Title 30—Mineral Resources--Volume 1
PART 550—OIL AND GAS AND SULFUR OPERATIONS IN THE OUTER CONTINENTAL SHELF
§ 550.1409   What are my appeal rights?
(a) When you receive the Reviewing Officer's final decision, you have 60 days to either pay the penalty or file an appeal in accordance with 30 CFR part 590, subpart A.
(b) If you file an appeal, you must either:
(1) Submit a surety bond in the amount of the penalty to the appropriate Leasing Office in the Region where the penalty was assessed, following instructions that the Reviewing Officer will include in the final decision; or
(2) Notify the appropriate Leasing Office, in the Region where the penalty was assessed, that you want your lease-specific/area-wide bond on file to be used as the bond for the penalty amount.
(c) If you choose the alternative in paragraph (b)(2) of this section, the BOEM Regional Director may require additional security ( i.e., security in excess of your existing bond) to ensure sufficient coverage during an appeal. In that event, the Regional Director will require you to post the supplemental bond with the regional office in the same manner as under § 556.53(d) through (f) of this chapter. If the Regional Director determines the appeal should be covered by a lease-specific abandonment account then you must establish an account that meets the requirements of § 556.56.
(d) If you do not either pay the penalty or file a timely appeal, BOEM will take one or more of the following actions:
(1) We will collect the amount you were assessed, plus interest, late payment charges, and other fees as provided by law, from the date you received the Reviewing Officer's final decision until the date we receive payment;
(2) We may initiate additional enforcement, including, if appropriate, cancellation of the lease, right-of-way, license, permit, or approval, or the forfeiture of a bond under this part; or
(3) We may bar you from doing further business with the Federal Government according to Executive Orders 12549 and 12689, and section 2455 of the Federal Acquisition Streamlining Act of 1994, 31 U.S.C. 6101. The Department of the Interior's regulations implementing these authorities are found at 43 CFR part 12, subpart D.
§ 550.1450   What definitions apply to this subpart?
The terms used in this subpart have the same meaning as in 30 U.S.C. 1702.
§ 550.1451   What may BOEM do if I violate a statute, regulation, order, or lease term relating to a Federal oil and gas lease?
(a) If we believe that you have not followed any requirement of a statute, regulation, order, or lease term for any Federal oil or gas lease, we may send you a Notice of Noncompliance informing you what the violation is and what you need to do to correct it to avoid civil penalties under 30 U.S.C. 1719(a) and (b).
(b) We will serve the Notice of Noncompliance by registered mail or personal service using the most current address on file as maintained by the BOEM Leasing Office in your respective Region.
§ 550.1452   What if I correct the violation?
The matter will be closed if you correct all of the violations identified in the Notice of Noncompliance within 20 days after you receive the Notice (or within a longer time period specified in the Notice).
§ 550.1453   What if I do not correct the violation?
(a) We may send you a Notice of Civil Penalty if you do not correct all of the violations identified in the Notice of Noncompliance within 20 days after you receive the Notice of Noncompliance (or within a longer time period specified in that Notice). The Notice of Civil Penalty will tell you how much penalty you must pay for each day, beginning with the date of the Notice of Noncompliance, for each violation identified in the Notice of Noncompliance for as long as you do not correct the violation. The maximum civil penalty amount for each day for each uncorrected violation is as specified in 30 CFR 1241.52(a)(2).
(b) If you do not correct all of the violations identified in the Notice of Noncompliance within 40 days after you receive the Notice of Noncompliance (or 20 days following the expiration of a longer time period specified in that Notice), we may increase the penalty for each day, beginning with the date of the Notice of Noncompliance, for each violation for as long as you do not correct the violation. The maximum civil penalty amount for each day for each uncorrected violation is as specified in 30 CFR 1241.52(b).
§ 550.1454   How may I request a hearing on the record on a Notice of Noncompliance?
You may request a hearing on the record on a Notice of Noncompliance by filing a request within 30 days of the date you received the Notice of Noncompliance with the Hearings Division (Departmental), Office of Hearings and Appeals, U.S. Department of the Interior, 351 South West Temple, Suite 6.300, Salt Lake City, Utah 84101. You may do this regardless of whether you correct the violations identified in the Notice of Noncompliance.
§ 550.1455   Does my request for a hearing on the record affect the penalties?
(a) If you do not correct the violations identified in the Notice of Noncompliance, the penalties will continue to accrue even if you request a hearing on the record.
(b) You may petition the Hearings Division (Departmental) of the Office of Hearings and Appeals, to stay the accrual of penalties pending the hearing on the record and a decision by the Administrative Law Judge under § 550.1472.
(1) You must file your petition within 45 calendar days of receiving the Notice of Noncompliance.
(2) To stay the accrual of penalties, you must post a bond or other surety instrument, or demonstrate financial solvency, using the standards and requirements as prescribed in §§ 550.1490 through 550.1497, for the principal amount of any unpaid amounts due that are the subject of the Notice of Noncompliance, including interest thereon, plus the amount of any penalties accrued before the date a stay becomes effective.
(3) The Hearings Division will grant or deny the petition under 43 CFR 4.21(b).
§ 550.1456   May I request a hearing on the record regarding the amount of a civil penalty if I did not request a hearing on the Notice of Noncompliance?
(a) You may request a hearing on the record to challenge only the amount of a civil penalty when you receive a Notice of Civil Penalty, if you did not previously request a hearing on the record under § 550.1454. If you did not request a hearing on the record on the Notice of Noncompliance under § 550.1454, you may not contest your underlying liability for civil penalties.
(b) You must file your request within 10 days after you receive the Notice of Civil Penalty with the Hearings Division (Departmental), Office of Hearings and Appeals, U.S. Department of the Interior, 351 South West Temple, Suite 6.300, Salt Lake City, Utah 84101.
§ 550.1460   May I be subject to penalties without prior notice and an opportunity to correct?
The Federal Oil and Gas Royalty Management Act sets out several specific violations for which penalties accrue without an opportunity to first correct the violation.
(a) [Reserved]
(b) Under 30 U.S.C. 1719(d), you may be subject to civil penalties up to the maximum amount specified in 30 CFR 1241.60(b)(2) for each violation for each day that it continues if you:
(1) Knowingly or willfully prepare, maintain, or submit false, inaccurate, or misleading reports, notices, affidavits, records, data, or other written information.
(2) [Reserved]
§ 550.1461   How will BOEM inform me of violations without a period to correct?
We will inform you of any violation, without a period to correct, by issuing a Notice of Noncompliance and Civil Penalty explaining the violation, how to correct it, and the penalty assessment. We will serve the Notice of Noncompliance and Civil Penalty by registered mail or personal service using your address of record as specified under 30 CFR part 1218, subpart H.
§ 550.1462   How may I request a hearing on the record on a Notice of Noncompliance regarding violations without a period to correct?
You may request a hearing on the record of a Notice of Noncompliance regarding violations without a period to correct by filing a request within 30 days after you receive the Notice of Noncompliance with the Hearings Division (Departmental), Office of Hearings and Appeals, U.S. Department of the Interior, 351 South West Temple, Suite 6.300, Salt Lake City, Utah 84101. You may do this regardless of whether you correct the violations identified in the Notice of Noncompliance.
§ 550.1463   Does my request for a hearing on the record affect the penalties?
(a) If you do not correct the violations identified in the Notice of Noncompliance regarding violations without a period to correct, the penalties will continue to accrue even if you request a hearing on the record.
(b) You may ask the Hearings Division (Departmental) to stay the accrual of penalties pending the hearing on the record and a decision by the Administrative Law Judge under § 550.1472.
(1) You must file your petition within 45 calendar days after you receive the Notice of Noncompliance.
(2) To stay the accrual of penalties, you must post a bond or other surety instrument, or demonstrate financial solvency, using the standards and requirements as prescribed in §§ 550.1490 through 550.1497, for the principal amount of any unpaid amounts due that are the subject of the Notice of Noncompliance, including interest thereon, plus the amount of any penalties accrued before the date a stay becomes effective.
(3) The Hearings Division will grant or deny the petition under 43 CFR 4.21(b).
§ 550.1464   May I request a hearing on the record regarding the amount of a civil penalty if I did not request a hearing on the Notice of Noncompliance?
(a) You may request a hearing on the record to challenge only the amount of a civil penalty when you receive a Notice of Civil Penalty regarding violations without a period to correct, if you did not previously request a hearing on the record under § 550.1462. If you did not request a hearing on the record on the Notice of Noncompliance under § 550.1462, you may not contest your underlying liability for civil penalties.
(b) You must file your request within 10 days after you receive Notice of Civil Penalty with the Hearings Division (Departmental), Office of Hearings and Appeals, U.S. Department of the Interior, 351 South West Temple, Suite 6.300, Salt Lake City, Utah 84101.
§ 550.1470   How does BOEM decide what the amount of the penalty should be?
We determine the amount of the penalty by considering the severity of the violations, your history of compliance, and if you are a small business.
§ 550.1471   Does the penalty affect whether I owe interest?
If you do not pay the penalty by the date required under § 550.1475(d), BOEM will assess you late payment interest on the penalty amount at the same rate interest is assessed under 30 CFR 1218.54.
§ 550.1472   How will the Office of Hearings and Appeals conduct the hearing on the record?
If you request a hearing on the record under § 550.1454, § 550.1456, § 550.1462, or § 550.1464, the hearing will be conducted by a Departmental Administrative Law Judge from the Office of Hearings and Appeals. After the hearing, the Administrative Law Judge will issue a decision in accordance with the evidence presented and applicable law.
§ 550.1473   How may I appeal the Administrative Law Judge's decision?
If you are adversely affected by the Administrative Law Judge's decision, you may appeal that decision to the Interior Board of Land Appeals under 43 CFR part 4, subpart E.
§ 550.1474   May I seek judicial review of the decision of the Interior Board of Land Appeals?
Under 30 U.S.C. 1719(j), you may seek judicial review of the decision of the Interior Board of Land Appeals. A suit for judicial review in the District Court will be barred unless filed within 90 days after the final order.
§ 550.1475   When must I pay the penalty?
(a) You must pay the amount of the Notice of Civil Penalty issued under § 550.1453 or § 550.1461, if you do not request a hearing on the record under § 550.1454, § 550.1456, § 550.1462, or § 550.1464
(b) If you request a hearing on the record under § 550.1454, § 550.1456, § 550.1462, or § 550.1464, but you do not appeal the determination of the Administrative Law Judge to the Interior Board of Land Appeals under § 550.1473, you must pay the amount assessed by the Administrative Law Judge.
(c) If you appeal the determination of the Administrative Law Judge to the Interior Board of Land Appeals, you must pay the amount assessed in the IBLA decision.
(d) You must pay the penalty assessed within 40 days after:
(1) You received the Notice of Civil Penalty, if you did not request a hearing on the record under either § 550.1454, § 550.1456, § 550.1462, or § 550.1464;
(2) You received an Administrative Law Judge's decision under § 550.1472, if you obtained a stay of the accrual of penalties pending the hearing on the record under § 550.1455(b) or § 550.1463(b) and did not appeal the Administrative Law Judge's determination to the IBLA under § 550.1473;
(3) You received an IBLA decision under § 550.1473 if the IBLA continued the stay of accrual of penalties pending its decision and you did not seek judicial review of the IBLA's decision; or
(4) A final non-appealable judgment of a court of competent jurisdiction is entered, if you sought judicial review of the IBLA's decision and the Department or the appropriate court suspended compliance with the IBLA's decision pending the adjudication of the case.
(e) If you do not pay, that amount is subject to collection under the provisions of § 550.1477.
§ 550.1476   Can BOEM reduce my penalty once it is assessed?
Under 30 U.S.C. 1719(g), the Director or his or her delegate may compromise or reduce civil penalties assessed under this part.
§ 550.1477   How may BOEM collect the penalty?
(a) BOEM may use all available means to collect the penalty including, but not limited to:
(1) Requiring the lease surety, for amounts owed by lessees, to pay the penalty;
(2) Deducting the amount of the penalty from any sums the United States owes to you; and
(3) Using judicial process to compel your payment under 30 U.S.C. 1719(k).
(b) If the Department uses judicial process, or if you seek judicial review under § 550.1474 and the court upholds assessment of a penalty, the court shall have jurisdiction to award the amount assessed plus interest assessed from the date of the expiration of the 90-day period referred to in § 550.1474. The amount of any penalty, as finally determined, may be deducted from any sum owing to you by the United States.
§ 550.1480   May the United States criminally prosecute me for violations under Federal oil and gas leases?
If you commit an act for which a civil penalty is provided at 30 U.S.C. 1719(d) and § 550.1460(b), the United States may pursue criminal penalties as provided at 30 U.S.C. 1720, in addition to any authority for prosecution under other statutes.
§ 550.1490   What standards must my BOEM-specified surety instrument meet?
(a) A BOEM-specified surety instrument must be in a form specified in BOEM instructions. BOEM will give you written information and standard forms for BOEM-specified surety instrument requirements.
(b) BOEM will use a bank-rating service to determine whether a financial institution has an acceptable rating to provide a surety instrument adequate to indemnify the lessor from loss or damage.
(1) Administrative appeal bonds must be issued by a qualified surety company which the Department of the Treasury has approved.
(2) Irrevocable letters of credit or certificates of deposit must be from a financial institution acceptable to BOEM with a minimum 1-year period of coverage subject to automatic renewal up to 5 years.
§ 550.1491   How will BOEM determine the amount of my bond or other surety instrument?
(a) BOEM bond-approving officer may approve your surety if he or she determines that the amount is adequate to guarantee payment. The amount of your surety may vary depending on the form of the surety and how long the surety is effective.
(1) The amount of the BOEM-specified surety instrument must include the principal amount owed under the Notice of Noncompliance or Notice of Civil Penalty plus any accrued interest we determine is owed plus projected interest for a 1-year period.
(2) Treasury book-entry bond or note amounts must be equal to at least 120 percent of the required surety amount.
(b) If your appeal is not decided within 1 year from the filing date, you must increase the surety amount to cover additional estimated interest for another 1-year period. You must continue to do this annually on the date your appeal was filed. We will determine the additional estimated interest and notify you of the amount so you can amend your surety instrument.
(c) You may submit a single surety instrument that covers multiple appeals. You may change the instrument to add new amounts under appeal or remove amounts that have been adjudicated in your favor or that you have paid, if you:
(1) Amend the single surety instrument annually on the date you filed your first appeal; and
(2) Submit a separate surety instrument for new amounts under appeal until you amend the instrument to cover the new appeals.
§ 550.1495   How do I demonstrate financial solvency?
(a) To demonstrate financial solvency under this part, you must submit an audited consolidated balance sheet, and, if requested by the BOEM bond-approving officer, up to 3 years of tax returns to BOEM using the U.S. Postal Service, private delivery, courier, or overnight delivery at:
(1) For Alaska OCS: BOEM Alaska OCS Region, 3801 Centerpoint Drive, Suite 500, Anchorage, AK 99503, (907) 334-5200.
(2) For Gulf of Mexico and Atlantic OCS: BOEM Gulf of Mexico OCS Region, 1201 Elmwood Park Boulevard, New Orleans, LA 70123-2394, (800) 200-4853.
(3) For Pacific OCS: BOEM Pacific OCS Region, 760 Paseo Camarillo, Suite 102 (CM 102), Camarillo, CA 93010, (805) 384-6305.
(b) You must submit an audited consolidated balance sheet annually, and, if requested, additional annual tax returns on the date BOEM first determined that you demonstrated financial solvency as long as you have active appeals, or whenever BOEM requests.
(c) If you demonstrate financial solvency in the current calendar year, you are not required to redemonstrate financial solvency for new appeals of orders during that calendar year unless you file for protection under any provision of the U.S. Bankruptcy Code (Title 11 of the United States Code), or BOEM notifies you that you must redemonstrate financial solvency.
§ 550.1496   How will BOEM determine if I am financially solvent?
(a) BOEM bond-approving officer will determine your financial solvency by examining your total net worth, including, as appropriate, the net worth of your affiliated entities.
(b) If your net worth, minus the amount we would require as surety under §§ 550.1490 and 550.1491 for all orders you have appealed is greater than $300 million, you are presumptively deemed financially solvent, and we will not require you to post a bond or other surety instrument.
(c) If your net worth, minus the amount we would require as surety under §§ 550.1490 and 550.1491 for all orders you have appealed is less than $300 million, you must submit the following to BOEM by one of the methods in § 550.1495(a):
(1) A written request asking us to consult a business-information, or credit-reporting service or program to determine your financial solvency; and
(2) A nonrefundable $50 processing fee:
(i) You must pay the processing fee to us following the requirements for making payments found in 30 CFR 550.126. You are required to use Electronic Funds Transfer (EFT) for these payments;
(ii) You must submit the fee with your request under paragraph (c)(1) of this section, and then annually on the date we first determined that you demonstrated financial solvency, as long as you are not able to demonstrate financial solvency under paragraph (a) of this section and you have active appeals.
(d) If you request that we consult a business-information or credit-reporting service or program under paragraph (c) of this section:
(1) We will use criteria similar to that which a potential creditor would use to lend an amount equal to the bond or other surety instrument we would require under §§ 550.1490 and 550.1491;
(2) For us to consider you financially solvent, the business-information or credit-reporting service or program must demonstrate your degree of risk as low to moderate:
(i) If our bond-approving officer determines that the business-information or credit-reporting service or program information demonstrates your financial solvency to our satisfaction, our bond-approving officer will not require you to post a bond or other surety instrument under §§ 550.1490 and 550.1491;
(ii) If our bond-approving officer determines that the business-information or credit-reporting service or program information does not demonstrate your financial solvency to our satisfaction, our bond-approving officer will require you to post a bond or other surety instrument under §§ 550.1490 and 550.1491 or pay the obligation.
§ 550.1497   When will BOEM monitor my financial solvency?
(a) If you are presumptively financially solvent under § 550.1496(b), BOEM will determine your net worth as described under §§ 550.1496(b) and (c) to evaluate your financial solvency at least annually on the date we first determined that you demonstrated financial solvency as long as you have active appeals and each time you appeal a new order.
(b) If you ask us to consult a business-information or credit-reporting service or program under § 550.1496(c), we will consult a service or program annually as long as you have active appeals and each time you appeal a new order.
(c) If our bond-approving officer determines that you are no longer financially solvent, you must post a bond or other BOEM-specified surety instrument under §§ 550.1490 and 550.1491.