30 CFR 581 Leasing for Minerals Other than Oil, Gas, Sulfur

Pt. 581

30 CFR Ch. V (7–1–16 Edition)

PART 581—LEASING OF MINERALS
OTHER THAN OIL, GAS, AND SULPHUR IN THE OUTER CONTINENTAL SHELF
Subpart A—General
Sec.
581.0 Authority for information collection.
581.1 Purpose and applicability.
581.2 Authority.
581.3 Definitions.
581.4 Qualifications of lessees.
581.5 False statements.
581.6 Appeals.
581.7 Disclosure of information to the public.
581.8 Rights to minerals.
581.9 Jurisdictional controversies.

Subpart B—Leasing Procedures
581.11 Unsolicited request for a lease sale.
581.12 Request for OCS mineral information
and interest.
581.13 Joint State/Federal coordination.
581.14 OCS mining area identification.
581.15 Tract size.
581.16 Proposed leasing notice.
581.17 Leasing notice.
581.18 Bidding system.
581.19 Lease term.
581.20 Submission of bids.
581.21 Award of leases.
581.22 Lease form.
581.23 Effective date of leases.

Subpart C—Financial Considerations
581.26 Payments.
581.27 Annual rental.
581.28 Royalty.
581.29 Royalty valuation.
581.30 Minimum royalty.
581.31 Overriding royalties.
581.32 Waiver, suspension, or reduction of
rental, minimum royalty, or production
royalty.
581.33 Bonds and bonding requirements.

Subpart D—Assignments and Lease
Extensions

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581.40 Assignment of leases or interests
therein.
581.41 Requirements for filing for transfers.
581.42 Effect of assignment on particular
lease.
581.43 Effect of suspensions on lease term.

Subpart E—Termination of Leases
581.46 Relinquishment of leases or parts of
leases.
581.47 Cancellation of leases.

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
§ 581.0 Authority for information collection.
The information collection requirements contained in part 581 have been
approved by the Office of Management
and Budget under 44 U.S.C. 3507 and assigned clearance number 1010–0082. The
information is being collected to determine if the applicant for a lease on the
Outer Continental Shelf (OCS) is qualified to hold such a lease or to determine if a requested action is warranted. The information will be used to
make those determinations. An applicant must respond to obtain or retain a
benefit.
§ 581.1

Purpose and applicability.

The purpose of these regulations is to
establish procedures under which the
Secretary of the Interior (Secretary)
will exercise the authority granted to
administer a leasing program for minerals other than oil, gas, and sulphur in
the OCS. The rules in this part apply
exclusively to leasing activities for
minerals other than oil, gas, and sulphur in the OCS pursuant to the Act.
§ 581.2

Authority.

The Act authorizes the Secretary to
grant leases for any mineral other than
oil, gas, and sulphur in any area of the
OCS to the qualified persons offering
the highest cash bonuses on the basis
of competitive bidding upon such royalty, rental, and other terms and conditions as the Secretary may prescribe
at the time of offering the area for
lease (43 U.S.C. 1337(k)). The Secretary
is to administer the leasing provisions
of the Act and prescribe the rules and
regulations necessary to carry out
those provisions (43 U.S.C. 1334(a)).

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Ocean Energy Management, Interior

§ 581.5

§ 581.3 Definitions.
When used in this part, the following
terms shall have the following meaning:
Act means the OCS Lands Act, as
amended (43 U.S.C. 1331 et seq.).
Adjacent State means with respect to
any activity proposed, conducted, or
approved under this part, any coastal
State—
(1) That is, or is proposed to be, receiving for processing, refining, or
transshipping OCS mineral resources
commercially recovered from the seabed;
(2) That is used, or is scheduled to be
used, as a support base for prospecting,
exploration, testing, and mining activities; or
(3) In which there is a reasonable
probability of significant effect on land
or water uses from such activity.
Director means the Director of the
Bureau of Ocean Energy Management
(BOEM) of the U.S. Department of the
Interior or an official authorized to act
on the Director’s behalf.
Governor means the Governor of a
State or the person or entity designated by, or pursuant to, State law
to exercise the powers granted to such
Governor pursuant to the Act.
Lease means any form of authorization which is issued under section 8 of
the Act and which authorizes exploration for, and development and production of, minerals, or the area covered by that authorization, whichever
is required by the context.
Lessee means the person authorized
by a lease, or an approved assignment
thereof, to explore for and develop and
produce the leased deposits in accordance with the regulations in this chapter. The term includes all persons holding that authority by or through the
lessee.
OCS mineral means a mineral deposit
or accretion found on or below the surface of the seabed but does not include
oil, gas, sulphur; salt or sand and gravel intended for use in association with
the development of oil, gas, or sulphur;
or source materials essential to production of fissionable materials which
are reserved to the United States pursuant to section 12(e) of the Act.
Outer Continental Shelf means all submerged lands lying seaward and out-

side of the area of lands beneath navigable waters as defined in section 2 of
the Submerged Lands Act (43 U.S.C.
1301) and of which the subsoil and seabed appertain to the United States and
are subject to its jurisdiction and control.
Overriding royalty means a royalty
created out of the lessee’s interest
which is over and above the royalty reserved to the lessor in the original
lease.
Person means a citizen or national of
the United States; an alien lawfully admitted for permanent residency in the
United States as defined in 8 U.S.C.
1101(a)(20); a private, public, or municipal corporation organized under the
laws of the United States or of any
State or territory thereof; an association of such citizens, nationals, resident aliens or private, public, or municipal corporations, States, or political subdivisions of States; or anyone
operating in a manner provided for by
treaty or other applicable international agreements. The term does
not include Federal Agencies.
Secretary means the Secretary of the
Interior or an official authorized to act
on the Secretary’s behalf.
§ 581.4 Qualifications of lessees.
(a) In accordance with section 8(k) of
the Act, leases shall be awarded only to
qualified persons offering the highest
cash bonus bid.
(b) Mineral leases issued pursuant to
section 8 of the Act may be held only
by:
(1) Citizens and nationals of the
United States;
(2) Aliens lawfully admitted for permanent residence in the United States
as defined in 8 U.S.C. 1101(a)(20);
(3) Private, public, or municipal corporations organized under the laws of
the United States or of any State or of
the District of Columbia or territory
thereof; or
(4) Associations of such citizens, nationals, resident aliens, or private, public, or municipal corporations, States,
or political subdivisions of States.
§ 581.5 False statements.
Under the provisions of 18 U.S.C. 1001,
it is a crime punishable by up to 5
years imprisonment or a fine of $10,000,

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§ 581.6

30 CFR Ch. V (7–1–16 Edition)

or both, for anyone knowingly and
willfully to submit or cause to be submitted to any Agency of the United
States any false or fraudulent statement(s) to any matters within the
Agency’s jurisdiction.
§ 581.6 Appeals.
Any party adversely affected by a decision of a BOEM official made pursuant to the provisions of this part shall
have the right of appeal pursuant to 30
CFR part 590, except as provided otherwise in § 581.21 of this part.

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§ 581.7 Disclosure of information to
the public.
The Secretary shall make data and
information available to the public in
accordance with the requirements and
subject to the limitations of the Act,
the Freedom of Information Act (5
U.S.C. 552), and the implementing regulations (30 CFR parts 580, 582, and 43
CFR part 2).
§ 581.8 Rights to minerals.
(a) Unless otherwise specified in the
leasing notice, a lease for OCS minerals shall include rights to all minerals within the leased area except the
following;
(1) Minerals subject to rights granted
by existing leases;
(2) Oil;
(3) Gas;
(4) Sulphur;
(5) Minerals produced in direct association with oil, gas, or sulphur;
(6) Salt deposits which are identified
in the leasing notice as being reserved;
(7) Sand and gravel deposits which
are identified in the leasing notice as
being reserved; and
(8) Source materials essential to production of fissionable materials which
are reserved pursuant to section 12(a)
of the Act.
(b) When an OCS mineral lease issued
under this part limits the minerals to
which rights are granted, such lease
shall include rights to minerals produced in direct association with the
OCS mineral specified in the lease but
not the rights to minerals specifically
reserved.
(c) The existence of an OCS mineral,
oil and gas, or sulphur lease shall not
preclude the issuance of a lease(s) for

other OCS minerals in the same area.
However, no OCS mineral lease shall
authorize or permit the lessee thereunder to unreasonably interfere with
or endanger operations under an existing OCS mineral, oil and gas, or sulphur lease.
§ 581.9 Jurisdictional controversies.
In the event of a controversy between
the United States and a State as to
whether certain lands are subject to
Federal or State jurisdiction (43 U.S.C.
1336), either the Governor or the Secretary may initiate negotiations in an
attempt to settle the jurisdictional
controversy. With the concurrence of
the Attorney General, the Secretary
may enter into an agreement with a
State with respect to OCS mineral activities under the Act or under State
authority and to payment and impounding of rents, royalties, and other
sums and with respect to the offering
of lands for lease pending settlement of
the controversy.

Subpart B—Leasing Procedures
§ 581.11 Unsolicited request for a lease
sale.
(a) Any person may at any time request that OCS minerals be offered for
lease. A request that OCS minerals be
offered for lease shall be submitted to
the Director and shall contain the following information:
(1) The area to be offered for lease.
(2) The OCS minerals of primary interest.
(3) The available OCS mineral resource and environmental information
pertaining to the area of interest to be
offered for lease which supports the request.
(b) Within 45 days after receipt of a
request submitted under paragraph (a)
of this section, the Director shall either initiate steps leading to the offer
of OCS minerals for lease and notify
the applicant of the action taken or inform the applicant of the reasons for
not initiating steps leading to the offer
of OCS minerals for lease.
(c) Any interested party may at any
time submit information to the Director concerning the scheduling of proposed lease sales of OCS minerals in
any area of the OCS. Such information

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§ 581.13

may include but not be limited to any
of the following:
(1) Benefits of conducting a lease sale
in an area.
(2) Costs of conducting a lease sale in
an area.
(3) Geohazards which could be encountered in an area.
(4) Geological information about an
area and mineral resource potential.
(5) Environmental information about
an area.
(6) Information about known archaeological resources in an area.

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§ 581.12 Request for OCS mineral information and interest.
(a) When considering whether to offer
OCS minerals for lease, the Secretary,
upon the Department of the Interior’s
own initiative or as a result of a submission under § 581.11, may request indications of interest in the leasing of a
specific OCS mineral, a group of OCS
minerals, or all OCS minerals in the
area being considered for lease. Requests for information and interest
shall be published in the FEDERAL REGISTER and may be published elsewhere.
(b) States and local governments, industry, other Federal Agencies, and all
interested parties (including the public) may respond to a request for information and interest. All information
provided to the Secretary will be considered in the decision whether to proceed with additional steps leading to
the offering of OCS minerals for lease.
(c) The Secretary may request specific information concerning the offering of a specific OCS mineral, a group
of OCS minerals, or all OCS minerals
in a broad area for lease or the offering
of one or more discrete tracts which
represent a minable orebody. The Secretary’s request may ask for comments
on OCS areas which have been determined to warrant special consideration
and analysis. Requests may be for comments concerning geological conditions
or archaeological resources on the seabed; multiple uses of the area proposed
for leasing, including navigation,
recreation and fisheries; and other socioeconomic, biological, and environmental information relating to the
area proposed for leasing.

§ 581.13 Joint State/Federal coordination.
(a) The Secretary may invite the adjacent State Governor(s) to join in, or
the adjacent State Governor(s) may request that the Secretary join in, the
establishment of a State/Federal task
force or some other joint planning or
coordination arrangement when industry interest exists for OCS mineral
leasing or geological information appears to support the leasing of OCS
minerals in specific areas. Participation in joint State/Federal task forces
or other arrangements will afford the
adjacent State Governor(s) opportunity
for access to available data and information about the area; knowledge of
progress made in the leasing process
and of the results of subsequent exploration and development activities; facilitate the resolution of issues of mutual interest; and provide a mechanism
for planning, coordination, consultation, and other activities which the
Secretary and the Governor(s) may
identify as contributing to the leasing
process.
(b) State/Federal task forces or other
such arrangements are to be constituted pursuant to such terms and
conditions (consistent with Federal law
and these regulations) as the Secretary
and the adjacent State Governor(s)
may agree.
(c) State/Federal task forces or other
such arrangements will provide a
forum which the Secretary and adjacent State Governor(s) may use for
planning, consultation, and coordination on concerns associated with the
offering of OCS minerals other than
oil, gas, or sulphur for lease.
(d) With respect to the activities authorized under these regulations each
State/Federal task force may make
recommendations to the Secretary and
adjacent State Governor(s) concerning:
(1) The identification of areas in
which OCS minerals might be offered
for lease;
(2) The potential for conflicts between the exploration and development
of OCS mineral resources, other users
and uses of the area, and means for resolution or mitigation of these conflicts;

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§ 581.14

30 CFR Ch. V (7–1–16 Edition)

(3) The economic feasibility of developing OCS mineral resources in the
area proposed for leasing;
(4) Potential environmental problems
and measures that might be taken to
mitigate these problems;
(5) Development of guidelines and
procedures for safe, environmentally
responsible exploration and development practices; and
(6) Other issues of concern to the Secretary and adjacent State Governor(s).
(e) State/Federal task forces or other
such arrangements might also be used
to conduct or oversee research, studies,
or reports (e.g., Environmental Impact
Statements).
§ 581.14 OCS mining area identification.
The Secretary, after considering the
available OCS mineral resources and
environmental data and information,
the recommendation of any joint State/
Federal task force established pursuant
to § 581.13 of this part, and the comments received from interested parties,
shall select the tracts to be considered
for offering for lease. The selected
tracts will be considered in the environmental analysis conducted for the
proposed lease offering.

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§ 581.15 Tract size.
The size of the tracts to be offered for
lease shall be as determined by the
Secretary and specified in the leasing
notice. It is intended that tracts offered for lease be sufficiently large to
include potentially minable OCS mineral orebodies. When the presence of
any minable orebody is unknown and
additional prospecting is needed to discover and delineate OCS minerals, the
size of tracts specified in the leasing
notice may be relatively large.
§ 581.16 Proposed leasing notice.
(a) Prior to offering OCS minerals in
an area for lease, the Director shall assess the available information including recommendations of any joint
State/Federal task force established
pursuant to § 581.13 of this part to determine lease sale procedures to be prescribed and to develop a proposed leasing notice which sets out the proposed
primary term of the OCS mineral
leases to be offered; lease stipulations

including measures to mitigate potentially adverse impacts on the environment; and such rental, royalty, and
other terms and conditions as the Secretary may prescribe in the leasing notice.
(b) The proposed leasing notice shall
be sent to the Governor(s) of any adjacent State(s), and a Notice of its availability shall be published in the FEDERAL REGISTER at least 60 days prior to
the publication of the leasing notice.
(c) Written comments of the adjacent
State Governor(s) submitted within 60
days after publication of the Notice of
Availability of the proposed leasing notice shall be considered by the Secretary.
(d) Prior to publication of the leasing
notice, the Secretary shall respond in
writing to the comments of the adjacent State Governor(s) stating the reasons for accepting or rejecting the Governor’s recommendations, or for implementing any alternative mutually acceptable approach identified in consultation with the Governor(s) as a
means to provide a reasonable balance
between the National interest and the
well being of the citizens of the adjacent State.
§ 581.17

Leasing notice.

(a) The Director shall publish the
leasing notice in the FEDERAL REGISTER at least 30 days prior to the date
that OCS minerals will be offered for
lease. The leasing notice shall state
whether oral or sealed bids or a combination thereof will be used; the place,
date, and time at which sealed bids
shall be filed; and the place, date, and
time at which sealed bids shall be
opened and/or oral bids received. The
leasing notice shall contain or reference a description of the tract(s) to
be offered for lease; specify the mineral(s) to be offered for lease (if less
than all OCS minerals are being offered); specify the period of time the
primary term of the lease shall cover;
and any stipulation(s), term(s), and
condition(s) of the offer to lease (43
U.S.C. 1337(k)).
(b) The leasing notice shall contain a
reference to the OCS minerals lease
form which shall be issued to successful bidders.

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§ 581.20

(c) The leasing notice shall specify
the terms and conditions governing the
payment of the winning bid.

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§ 581.18

Bidding system.

(a) The OCS minerals shall be offered
by competitive, cash bonus bidding
under terms and conditions specified in
the leasing notice and in accordance
with all applicable laws and regulations.
(b)(1) When the leasing notice specifies the use of sealed bids, such bids received in response to the leasing notice
shall be opened at the place, date, and
time specified in the leasing notice.
The sole purpose of opening bids is to
publicly announce and record the bids
received, and no bids shall be accepted
or rejected at that time.
(2) The Secretary reserves the right
to reject any and all sealed bids received for any tract, regardless of the
amount offered.
(3) In the event the highest bids are
tie bids when using sealed bidding procedures, the tied bidders may be permitted to submit oral bids to determine the highest cash bonus bidder.
(c)(1) When the leasing notice specifies the use of oral bids, oral bids shall
be received at the place, time, and date
and in accordance with the procedures
specified in the leasing notice.
(2) The Secretary reserves the right
to reject all oral bids received for any
tract, regardless of the amount offered.
(d) When the leasing notice specifies
the use of deferred cash bonus bidding,
bids shall be received in accordance
with paragraph (b) or (c) of this section, as appropriate. The high bid will
be determined based upon the net
present value of each total bid. The appropriate discount rate will be specified in the leasing notice. High bidders
using the deferred bonus option shall
pay a minimum of 20 percent of the
cash bonus bid prior to lease issuance.
At least a total of 60 percent of the
cash bonus bid shall be due on or before
the 5th anniversary of the lease, and
payment of the remainder of the cash
bonus bid shall be due on the 10th anniversary of the lease. The lessee shall
submit a bond guaranteeing payment
of the deferred portion of the bonus, in
accordance with § 581.33.

§ 581.19

Lease term.

An OCS mineral lease for OCS minerals other than sand and gravel shall
be for a primary term of not less than
20 years as stipulated in the leasing notice. The primary lease term for each
OCS mineral shall be determined based
on exploration and development requirements for the OCS minerals being
offered by the Secretary. An OCS mineral lease for sand and gravel shall be
for a primary term of 10 years unless
otherwise stipulated in the leasing notice. A lease will continue beyond the
specified primary term for so long
thereafter as leased OCS minerals are
being produced in accordance with an
approved mining operation or the lessee is otherwise in compliance with
provisions of the lease and the regulations in this chapter under which a lessee can earn continuance of the OCS
mineral lease in effect.
§ 581.20

Submission of bids.

(a) If the bidder is an individual, a
statement of citizenship shall accompany the bid.
(b) If the bidder is an association (including a partnership), the bid shall be
accompanied by a certified statement
indicating the State in which it is registered and that the association is authorized to hold mineral leases on the
OCS, or appropriate reference to statements or records previously submitted
to a BOEM OCS office (including material submitted in compliance with
prior regulations).
(c) If the bidder is a corporation, the
bid shall be accompanied by the following information:
(1) Either a statement certified by
the corporate Secretary or Assistant
Secretary over the corporate seal
showing the State in which it was incorporated and that it is authorized to
hold mineral leases on the OCS or appropriate reference to statements or
record previously submitted to a BOEM
OCS office (including material submitted in compliance with prior regulations).
(2) Evidence of authority of persons
signing to bind the corporation. Such
evidence may be in the form of a certified copy of either the minutes of the

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§ 581.21

30 CFR Ch. V (7–1–16 Edition)

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board of directors or of the bylaws indicating that the person signing has authority to do so, or a certificate to that
effect signed by the Secretary or Assistant Secretary of the corporation
over the corporate seal, or appropriate
reference to statements or records previously submitted to a BOEM OCS office (including material submitted in
compliance with prior regulations).
Bidders are advised to keep their filings current.
(3) The bid shall be executed in conformance with corporate requirements.
(d) Bidders should be aware of the
provisions of 18 U.S.C. 1860, which prohibits unlawful combination or intimidation of bidders.
(e) When sealed bidding is specified in
the leasing notice, a separate sealed
bid shall be submitted for each bid unit
that is bid upon as described in the
leasing notice. A bid may not be submitted for less than a bidding unit
identified in the leasing notice.
(f) When oral bidding is specified in
the leasing notice, information which
must accompany a bid pursuant to
paragraph (a), (b), or (c) of this section,
shall be presented to BOEM at the
lease sale prior to the offering of an
oral bid.
§ 581.21 Award of leases.
(a)(1) The decision of the Director on
bids shall be the final action of the Department, subject only to reconsideration by the Secretary, pursuant to a
written request in accordance with
paragraph (a)(2) of this section. The
delegation of review authority to the
Office of Hearings and Appeals shall
not be applicable to decisions on high
bids for leases in the OCS.
(2) Any bidder whose bid is rejected
by the Director may file a written request for reconsideration with the Secretary within 15 days of notice of rejection, accompanied by a statement of
reasons with a copy to the Director.
The Secretary shall respond in writing
either affirming or reversing the decision.
(b) Written notice of the Director’s
action in accepting or rejecting bids
shall be transmitted promptly to those
bidders whose deposits have been held.
If a bid is accepted, such notice shall
transmit three copies of the lease form

to the successful bidder. As provided in
§ 581.26 of this part, the bidder shall,
not later than the 10th business day
after receipt of the lease, execute the
lease, pay the first year’s rental, and
unless payment of a portion of the bid
is deferred, pay the balance of the
bonus bid. When payment of a portion
of the bid is deferred, the successful
bidder shall also file a bond to guarantee payment of the deferred portion
as required in § 581.33. Deposits shall be
refunded on high bids subsequently rejected. When three copies of the lease
have been executed by the successful
bidder and returned to the Director,
the lease shall be executed on behalf of
the United States; and one fully executed copy shall be transmitted to the
successful bidder.
(c) If the successful bidder fails to
execute the lease within the prescribed
time or to otherwise comply with the
applicable regulations, the successful
bidder’s deposit shall be forfeited and
disposed of in the same manner as
other receipts under the Act.
(d) If, before the lease is executed on
behalf of the United States, the land
which would be subject to the lease is
withdrawn or restricted from leasing,
the deposit shall be refunded.
(e) If the awarded lease is executed
by an agent acting on behalf of the bidder, the bidder shall submit with the
executed lease, evidence that the agent
is authorized to act on behalf of the
bidder.
§ 581.22

Lease form.

The OCS mineral leases shall be
issued on the lease form prescribed by
the Secretary in the leasing notice.
§ 581.23

Effective date of leases.

Leases issued under the regulations
in this part shall be dated and become
effective as of the first day of the
month following the date leases are
signed on behalf of the lessor except
that, upon written request, a lease may
be dated and become effective as of the
first day of the month within which it
is signed on behalf of the lessor.

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§ 581.27

Subpart C—Financial
Considerations

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§ 581.26

Payments.

(a) For sealed bids, a bonus bid deposit of a specified percentage of the
total amount bid is required to be submitted with the bid. The percentage of
bonus bid required to be deposited will
be specified in the leasing notice. The
remittance may be made in cash or by
Federal Reserve check, commercial
check, bank draft, money order, certified check, or cashier’s check made
payable to ‘‘Department of the Interior—BOEM.’’ Payment of this portion
of the bonus bid may not be made by
Electronic Funds Transfer.
(b) For oral bids, a bonus bid deposit
of a specified percentage of the total
amount bid must be submitted to the
official designated in the leasing notice
following the completion of the oral
bidding. The percentage of bonus bid
required to be deposited will be specified in the leasing notice. Payment of
this portion of the bonus bid must be
made by Electronic Fund Transfer
within the timeframe specified in the
leasing notice.
(c) The deposit received from high
bidders will be placed in a Treasury account pending acceptance or rejection
of the bid. Other bids submitted under
paragraph (a) of this section will be returned to the bidders. If the high bid is
subsequently rejected, an amount
equal to that deposited with the high
bid will be returned according to applicable regulations.
(d) The balance of the winning bonus
bid and all rentals and royalties must
be paid in accordance with the terms
and conditions of this part, the Leasing
Notice, and subchapter A of this chapter.
(e) For each lease issued pursuant to
this subpart, there shall be one person
identified who shall be solely responsible for all payments due and payable
under the provisions of the lease. The
single responsible person shall be designated as the payor for the lease and
shall be so identified on the Solid Minerals Production and Royalty Report
(P&R) (Form ONRR–4430) in accordance
with 30 CFR 1210.201 of this title. The
designated person shall be responsible

for all bonus, rental, and royalty payments.
(f) Royalty shall be computed at the
rate specified in the leasing notice, and
paid in value unless the Secretary
elects to have the royalty delivered in
kind.
(g) For leases which provide for minimum royalty payments, each lessee
shall pay the minimum royalty specified in the lease at the end of each
lease year beginning with the lease
year in which production royalty is
paid (whether the full amount specified
in the lease or 1⁄2 the amount specified
in the lease pursuant to § 581.28(b) on
this part) of OCS minerals produced
(sold, transferred, used, or otherwise
disposed of) from the leasehold.
(h)(1) Unless stated otherwise in the
lease, product valuation will be in accordance with the regulations in part
1206 of chapter XII. The value used in
the computation of royalty shall be determined by the Director of the Office
of Natural Resources Revenue. The
value, for royalty purposes, shall be
the gross proceeds received by the lessee for produced substances at the
point the product is produced and
placed in its first marketable condition, consistent with prevailing practices in the industry. In establishing
the value, the Director shall consider,
in this order:
(i) The price received by the lessee;
(ii) Commodity and spot market
transactions;
(iii) Any other valuation method proposed by the lessee and approved by the
Director; and
(iv) Value or cost netback.
(2) For non-arm’s length transactions, the first benchmark will only
be accepted if it is not less than the
second benchmark.
(i) All payors must submit payments
and payment forms and maintain
auditable records in accordance with 30
CFR chapter XII, Subchapter A—Natural Resources Revenue.
§ 581.27

Annual rental.

(a) The annual lease rental shall be
due and payable in accordance with the
provisions of this section. No rental
shall be due or payable under a lease

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§ 581.28

30 CFR Ch. V (7–1–16 Edition)

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commencing with the first lease anniversary date following the commencement of royalty payments on leasehold
production computed on the basis of
the royalty rate specified in the lease
except that annual rental shall be due
for any year in which production from
the leasehold is not subject to royalty
pursuant to § 581.28.
(b) Unless otherwise specified in the
leasing notice and subsequently issued
lease, no annual rental payment shall
be due during the first 5 years in the
life of a lease.
(c) The leasee shall pay an annual
rental in the amount specified in the
leasing notice and subsequently issued
lease not later than the last day prior
to the commencement of the rental
year.
(d) A rental adjustment schedule and
amount may be specified in a leasing
notice and subsequently issued lease
when a variance is warranted by geologic, geographic, technical, or economic conditions.
§ 581.28 Royalty.
(a) The royalty due the lessor on OCS
minerals produced (i.e., sold, transferred, used, or otherwise disposed of)
from a lease shall be set out in a separate schedule attached to and made a
part of each lease and shall be as specified in the leasing notice. The royalty
due on production shall be based on a
percentage of the value or amount of
the OCS mineral(s) produced, a sum assessed per unit of product, or other
such method as the Secretary may prescribe in the leasing notice. When the
royalty specified is a sum assessed per
unit of product, the amount of the royalty shall be subject to an annual adjustment based on changes in the appropriate price index, when specified in
the leasing notice. When the royalty is
specified as a percentage of the value
or amount of the OCS minerals produced, the Secretary will notify the
lessee when and where royalty is to be
delivered in kind. Unless stated otherwise in the lease, product valuation
will be in accordance with the regulations in part 1206 of chapter XII. The
value used in the computation of royalty shall be determined by the Director of the Office of Natural Resources
Revenue.

(b) When prescribed in the leasing notice and subsequently issued lease, royalty due on OCS minerals produced
from a leasehold will be reduced for up
to any 5 consecutive years, as specified
by the lessee prior to the commencement of production, during the 1st
through 15th year in the life of the
lease. No royalty shall be due in any
year of the specified 5-year period that
occurs during the 1st through 10th
years in the life of the lease, and a royalty of one-half the amount specified in
the lease shall be due in any year of
the specified 5-year period that occurs
in the 11th through 15th year in the life
of the lease. The lessee shall pay the
amount specified in the lease rental for
any royalty free year. The minimum
royalty specified in the lease shall
apply during any year of reduced royalty.
§ 581.29 Royalty valuation.
Unless stated otherwise in the leasing notice and subsequently issued
lease, product valuation will be in accordance with the regulations in part
1206 of chapter XII. The value used in
the computation of royalty shall be determined by the Director of the Office
of Natural Resources Revenue.
§ 581.30 Minimum royalty.
Unless otherwise specified in the
leasing notice, each lease issued pursuant to the regulations in this part shall
require the payment of a specified minimum annual royalty beginning with
the year in which OCS minerals are
produced (sold, transferred, used, or
otherwise disposed of) from the leasehold except that the annual rentals
shall apply during any year that royalty free production is in effect pursuant to § 581.28(b). Minimum royalty
payments shall be offset by royalty
paid on production during the lease
year. Minimum royalty payments are
due at the beginning of the lease year
and payable by the end of the month
following the end of the lease year for
which they are due.
§ 581.31 Overriding royalties.
(a) Subject to the approval of the
Secretary, an overriding royalty interest may be created by an assignment
pursuant to section 8(e) of the Act. The

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Ocean Energy Management, Interior

§ 581.33

Secretary may deny approval of an assignment which creates an overriding
royalty on a lease whenever that denial
is determined to be in the interest of
conservation, necessary to prevent premature abandonment of a producing
mine, or to make possible the mining
of economically marginal or low-grade
ore deposits. In any case, the total of
applicable overriding royalties may
not exceed 2.5 percent or one-half the
base royalty due the Federal Government, whichever is less.
(b) No transfer or agreement may be
made which creates an overriding royalty interest unless the owner of that
interest files an agreement in writing
that such interest is subject to the limitations provided in § 581.30 of this part,
paragraph (a) of this section, and
§ 581.32 of this part.

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§ 581.32 Waiver, suspension, or reduction of rental, minimum royalty, or
production royalty.
(a) The Secretary may waive, suspend, or reduce the rental, minimum
royalty, and/or production royalty prescribed in a lease for a specified time
period when the Secretary determines
that it is in the National interest, it
will result in the conservation of natural resources of the OCS, it will promote development, or the mine cannot
be successfully operated under existing
conditions.
(b) An application for waiver, suspension, or reduction of rental, minimum
royalty, or production royalty under
paragraph (a) of this section shall be
filed in duplicate with the Director.
The application shall contain the serial
number(s) of the lease(s), the name of
the lessee(s) of record, and the operator(s) if applicable. The application
shall either:
(1)(i) Show the location and extent of
all mining operations and a tabulated
statement of the minerals mined and
subject to royalty for each of the last
12 months immediately prior to filing
the application:
(ii) Contain a detailed statement of
expenses and costs of operating the
lease, the income from the sale of any
lease products, and the amount of all
overriding royalties and payments out
of production paid to others than the
United States; and

(iii) All facts showing whether or not
the mine(s) can be successfully operated under the royalty fixed in the
lease; or
(2) If no production has occurred
from the lease, show that the lease
cannot be successfully operated under
the rental, royalty, and other conditions specified in the lease.
(c) The applicant for a waiver, suspension, or reduction under this section shall file documentation that the
lessee and the royalty holders agree to
a reduction of all other royalties from
the lease so that the aggregate of all
other royalties does not exceed onehalf the amount of the reduced royalties that would be paid to the United
States.
§ 581.33 Bonds and bonding requirements.
(a) When the leasing notice specifies
that payment of a portion of the bonus
bid can be deferred, the lessee shall be
required to submit a surety or personal
bond to guarantee payment of a deferred portion of the bid. Upon the payment of the full amount of the cash
bonus bid, the lessee’s bond will be released.
(b) All bonds to guarantee payment
of the deferred portion of the high cash
bonus bid furnished by the lessee must
be in a form or on a form approved by
the Deputy Director. A single copy of
the required form is to be executed by
the principal or, in the case of surety
bonds, by both the principal and an acceptable surety.
(1) Only those surety bonds issued by
qualified surety companies approved by
the Department of the Treasury shall
be accepted (see Department of the
Treasury Circular No. 570 and any supplemental or replacement circulars).
(2) Personal bonds shall be accompanied by a cashier’s check, certified
check, or negotiable U.S. Treasury
bonds of an equal value to the amount
specified in the bond. Negotiable Treasury bonds shall be accompanied by a
proper conveyance of full authority to
the Director to sell such securities in
case of default in the performance of
the terms and conditions of the lease.
(c) Prior to the commencement of
any activity on a lease(s), the lessee
shall submit a surety or personal bond

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§ 581.40

30 CFR Ch. V (7–1–16 Edition)

as described in § 582.40 of this title.
Prior to the approval of a Delineation,
Testing, or Mining Plan, the bond
amount shall be adjusted, if appropriate, to cover the operations and activities described in the proposed plan.
[76 FR 64623, Oct. 18, 2011, as amended at 80
FR 57098, Sept. 22, 2015]

Subpart D—Assignments and
Lease Extensions

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§ 581.40 Assignment of leases or interests therein.
(a) Subject to the approval of the
Secretary, a lease may be assigned, in
whole or in part, pursuant to section
8(e) of the Act to anyone qualified to
hold a lease.
(b) Any approved assignment shall be
deemed to be effective on the first day
of the lease month following the date
that it is submitted to the Director for
approval unless by written request the
parties request that the effective date
be the first of the month in which the
Director approves the assignment.
(c) The assignor shall be liable for all
obligations under the lease occurring
prior to the effective date of an assignment.
(d) The assignee shall be liable for all
obligations under the lease occurring
on or after the effective date of an assignment and shall comply with all
terms and conditions of the lease and
applicable regulations issued under the
Act.
§ 581.41 Requirements for filing for
transfers.
(a)(1) All instruments of transfer of a
lease or of an interest therein including subleases and assignments of
record interest shall be filed in triplicate for approval within 90 days from
the date of final execution. They shall
include a statement over the transferee’s own signature with respect to
citizenship and qualifications similar
to that required of a lessee and shall
contain all of the terms and conditions
agreed upon by the parties thereto.
(2) An application for approval of any
instrument required to be filed will not
be accepted unless a nonrefundable fee
of $50 is paid electronically through
Pay.gov at: https://www.pay.gov/paygov/
and a copy of the Pay.gov confirmation

receipt page is included with your application. For any document you are
not required to file by these regulations but which you submit for record
purposes, you must also pay electronically through Pay.gov a nonrefundable
fee of $50 per lease affected, and you
must include a copy of the Pay.gov confirmation receipt page with your document. Such documents may be rejected
at the discretion of the authorized officer.
(b) An attorney in fact signing on behalf of the holder of a lease or sublease,
shall furnish evidence of authority to
execute the assignment or application
for approval and the statement required by § 581.20 of this part.
(c) Where an assignment creates separate leases, a bond shall be furnished
for each of the resulting leases in the
amount prescribed in § 582.40 of this
title. Where an assignment does not
create separate leases, the assignee, if
the assignment so provides and the surety consents, may become a joint principal on the bond with the assignor.
(d) An heir or devisee of a deceased
holder of a lease or any interest therein shall be recognized as the lawful successor to such lease or interest if evidence of status as an heir or devisee is
furnished in the form of:
(1) A certified copy of an appropriate
order or decree of the court having jurisdiction over the distribution of the
estate, or
(2) If no court action is necessary,
the statement of two disinterested persons having knowledge of the fact or a
certified copy of the will.
(e) The heirs or devisee shall file
statements that they are the persons
named as successors to the estate with
evidence of their qualifications to hold
such lease or interest therein.
(f) In the event an heir or devisee is
unable to qualify to hold the lease or
interest, the heir or devisee shall be
recognized as the lawful successor of
the deceased and be entitled to hold
the lease for a period not to exceed 2
years from the date of death of the
predecessor in interest.
(g) Each obligation under any lease
and under the regulations in this part
shall inure to the heirs, executors, administrators, successors, or assignees
of the lease.

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§ 581.47

§ 581.42 Effect of assignment on particular lease.
(a) When an assignment is made of
all the record title to a portion of the
acreage in a lease, the assigned and retained portions of the lease area become segregated into separate and distinct leases. In such a case, the assignee becomes a lessee of the Government as to the segregated tract that is
the subject of the assignment and is
bound by the terms of the lease as
though the lease had been obtained
from the United States in the assignee’s own name, and the assignment,
after its approval, shall be the basis of
a new record. Royalty, minimum royalty, and annual rental provisions of
the lease shall apply separately to each
segregated portion.
(b) Each lease of an OCS mineral created by the segregation of a lease
under paragraph (a) of this section
shall continue in full force and effect
for the remainder of the primary term
of the original lease and so long thereafter as minerals are produced from the
portion of the lease created by segregation in accordance with operations approved by the Director or the lessee is
otherwise in compliance with provisions of the lease or regulations for
earning the continuation of the lease
in effect.
§ 581.43 Effect of suspensions on lease
term.
(a) If the BSEE Director orders the
suspension of either operations or production, or both, with respect to any
lease in its primary term, the primary
term of the lease shall be extended by
a period of time equivalent to the period of the directed suspension.
(b) If the BSEE Director orders or approves the suspension of either operations or production, or both, with respect to any lease that is in force beyond its primary term, the term of the
lease shall not be deemed to expire so
long as the suspension remains in effect.

jstallworth on DSK7TPTVN1PROD with CFR

Subpart E—Termination of Leases
§ 581.46 Relinquishment of leases or
parts of leases.
(a) A lease or any part thereof may
be surrendered by the record title hold-

er by filing a written relinquishment
with the Director. A relinquishment
shall take effect on the date it is filed
subject to the continued obligation of
the lessee and the surety to:
(1) Make all payments due, including
any accrued rentals and royalties; and
(2) Abandon all operations, remove
all facilities, and clear the land to be
relinquished to the satisfaction of the
Director.
(b) Upon relinquishment of a lease,
the data and information submitted
under the lease will no longer be held
confidential and will be available to
the public.
§ 581.47 Cancellation of leases.
(a) Whenever the owner of a nonproducing lease fails to comply with any
of the provisions of the Act, the lease,
or the regulations issued under the
Act, and the default continues for a period of 30 days after mailing of notice
by registered or certified letter to the
lease owner at the owner’s record post
office address, the Secretary may cancel the lease pursuant to section 5(c) of
the Act, and the lessee shall not be entitled to compensation. Any such cancellation is subject to judicial review
as provided by section 23(b) of the Act.
(b) Whenever the owner of any producing lease fails to comply with any
of the provisions of the Act, the lease,
or the regulations issued under the
Act, the Secretary may cancel the
lease only after judicial proceedings
pursuant to section 5(d) of the Act, and
the lessee shall not be entitled to compensation.
(c) Any lease issued under the Act,
whether producing or not, may be canceled by the Secretary upon proof that
it was obtained by fraud or misrepresentation and after notice and opportunity to be heard has been afforded to
the lessee.
(d) The Secretary may cancel a lease
in accordance with the following:
(1) Cancellation may occur at any
time if the Secretary determines after
a hearing that:
(i) Continued activity pursuant to
such lease would probably cause serious harm or damage to life (including
fish and other aquatic life), to property, to any mineral (in areas leased or
not leased), to the National security or

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Pt. 582

30 CFR Ch. V (7–1–16 Edition)

defense, or to the marine, coastal, or
human environment;
(ii) The threat of harm or damage
will not disappear or decrease to an acceptable extent within a reasonable period of time; and
(iii) The advantages of cancellation
outweigh the advantages of continuing
such lease in force;
(2) Cancellation shall not occur unless and until operations under such
lease shall have been under suspension
or temporary prohibition by the Secretary, with due extension of any lease
term continuously for a period of 5
years, or for a lesser period upon request of the lessee; and
(3) Cancellation shall entitle the lessee to receive such compensation as is
shown to the Secretary as being equal
to the lesser of:
(i) The fair value of the canceled
rights as of the date of cancellation,
taking into account both anticipated
revenues from the lease and anticipated costs, including costs of compliance with all applicable regulations
and operating orders, liability for
cleanup costs or damages, or both, and
all other costs reasonably anticipated
on the lease, or
(ii) The excess, if any, over the lessee’s revenues from the lease (plus interest thereon from the date of receipt
to date of reimbursement) of all consideration paid for the lease and all direct expenditures made by the lessee
after the date of issuance of such lease
and in connection with exploration or
development, or both, pursuant to the
lease (plus interest on such consideration and such expenditures from date
of payment to date of reimbursement),
except that in the case of joint leases
which are canceled due to the failure of
one or more partners to exercise due
diligence, the innocent parties shall
have the right to seek damages for
such loss from the responsible party or
parties and the right to acquire the interests of the negligent party or parties and be issued the lease in question.
(iii) The lessee shall not be entitled
to compensation where one of the following circumstances exists when a
lease is canceled:
(A) A producing lease is forfeited or
is canceled pursuant to section (5)(d) of
the Act;

(B) A Testing Plan or Mining Plan is
disapproved because of the lessee’s failure to demonstrate compliance with
the requirements of applicable Federal
Law; or
(C) The lessee(s) of a nonproducing
lease fails to comply with a provision
of the Act, the lease, or regulations
issued under the Act, and the noncompliance continues for a period of 30
days or more after the mailing of a notice of noncompliance by registered or
certified letter to the lessee(s).

PART 582—OPERATIONS IN THE
OUTER CONTINENTAL SHELF FOR
MINERALS OTHER THAN OIL,
GAS, AND SULPHUR
Subpart A—General
Sec.
582.0 Authority for information collection.
582.1 Purpose and authority.
582.2 Scope.
582.3 Definitions.
582.4 Opportunities for review and comment.
582.5 Disclosure of data and information to
the public.
582.6 Disclosure of data and information to
an adjacent State.
582.7 Jurisdictional controversies.

Subpart B—Jurisdiction and Responsibilities
of Director
582.10 Jurisdiction and responsibilities of
Director.
582.11 Director’s authority.
582.12 Director’s responsibilities.
582.13 [Reserved]
582.14 Noncompliance, remedies, and penalties.
582.15 Cancellation of leases.

Subpart C—Obligations and
Responsibilities of Lessees
582.20 Obligations and responsibilities of
lessees.
582.21 Plans, general.
582.22 Delineation Plan.
582.23 Testing Plan.
582.24 Mining Plan.
582.25 Plan modification.
582.26 Contingency Plan.
582.27 Conduct of operations.
582.28 Environmental protection measures.
582.29 Reports and records.
582.30 Right of use and easement.
582.31 [Reserved]

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