[Federal Register Volume 68, Number 79 (Thursday, April 24, 2003)]
[Proposed Rules]
[Pages 20091-20095]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-10173]


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DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR Part 250

RIN 1010-AC91


Oil and Gas and Sulphur Operations in the Outer Continental 
Shelf--Revision of Requirements Governing Outer Continental Shelf 
Rights-of-Use and Easement and Pipeline Rights-of-Way

AGENCY: Minerals Management Service (MMS), Interior.

ACTION: Proposed rule.

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SUMMARY: MMS is proposing to modify requirements governing rights-of-
use and easements and pipeline rights-of-way on the Outer Continental 
Shelf (OCS). These changes will increase rental rates for pipeline 
rights-of-way and establish rentals for rights-of-use and easements. 
This change is needed because of requests by lessees and pipeline 
right-of-way holders to use large areas outside of the area covered by 
their lease and pipeline right-of-way for accessory structures. This 
rule will require holders of rights-of-use and easements and holders of 
large areas as part of a pipeline right-of-way to pay rentals on a per 
acre basis.

DATES: We will consider all comments we receive by May 27, 2003. We 
will begin reviewing comments then and may not fully consider comments 
we receive after May 27, 2003.

ADDRESSES: If you wish to comment, you may submit your comments by any 
one of several methods. You may mail or hand-carry comments (three 
copies) to the Department of the Interior; Minerals Management Service; 
Mail Stop 4024; 381 Elden Street; Herndon, Virginia 20170-4817; 
Attention: Rules Processing Team. You may also send your comments by e-
mail or e-mail attachment. The e-mail address is: 
[email protected]. Reference ``1010-AC91, Rights-of-Use and 
Easement'' in your subject line. Include your name and return address 
in your e-mail message and mark your message for return receipt.

FOR FURTHER INFORMATION CONTACT: John Mirabella, Engineering and 
Operations Division, (703) 787-1600.

SUPPLEMENTARY INFORMATION: This proposed rule provides a 30-day comment 
period. We believe that the issues involved in this proposed rule are 
not complex and 30 days will provide sufficient time for interested 
parties to prepare and submit comments.
    Areas of the Gulf of Mexico (GOM) once thought beyond reach, 
located in water depths greater than 5,000 feet, are now being explored 
for development. A new generation of drillships and the development of 
new techniques allow drilling in waters as deep as 10,000 feet. Lease 
operators and pipeline right-of-way holders are developing more 
sophisticated and cost-efficient technology that will lower the cost of 
safely finding, extracting, and delivering deepwater oil and natural 
gas.
    In the next decade, as the offshore industry moves into ultra-
deepwater frontiers, the number of floating production vessels will 
increase substantially. Structures such as tension-leg platforms and 
floating production and offloading systems will become widely used to 
produce oil and gas in the GOM. These systems must be stabilized above 
the seafloor in water depths of 1,000 to 10,000 feet and, therefore, 
require a mooring system which may have a ``footprint'' radius greater 
than 8,500 feet. In some cases, we expect that the mooring system will 
cover the majority of the OCS block on which the facility is 
positioned.
    Additionally, lease operators will produce smaller hydrocarbon 
discoveries in deep water by means of wells with production trees, 
i.e., the assemblage of valves, etc., used to control the flow from the 
well, that are located on the ocean floor. These subsea systems must be 
tied back to a host facility by means of pipelines that deliver the 
production for processing and/or measurement, and cable-like control 
umbilicals that contain electrical conductors and small diameter steel 
tubing. Umbilicals allow control of the valves in the production tree 
and the measurement of pressure and temperature within the well to be 
accomplished remotely from the host facility.
    A right-of-use and easement or pipeline right-of-way grant allows 
OCS operators and pipeline right-of-way holders the freedom to optimize 
the placement of their facilities on unleased blocks or on blocks 
leased by other operators. OCS blocks on which facilities such as 
floating structures with large mooring footprints, convergent 
pipelines, export pipelines, and control umbilicals are installed may 
present safety concerns. The safety concerns could occur if drilling 
facilities, work boats, or other vessel traffic associated with a new 
lease were located too close to floating structures, convergent 
pipelines, export pipelines, or control umbilicals associated with a 
right-of-way or right-of-use and easement previously granted. For this 
reason, MMS might decide to set aside adequate space around some 
pipeline rights-of-way or rights-of-use and easements. By removing 
blocks from the inventory or by otherwise restricting surface 
occupancy, potential safety and environmental concerns will be 
eliminated. In reviewing and approving applications for rights-of-use 
and easements and rights-of-way, MMS will ensure that safety and 
environmental problems do not occur. However, since issuance of these 
rights-of-use and easements and rights-of-way could have some adverse 
affects on other projects, MMS believes that the government should be 
compensated when the right-of-use and easement or right-of-way is 
issued.
    The proposed modifications of 30 CFR 250.160, in subpart A, and 30 
CFR 250.1009, in subpart J, would allow MMS to charge an annual rental 
to compensate the United States for the use of the unleased area being 
provided to the lessee or pipeline right-of-way holder. This proposed 
rule applies to applicants of pipeline rights-of-way who request a site 
for accessories for the pipeline right-of-way and for operators

[[Page 20092]]

who request use of an area which is not part of their lease, i.e., a 
right-of-use and easement. The proposed rule would cover applications 
granted after the effective date of a final rule for new areas or 
applications to modify an existing area. The proposed rule includes a 
rental of $5 per acre affected in water depths less than 200 meters and 
$7.50 per acre affected in water depths of 200 meters or greater. These 
rental rates correspond to the rental rates charged for leases in those 
water depths. The total proposed annual rental depends on the size of 
the area requested except that a minimum annual rental will be charged 
based on 90 acres. The proposed minimum rental is $450 per year in 
water depths of less than 200 meters and $675 per year in water depths 
of 200 meters or greater. Establishing the minimum charge based on 90 
acres will ensure that the government receives sufficient payment to 
cover administrative costs.
    Existing regulations for payment of pipeline right-of-way rentals 
allows for payment on an annual basis, for a 5-year period, or for 
multiples of 5 years. This proposed regulation retains that option for 
pipeline rights-of-way and establishes the same option for rights-of-
use and easements.
    Section 160 was rewritten to add a table. Section 1009 was 
separated and redesignated as sections 1009 through 1014. Current 
sections 1010 through 1014 were redesignated as sections 1015 through 
1019. Redesignated section 1012 was rewritten to add a table. The use 
of tables and the use of shorter sections with titles are intended to 
improve the clarity and readability of the regulation.

Procedural Matters

Public Comment Procedure

    Our practice is to make comments, including names and home 
addresses of respondents, available for public review during regular 
business hours. Individual respondents may request that we withhold 
their home address from the rulemaking record, and there may be 
circumstances in which we would withhold from the rulemaking record a 
respondent's identity, to the extent allowable by law. If you wish us 
to withhold your name and/or address, you must state this prominently 
at the beginning of your comment. However, we will not consider 
anonymous comments. We will make all submissions from organizations or 
businesses, and from individuals identifying themselves as 
representatives or officials of organizations or businesses, available 
for public inspection in their entirety.

Regulatory Planning and Review (Executive Order 12866)

    This document was determined by the Office of Management and Budget 
to be significant and has been reviewed by OMB under Executive Order 
12866.
    Over the next 5 years, in water depths 200 meters or greater, MMS 
anticipates that it will receive an average of two requests per year 
for a new or modified right-of-use and easement and an average of two 
requests per year for a new or modified pipeline right-of-way that 
includes an area for an accessory. These requests would be affected by 
this rule. Based on historical data, we estimate that the affected area 
per request in water depths 200 meters or greater will average 5,760 
acres, which is the typical size of one OCS lease block. In these water 
depths, the new rule proposes a rental of $7.50 per acre affected. This 
equates to a total cost of $86,400 (5,760 x $7.50 x 2) for pipeline 
right-of-way applicants and $86,400 (5,760 x $7.50 x 2) for right-of-
use and easement applicants.
    Over the next 5 years, in water depths less than 200 meters, MMS 
anticipates, based on requests in recent years, that it will receive an 
average of 10 requests per year for a new right-of-use and easement and 
an average of two requests per year for a new or modified pipeline 
right-of-way that includes an area for an accessory. These requests 
would be affected by this rule. We estimate that the affected area per 
request in water depths less than 200 meters will average 90 acres, 
which is the proposed minimum size of an affected area. In these water 
depths, the new rule proposes a rental of $5 per acre affected. This 
equates to a total annual cost of $4,500 (90 x $5 x 10) for right-of-
use and easement applicants and $900 (90 x $5 x 2) for pipeline right-
of-way applicants.
    The annual cost to industry for rentals would be $178,200 ($86,400 
+ $86,400 + $4,500 + $900).
    Since the current regulations provide for an annual rental of $75 
per site included in an application for pipeline rights-of-way 
accessories and no cost for right-of-use and easement applications, the 
total cost under current rules for these same activities is $300 per 
year for pipeline right-of-way applicants ($75 x 2 + $75 x 2) and no 
cost for right-of-use and easement applicants.
    (1) This rule would not have an effect of $100 million or more on 
the economy. It will not adversely affect in a material way the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities.
    (2) This rule would not create a serious inconsistency or otherwise 
interfere with an action taken or planned by another agency. Issuance 
of a pipeline right-of way or right-of-use and easement does not 
interfere with the ability of other agencies to exercise their 
authority.
    (3) This rule would not alter the budgetary effects of 
entitlements, grants, user fees, or loan programs or the rights or 
obligations of their recipients. This rule will have no effect on the 
rights of the recipients of entitlements, grants, user fees, or loan 
programs.
    (4) This rule may raise novel legal or policy issues.

Regulatory Flexibility (RF) Act

    The Department certifies that this rule would not have a 
significant economic effect on a substantial number of small entities 
under the RF Act (5 U.S.C. 601 et seq.).
    This rule would affect lessees and operators of leases and holders 
of pipeline rights-of-way in the OCS. This includes about 130 different 
companies. These companies are generally classified under the North 
American Industry Classification System (NAICS) code 211111, which 
includes companies that extract crude petroleum and natural gas. For 
this NAICS code classification, a small company is one with fewer than 
500 employees. Based on these criteria, we estimate that about 70 
percent of these companies are considered small. This rule, therefore, 
affects a substantial number of small entities.
    The companies that are considered small have an average of about 15 
offshore facilities. We estimate that the small companies have annual 
sales between $10 million and $40 million. As discussed earlier, the 
total annual cost to industry is estimated to be $178,800. No large or 
small company will bear a significant cost.
    Your comments are important. The Small Business and Agriculture 
Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards were 
established to receive comments from small business about Federal 
agency enforcement actions. The Ombudsman will annually evaluate the 
enforcement activities and rate each agency's responsiveness to small 
business. If you wish to comment on the actions of MMS, call 1-888-734-
3247. You may comment to the Small Business Administration without fear 
of retaliation. Disciplinary action for retaliation by an MMS employee 
may include suspension or termination from

[[Page 20093]]

employment with the Department of the Interior.

Small Business Regulatory Enforcement Fairness Act (SBREFA)

    This rule is not a major rule under the SBREFA (5 U.S.C. 804(2)). 
This rule:
    (a) Would not have an annual effect on the economy of $100 million 
or more.
    (b) Would not cause a major increase in costs or prices for 
consumers, individual industries, Federal, State, or local government 
agencies, or geographic regions.
    (c) Would not have significant adverse effects on competition, 
employment, investment, productivity, innovation, or the ability of 
U.S.-based enterprises to compete with foreign-based enterprises.
    We do not expect this rule to have a significant effect because, as 
discussed under procedural matters, Regulatory Planning and Review 
(Executive Order 12866), this rule would have a total industry effect 
of $178,200 annually. This amount is not a significant effect for 
companies that do business on the OCS.

Paperwork Reduction Act (PRA) of 1995

    The PRA provides that an agency may not conduct or sponsor a 
collection of information unless it displays a currently valid OMB 
control number. Until OMB approves a collection of information and 
assigns a control number, you are not required to respond. The proposed 
revisions to 30 CFR part 250, subparts A and J, refer to, but do not 
change, information collection requirements in current regulations. OMB 
has approved the referenced information collection requirements under 
OMB control numbers 1010-0114 for subpart A, current expiration date of 
July 31, 2005; and 1010-0051 for subpart J, current expiration date of 
August 31, 2003. The rule proposes no new paperwork requirements, and 
an OMB form 83-I submission to OMB under the PRA is not required.

Federalism (Executive Order 13132)

    With respect to Executive Order 13132, the rule would not have 
Federalism implications. This rule would not substantially and directly 
affect the relationship between the Federal and State governments. To 
the extent that State and local governments have a role in OCS 
activities, this rule would not affect that role.

Takings (Executive Order 12630)

    With respect to Executive Order 12630, the proposed rule would not 
have significant Takings implications. A Takings Implication Assessment 
is not required. The proposed rulemaking is not a governmental action 
capable of interfering with constitutionally protected property rights.

Energy Supply, Distribution, or Use (Executive Order 13211)

    This rule is not a significant rule and is not subject to review by 
the Office of Management and Budget under Executive Order 13211. The 
rule would not have a significant effect on energy supply, 
distribution, or use because proposed payments to compensate the 
government for making resources unavailable for leasing will occur on 
the average less than one time a year. The costs due to increases in 
rental costs will be very small compared to the costs of operating in 
the OCS. Thus, a Statement of Energy Effects is not required.

Civil Justice Reform (Executive Order 12988)

    With respect to Executive Order 12988, the Office of the Solicitor 
has determined that this rule would not unduly burden the judicial 
system and meets the requirements of sections 3(a) and 3(b)(2) of the 
Executive Order.

National Environmental Policy Act (NEPA) of 1969

    This rule would not constitute a major Federal action significantly 
affecting the quality of the human environment. This rule would not 
affect the environmental regulations that a right-of-use and easement 
holder or a pipeline right-of-way holder will need to follow. A 
detailed statement under the NEPA is not required.

Unfunded Mandate Reform Act (UMRA) of 1995 (Executive Order 12866)

    This rule would not impose an unfunded mandate on State, local, or 
tribal governments or the private sector of more than $100 million per 
year. The rule would not have a significant or unique effect on State, 
local, or tribal governments or the private sector. A statement 
containing the information required by the UMRA (2 U.S.C. 1531 et seq.) 
is not required. This is because the rule would not affect State, 
local, or tribal governments, and the effect on the private sector is 
small.

List of Subjects in 30 CFR Part 250

    Continental shelf, Environmental impact statements, Environmental 
protection, Government contracts, Investigations, Mineral royalties, 
Oil and gas development and production, Oil and gas exploration, Oil 
and gas reserves, Penalties, Pipelines, Public lands-mineral resources, 
Public lands-right-of-way, Reporting and recordkeeping requirements, 
Sulphur development and production, Sulphur exploration, Surety bonds.

    Dated: January 29, 2003.
Rebecca W. Watson,
Assistant Secretary, Land and Minerals Management.
    For the reasons stated in the preamble, the Minerals Management 
Service (MMS) proposes to amend 30 CFR part 250 as follows:

PART 250--OIL AND GAS AND SULPHUR OPERATIONS IN THE OUTER 
CONTINENTAL SHELF

Subpart A--General

    1. The authority citation for part 250 continues to read as 
follows:

    Authority: 43 U.S.C. 1331, et seq.

    2. In Sec.  250.160, new paragraphs (f) through (h) are added to 
read as follows:


Sec.  250.160  When will MMS grant me a right-of-use and easement, and 
what requirements must I meet?

* * * * *
    (f) You must pay a fee as required by paragraph (g) of this section 
if:
    (1) You obtain a right-of-use and easement after the effective date 
of this rule; or
    (2) You ask MMS to modify your right-of-use and easement to change 
the footprint of the associated platform, artificial island, or 
installation or device.
    (g) If you meet either of the conditions in paragraph (f) of this 
section, you must pay a fee to MMS as shown in the following table:

[[Page 20094]]



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                 If . . .                                                Then . . .
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(1) Your right-of-use and easement site is  You must pay a rental of $5 per acre per year with a minimum of $450
 located in water depths of less than 200    per year. The area subject to annual rental includes the areal
 meters.                                     extent of anchor chains, pipeline risers, and other equipment
                                             associated with the platform, artificial island, or installation or
                                             device.
(2) Your right-of-use and easement site is  You must pay a rental of $7.50 per acre per year with a minimum of
 located in water depths of 200 meters or    $675 per year. The area subject to annual rental includes the areal
 greater.                                    extent of anchor chains, pipeline risers, and other equipment
                                             associated with the platform, artificial island, or installation or
                                             device.
----------------------------------------------------------------------------------------------------------------

    (h) You must make the rental payments required by paragraph (g)(1) 
and (g)(2) of this section on an annual basis, for a 5-year period, or 
for multiples of 5 years. You must make the first payment at the time 
you submit the right-of-use and easement application. You must make all 
subsequent payments before the respective time periods begin.
    3. In subpart J, Sec. Sec.  250.1009 through 250.1014 are 
redesignated as shown in the following table:

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       Current section and paragraph                         Redesignated section and paragraph
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250.1009(a)(1)............................  250.1009(a).
250.1009(a)(2)............................  250.1009(b).
250.1009(b)(1)............................  250.1011(a).
250.1009(b)(1)(i).........................  250.1011(a)(1).
250.1009(b)(1)(ii)........................  250.1011(a)(2).
250.1009(b)(2)............................  250.1011(b).
250.1009(b)(2)(i).........................  250.1011(b)(1).
250.1009(b)(2)(ii)........................  250.1011(b)(2).
250.1009(b)(2)(iii).......................  250.1011(b)(3).
250.1009(b)(3)............................  250.1011(c).
250.1009(b)(4)............................  250.1011(d).
250.1009(c) introductory text.............  250.1010 introductory text
250.1009(c)(1)............................  250.1010(a).
250.1009(c)(2)............................  250.1012.
250.1009(c)(3)............................  250.1010(b).
250.1009(c)(4)............................  250.1010(c).
250.1009(c)(5)............................  250.1010(d).
250.1009(c)(6)............................  250.1010(e).
250.1009(c)(7)(i).........................  250.1010(f)(1).
250.1009(c)(7)(ii)........................  250.1010(f)(2).
250.1009(c)(7)(ii)(A).....................  250.1010(f)(2)(i).
250.1009(c)(7)(ii)(B).....................  250.1010(f)(2)(ii).
250.1009(c)(8)............................  250.1010(g).
250.1009(c)(9)............................  250.1010(h).
250.1009(d)...............................  250.1013.
250.1009(e)...............................  250.1014.
250.1010..................................  250.1015.
250.1011..................................  250.1016.
250.1012..................................  250.1017.
250.1013..................................  250.1018.
250.1014..................................  250.1019.
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    4. The headings for newly redesignated Sec. Sec.  250.1010 through 
250.1014 are revised, and headings for newly redesignated Sec. Sec.  
250.1015 through 250.1019 are added to read as follows:


Sec.  250.1009  Requirements to obtain pipeline right-of-way grants.

* * * * *


Sec.  250.1010  General requirements for pipeline right-of-way holders.

* * * * *


Sec.  250.1011  Bond requirements for pipeline right-of-way holders.

* * * * *


Sec.  250.1012  Required payments for right-of-way holders.

* * * * *


Sec.  250.1013  Grounds for forfeiture of pipeline right-of-way grants.

* * * * *


Sec.  250.1014  When pipeline right-of-way grants expire.

* * * * *


Sec.  250.1015  Applications for pipeline right-of-way grants.

* * * * *


Sec.  250.1016  Granting pipeline rights-of-way.

* * * * *


Sec.  250.1017  Requirements for construction under pipeline right-of-
way grants.

* * * * *

[[Page 20095]]

Sec.  250.1018  Assignment of pipeline right-of-way grants.

* * * * *


Sec.  250.1019  Relinquishment of pipeline right-of-way grants.

* * * * *
    5. Redesignated Sec.  250.1012 is revised to read as follows:


Sec.  250.1012  Required payments for pipeline right-of-way holders.

    (a) You must pay MMS an annual rental of $15 for each statute mile, 
or part of a statute mile, of the OCS that your pipeline right-of-way 
crosses.
    (b) This paragraph applies to you if you obtain a pipeline right-
of-way that includes a site for an accessory to the pipeline, including 
fixed and floating platforms, subsea manifolds, and other similar 
structures. If either MMS grants the pipeline right-of-way after the 
effective date of this rule or you apply to modify the grant to change 
the site footprint, then you must make additional payment to MMS as 
shown in the following table.

------------------------------------------------------------------------
                If . . .                            Then . . .
------------------------------------------------------------------------
(1) Your accessory site is located in    You must pay a rental of $5 per
 water depths of less than 200 meters.    acre per year with a minimum
                                          of $450 per year. The area
                                          subject to annual rental
                                          includes the areal extent of
                                          anchor chains, pipeline
                                          risers, and other facilities
                                          and devices associated with
                                          the accessory.
(2) Your accessory site is located in    You must pay a rental of $7.50
 water depths of 200 meters or greater.   per acre per year with a
                                          minimum of $675 per year. The
                                          area subject to annual rental
                                          includes the areal extent of
                                          anchor chains, pipeline
                                          risers, and other facilities
                                          and devices associated with
                                          the accessory.
------------------------------------------------------------------------

    (c) If you hold a pipeline right-of-way that includes a site for an 
accessory to your pipeline and you are not covered by paragraph (b) of 
this section, then you must pay MMS an annual rental of $75 for use of 
the affected area.
    (d) You must make the rental payments required by paragraphs (a), 
(b)(1), (b)(2), and (c) of this section on an annual basis, for a 5-
year period, or for multiples of 5 years. You must make the first 
payment at the time you submit the pipeline right-of-way application. 
You must make all subsequent payments before the respective time 
periods begin.

[FR Doc. 03-10173 Filed 4-23-03; 8:45 am]
BILLING CODE 4310-MR-P