
geophysical data in order for BOEM to
properly evaluate the bid. If a GDIS required, each GDIS must include, as required by § 551.12(b) and (c) of this chapter:
(1) A list of geophysical surveys or
other information used as part of the
decision to bid or participate in a bid
on the block.
(2) An accurate and complete record
of each geophysical survey conducted,
including digital navigational data and
final location maps. The bidder and
any joint bidder must include a map
for each survey identified in the GDIS
that illustrates the actual areal extent
of the proprietary geophysical data.
(b) If a bidder is required to submit a
GDIS, the GDIS must be submitted
even if the bidder did not rely on proprietary geophysical data and information in deciding to bid or participate as
a joint bidder in the bid for any particular block, and must include entries
for all such blocks.
(c) The bidder must submit each
GDIS in a separate and sealed envelope, or in an electronically readable
spreadsheet format, with proprietary
seismic data maps also available in an
electronic format. Each bidder must
submit the GDIS even if its joint bidder or bidders on a specific block also
have submitted a GDIS.
(d) If BOEM requires additional information related to bidding, it will describe the additional information requirements in the final notice of sale.
(e) BOEM will reimburse bidders for
the costs of complying with the requirements of this section, in accordance with § 550.196 (on lease) and/or
§ 551.13 (off lease) of this chapter.

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§ 556.512

(f) Bids that are not made in compliance with this section will be considered incomplete and invalid.

jstallworth on DSKBBY8HB2PROD with CFR

RESTRICTIONS ON JOINT BIDDING
§ 556.511 Are there restrictions on bidding with others and do those restrictions 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 certain circumstances.
BOEM implements 42 U.S.C. 6213 as follows:
(a) BOEM publishes twice yearly in
the FEDERAL REGISTER a restricted
joint bidders list. A person appearing
on this list is limited in its ability to
submit a joint bid. The list:
(1) Consists of the persons chargeable
with an average worldwide daily production in excess of 1.6 million barrels
of crude oil and/or its equivalent in
natural gas liquids and natural gas for
the prior production period; and
(2) Is based upon the statement of
production that filed as required by
§ 556.513.
(b) If BOEM places you on the restricted joint bidders list, BOEM 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 590, 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 will result in joint ownership in
an OCS lease.
(d) If you are listed in the FEDERAL
REGISTER in any group of restricted
bidders, you may not make any prebidding agreement for the conveyance
of any potential lease interest, whether
by assignment, sale, transfer, or other
means, to any person on the list of restricted joint bidders.
(e) Even if you are not listed in the
FEDERAL REGISTER in any group of restricted bidders, you are prohibited
from making any pre-bidding agreement for the assignment, sale, transfer,

or other conveyance of any potential
lease interest to two or more persons
in different groups on the list of restricted joint bidders.
(f) As a bidder, you are prohibited
from unlawful combination with, or intimidation of, bidders under 18 U.S.C.
1860.
§ 556.512 What bids may be disqualified?
The following bids for any oil and gas
lease will be disqualified and rejected
in their entirety:
(a) A joint bid submitted by two or
more persons who are on the effective
List of Restricted Joint Bidders; or
(b) A joint bid submitted by two or
more persons when:
(1) One or more of those persons is
chargeable for the prior production period with an average daily production
in excess of 1.6 million barrels of crude
oil, natural gas and natural gas liquids
and has not filed a Statement of Production, as required by § 556.513 of this
part for the applicable 6-month bidding
period, or
(2) Any of those persons have failed
or refused to file a detailed report of
production when required to do so
under § 556.513, or
(c) A single or joint bid submitted
pursuant to an agreement (whether
written or oral, formal or informal, entered into or arranged prior to or simultaneously with the submission of
such single or joint bid, or prior to or
simultaneously with the award of the
bid upon the tract) that provides:
(1) For the assignment, transfer, sale,
or other conveyance of less than a 100
percent interest in the entire tract on
which the bid is submitted, by a person
or persons on the List of Restricted
Joint Bidders, effective on the date of
submission of the bid, to another person or persons on the same List of Restricted Joint Bidders; or
(2) For the assignment, sale, transfer
or other conveyance of less than a 100
percent interest in any fractional interest in the entire tract (which fractional interest was originally acquired
by the person making the assignment,
sale, transfer or other conveyance,
under the provisions of the act) by a
person or persons on the List of Restricted Joint Bidders, effective on the

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30 CFR Ch. V (7–1–18 Edition)

date of submission of the bid, to another person or persons on the same
List of Restricted Joint Bidders; or
(3) For the assignment, sale, transfer,
or other conveyance of any interest in
a tract by a person or persons not on
the List of Restricted Joint Bidders, effective on the date of submission of the
bid, to two or more persons on the
same List of Restricted Joint Bidders;
or
(4) For any of the types of conveyances described in paragraphs (c)(1),
(2), or (3) of this section where any
party to the conveyance is chargeable
for the prior production period with an
average daily production in excess of
1.6 million barrels of crude oil, natural
gas and natural gas liquids and has not
filed a Statement of Production pursuant to § 556.513 for the applicable sixmonth bidding period. Assignments expressly required by law, regulation,
lease or lease stipulation will not disqualify an otherwise qualified bid; or
(d) A bid submitted by or in conjunction with a person who has filed a false,
fraudulent or otherwise intentionally
false or misleading detailed Report of
Production.
§ 556.513 When must I file a statement
of production?
(a) You must file a statement of production if your average worldwide
daily production exceeded 1.6 million
barrels for the prior production period,
as determined using the method set
forth in § 556.514. Your statement of
production 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 .......
(2) November through April ...

July through December.
January through June.

§ 556.514 How do I determine my production for purposes of the restricted joint bidders list?

jstallworth on DSKBBY8HB2PROD with CFR

(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 .......
(2) November through April ...

March 17.
September 17.

(d) If you are required to file a statement of production, BOEM may require
you to submit a detailed report of production.
(1) The detailed report of production
must list crude oil, natural gas liquids,
and natural gas produced worldwide
from reservoirs during the prior production period, and therefore chargeable to the prior production period.
(i) The amount of crude oil chargeable to the prior production period will
be established by measurement of volumes delivered at the point of custody
transfer (e.g., from storage tanks to
pipelines, trucks, tankers, or other
media for transport to refineries or terminals), with adjustments for net differences between opening and closing
inventories, and basic sediment and
water.
(ii) The amount of natural gas liquids
chargeable to the prior production period must include gas liquefied at surface separators, field facilities, or gas
processing plants.
(iii) The amount of natural gas
chargeable to the prior production period must include adjustments, where
applicable, to reflect the volume of gas
returned to natural reservoirs, and the
reduction of volume resulting from the
removal of natural gas liquids and nonhydrocarbon gases.
(2) You must submit the detailed report of production within 30 days after
receiving BOEM’s request.
(3) BOEM may inspect and copy any
document, record of production, analysis, and other material to verify the
accuracy of any earlier statement of
production.
(e) If you submit a statement of production
that
misrepresents
your
chargeable production, the Department
may cancel any lease awarded in reliance upon the statement.

(a) To determine the amount of production chargeable to you, add together:
(1) Your average daily production in
barrels of crude oil, natural gas liquids,
and natural gas worldwide, all measured at 60 °F, using the equivalency or

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conversion factors for natural gas liquids and natural gas set out in 42
U.S.C. 6213(b)(2) and (3); and
(2) Your proportionate share of the
average daily production owned by any
person that has an interest in you and/
or in which you have an interest.
(b) For the purpose of paragraph
(a)(1) of this section, your production
includes 100 percent of 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 paragraph (a)(2) of
this section, interest means at least a
five 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, natural gas liquids, or
natural gas.
(d) For purposes of this section, subsidiary means a person, 50 percent or
more of whose 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 or controlled by another person.
(e) For purposes of this section, production chargeable to you includes, but
is not limited to, production obtained
as a result of a production payment or
a working, net profit, royalty, overriding royalty, or carried interest.
(f) For purposes of this section, production must be measured with appropriate adjustments for:
(1) Basic sediment and water;
(2) Removal of natural gas liquids
and non-hydrocarbon gases; and
(3) Volume of gas returned to natural
reservoirs.
§ 556.515 May a person be exempted
from joint bidding restrictions?
BOEM may exempt you from some or
all of the reporting requirements listed
in § 556.513, and/or some or all of the
joint bidding restrictions listed in
§§ 556.511 and/or 556.512(a), (b), and/or
(c), if, after opportunity for a hearing,

BOEM determines that the extremely
high costs in an area will preclude exploration and development without an
exemption.
HOW DOES BOEM ACT ON BIDS?
§ 556.516
bid?

What does BOEM do with my

(a) BOEM opens the sealed bids at the
place, date, and hour specified in the
final notice of sale for the sole purpose
of publicly announcing and recording
the bids. BOEM does not accept or reject any bids at that time.
(b) BOEM reserves the right to reject
any and all bids received, regardless of
the amount offered. BOEM accepts or
rejects all bids within 90 days of opening. BOEM reserves the right to extend
that time if necessary, and in that
event, BOEM will notify bidder(s) in
writing prior to the expiration of the
initial 90-day period, or of any extension. Any bid not accepted within the
prescribed 90-day period, or any extension thereof, will be deemed rejected. If
your bid is rejected, BOEM will refund
any money deposited with your bid,
plus any interest accrued.
(c) If the highest bids are a tie,
BOEM will notify the bidders who submitted the tie bids. Within 15 days
after notification, those bidders, if
qualified, and not otherwise prohibited
from bidding together, may:
(1) Agree to accept the lease jointly.
The bidders must notify BOEM of their
decision and submit a copy of their
agreement to accept the lease jointly.
(2) Agree between/among themselves
which bidder will accept the lease. The
bidders must notify BOEM of their decision.
(d) If no agreement is submitted pursuant to paragraph (c) of this section,
BOEM will reject all the tie bids.
(e) The Attorney General, in consultation with the Federal Trade Commission, has 30 days to review the results of the lease sale before BOEM
may accept the bid(s) and issue the
lease(s).
§ 556.517 What may I do if my high bid
is rejected?
(a) The decision of the authorized officer on bids is the final action of the

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§ 556.520

30 CFR Ch. V (7–1–18 Edition)

Department, subject only to reconsideration of the rejection of the high bid
by the Director, in accordance with
paragraph (b) of this section.
(b) Within 15 days of bid rejection,
you may file a written request for reconsideration with the Director, with a
copy to the authorized officer. Such request must provide evidence as to why
the Director should reconsider your
bid. You will receive a written response
either affirming or reversing the rejection of your bid.
(c) The Director’s decision on the request for reconsideration is not subject
to appeal to the Interior Board of Land
Appeals in the Department’s Office of
Hearings and Appeals.
AWARDING THE LEASE

jstallworth on DSKBBY8HB2PROD with CFR

§ 556.520 What happens if I am the successful high bidder and BOEM accepts my bid?
(a) If BOEM accepts your bid, BOEM
will provide you with the appropriate
number of copies of the lease for you to
execute and return to BOEM. Within 11
business days after you receive the
lease copies, you must:
(1) Execute all copies of the lease;
(2) Pay the first year’s rental;
(3) Pay the balance of the bonus bid,
unless deferred under paragraph (b)
below;
(4) Comply with subpart I of this
part; and,
(5) Return all copies of the executed
lease, including any required bond or
other form of security approved by the
Regional Director, to BOEM.
(b) If provided for in the final notice
of sale, BOEM may defer any part of
the bonus and bid payment for up to
five years after the sale according to a
schedule included in the final notice of
sale. You must provide a bond acceptable to BOEM to guarantee payment of
a deferred bonus bid.
(c) If you do not make the required
payments and execute and return all
copies of the lease and any required
bond within 11 business days after receipt, or if you otherwise fail to comply with applicable regulations, your
deposit will be forfeited. However,
BOEM 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 that a
person who is on the list of persons referenced in § 556.402(c)(3) authorized the
agent to act for you.
(e) After you comply with all requirements in this section, and after BOEM
has executed the lease, BOEM will send
you a fully executed lease.
§ 556.521

When is my lease effective?

Your lease is effective on the first
day of the month following the date
that BOEM executes the lease. You
may request in writing, before BOEM
executes the lease, that your lease be
effective as of the first day of the
month in which BOEM executes the
lease. If BOEM agrees to make the
lease effective as of the earlier date,
BOEM will so indicate when it executes
the lease.
§ 556.522 What are the terms and conditions of the lease and when are
they published?
The terms and conditions of the lease
will be stated in the final notice of sale
and contained in the lease instrument
itself. Oil and gas leases and leases for
sulfur will be issued on forms approved
by the Director.

Subpart F—Lease Term and
Obligations
LENGTH OF LEASE
§ 556.600 What is the primary term of
my oil and gas lease?
(a) The primary term of an oil and
gas lease will be five years, unless
BOEM determines that:
(1) The lease is located in unusually
deep water or involves other unusually
adverse conditions; and,
(2) A lease term longer than five
years is necessary to explore and develop the lease.
(b) If BOEM determines that the criteria in paragraphs (a)(1) and (2) of this
section are met, it may specify a
longer primary term, not to exceed 10
years.
(c) BOEM will specify the primary
term in the final notice of sale and in
the lease instrument.

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Ocean Energy Management, Interior

§ 556.604

(d) The lease will expire at the end of
the primary term, unless maintained
beyond that term in accordance with
the provisions of § 556.601.

pension directed by BSEE for reasons
other than gross negligence or a willful
violation of a provision of your lease or
governing regulations.

§ 556.601 How may I maintain my oil
and gas lease beyond the primary
term?

LEASE OBLIGATIONS

You may maintain your oil and gas
lease beyond the expiration of the primary term as long as:
(a) You are producing oil or gas in
paying quantities;
(b) You are conducting approved
drilling or well reworking operations
with the objective of establishing production in paying quantities, in accordance with 30 CFR 250.180;
(c) You are producing from, or drilling or reworking, an approved well adjacent to or adjoining your lease that
extends directionally into your lease in
accordance with 30 CFR 256.71;
(d) You make compensatory payments on your lease in accordance with
30 CFR 256.72;
(e) Your lease is included in a BSEEapproved unit, in accordance with 30
CFR part 250, subpart M; or
(f) Your lease is subject to a suspension of production or a suspension of
operations, in accordance with 30 CFR
250.168 through 250.180, for reasons
other than gross negligence or a willful
violation of a provision of your lease or
any governing regulations.
§ 556.602 What is the primary term of
my sulfur lease?

jstallworth on DSKBBY8HB2PROD with CFR

(a) Your sulfur lease will have a primary term of not more than 10 years,
as specified in the lease.
(b) BOEM will announce the primary
term prior to the lease sale.
(c) The lease will expire at the end of
the primary term unless maintained
beyond that term in accordance with
the provisions of § 556.603.
§ 556.603 How may I maintain my sulfur lease beyond the primary term?
You may maintain your sulfur lease
after the primary term as long as you
are producing sulfur in paying quantities, conducting drilling, well reworking or plant construction, or other
operations for the production of sulfur
or you are granted a suspension by
BSEE; or your lease is subject to a sus-

§ 556.604 What are my rights and obligations as a record title owner?
(a) As a record title owner, you are
responsible for all administrative and
operating performance on the lease, including paying any rent and royalty
due.
(b)(1) A record title owner owns operating rights to the lease, unless and
until he or she severs the operating
rights by subleasing them to someone
else.
(2) A sublease of operating rights
from record title may be for a whole or
undivided fractional interest in the entire lease or a described aliquot portion
of the lease and/or a depth interval.
The sublease creates an operating
rights interest in the sublessee, herein
referred to as the operating rights
owner.
(c) Within any given aliquot, the
record title owner may sublease operating rights for up to a maximum of
two depth divisions, which may result
in a maximum of three different depth
intervals. But, if the one, or two, depth
divisions to which operating rights are
subleased do not include the entire
depth of the lease, whatever depth division(s) has not been subleased, remains
part of the lessee/sublessor’s record
title interest. The depth intervals for
which operating rights are subleased
must be defined by a beginning and
ending depth and the ending of one
depth level must abut the beginning of
the next depth level, with no gap in between.
(d) Every current and prior record
title owner is jointly and severally liable, along with all other record title
owners and all prior and current operating rights owners, for compliance
with all non-monetary terms and conditions of the lease and all regulations
issued under OCSLA, as well as for fulfilling all non-monetary obligations,
including
decommissioning
obligations, which accrue while it holds
record title interest.

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§ 556.605

30 CFR Ch. V (7–1–18 Edition)

(e) Record title owners that acquired
their record title interests through assignment from a prior record title
owner are also responsible for remedying all existing environmental or
operational problems on any lease in
which they own record title interests,
with subrogation rights against prior
lessees.
(f) For monetary obligations, your
obligation depends on the source of the
monetary obligation and whether you
have retained or severed your operating rights.
(1) With respect to those operating
rights that you have retained, you are
primarily liable under 30 U.S.C. 1712(a)
for your pro-rata share of all other
monetary obligations pertaining to
that portion of the lease subject to the
operating rights you have retained,
based on your share of operating rights
in that portion of the lease.
(2) With respect to all monetary obligations arising from or in connection
with those operating rights that have
been severed from your record title interest, your obligation is secondary to
that of the sublessee(s) or later assignee(s) of the operating rights that
were severed from your record title interest, as prescribed in 30 U.S.C.
1712(a).

jstallworth on DSKBBY8HB2PROD with CFR

§ 556.605 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 explore for, develop, and produce oil
and gas resources, except helium gas,
contained within the aliquot(s) and
depths within which you own operating
rights, according to the lease terms,
applicable regulations, and BOEM’s approval of the sublease or subsequent assignment of the operating rights.
(b) Unless otherwise prohibited, you
have the right to authorize another
party to conduct operations on the
part of the lease to which your operating rights appertain.
(c) An owner of operating rights who
is designating a new designated operator must file a designation of operator
under § 550.143 of this chapter.
(d) An operating rights owner is only
liable for obligations arising from that
portion of the lease to which its oper-

ating rights appertain and that accrue
during the period in which the operating rights owner owned the operating
rights.
(e) You are jointly and severally liable with other operating rights owners
and the record title owners for all nonmonetary lease obligations pertaining
to that portion of the lease subject to
your operating rights, which accrued
during the time you held your operating rights interest.
(f) An operating rights owner that acquires its operating rights interests
through assignment from a prior operating rights owner is also responsible,
with subrogation rights against prior
operating rights owners, for remedying
existing environmental or operational
problems, to the extent that such problems arise from that portion of the
lease to which its operating rights appertain, on any lease in which it owns
operating rights.
(g) You are primarily liable for monetary obligations pertaining to that
portion of the lease subject to your operating rights, and the record title
owners are secondarily liable. If there
is more than one operating rights
owner in a lease, each operating rights
owner is primarily liable for its prorata share of the monetary obligations
that pertain to the portion of the lease
that is subject to its operating rights.
HELIUM
§ 556.606 What must a lessee do if
BOEM elects to extract helium from
a lease?
(a) BOEM reserves the ownership of,
and the right to extract, helium from
all gas produced from your OCS lease.
Under section 12(f) of OCSLA (43 U.S.C.
1341(f)), upon our request, you must deliver all or a specified portion of the
gas containing helium to BOEM at a
point on the leased area or at an onshore processing facility that BOEM
designates.
(b) BOEM will determine reasonable
compensation and pay you for any loss
caused by the extraction of helium, except for the value of the helium itself.
BOEM 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

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Ocean Energy Management, Interior

§ 556.703

not cause substantial delays in the delivery of gas to your purchaser.

Subpart G—Transferring All or Part
of the Record Title Interest in a
Lease

jstallworth on DSKBBY8HB2PROD with CFR

§ 556.700 May I assign or sublease all
or any part of the record title interest in my lease?
(a) With BOEM approval, you may assign your whole, or a partial record
title interest in your entire lease, or in
any aliquot(s) thereof.
(b) With BOEM approval, you may
sever all, or a portion of, your operating rights.
(c) You must request approval of
each assignment of a record title interest and each sublease of an operating
rights interest. Each instrument that
transfers a record title interest must
describe, by aliquot parts, the interest
you propose to transfer. Each instrument that severs an operating rights
interest must describe, by officially
designated aliquot parts and depth levels, the interest proposed to be transferred.
§ 556.701 How do I seek approval of an
assignment of the record title interest in my lease, or a severance of
operating rights from that record
title interest?
(a) The Regional Director will provide the form to record an assignment
of record title interest in a Federal
OCS oil and gas or sulfur lease, or a
severance of operating rights from that
record title interest. You must submit
to BOEM two originals of each instrument that transfers ownership of
record title within 90 days after the
last party executes the transfer instrument. You must pay the service fee
listed in § 556.106 with your request and
your submission must include evidence
of payment via pay.gov.
(b) Before BOEM approves an assignment or transfer, it must consult with,
and consider the views of, the Attorney
General. The Secretary may act on an
assignment or transfer if the Attorney
General has not responded to a request
for consultation within 30 days of said
request.
(c) A new record title owner or sublessee must file a designation of oper-

ator, in accordance with § 550.143 of this
chapter, along with the request for the
approval of the assignment.
§ 556.702 When will my assignment result in a segregated lease?
(a) When there is an assignment by
all record title owners of 100 percent of
the record title to one or more aliquots
in a lease, the assigned and retained
portions become segregated into separate and distinct leases. In such case,
both the new lease and the remaining
portion of the original lease are referred to as ‘‘segregated leases’’ and
the assignee(s) becomes the record title
owner(s) of the new lease, which is subject to all the terms and conditions of
the original lease.
(b) If a record title holder transfers
an undivided interest, i.e., less than 100
percent of the record title interest in
any given aliquot(s), that transfer will
not segregate the portions of the
aliquots, or the whole aliquots, in
which part of the record title was
transferred, into separate leases from
the portion(s) in which no interest was
transferred. Instead, that transfer will
create a joint ownership between the
assignee(s) and assignor(s) in the portions of the lease in which part of the
record title interest was transferred.
Any transfer of an undivided interest is
subject to approval by BOEM.
§ 556.703 What is the effect of the approval of the assignment of 100 percent of the record title in a particular aliquot(s) of my lease and of
the resulting lease segregation?
(a) The bonding/financial assurance
requirements of subpart I of this part
apply separately to each segregated
lease.
(b) The royalty, minimum royalty,
and rental provisions of the original
lease will apply separately to each segregated lease.
(c) BOEM will allocate among the
segregated leases, on a basis that is equitable under the circumstances, any
remaining unused royalty suspension
volume or other form of royalty suspension or royalty relief that had been
granted to the original lease, not to exceed in aggregate the total remaining
amount.
(d) Each segregated lease will continue in full force and effect for the

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§ 556.704

30 CFR Ch. V (7–1–18 Edition)

primary term of the original lease and
so long thereafter as each segregated
lease meets the requirements outlined
in § 556.601. A segregated lease that
does not meet the requirements of
§ 556.601 does not continue in force even
if another segregated lease, which was
part of the original lease, continues to
meet those requirements.
§ 556.704 When would BOEM disapprove an assignment or sublease
of an interest in my lease?

jstallworth on DSKBBY8HB2PROD with CFR

(a) BOEM may disapprove an assignment or sublease of all or part of your
lease interest(s):
(1) When the transferor or transferee
has unsatisfied obligations under this
chapter or 30 CFR chapters II or XII;
(2) When a transferor attempts a
transfer that is not acceptable as to
form or content (e.g., not on standard
form, containing incorrect legal description, not executed by a person authorized to bind the corporation, transferee does not meet the requirements
of § 556.401, etc.); or,
(3) When the transfer does not conform to these regulations, or any other
applicable laws or regulations (e.g., departmental debarment rules).
(b) A transfer will be void if it is
made pursuant to any prelease agreement that would cause a bid to be disqualified, such as those described in
§ 556.511(c), (d), or (e).

(c) If the heir or devisee does not
qualify to hold a lease under subpart D
of this part, he/she will be recognized
as the successor in interest, but he/she
must divest him/herself of this interest
in the lease, to a person qualified to be
a hold a lease, within two years.
§ 556.706 What if I want to transfer
record title interests in more than
one lease at the same time, but to
different parties?
You may not transfer interests in
more than one lease to different parties
using the same instrument. If you want
to transfer the interest in more than
one lease at the same time, you must
submit duplicate, originally executed
forms for each transfer. The forms used
for each transfer must be accompanied
by a cover letter executed by one of the
parties to the transfer (or an authorized agent thereof) and evidence of payment via pay.gov.

§ 556.705 How do I transfer the interest of a deceased natural person
who was a lessee?

§ 556.707 What if I want to transfer different types of lease interests (not
only record title interests) in the
same lease to different parties?
You may not transfer different types
of lease interests in a lease to different
parties using the same instrument.
You must submit duplicate, originally
executed forms for each transfer, to a
different party, of a different type of
lease interest. The form used to transfer each type of lease interest must be
accompanied by a cover letter executed
by one of the parties to the transfer (or
an authorized agent thereof) and evidence of payment via pay.gov.

(a) An heir or devisee must submit
evidence by means of a certified copy
of an appropriate court order or decree
that the person is deceased; or, if no
court action is necessary, a certified
copy of the will and death certificate
or notarized affidavits of two disinterested parties with knowledge of the
facts.
(b) The heir or devisee, if the lawful
successor in interest, must submit evidence that he/she is the person named
in the will or evidence from an appropriate judgment of a court or decree
that he/she is the lawful successor in
interest, along with the required evidence of his/her qualifications to hold a
lease under subpart D of this part.

§ 556.708 What if I want to transfer my
record title interests in more than
one lease to the same party?
You may not transfer your record
title interests in more than one lease
to the same party using the same instrument. If you want to transfer
record title interests in more than one
lease at the same time, you must submit separate, originally executed forms
for each transfer. The forms used for
each transfer must be accompanied by
a cover letter executed by one of the
parties to the transfer (or an authorized agent thereof), and evidence of
payment via pay.gov. A separate fee
applies to each individual transfer of
interest.

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§ 556.714

§ 556.709 What if I want to transfer my
record title interest in one lease to
multiple parties?
You may transfer your record title
interest in one lease to multiple parties using the same instrument. That
instrument must be submitted in duplicate originals, accompanied by a cover
letter executed by one of the parties to
the transfer (or an authorized agent
thereof). In such a multiple transfer of
interests using a single instrument, a
separate fee applies to each individual
transfer of interest, and evidence of
payment via pay.gov must accompany
the instrument.
§ 556.710 What is the effect of an assignment of a lease on an assignor’s
liability under the lease?
If you assign your record title interest, as an assignor you remain liable
for all obligations, monetary and nonmonetary, that accrued in connection
with your lease during the period in
which you owned the record title interest, up to the date BOEM approves
your assignment. BOEM’s approval of
the assignment does not relieve you of
these accrued obligations. Even after
assignment, BOEM or BSEE may require you to bring the lease into compliance if your assignee or any subsequent assignee fails to perform any obligation under the lease, to the extent
the obligation accrued before approval
of your assignment. Until there is a
BOEM-approved assignment of interest, you, as the assignor, remain liable
for the performance of all lease obligations that accrued while you held
record title interest, until all such obligations are fulfilled.

jstallworth on DSKBBY8HB2PROD with CFR

§ 556.711 What is the effect of a record
title holder’s sublease of operating
rights on the record title holder’s liability?
(a) A record title holder who subleases operating rights remains liable
for all obligations of the lease, including those obligations accruing after
BOEM’s approval of the sublease, subject to § 556.604(e) and (f).
(b) Neither the sublease of operating
rights, nor subsequent assignment of
those rights by the original sublessee,
nor by any subsequent assignee of the
operating rights, alters in any manner

the liability of the record title holder
for nonmonetary obligations.
(c) Upon approval of the sublease of
the operating rights, the sublessee and
subsequent assignees of the operating
rights become primarily liable for
monetary obligations, but the record
title holder remains secondarily liable
for them, as prescribed in 30 U.S.C.
1712(a) and § 556.604(f)(2).
§ 556.712 What is the effective date of a
transfer?
Any transfer is effective at 12:01 a.m.
on the first day of the month following
the date on which BOEM approves your
request, unless you request an earlier
effective date and BOEM approves that
earlier date, but such earlier effective
date, if prior to the date of BOEM’s approval, does not relieve you of obligations accrued between that earlier effective date and the date of approval.
§ 556.713 What is the effect of an assignment of a lease on an assignee’s
liability under the lease?
As assignee, you and any subsequent
assignees are liable for all obligations
that accrue after the effective date of
your assignment. As assignee, you
must comply with all the terms and
conditions of the lease and regulations
issued under OCSLA, and in addition,
you must 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.
§ 556.714 As a restricted joint bidder,
may I transfer an interest to another restricted joint bidder?
(a) Where the proposed assignment or
transfer is by a person who, at the time
of acquisition of an interest in the
lease, was on the List of Restricted
Joint Bidders, and that assignment or
transfer is of less than the entire interest held by the assignor or transferor
and to a person or persons on the same
List of Restricted Joint Bidders, the
assignor or transferor must file, prior
to the approval of the assignment, a
copy of all agreements applicable to
the acquisition of that lease or fractional interest, or a description of the
timing and nature of the agreement(s)

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§ 556.715

30 CFR Ch. V (7–1–18 Edition)

by which the assignor or transferor acquired the interest it now wishes to
transfer.
(b) Such description of the timing
and nature of the transfer agreement
must be submitted together with a certified statement that attests to the
truth and accuracy of any information
reported concerning that agreement,
subject to the penalties of 18 U.S.C.
1001.
(c) If you wish to transfer less than
your entire interest to another restricted joint bidder, BOEM may request the opinion of the Attorney General before acting on your request.
(d) You may request that any submission to BOEM made pursuant to
this part be treated confidentially.
Please note such a request on your submission. BOEM will treat this request
for confidentiality in accordance with
the regulations at § 556.104 and the regulations at 43 CFR part 2.

jstallworth on DSKBBY8HB2PROD with CFR

§ 556.715 Are there any interests I may
transfer or record without BOEM
approval?
(a) You may create, transfer, or assign economic interests without BOEM
approval. However, for record purposes,
you must send BOEM a copy of each instrument creating or transferring such
interests within 90 days after the last
party executes the transfer instrument. For each lease affected, you
must pay the service fee listed in
§ 556.106 with your documents submitted for record purposes and your
submission must include evidence of
payment via pay.gov.
(b) For recordkeeping purposes, you
may also submit other legal documents
to BOEM for transactions that do not
require BOEM approval. If you submit
such documents for record purposes not
required by this part, you must pay the
service fee listed in § 556.106 with your
document submissions for each lease
affected. Your submission must include
evidence of payment via pay.gov.
§ 556.716 What must I do with respect
to the designation of operator on a
lease when a transfer of record title
is submitted?
(a) If a transfer of ownership of the
record title interest only changes the
percentage ownership of the record
title, no new parties or new aliquots

are involved in the transaction, and no
change of designated operator is made,
you will not need to submit a new designation of operator form.
(b) In all cases other than that in
paragraph (a) of this section, you must
submit new designation of operator
forms in accordance with § 550.143 of
this chapter. In the event that you are
transferring multiple record title interests, you must comply with this requirement for each interest that does
not fall within paragraph (a) of this
section.

Subpart H—Transferring All or Part
of the Operating Rights in a Lease
§ 556.800 As an operating rights owner,
may I assign all or part of my operating rights interest?
An operating rights owner may assign all or part of its operating rights
interests, subject to BOEM approval.
Each instrument that transfers an interest must describe, by officially designated aliquot parts and depth levels,
the interest proposed to be transferred.
§ 556.801 How do I seek approval of an
assignment of my operating rights?
(a) The Regional Director will provide the form to document the assignment of an operating rights interest.
You must request approval of each assignment of operating rights and submit to BOEM two originals of each instrument that transfers ownership of
operating rights within 90 days after
the last party executes the transfer instrument. You must pay the service fee
listed in § 556.106 with your request and
your submission must include evidence
of payment via pay.gov.
(b) A new operating rights owner
must file a designation of operator, in
accordance with § 550.143, along with
the request for the approval of the assignment.
(c) If an operating rights owner assigns an undivided ownership interest
in its operating rights, that assignment creates a joint ownership in the
operating rights.
(d) Before BOEM approves a sublease
or re-assignment of operating rights,
BOEM may consult with and consider
the views of the Attorney General.

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§ 556.808

§ 556.802 When would BOEM disapprove the assignment of all or
part of my operating rights interest?

§ 556.805 What is the effect of an operating rights owner’s assignment of
operating rights on the assignor’s
liability?

BOEM may disapprove an assignment
of all or part of your operating rights
interest:
(a) When the transferor or transferee
has outstanding or unsatisfied obligations under this chapter or 30 CFR
chapter II or XII;
(b) When a transferor attempts a
transfer that is not acceptable as to
form or content (e.g., not on standard
form, containing incorrect legal description, not executed in accordance
with corporate governance, transferee
does not meet the requirements of
§ 556.401, etc.); or
(c) When the transfer does not conform to these regulations, or any other
applicable laws or regulations (e.g., departmental debarment rules).

An operating rights owner (who does
not hold record title) who assigns the
operating rights remains liable for all
obligations of the lease that accrued
during the period in which the assignor
owned the operating rights, up to the
effective date of the assignment, including decommissioning obligations
that accrued during that period.
BOEM’s approval of the assignment
does not alter that liability. Even after
assignment, BOEM or BSEE may require the assignor to bring the lease
into compliance if the assignee or any
subsequent assignee fails to perform
any obligation under the lease, to the
extent the obligation accrued before
approval of the assignment.

§ 556.803 What if I want to assign operating rights interests in more than
one lease at the same time, but to
different parties?
You may not assign operating rights
interests in more than one lease to different parties using the same instrument. If you want to transfer operating
rights interests in more than one lease
at the same time, you must submit two
originally executed forms for each
transfer. Each request for a transfer of
operating rights interest must be accompanied by a cover letter executed
by one of the parties to the transfer (or
an authorized agent thereof) and evidence of payment via pay.gov.

jstallworth on DSKBBY8HB2PROD with CFR

§ 556.804 What if I want to assign my
operating rights interest in a lease
to multiple parties?
You may assign your operating
rights interest in one lease to multiple
parties using the same instrument.
That instrument must be submitted in
duplicate originals, accompanied by a
cover letter executed by one of the parties to the transfer (or an authorized
agent thereof). In such a multiple
transfer of interests using a single instrument, a separate fee applies to
each individual transfer of interest and
evidence of payment via pay.gov must
accompany the instrument.

§ 556.806 What is the effective date of
an assignment of operating rights?
An assignment is effective at 12:01
a.m. on the first day of the month following the date on which BOEM approves your request, unless you request
an earlier effective date and BOEM approves that earlier date. Such an earlier effective date, if prior to the date
of BOEM’s approval, does not relieve
you of obligations accrued between
that earlier effective date and the date
of approval.
§ 556.807 What is the effect of an assignment of operating rights on an
assignee’s liability?
As assignee, you and any subsequent
assignees are liable for all obligations
that accrue after the effective date of
your assignment. As assignee, you
must comply with all the terms and
conditions of the lease and regulations
issued under OCSLA. In addition, you
must 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.
§ 556.808 As an operating rights owner,
are there any interests I may assign
without BOEM approval?
(a) You may create, transfer, or assign economic interests without BOEM
approval. However, for record purposes,

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§ 556.809

30 CFR Ch. V (7–1–18 Edition)

you must send BOEM a copy of each instrument creating or transferring such
interests within 90 days after the last
party executes the transfer instrument. For each lease affected, you
must pay the service fee listed in
§ 556.106 with your documents submitted for record purposes, and your
submission must include evidence of
payment via pay.gov.
(b) For record keeping purposes, you
may also submit other legal documents
to BOEM for transactions that do not
require BOEM approval. If you submit
such documents for record purposes
that are not required by these regulations, for each lease affected, you must
pay the service fee listed in § 556.106
with your document submissions, and
your submission must include evidence
of payment via pay.gov.
§ 556.809

[Reserved]

§ 556.810 What must I do with respect
to the designation of operator on a
lease when a transfer of operating
rights ownership is submitted?
(a) If a transfer of ownership of operating rights only changes the percentage ownership; no new parties, new
aliquots, or new depths are involved in
the transaction; and no change of designated operator is made, you will not
need to submit a new designation of operator form.
(b) In all cases other than that in
paragraph (a) of this section, you must
submit new designation of operator
forms, in accordance with § 550.143 of
this chapter. In the event that you are
transferring multiple operating rights
interests, you must comply with this
requirement for each interest that does
not fall within paragraph (a) of this
section.

Subpart I—Bonding or Other
Financial Assurance

jstallworth on DSKBBY8HB2PROD with CFR

§ 556.900 Bond requirements for an oil
and gas or sulfur lease.
This section establishes bond requirements for the lessee of an OCS oil and
gas or sulfur lease.
(a) Before BOEM will issue a new
lease or approve the assignment of an
existing lease to you as lessee, you or

another record title owner for the lease
must:
(1) Maintain with the Regional Director a $50,000 lease bond that guarantees
compliance with all the terms and conditions of the lease; or
(2) Maintain a $300,000 area-wide bond
that guarantees compliance with all
the terms and conditions of all your oil
and gas and sulfur leases in the area
where the lease is located; or
(3) Maintain a lease or area-wide
bond in the amount required in
§ 556.901(a) or (b).
(b) For the purpose of this section,
there are three areas. The three areas
are:
(1) The Gulf of Mexico and the area
offshore the Atlantic Coast;
(2) The area offshore the Pacific
Coast States of California, Oregon,
Washington, and Hawaii; and
(3) The area offshore the Coast of
Alaska.
(c) The requirement to maintain a
lease bond (or substitute security instrument) under paragraph (a)(1) of
this section and § 556.901(a) and (b) may
be satisfied if your operator or an operating rights owner provides a lease
bond in the required amount that guarantees compliance with all the terms
and conditions of the lease. Your operator or an operating rights owner may
use an areawide bond under this paragraph to satisfy your bond obligation.
(d) If a surety makes payment to the
United States under a bond or alternative form of security maintained
under this section, the surety’s remaining liability under the bond or alternative form of security is reduced by
the amount of that payment. See paragraph (e) of this section for the requirement to replace the reduced bond coverage.
(e) If the value of your surety bond or
alternative security is reduced because
of a default or for any other reason,
you must provide additional bond coverage sufficient to meet the security
required under this subpart within 6
months, or such shorter period of time
as the Regional Director may direct.
(f) You may pledge United States Department of the Treasury (Treasury)

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§ 556.901

securities instead of a bond. The Treasury securities you pledge must be negotiable for an amount of cash equal to
the value of the bond they replace.
(1) If you pledge Treasury securities
under this paragraph (f), you must
monitor their value. If their market
value falls below the level of bond coverage required under this subpart, you
must pledge additional Treasury securities to raise the value of the securities pledged to the required amount.
(2) If you pledge Treasury securities,
you must include authority for the Regional Director to sell them and use
the proceeds in the event that the Regional Director determines that you
fail to satisfy any lease obligation.
(g) You may pledge alternative types
of security instruments instead of providing a bond if the Regional Director
determines that the alternative security protects the interests of the
United States to the same extent as
the required bond.
(1) If you pledge an alternative type
of security under this paragraph, you
must monitor the security’s value. If
its market value falls below the level
of bond coverage required under this
subpart, you must pledge additional securities to raise the value of the securities pledged to the required amount.
(2) If you pledge an alternative type
of security, you must include authority
for the Regional Director to sell the security and use the proceeds when the
Regional Director determines that you
failed to satisfy any lease obligation.
(h) If you fail to replace a deficient
bond or to provide additional bond coverage upon demand, the Regional Director may:
(1) Assess penalties under part 550,
subpart N of this chapter;
(2) Suspend production and other operations on your leases in accordance
with 30 CFR 250.173; and
(3) Initiate action to cancel your
lease.

jstallworth on DSKBBY8HB2PROD with CFR

§ 556.901

Additional bonds.

(a) This paragraph explains what
bonds you must provide before lease exploration activities commence.
(1)(i) You must furnish the Regional
Director a $200,000 bond that guarantees compliance with all the terms and

conditions of the lease by the earliest
of:
(A) The date you submit a proposed
exploration plan (EP) for approval; or
(B) The date you submit a request for
approval of the assignment of a lease
on which an EP has been approved.
(ii) The Regional Director may authorize you to submit the $200,000 lease
exploration bond after you submit an
EP, but before approval of drilling activities under the EP.
(iii) You may satisfy the bond requirement of this paragraph (a) by providing a new bond or by increasing the
amount of your existing bond.
(2) A $200,000 lease exploration bond
pursuant to paragraph (a)(1) of this section need not be submitted and maintained if the lessee either:
(i) Furnishes and maintains an
areawide bond in the sum of $1 million
issued by a qualified surety and conditioned on compliance with all the
terms and conditions of oil and gas and
sulfur leases held by the lessee on the
OCS for the area in which the lease is
situated; or
(ii) Furnishes and maintains a bond
pursuant to paragraph (b)(2) of this section.
(b) This paragraph explains what
bonds you (the lessee) must provide before lease development and production
activities commence.
(1)(i) You must furnish the Regional
Director a $500,000 bond that guarantees compliance with all the terms and
conditions of the lease by the earliest
of:
(A) The date you submit a proposed
development and production plan
(DPP) or development operations coordination document (DOCD) for approval; or
(B) The date you submit a request for
approval of the assignment of a lease
on which a DPP or DOCD has been approved.
(ii) The Regional Director may authorize you to submit the $500,000 lease
development bond after you submit a
DPP or DOCD, but before he/she approves the installation of a platform or
the commencement of drilling activities under the DPP or DOCD.

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§ 556.902

30 CFR Ch. V (7–1–18 Edition)

(iii) You may satisfy the bond requirement of this paragraph by providing a new bond or by increasing the
amount of your existing bond.
(2) You need not submit and maintain a $500,000 lease development bond
pursuant to paragraph (b)(1) of this section if you furnish and maintain an
areawide bond in the sum of $3 million
issued by a qualified surety and conditioned on compliance with all the
terms and conditions of oil and gas and
sulfur leases you hold on the OCS for
the area in which the lease is located.
(c) If you can demonstrate to the satisfaction of the authorized officer that
you can satisfy your decommissioning
obligations for less than the amount of
lease bond coverage required under
paragraph (b)(1) of this section, the authorized officer may accept a lease surety bond in an amount less than the
prescribed amount, but not less than
the amount of the cost for decommissioning.
(d) The Regional Director may determine that additional security (i.e., security above the amounts prescribed in
§ 556.900(a) and paragraphs (a) and (b) of
this section) is necessary to ensure
compliance with the obligations under
your lease, the regulations in this
chapter, and the regulations in 30 CFR
chapters II and XII.
(1) The Regional Director’s determination will be based on his/her evaluation of your ability to carry out
present and future financial obligations demonstrated by:
(i) Financial capacity substantially
in excess of existing and anticipated
lease and other obligations, as evidenced by audited financial statements
(including auditor’s certificate, balance sheet, and profit and loss sheet);
(ii) Projected financial strength significantly in excess of existing and future lease obligations based on the estimated value of your existing OCS
lease production and proven reserves
for future production;
(iii) Business stability based on five
years of continuous operation and production of oil and gas or sulfur in the
OCS or in the onshore oil and gas industry;
(iv) Reliability in meeting obligations based on:
(A) Credit rating; or

(B)
Trade
references,
including
names and addresses of other lessees,
drilling contractors, and suppliers with
whom you have dealt; and
(v) Record of compliance with laws,
regulations, and lease terms.
(2) You may satisfy the Regional Director’s demand for additional security
by increasing the amount of your existing bond or by providing additional
bond or bonds.
(e) The Regional Director will determine the amount of additional bond required to guarantee compliance. The
Regional Director will consider potential underpayment of royalty and cumulative decommissioning obligations.
(f) If your cumulative potential obligations and liabilities either increase
or decrease, the Regional Director may
adjust the amount of additional bond
required.
(1) If the Regional Director proposes
an adjustment, the Regional Director
will:
(i) Notify you and the surety of any
proposed adjustment to the amount of
bond required; and
(ii) Give you an opportunity to submit written or oral comment on the adjustment.
(2) If you request a reduction of the
amount of additional bond required,
you must submit evidence to the Regional Director demonstrating that the
projected amount of royalties due the
Government and the estimated costs of
decommissioning are less than the required bond amount. If the Regional
Director finds that the evidence you
submit is convincing, the Regional Director may reduce the amount of additional bond required.
§ 556.902 General
bonds.

requirements

(a) Any bond or other security that
you, as lessee, operating rights owner
or operator, provide under this part
must:
(1) Be payable upon demand to the
Regional Director;
(2) Guarantee compliance with all of
your obligations under the lease, regulations in this chapter, and regulations
under 30 CFR chapters II and XII; and
(3) Guarantee compliance with the
obligations of all lessees, operating

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Ocean Energy Management, Interior

§ 556.904

rights owners and operators on the
lease.
(b) All bonds and pledges you furnish
under this part must be on a form or in
a form approved by the Director. Surety bonds must be issued by a surety
that the Treasury certifies as an acceptable surety on Federal bonds and
that is listed in the current Treasury
Circular No. 570. You may obtain a
copy of the current Treasury Circular
No. 570 from the Surety Bond Branch,
Financial Management Service, Department of the Treasury, East-West
Highway, Hyattsville, MD 20782.
(c) You and a qualified surety must
execute your bond. When either party
is a corporation, an authorized official
for the party must sign the bond and
attest to it by an imprint of the corporate seal.
(d) Bonds must be non-cancellable,
except as provided in § 556.906 of this
part. Bonds must continue in full force
and effect even though an event occurs
that could diminish, terminate, or cancel a surety obligation under State surety law.
(e) Lease bonds must be:
(1) A surety bond;
(2) Treasury securities as provided in
§ 556.900(f);
(3) Another form of security approved
by the Regional Director; or
(4) A combination of these security
methods.
(f) You may submit a bond to the Regional Director executed on a form approved under paragraph (b) of this section that you have reproduced or generated by use of a computer. If you do,
and if the document omits terms or
conditions contained on the form approved by the Director, the bond you
submit will be deemed to contain the
omitted terms and conditions.

jstallworth on DSKBBY8HB2PROD with CFR

§ 556.903

Lapse of bond.

(a) If your surety becomes bankrupt,
insolvent, or has its charter or license
suspended or revoked, any bond coverage from that surety terminates immediately. In that event, you must
promptly provide a new bond in the
amount required under §§ 556.900 and
556.901 to the Regional Director and advise the Regional Director of the lapse
in your previous bond.

(b) You must notify the Regional Director of any action filed alleging that
you, your surety, or your guarantor are
insolvent or bankrupt. You must notify
the Regional Director within 72 hours
of learning of such an action. All bonds
must require the surety to provide this
information to you and directly to
BOEM.
§ 556.904 Lease-specific abandonment
accounts.
(a) The Regional Director may authorize you to establish a lease-specific
abandonment account in a federally insured institution in lieu of the bond required under § 556.901(d). The account
must provide that, except as provided
in paragraph (a)(3) of this section,
funds may not be withdrawn without
the written approval of the Regional
Director.
(1) Funds in a lease-specific abandonment account must be payable upon demand to BOEM and pledged to meet
your decommissioning obligations.
(2) You must fully fund the lease-specific abandonment account to cover all
decommissioning costs as estimated by
BOEM within the timeframe the Regional Director prescribes.
(3) You must provide binding instructions under which the institution managing the account is to purchase Treasury securities pledged to BOEM under
paragraph (d) of this section.
(b) Any interest paid on funds in a
lease-specific abandonment account
will be treated as other funds in the account unless the Regional Director authorizes in writing the payment of interest to the party who deposits the
funds.
(c) The Regional Director may allow
you to pledge Treasury securities that
are made payable upon demand to the
Regional Director to satisfy your obligation to make payments into a leasespecific abandonment account.
(d) Before the amount of funds in a
lease-specific abandonment account
equals the maximum insurable amount
as determined by the Federal Deposit
Insurance Corporation or the Federal
Savings and Loan Insurance Corporation, the institution managing the account must use the funds in the account to purchase Treasury securities
pledged to BOEM under paragraph (c)

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§ 556.905

30 CFR Ch. V (7–1–18 Edition)

jstallworth on DSKBBY8HB2PROD with CFR

of this section. The institution managing the lease specific-abandonment
account will join with the Regional Director to establish a Federal Reserve
Circular 154 account to hold these
Treasury securities, unless the Regional Director authorizes the managing institution to retain the pledged
Treasury securities in a separate trust
account. You may obtain a copy of the
current Treasury Circular No. 154 from
the Surety Bond Branch, Financial
Management Service, Department of
the Treasury, East-West Highway, Hyattsville, MD 20782.
(e) The Regional Director may require you to create an overriding royalty or production payment obligation
for the benefit of a lease-specific account pledged for the decommissioning
of a lease. The required obligation may
be associated with oil and gas or sulfur
production from a lease other than the
lease bonded through the lease-specific
abandonment account.
§ 556.905 Using a third-party guarantee instead of a bond.
(a) When the Regional Director may accept a third-party guarantee. The Regional Director may accept a thirdparty guarantee instead of an additional bond under § 556.901(d) if:
(1) The guarantee meets the criteria
in paragraph (c) of this section;
(2) The guarantee includes the terms
specified in paragraph (d) of this section;
(3) The guarantor’s total outstanding
and proposed guarantees do not exceed
25 percent of its unencumbered net
worth in the United States; and
(4) The guarantor submits an indemnity agreement meeting the criteria in
paragraph (e) of this section.
(b) What to do if your guarantor becomes unqualified. If, during the life of
your third-party guarantee, your guarantor no longer meets the criteria of
paragraphs (a)(3) and (c)(3) of this section, you must:
(1) Notify the Regional Director immediately; and
(2) Cease production until you comply with the bond coverage requirements of this subpart.
(c) Criteria for acceptable guarantees. If
you propose to furnish a third party’s
guarantee, that guarantee must ensure

compliance with all lessees’ lease obligations, the obligations of all operating rights owners, and the obligations of all operators on the lease. The
Regional Director will base acceptance
of your third-party guarantee on the
following criteria:
(1) The period of time that your
third-party guarantor (guarantor) has
been in continuous operation as a business entity where:
(i) Continuous operation is the time
that your guarantor conducts business
immediately before you post the guarantee; and
(ii) Continuous operation excludes
periods of interruption in operations
that are beyond your guarantor’s control and that do not affect your guarantor’s likelihood of remaining in business during exploration, development,
production, and decommissioning.
(2) Financial information available in
the public record or submitted by your
guarantor, on your guarantor’s own
initiative, in sufficient detail to show
to the Regional Director’s satisfaction
that your guarantor is qualified based
on:
(i) Your guarantor’s current rating
for its most recent bond issuance by either Moody’s Investor Service or
Standard and Poor’s Corporation;
(ii) Your guarantor’s net worth, taking into account liabilities under its
guarantee of compliance with all the
terms and conditions of your lease, the
regulations in this chapter and 30 CFR
chapters II and XII, and your guarantor’s other guarantees;
(iii) Your guarantor’s ratio of current
assets to current liabilities, taking
into account liabilities under its guarantee of compliance with all the terms
and conditions of your lease, the regulations in this chapter and 30 CFR
chapters II and XII, and your guarantor’s other guarantees; and
(iv) Your guarantor’s unencumbered
fixed assets in the United States.
(3) When the information required by
paragraph (c) of this section is not publicly available, your guarantor may
submit the information in the following table. Your guarantor must update the information annually within
90 days of the end of the fiscal year or
by the date prescribed by the Regional
Director.

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Ocean Energy Management, Interior
The guarantor should submit

That

(i) Financial statements for the most recently
completed fiscal year,

Include a report by an independent certified public accountant containing the
accountant’s audit opinion or review opinion of the statements. The report
must be prepared in conformance with generally accepted accounting principles and contain no adverse opinion.
Your guarantor’s financial officer certifies to be correct.

(ii) Financial statements for completed quarters
in the current fiscal year, and
(iii) Additional information as requested by the
Regional Director.

jstallworth on DSKBBY8HB2PROD with CFR

§ 556.905

Your guarantor’s financial officer certifies to be correct.

(d) Provisions required in all thirdparty guarantees. Your third-party
guarantee must contain each of the following provisions.
(1) If you, your operator, or an operating rights owner fails to comply with
any lease term or regulation, your
guarantor must either:
(i) Take corrective action; or,
(ii) Be liable under the indemnity
agreement to provide, within 7 calendar days, sufficient funds for the Regional Director to complete corrective
action.
(2) If your guarantor complies with
paragraph (d)(1) of this section, this
compliance will not reduce its liability.
(3) If your guarantor wishes to terminate the period of liability under its
guarantee, it must:
(i) Notify you and the Regional Director at least 90 days before the proposed termination date;
(ii) Obtain the Regional Director’s
approval for the termination of the period of liability for all or a specified
portion of your guarantor’s guarantee;
and
(iii) Remain liable for all work and
workmanship performed during the period that your guarantor’s guarantee is
in effect.
(4) You must provide a suitable replacement security instrument before
the termination of the period of liability under your third-party guarantee.
(e) Required criteria for indemnity
agreements. If the Regional Director approves your third-party guarantee, the
guarantor must submit an indemnity
agreement.
(1) The indemnity agreement must be
executed by your guarantor and all
persons and parties bound by the agreement.
(2) The indemnity agreement must
bind each person and party executing
the agreement jointly and severally.

(3) When a person or party bound by
the indemnity agreement is a corporate entity, two corporate officers
who are authorized to bind the corporation must sign the indemnity agreement.
(4) Your guarantor and the other corporate entities bound by the indemnity
agreement must provide the Regional
Director copies of:
(i) The authorization of the signatory
corporate officials to bind their respective corporations;
(ii) An affidavit certifying that the
agreement is valid under all applicable
laws; and
(iii) Each corporation’s corporate authorization to execute the indemnity
agreement.
(5) If your third-party guarantor or
another party bound by the indemnity
agreement is a partnership, joint venture, or syndicate, the indemnity
agreement must:
(i) Bind each partner or party who
has a beneficial interest in your guarantor; and
(ii) Provide that, upon demand by the
Regional Director under your thirdparty guarantee, each partner is jointly and severally liable for compliance
with all terms and conditions of your
lease.
(6) When forfeiture is called for under
§ 556.907, the indemnity agreement
must provide that your guarantor will
either:
(i) Bring your lease into compliance;
or
(ii) Provide, within 7 calendar days,
sufficient funds to permit the Regional
Director to complete corrective action.
(7) The indemnity agreement must
contain a confession of judgment. It
must provide that, if the Regional Director determines that you, your operator, or an operating rights owner is in
default of the lease, the guarantor:

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§ 556.906

30 CFR Ch. V (7–1–18 Edition)

(i) Will not challenge the determination; and
(ii) Will remedy the default.
(8) Each indemnity agreement is
deemed to contain all terms and conditions contained in this paragraph (e),
even if the guarantor has omitted
them.

jstallworth on DSKBBY8HB2PROD with CFR

§ 556.906 Termination of the period of
liability and cancellation of a bond.
This section defines the terms and
conditions under which BOEM will terminate the period of liability of a bond
or cancel a bond. 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
that accrued during the period of liability. Canceling a bond relieves the
surety of all liability. The liabilities
that accrue during a period of liability
include obligations that started to accrue prior to the beginning of the period of liability and had not been met,
and obligations that begin accruing
during the period of liability.
(a) When you or the surety under
your bond requests termination:
(1) The Regional Director will terminate the period of liability under your
bond within 90 days after BOEM receives the request; and
(2) If you intend to continue operations, or have not met all decommissioning obligations, you must provide a
replacement bond of an equivalent
amount.
(b) If you provide a replacement
bond, the Regional Director will cancel
your previous bond and the surety that
provided your previous bond will not
retain any liability, provided that:

(1) The new bond is equal to or greater than the bond that was terminated,
or you provide an alternative form of
security, and the Regional Director determines that the alternative form of
security provides a level of security
equal to or greater than that provided
for by the bond that was terminated;
(2) For a base bond submitted under
§ 556.900(a) or under § 556.901(a) or (b),
the surety issuing the new bond agrees
to assume all outstanding liabilities
that accrued during the period of liability that was terminated; and
(3) For additional bonds submitted
under § 556.901(d), the surety issuing the
new additional bond agrees to assume
that portion of the outstanding liabilities that accrued during the period of
liability that was terminated and that
the Regional Director determines may
exceed the coverage of the base bond,
and of which the Regional Director notifies the provider of the bond.
(c) This paragraph applies if the period of liability is terminated for a
bond, but the bond is not replaced by a
bond of an equivalent amount. The surety that provided your terminated
bond will continue to be responsible for
accrued obligations:
(1) Until the obligations are satisfied;
and
(2) For additional periods of time in
accordance with paragraph (d) of this
section.
(d) When your lease expires or is terminated, the surety that issued a bond
will continue to be responsible, and the
Regional Director will retain other
forms of security as shown in the following table:

For the following type of bond

The period of liability will end

Your bond will be cancelled

(1) Base bonds submitted
under § 556.900(a),
§ 556.901(a), or (b).

When the Regional Director
determines that you have
met all of your obligations
under the lease,

(2) Additional bonds submitted
under § 556.901(d).

When the Regional Director
determines that you have
met all your obligations covered by the additional bond,

Seven years after the termination of the lease, 6 years after
completion of all bonded obligations, or at the conclusion of
any appeals or litigation related to your bonded obligation,
whichever is the latest. The Regional Director will reduce
the amount of your bond or return a portion of your security
if the Regional Director determines that you need less than
the full amount of the base bond to meet any possible future problems.
When you meet your bonded obligations, unless the Regional
Director: (i) Determines that the future potential liability resulting from any undetected problem is greater than the
amount of the base bond; and
(ii) Notifies the provider of the bond that the Regional Director
will wait 7 years before cancelling all or a part of the bond
(or longer period as necessary to complete any appeals or
judicial litigation related to your bonding obligation).

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Ocean Energy Management, Interior

§ 556.907

(e) For all bonds, the Regional Director may reinstate your bond as if no
cancellation or release had occurred if:
(1) A person makes a payment under
the lease and the payment is rescinded
or must be repaid by the recipient because the person making the payment
is insolvent, bankrupt, subject to reorganization, or placed in receivership; or
(2) The responsible party represents
to BOEM that it has discharged its obligations under the lease, and the representation was materially false when
the bond was canceled or released.

jstallworth on DSKBBY8HB2PROD with CFR

§ 556.907 Forfeiture of bonds and/or
other securities.
This section explains how a bond or
other security may be forfeited.
(a) The Regional Director will call
for forfeiture of all or part of the bond,
other form of security, or guarantee
you provide under this part if:
(1) You (the party who provided the
bond) refuse, or the Regional Director
determines that you are unable to comply with any term or condition of your
lease; or
(2) You default on one of the conditions under which the Regional Director accepts your bond, third-party
guarantee, and/or other form of security.
(b) The Regional Director may pursue forfeiture of your bond without
first making demands for performance
against any lessee, operating rights
owner, or other person authorized to
perform lease obligations.
(c) The Regional Director will:
(1) Notify you, the surety on your
bond or other form of security, and any
third-party guarantor of a determination to call for forfeiture of the bond,
security, or guarantee under this section.
(i) This notice will be in writing, and
will provide the reason for the forfeiture and the amount to be forfeited.
(ii) The Regional Director must base
the amount he/she determines is forfeited upon his/her estimate of the
total cost of corrective action to bring
your lease into compliance.
(2) Advise you, your third-party guarantor, and any surety that you, your
guarantor, and any surety may avoid
forfeiture if, within five working days:

(i) You agree to, and demonstrate
that you will bring your lease into
compliance within the timeframe that
the Regional Director prescribes;
(ii)
Your
third-party
guarantor
agrees to and demonstrates that it will
complete the corrective action to bring
your lease into compliance within the
timeframe that the Regional Director
prescribes; or
(iii) Your surety agrees to and demonstrates that it will bring your lease
into compliance within the timeframe
that the Regional Director prescribes,
even if the cost of compliance exceeds
the face amount of the bond or other
surety instrument.
(d) If the Regional Director finds you
are in default, he/she may cause the
forfeiture of any bonds and other security deposited as your guarantee of
compliance with the terms and conditions of your lease and the regulations
in this chapter and 30 CFR chapters II
and XII.
(e) If the Regional Director determines that your bond and/or other security is forfeited, the Regional Director will:
(1) Collect the forfeited amount; and
(2) Use the funds collected to bring
your leases into compliance and to correct any default.
(f) If the amount the Regional Director collects under your bond and other
security is insufficient to pay the full
cost of corrective actions he/she may:
(1) Take or direct action to obtain
full compliance with your lease and the
regulations in this chapter; and
(2) Recover from you, any co-lessee,
operating rights owner, and/or any
third-party
guarantor
responsible
under this subpart all costs in excess of
the amount he/she collects under your
forfeited bond and other security.
(g) The amount that the Regional Director collects under your forfeited
bond and other security may exceed
the costs of taking the corrective actions required to obtain full compliance with the terms and conditions of
your lease and the regulations in this
chapter and 30 CFR chapters II and XII.
In this case, the Regional Director will
return the excess funds to the party
from whom they were collected.

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§ 556.1000

30 CFR Ch. V (7–1–18 Edition)

Subpart J—Bonus or Royalty Credits for Exchange of Certain
Leases
§ 556.1000 Leases formerly eligible for
a bonus or royalty credit.
Bonus or royalty credits were available to lessees with leases:
(a) In effect on December 20, 2006, and
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.
(b) The deadline for applying for such
a bonus or royalty credit was October
14, 2010; therefore, lessees may no
longer apply for such credits.

Subpart K—Ending a Lease
§ 556.1100

How does a lease expire?

(a) Your oil and gas lease will automatically expire at the end of its primary term unless you have taken action, as set forth in § 556.601, to maintain the lease beyond the primary
term.
(b) Your sulfur lease will automatically expire at the end of its primary
term unless you have taken action, as
set forth in § 556.603, to maintain the
lease beyond the primary term.

jstallworth on DSKBBY8HB2PROD with CFR

§ 556.1101 May I relinquish my lease or
an aliquot part thereof?
(a) A record title owner may relinquish a lease or an aliquot part of a
lease if all record title owners of a
lease or any aliquot part(s) of the lease
file three original copies of a request to
relinquish with BOEM on Form BOEM–
0152, entitled, ‘‘Relinquishment of Federal Oil and Gas Lease.’’ No filing fee is
required.
(b) A relinquishment will be subject
to the continued obligation of the
record title owner and the surety to
make all payments due, including any
accrued rentals, royalties and deferred
bonuses, and to abandon all wells and
condition or remove all platforms and
other facilities on the land to be relin-

quished to the satisfaction of the Director.
(c) The effective date of the relinquishment is the date on which the relinquishment is filed with the proper
BOEM regional office.
§ 556.1102 Under what circumstances
will BOEM cancel my lease?
(a) BOEM may cancel your non-producing lease if you fail to comply with
any provision of OCSLA, the lease, or
applicable regulations if the failure
continues for 30 days after mailing of
notice to your post office address of
record by registered mail and you have
not requested and been granted any additional time within which to correct
the failure. Such cancellation is subject to judicial review under section 23
of OCSLA (43 U.S.C. 1349).
(b) Your producing lease may be cancelled if you fail to comply with any
provision of OCSLA, the lease, or applicable regulations. The Secretary will
cancel a producing lease after the judicial proceedings required under section
5(d) of OCSLA (43 U.S.C. 1334(d)).
(c) BOEM may cancel your lease if it
determines that the lease was obtained
by fraud or misrepresentation. You will
have notice and an opportunity to be
heard before BOEM cancels your lease.
(d) BOEM may cancel your lease at
any time if it determines, after a hearing, that continued activity will probably cause serious harm or damage to
life (including fish and other aquatic
life), property, any mineral, national
security or defense, or the marine,
coastal, or human environment; that
the threat of harm or damage will not
disappear or decrease to an acceptable
level within a reasonable period of
time; and the advantages of cancellation outweigh the advantages of continuing the lease.
(e) BOEM may cancel your lease at
any time after operations under the
lease have been suspended or temporarily prohibited by the Department
continuously for a period of five years
pursuant to paragraph (d) of this section, absent your request for a shorter
period.
(f) If, upon demand, you fail to provide a bond, or alternative type of security instrument acceptable to BOEM,

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Ocean Energy Management, Interior

§ 556.1300

the Regional Director may assess penalties or cancel your lease in accordance with part 550, subpart N of this
chapter;
(g) Title 30, part 550, subpart A of the
CFR provides the procedures for lease
cancellation and compensation, if applicable.

Subpart L—Leases Maintained
Under Section 6 of OCSLA

jstallworth on DSKBBY8HB2PROD with CFR

§ 556.1200 Effect of regulations on
lease.
(a) All regulations in this part, insofar as they are applicable, will supersede the provisions of any lease that is
maintained under section 6(a) of the
Act. However, the provisions of a lease
relating to area, minerals, rentals, royalties (subject to sections 6(a)(8) and (9)
of the Act), and term (subject to section 6(a)(10) of the Act and, as to sulfur, subject to section 6(b)(2) of the
Act) will continue in effect, and, in the
event of any conflict or inconsistency,
will take precedence over these regulations.
(b) A lease maintained under section
6(a) of the Act is also subject to all operating and conservation regulations
applicable to the OCS. In addition, the
regulations relating to geophysical and
geological exploratory operations and
to pipeline ROW(s) are applicable, to
the extent that those regulations are
not contrary to or inconsistent with
the lease provisions relating to area,
minerals, rentals, royalties and term.
The lessee must comply with any provision of the lease as validated, the
subject matter of which is not covered
in the regulations in this part.
§ 556.1201 Section 6(a) leases and
leases other than those for oil, gas,
or sulfur.
The existence of an oil and gas lease
maintained under section 6(a) of the
Act precludes only the issuance in the
same area of an oil and gas lease under
OCSLA, but does not preclude the
issuance of other types of leases under
OCSLA. However, no other lease may
authorize or permit the lessee thereunder unreasonably to interfere with
or endanger operations under the existing lease. The United States will not
grant any sulfur leases on any area

that is included in a lease covering sulfur under section 6(b) of the Act.

Subpart M—Environmental Studies
§ 556.1300 Environmental studies.
(a) The Director will conduct a study
or studies of any area or region included in any oil and gas lease sale or
other lease in order to establish information needed for assessment and
management of impacts on the human,
marine and coastal environments
which may be affected by OCS oil and
gas or other mineral activities in such
area or region. The purposes of such
studies will include, to the extent practicable, analyses of the impacts of pollutants introduced into the environments and impacts of offshore activities on the seabed and affected coastal
areas.
(b) Studies will be planned and carried out in cooperation with the affected States and interested parties
and, to the extent possible, will not duplicate studies done under other laws.
Where appropriate, the Director will,
to the maximum extent practicable,
coordinate with the National Oceanic
and
Atmospheric
Administration
(NOAA) in executing its environmental
studies responsibilities. The Director
may also make agreements for the coordination with, or the use of the services or resources of, any other Federal,
State or local government agency in
the conduct of such studies.
(c) Any study of an area or region required by paragraph (a) of this section
for a lease sale will be commenced not
later than six months prior to holding
a lease sale for that area. The Director
may use information collected in any
prior study. The Director may initiate
studies for an area or region not identified in the leasing program.
(d) After the leasing and developing
of any area or region, the Director will
conduct such studies as are deemed
necessary to establish additional information and will monitor the human,
marine and coastal environments of
such area or region in a manner designed to provide information, which
can be compared with the results of
studies conducted prior to OCS oil and
gas development. This will be done to
identify any significant changes in the

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Pt. 560

30 CFR Ch. V (7–1–18 Edition)

quality and productivity of such environments, to establish trends in the
area studies, and to design experiments
identifying the causes of such changes.
Findings from such studies will be used
to recommend modifications in practices that are employed to mitigate the
effects of OCS activities and to enhance the data/information base for
predicting impacts which might result
from a single lease sale or cumulative
OCS activities.
(e) Information available or collected
by the studies program will, to the extent practicable, be provided in a form
and in a timeframe that can be used in
the decision-making process associated
with a specific leasing action or with
longer term OCS minerals management
responsibilities.

BIDDING SYSTEM SELECTION CRITERIA
560.230 What criteria does BOEM use for selecting bidding systems and bidding system components?

Subpart C—Operating Allowances
560.300

Operating allowances.

Subpart D [Reserved]
Subpart E—Electronic Filings

PART 560—OUTER CONTINENTAL
SHELF OIL AND GAS LEASING
Subpart A—General Provisions
560.100 Authority
560.100 What is the purpose of this part?
560.102 What definitions apply to this part?
560.103 What is BOEM’s authority to collect
information?

Subpart B—Bidding Systems
GENERAL PROVISIONS
560.200 What is the purpose of this subpart?
560.201 What definitions apply to this subpart?
560.202 What bidding systems may BOEM
use?
560.203 What conditions apply to the bidding
systems that BOEM uses?

560.500 Electronic document and data transmissions.
560.501 How long will the confidentiality of
electronic document and data transmissions be maintained?
560.502 Are electronically filed document
transmissions legally binding?
AUTHORITY: Section 104, Public Law 97–451,
96 Stat. 2451 (30 U.S.C. 1714), Public Law 109–
432, Div C, Title I, 120 Stat. 3000; 30 U.S.C.
1751; 31 U.S.C. 9701; 43 U.S.C. 1334; 33 U.S.C.
2704, 2716; E.O. 12777, as amended; 43 U.S.C.
1331 et seq., 43 U.S.C. 1337.
SOURCE: 76 FR 64623, Oct. 18, 2011, unless
otherwise noted.

Subpart A—General Provisions
§ 560.100

ELIGIBLE LEASES
560.210 How do royalty suspension volumes
apply to eligible leases?
560.211 When does an eligible lease qualify
for a royalty suspension volume?
560.212 How does BOEM assign and monitor
royalty suspension volumes for eligible
leases?
560.213 How long will a royalty suspension
volume for an eligible lease be effective?
550.214 How do I measure natural gas production on my eligible lease?
ROYALTY SUSPENSIONS (RS) LEASES

jstallworth on DSKBBY8HB2PROD with CFR

560.222 How long will a royalty suspension
volume be effective for a lease issued in
a sale held after November 2000?
560.223 How do I measure natural gas production for a lease issued in a sale held
after November 2000?
560.224 How will royalty suspension apply if
BOEM assigns a lease issued in a sale
held after November 2000 to a field that
has a pre-Act lease?

560.220 How does royalty suspension apply
to leases issued in a sale held after November 2000?
560.221 When does a lease issued in a sale
held after November 2000 get a royalty
suspension?

Authority.

(a) The Outer Continental Shelf
Lands Act (OCSLA) (43 U.S.C. 1334)
(‘‘Outer Continental Shelf Lands Act
Amendments of 1978’’).
(b) The Federal Oil and Gas Royalty
Management
Act,
as
amended
(FOGRMA) (30 U.S.C. 1711), including
the Federal Oil and Gas Royalty Simplification and Fairness Act of 1996, (30
U.S.C. 1701 note).
(c) The Independent Offices Appropriations Act of 1952 (31 U.S.C. 9701).
(d) Public Law 89–554, 1966 (5 U.S.C.
301).
[81 FR 18175, Mar. 30, 2016]

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