[Federal Register Volume 81, Number 137 (Monday, July 18, 2016)]
[Rules and Regulations]
[Page 46599]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-16846]



Bureau of Ocean Energy Management

30 CFR Parts 550 and 556


Notice of Availability of Notice to Lessees and Operators of 
Federal Oil and Gas, and Sulfur Leases, and Holders of Pipeline Right-
of-Way and Right-of-Use and Easement Grants in the Outer Continental 
Shelf--Requiring Additional Security

AGENCY: Bureau of Ocean Energy Management (BOEM), Interior.

ACTION: Notice of availability.


SUMMARY: The Bureau of Ocean Energy Management (BOEM) is announcing the 
availability of a guidance document entitled, ``Notice to Lessees and 
Operators of Federal Oil and Gas, and Sulfur Leases, and Holders of 
Pipeline Right-of-Way and Right-of-Use and Easement Grants in the Outer 
Continental Shelf--Requiring Additional Security'' (NTL No. 2016-N01).

DATES: This guidance document will become effective on September 12, 

FOR FURTHER INFORMATION CONTACT: Robert Sebastian, Office of Policy, 
Regulation and Analysis at (504) 736-2761 or email at 
[email protected].


I. Background

    The Bureau of Ocean Energy Management (BOEM) issues Notices to 
Lessees (NTL) as guidance documents in accordance with 30 CFR 550.103 
to clarify and provide more detail about certain BOEM regulatory 
requirements, and to outline the information to be provided in various 
submittals. Under that authority, NTL No. 2016-N01, Requiring 
Additional Security, sets forth a policy on, and an interpretation of, 
regulatory requirements to provide a clear and consistent approach for 
complying with those requirements.
    BOEM is issuing this NTL to clarify the procedures and criteria 
that BOEM Regional Directors use to determine if and when additional 
security, pursuant to 30 CFR 556.901(d)-(f), may be required for Outer 
Continental Shelf (OCS) leases, pipeline rights-of-way (ROW), and 
rights-of-use and easement (RUE). The guidance and clarification of 
requirements described in this NTL apply to all BOEM regions. This NTL 
has also been reformatted, revised, and updated to include correct 
Bureau names, citations, and web addresses. This NTL supersedes and 
replaces NTL No. 2008-N07, Supplemental Bond Procedures.
    This NTL details several changes in policy that are within the 
scope of the existing regulations and the discretion vested in the BOEM 
Regional Directors. First, BOEM has determined that its previously 
utilized formulas for determining financial strength and reliability 
are outdated and no longer provide sufficient protection for 
liabilities incurred during OCS operations. Therefore, this NTL 
describes new criteria that will be used to determine the financial 
ability of a lessee, ROW holder, or RUE holder to carry out its 
obligations, and addresses the possibility of individually tailoring a 
plan to enable the lessee, ROW holder, or RUE holder to use one or more 
forms of security other than surety bonds and pledges of Treasury 
securities and/or to phase-in compliance with the additional security 
requirement pursuant to such a plan. In addition, the current self-
insurance upper limit of 50% of a lessee's net worth is being reduced 
and will range from 0% to no more than 10% of a lessee's ``tangible net 
worth'' as defined in the NTL.
    Second, this NTL discontinues two policies under NTL No. 2008-N07: 
(1) If BOEM determined that one or more co-lessees or co-owners had 
sufficient financial strength and reliability, it was not necessary to 
provide additional security; and (2) for the purpose of determining the 
requirement for additional security, BOEM excluded from its 
decommissioning liability calculation the full amount of the 
decommissioning liability on leases, ROWs, and RUEs for which there was 
at least one financially strong co-lessee or co-owner. Thus lessees 
will no longer be granted waivers from the additional security 
obligations, and BOEM is discontinuing the policy of considering the 
combined strength and reliability of co-lessees when determining a 
lessee's additional security requirements. Now, when determining the 
amount of additional security that may be required, the Regional 
Director will consider whether each lessee, ROW holder, or RUE holder 
is capable of addressing the responsibility for 100 percent of the cost 
of decommissioning and other liability for every lease, ROW, and RUE in 
which the lessee, ROW holder, or RUE holder holds an ownership interest 
or for which they provide a guarantee. In order to meet all or a 
portion of the additional security required for any one lease, ROW, or 
RUE, BOEM will take into account enforceable agreements that lessees, 
ROW holders or RUE holders have made with their co-lessees or co-owners 
regarding the allocation of security obligations to such lease, ROW, or 

II. Electronic Access

    NTL No. 2016-N01 is available on BOEM's Web site at: http://www.boem.gov/Notices-to-Lessees-and-Operators/.

    Authority: This document is published pursuant to the Outer 
Continental Shelf Lands Act of August 7, 1953; 43 U.S.C. 1331 et 
seq., as amended, and the implementing regulations at 30 CFR 

    Date: July 12, 2016.
Abigail Ross Hopper,
Director, Bureau of Ocean Energy Management.
[FR Doc. 2016-16846 Filed 7-15-16; 8:45 am]