14052 Federal Register / Vol. 62, No. 57 / Tuesday, March 25, 1997 / Proposed Rules

employees. The likely respondents and

recordkeepers are individuals, business

or other for-profit institutions, state or

local governments, federal agencies, and

nonprofit institutions.

Estimated total annual reporting and

recordkeeping burden: 36,920,000

hours.

The estimated annual burden per

respondent or recordkeeper varies from

10 minutes to 20 hours, depending on

individual circumstances, with an

estimated average of 1.3 hours.

Estimated number of respondents and

recordkeepers: 28,400,000.

Estimated annual frequency of

responses: On occasion.

An agency may not conduct or

sponsor, and a person is not required to

respond to, a collection of information

unless the collection of information

displays a valid control number.

Books or records relating to a

collection of information must be

retained as long as their contents may

become material in the administration

of any internal revenue law. Generally,

tax returns and tax return information

are confidential, as required by 26

U.S.C. 6103.

Special Analyses

It has been determined that this notice

of proposed rulemaking is not a

significant regulatory action as defined

in EO 12866. Therefore, a regulatory

assessment is not required. It is hereby

certified that these regulations do not

have a significant economic impact on

a substantial number of small entities.

This certification is based on the fact

that, by increasing the receipt threshold

from $25 to $75, these regulations are

expected to reduce the existing

recordkeeping requirements of

taxpayers, including small entities, from

49,375,000 hours to 36,920,000 hours.

The regulations do not otherwise

significantly alter the reporting or

recordkeeping duties of small entities.

Therefore, a Regulatory Flexibility

Analysis under the Regulatory

Flexibility Act (5 U.S.C. chapter 6) is

not required. Pursuant to section 7805(f)

of the Internal Revenue Code, this

notice of proposed rulemaking will be

submitted to the Chief Counsel for

Advocacy of the Small Business

Administration for comment on its

impact on small business.

Comments and Requests for a Public

Hearing

Before adopting these proposed

regulations as final regulations,

consideration will be given to any

comments that are submitted timely

(and in the manner described in

ADDRESSES portion of this preamble)

to the IRS. The IRS is considering

publishing a revenue procedure

implementing § 1.274–5T(f)(4)(ii) of the

temporary regulations (that is,

prescribing rules under which an

employee may make an adequate

accounting to his employer by

submitting an expense voucher or

equivalent without submitting

documentary evidence such as receipts)

for federal government agencies that use

the published procedures. In addition,

the IRS is considering whether there are

circumstances or conditions under

which the IRS could extend these

procedures beyond federal government

agencies, and requests comments in this

regard. The IRS also requests comments

on what procedures (such as internal

controls) should be required in any

rules that permit a taxpayer to satisfy

the substantiation requirements of

section 274(d) for purposes of deducting

business expenses reimbursed to

employees who have accounted for their

expenses only by means of an expense

voucher or equivalent without

documentary evidence such as receipts.

All comments will be available for

public inspection and copying. A public

hearing will be scheduled and held

upon written request by any person who

submits written comments on the

proposed rules. Notice of the time and

place for the hearing will be published

in the Federal Register.

Drafting Information

The principal author of these

proposed regulations is Donna M.

Crisalli, Office of the Assistant Chief

Counsel (Income Tax and Accounting).

However, personnel from other offices

of the IRS and Treasury Department

participated in their development.

List of Subjects in 26 CFR Part 1

Income taxes, Reporting and

recordkeeping requirements.

Proposed Amendments to the

Regulations

Accordingly, 26 CFR part 1 is

proposed to be amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation

for part 1 is amended by adding an entry

to read in part as follows:

Authority: 26 U.S.C. 7805 * * *

Section 1.274–5 also issued under 26

U.S.C. 274(d). * * *

Par. 2. Section 1.274–5 is added to

read as follows:

§ 1.274–5 Substantiation requirements.

(a) through (c)(2)(iii)(A) [Reserved].

For further guidance, see § 1.274–5T.

(c)(2)(iii)(B) [The text of paragraph

(c)(2)(iii)(B) is the same as the text in

§ 1.274–5T published elsewhere in this

issue of the Federal Register].

(c)(2)(iv) through (f)(3) [Reserved]. For

further guidance, see § 1.274–5T.

(f)(4) through (f)(4)(iii) [The text of

paragraphs (f)(4) through (f)(4)(iii) is the

same as the text in § 1.274–5T published

elsewhere in this issue of the Federal

Register].

(f)(5) through (1) [Reserved]. For

further guidance, see § 1.274–5T.

Margaret Milner Richardson,

Commissioner of Internal Revenue.

[FR Doc. 97–7094 Filed 3–24–97; 8:45 am]

BILLING CODE 4830–01–U

FEDERAL MEDIATION AND

CONCILIATION SERVICE

29 CFR Part 1404

Arbitration Policy; Roster of

Arbitrators, and Procedures for

Arbitration Services

AGENCY: Federal Mediation and

Conciliation Service.

ACTION: Correction to proposed rule.

SUMMARY: A proposed rule on

arbitration policy contained an error in

page costs. This document is intended

to correct that error.

FOR FURTHER INFORMATION CONTACT:

Peter L. Regner, (202) 606–8181.

SUPPLEMENTARY INFORMATION: In

proposed rule document 97–6305

beginning on page 11797, in the Federal

Register issue of Thursday, March 13,

1997, make the following correction:

In the appendix to 29 CFR Part 1404

on page 11805, under ‘‘List and

biographical sketches of arbitrators in

specific areas’’, the term ‘‘$10 per page’’

should read ‘‘$.10 per page’’.

John Calhoun Wells,

Director.

[FR Doc. 97–7463 Filed 3–24–97; 8:45 am]

BILLING CODE 6732–01–M

DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR Part 253

RIN 1010–AC33

Oil Spill Financial Responsibility for

Offshore Facilities

AGENCY: Minerals Management Service

(MMS), Interior.

ACTION: Notice of proposed rulemaking.
Federal Register / Vol. 62, No. 57 / Tuesday, March 25, 1997 / Proposed Rules 14053

SUMMARY: MMS is proposing new

requirements for demonstrating oil spill

financial responsibility (OSFR) for

cleanup and damages from oil

discharges due to oil exploration,

production, and associated pipeline

facilities. This rule will apply to

operations located in: the Outer

Continental Shelf (OCS); State waters

seaward of the line of ordinary low

water along that portion of the coast that

is in direct contact with the open sea;

and in coastal inland waters, such as

bays and estuaries, seaward of the line

of ordinary low water along that portion

of the coast that is not in direct contact

with the open sea. This rule implements

the authority of the Oil Pollution Act of

1990 (OPA).

DATES: MMS will consider all comments

received by June 23, 1997. We may not

fully consider comments received after

June 23, 1997.

ADDRESSES: Mail or hand-carry

comments to the Department of the

Interior, Minerals Management Service,

Mail Stop 4700, 381 Elden Street,

Herndon, Virginia 20170–4817;

Attention: Rules Processing Team.

FOR FURTHER INFORMATION CONTACT: Ray

Beittel, Performance and Safety Branch,

at (703) 787–1591.

SUPPLEMENTARY INFORMATION: Title I of

OPA (33 U.S.C. 2701 et seq.), as

amended by the Coast Guard

Authorization Act of 1996 (Pub. L. 104–

324), provides at section 1016 that

parties responsible for offshore facilities

establish and maintain OSFR for those

facilities according to methods

determined acceptable to the President.

Section 1016 supersedes the offshore

facility OSFR provisions of the Outer

Continental Shelf Lands Act

Amendments (OCSLAA) of 1978. The

Presidential Executive Order (E.O.)

implementing OPA (E.O. 12777; October

18, 1991) assigned the offshore facility

OSFR certification function to the

Department of the Interior (DOI). The

Secretary of the Interior, in turn,

delegated this function to MMS.

The regulation proposed today

replaces the current offshore facility

OSFR regulation written pursuant to the

OCSLAA. The OCSLAA regulation is

limited to facilities located in the OCS

and sets the amount of OSFR that must

be demonstrated by responsible parties

at $35 million. The regulation proposed

today covers both the OCS and State

waters lying seaward of the line of

ordinary low water. Today’s proposal

also requires responsible parties to

demonstrate as much as $150 million in

OSFR if MMS believes it is justified by

the risks from potential oil spills from

covered offshore facilities.

The minimum amount of OSFR that

must be demonstrated under the

proposed regulation is $35 million for

covered facilities located in the OCS

and $10 million for covered facilities

located in State waters. The proposed

regulation provides a conditional

exemption for persons responsible for

facilities having a potential worst case

oil-spill discharge of 1,000 barrels or

less.

Background

The initial OSFR program for offshore

facilities was developed under Title III

of the OCSLAA and administered by the

U.S. Coast Guard (USCG). OPA replaced

and rescinded the Title III OSFR

requirements. However, section 1016(h)

of OPA provides that any regulation

relating to OSFR remain in force until

superseded by a new regulation issued

under OPA. Therefore, the existing

USCG OSFR regulations for offshore

facilities in the OCS (33 CFR part 135)

remain in effect until this proposed rule

becomes final.

The Secretary of Transportation has

authority for vessel oil pollution

financial responsibility, and the USCG

regulates the financial responsibility

program for vessels. However, a well

drilled from a mobile offshore drilling

unit (MODU), which is a type of vessel,

is an offshore facility under the

proposed rule.

Upon request from the USCG, MMS

will provide available information for

any covered offshore facility (COF)

involved in an oil pollution incident

including:

(1) The lease, permit, or right of use

and easement (RUE) for the area in

which the COF is located;

(2) The designated applicant and

guarantors and their contacts for claims;

(3) Agents for service of process; and

(4) Amounts guaranteed.

Section-by-Section Discussion

Subpart A

§ 253.1 What is the purpose of this

regulation? This is an introductory

section explaining that this part

establishes the requirements for OSFR

for COF’s under Title I of OPA, 33

U.S.C. 2701 et seq.

§ 253.3 How are the terms used in

this regulation defined? This section

contains definitions of terms used in

this part. Some of these definitions are

based on terms in OPA and differ from

how MMS normally uses them. The

principal definitions will be addressed

later in this preamble in the context in

which they are used.

§ 253.5 What is the authority for

collecting OSFR information? This

section explains that the information

collected under this part is used to

ensure compliance with the OSFR

requirements in OPA.

Subpart B

§ 253.10 What facilities does this

regulation cover? This introductory

section provides a general statement of

applicability. It states that this part

applies to any ‘‘COF’’ or any ‘‘lease’’ or

‘‘permit’’ issued under, or a ‘‘RUE’’

granted under the Outer Continental

Shelf Lands Act (OCSLA) or applicable

State law. This applicability concept

incorporates many defined terms.

An important term in these rules is

COF which is based on requirements in

OPA. There are three tests to determine

whether your facility is a COF. First, it

must be a structure, group of structures,

a well (including a well drilled from an

MODU), equipment, pipeline, or device

used for exploring for, drilling for, or

producing oil. This includes platforms,

gathering lines, subsea completions, and

other equipment common to oil

production activities. Facilities that are

used to store, handle, transfer, or

process oil and that are related to the oil

production process also are included.

Thus, a platform with equipment to

initially treat oil (dewatering,

desanding, etc.) is covered.

OPA excludes from the COF

definition vessels and pipelines

licensed under the Deepwater Port Act

of 1974 (33 U.S.C. 1501 et seq.). Also

within the coverage of this first test are

facilities used to transport oil, which

includes transportation pipelines

(gathering lines are part of production

facilities) and pipeline appurtenances. If

a well is drilled from a MODU, the well

could be a COF under the proposed

regulation, but the MODU could not.

However, the MODU owner or operator

is required to demonstrate OSFR for the

MODU according to USCG regulations

at 33 CFR part 138.

Under the proposed rule, for a facility

to be a COF, it must pass two other tests.

First, it must be located seaward of the

line of ordinary low water along that

portion of the coast that is in direct

contact with the open sea, or located in

coastal inland waters, such as bays and

estuaries, seaward of the line of

ordinary low water along that portion of

the coast that is not in direct contact

with the open sea. This concept comes

directly from the 1996 amendments to

OPA (see section 1016(c)(1)). It clearly

includes the Federal OCS and each

State’s territorial sea.

The line of ordinary low water along

that portion of the coast that is in direct

contact with the open sea was defined

by the courts for each coastal State
14054 Federal Register / Vol. 62, No. 57 / Tuesday, March 25, 1997 / Proposed Rules

where there might be a COF. This

adjudicated line, known as the

‘‘coastline,’’ represents both the seaward

limit of inland waters and the base for

establishing a State’s seaward boundary

that separates State waters from the

Federal OCS.

It is clear that OSFR regulations

should apply to areas seaward of the

coastline. It also seems clear that

‘‘coastal inland waters, such as bays and

estuaries, seaward of the line of

ordinary low water along that portion of

the coast that is not in direct contact

with the open sea’’ lie landward of the

coastline. However, OPA does not

define the extent of these coastal inland

waters, and the record of Congress for

the 1996 amendments to OPA offers no

clarification or statement of intent.

Thus, MMS is afforded some discretion

in determining the extent to which areas

lying landward of the coastline should

be covered by this proposed regulation.

We considered two options for

defining the phrase ‘‘coastal inland

waters, such as bays and estuaries,

seaward of the line of ordinary low

water along that portion of the coast that

is not in direct contact with the open

sea.’’ In developing these options, we

focused on the three relevant statutory

phrases: line of ordinary low water,

coastal inland waters, and bays and

estuaries.

The first option for defining places

landward of the coastline that are

covered by the rule includes the

submerged coastal areas subject to tidal

influence. That is, if an area affected by

the tide is normally submerged, even at

low tide, it is seaward of the line of

ordinary low water. As such, it is

covered by the rule. Given the dynamic

nature of coastal geologic processes,

especially in places like the Mississippi

River Delta, the area covered by this

option could change with time. As a

result, a person responsible for a facility

currently located on dry land is not

subject to the proposed rule today.

However, if that facility is later

inundated as a result of shoreline

erosion, the facility might become a

COF.

The area covered by this option does

not include large inland water bodies

affected by the tides (e.g., the Great Salt

Lake) because none lie along the coast.

Likewise, smaller landlocked water

bodies located along the coast are not

included because they are not affected

by the tides. The area that is covered by

this option includes coastal bays, river

mouths to the extent there is a tidal

influence, and coastal wetlands that are

submerged at low tide.

A second option for defining places

landward of the coastline that are

covered by the rule includes the area

affected by the tides lying between the

coastline and a parallel line that is a

fixed distance from the coastline. This

band of coastal inland waters does not

change unless the adjudicated coastline

changes. The band should be wide

enough to cover the prominent coastal

bays and estuaries. We believe an

appropriate width is 50 to 100 miles,

although some may not consider

locations 100 miles inland to be ‘‘along

the coast.’’ Conversely, if the band is

narrow, some bays and estuaries along

the coast might not be covered

completely. For example, a 50-mile

band excludes the furthest reaches of

San Francisco Bay and all of the Lake

Pontchartrain estuary.

MMS incorporated the first coastal

inland waters option into the proposed

rule because we believe it is more

consistent with the word and spirit of

OPA. However, we have neither finally

determined this option to be the best

one, nor have we decided that the two

options considered are the only suitable

ones. As such, we invite your comments

on both options and your

recommendations for others that might

be appropriate. In particular, we would

like your opinion on how wide the

coastal band should be if the second

option is adopted. Given the known

locations of existing coastal oil facilities,

we found little difference between the

options regarding who is subject to the

proposed rule. If you have evidence that

this finding may be inaccurate, please

submit it to us with your comments on

the proposed rule.

The last test to be a COF is that a

facility must have a worst case oil-spill

discharge potential of more than 1,000

barrels. MMS could require a facility

with a lesser spill potential to be

covered if we determine in writing that

OSFR must be demonstrated. Also, a

person may agree to cover a facility with

OSFR even if it does not exceed the

worst case oil-spill threshold. As

explained in more detail below, this

would occur if a person is providing

maximum blanket coverage for all its

facilities under the blanket.

For this proposed rule to apply, the

COF must be on a lease, permit (defined

as a permit for geological exploration),

or RUE issued under OCSLA or

applicable State law.

MMS recognizes the possibility that a

transportation pipeline could begin

offshore and move production onshore.

In that event, under § 253.10(b), the

pipeline is covered to the point it

reaches the first accessible flow shutoff

device landward of the line of ordinary

low water.

§ 253.11 Who must demonstrate

OSFR? MMS’s proposal is that every

lease, permit, or RUE with a COF would

have only one person who demonstrates

OSFR. This person is the designated

applicant.

The designated applicant is required

to submit Form MMS 1016 and agree to

demonstrate OSFR on behalf of all the

responsible parties for the lease, permit,

or RUE. If the designated applicant is

not a responsible party, it must agree to

be liable for oil pollution damages,

cleanup costs, and other claims under

OPA jointly and severally with the

responsible parties. MMS’s intent is that

the responsible parties agree who the

one designated applicant should be on

their behalf. MMS also wants that

person to be liable for any damages or

other claims so a claimant or the Oil

Spill Liability Trust Fund (the Fund)

does not have to pursue anyone other

than the person who agreed to be the

designated applicant. Of course, the

other responsible parties still remain

liable if the designated applicant does

not satisfy the liability.

Under paragraph (b), if the land

within a lease with a COF also is subject

to a permit or RUE with a COF, there

must be a designated applicant for the

lease and a designated applicant for

each permit or RUE. They may be the

same person, but a Form MMS 1017

designating the applicants for the

different COF’s must be filed with

MMS.

Paragraph (c) requires the designated

applicant for a lease with a COF to be

either a lessee (who is a responsible

party under these rules and OPA) or the

designated operator (who, if not a

lessee, does not meet the definition of

responsible party). However, the

designated operator for an OCS lease or

unit must be the same party that is the

designated operator under 30 CFR

250.8. That rule requires the designated

operator to fulfill the lessee’s obligations

under the OCSLA and MMS regulations.

Therefore, it makes sense for that person

to demonstrate OSFR and to accept

liability on behalf of the lessees. For

leases not in the OCS, to ensure that any

nonlessee designated applicant is a

person with similar responsibilities for

spill prevention and cleanup to those of

a Federal OCS operator, paragraph (c)(2)

requires that such applicant be an

operator under a lease or unit operating

agreement that provides the operator is

responsible for compliance with all the

laws and regulations applicable to the

lease or unit. Otherwise, that operator

could not be a designated applicant

under the proposed rules, and a lessee
Federal Register / Vol. 62, No. 57 / Tuesday, March 25, 1997 / Proposed Rules 14055

is required to demonstrate OSFR for the

lease.

Paragraph (d) provides that only the

permittee may be a designated applicant

for a permit with a COF. Under

paragraph (e), for a RUE with a COF,

who the designated applicant may be

depends on whether the COF is a

pipeline. If it is, then an owner or

operator of each pipeline segment on

the RUE must be a designated applicant.

For a RUE with a COF that is not a

pipeline segment, the holder of the RUE

is the designated applicant. If there also

is a pipeline segment on the RUE, both

the owner or operator of the pipeline

segment and the holder of the RUE must

be designated applicants. Again, the

designated applicant for each of these

situations could be the same person, but

the designation is required to be

separately denominated on the Form

MMS 1017.

Paragraph (f) is a catchall provision

allowing MMS to require a different

designated applicant if MMS determines

that the circumstances warrant a

different person than the rules

otherwise prescribe.

§ 253.12 Who determines whether I

must demonstrate OSFR? As a general

matter, it is the obligation of those

persons who could be responsible

parties to determine if there is a COF on

their lease, permit, or RUE. MMS

recognizes that this rule is unusual

since it regulates persons who do not

operate in the Federal OCS and are not

otherwise subject to MMS jurisdiction.

These persons may need help in

interpreting their obligation under the

rules, especially in marginal situations.

In other words, the person may not be

sure whether the lease, permit, or RUE

is geographically covered or whether its

facility has a sufficient worst case oilspill potential to warrant a

demonstration of OSFR. In this

circumstance, you could ask MMS

whether the rule applies to you. You are

required to submit sufficient

information for MMS to make the

determination.

§ 253.13 How much OSFR must I

demonstrate? This section explains the

amount of OSFR a designated applicant

must demonstrate. If you have only one

COF for your lease, permit, or RUE,

paragraph (b) of the section has a table

with different amounts of OSFR

depending on the worst case oil-spill

discharge volume for your COF. For a

COF in the Federal OCS, the amount of

OSFR ranges from $35 million to $150

million. For a COF not in the Federal

OCS, it ranges from $10 million to $150

million.

If you have two or more COF’s on the

lease, permit, or RUE, then you must

demonstrate the highest amount of

OSFR that applies to any of the COF’s.

Thus, if you had three production

platforms on a lease, then you must

demonstrate the amount of OSFR based

on the one with the highest worst case

oil-spill potential.

If you are the designated applicant for

more than one lease, permit, or RUE

with a COF, you are required to

demonstrate the highest amount of

OSFR that applies to any of them. By

way of illustration, assume you had one

lease with two production platforms

requiring $10 million of OSFR and the

other requiring $35 million, and you

had a second lease with a platform

requiring $10 million of OSFR. You are

required to demonstrate $35 million in

OSFR which covers all the COF’s on

both leases.

The table in paragraph (a) of this

section clarifies that if you have leases,

permits, and RUE’s located in the

Federal OCS and State waters, you must

demonstrate the highest amount of

OSFR that applies to any of the COF’s

on those leases, permits, or RUE’s

regardless of which jurisdiction they are

located in.

In addition to setting out the amount

of OSFR for a COF based on whether it

is located in the Federal OCS and its

worst case oil-spill discharge volume,

paragraph (b) allows MMS to increase

the OSFR amount to a maximum of

$150 million based on the relative

operational, environmental, human

health, and other risks posed by the

quality or quantity of oil handled. The

dollar amounts in the table are based on

estimates of the per-barrel costs of oilspill removal and damages as generated

by the ‘‘Spillcalc’’ element of MMS

General Purpose Environmental Cost

Model (GPECM).

The GPECM was developed to

support the MMS 5-Year OCS Oil and

Gas Leasing Program. The average of the

calculated high-range oil-spill removal

and damages costs for the offshore

regions analyzed in the GPECM

(Atlantic, Gulf of Mexico, California,

Washington-Oregon, Alaska) is about

$900 per barrel in 1993 dollars. For

simplicity, the table uses a cost factor of

$1,000 and the largest volume covered

by a spill discharge bracket to establish

the required OSFR amount for any COF

that fits into the bracket.

Under paragraph (b)(3), MMS could

require an OSFR demonstration in

excess of the table amounts based on the

relative operational, human health, and

other risks your COF poses. As noted

above, the maximum still is $150

million.

§ 253.14 How do I determine the

worst case oil-spill discharge volume?

Designated applicants are instructed to

use the same method of calculating

worst case discharges they use in

preparing oil spill response plans for

MMS or another Federal agency

administering section 311 of the Federal

Water Pollution Control Act.

§ 253.15 What are my general OSFR

compliance responsibilities? This

section spells out the designated

applicant’s obligation to maintain

continuous coverage for all leases,

permits, and RUE’s with COF’s.

Subpart C

§ 253.20 What are the methods for

evidencing OSFR? This section

authorizes the use of self-insurance,

insurance, guarantees or surety bonds to

evidence OSFR. In addition, the

Director may approve alternative

methods under § 253.32.

§§ 253.21 through 253.28 How can I

use self-insurance as OSFR evidence?

These sections establish two methods

for qualifying as a self-insurer: a networth test and a test involving the

pledge of unencumbered assets. The

self-insurance application must be

supported by audited financial

statements.

The section contains formulae for

calculating the level of self-insurance

for which you qualify under each selfinsurance method. These formulae are

different from those MMS currently uses

to determine whether a person qualifies

as a self-insurer under 33 CFR part 135.

The revised formulae are intended to

provide a more realistic assessment of

net worth by better reflecting current

business practices and economic

conditions.

An independent certified public

accounting firm has reviewed the

proposed formulae and has

recommended certain changes to ensure

their suitability for making selfinsurance determinations. You are

encouraged to request a copy of this

report from the address listed at the

beginning of this notice and provide

MMS comments on the formulae and

the contractor’s recommendations. We

will consider your comments and the

contractor’s recommendations in

developing the formulae that will be

included in the final rule.

§ 253.29 How can I use insurance as

OSFR evidence? This section establishes

minimum qualifications of insurers and

the documentation required to support

insurance as OSFR evidence. An insurer

must be a syndicate of Lloyds of

London, a member of the Institute of

London Underwriters, or rated ‘‘secure’’

or better by A.M. Best, Standard and

Poor’s, or an equivalent rating service.

While you may obtain insurance
14056 Federal Register / Vol. 62, No. 57 / Tuesday, March 25, 1997 / Proposed Rules

coverage in layers, the rule limits the

number of layers in relation to the

amount of coverage provided.

§ 253.30 How can I use a guarantee

as OSFR evidence? This section allows

a designated applicant to use a single

guarantee to meet all or part of its OSFR

obligation. A guarantee is a promise of

indemnification by a single indemnitor

who meets the qualifications for selfinsurance under §§ 253.21 through

253.28.

§ 253.31 How can I use a surety

bond as OSFR evidence? This section

allows a designated applicant to use a

surety bond as OSFR evidence if the

bond is issued by a surety acceptable to

the Department of the Treasury and

licensed in the State (or the State

adjacent to that portion of the OCS)

where at least one COF is located.

§ 253.32 Are there alternative

methods to evidence OSFR? This

section authorizes the MMS Director,

within his/her sole discretion, to accept

letters of credit, pooling arrangements,

or other alternative methods of

evidencing OSFR that provide

equivalent assurance of the prompt

satisfaction of claims that is equivalent

to the methods authorized in the

proposed regulations.

Subpart D

§ 253.40 What OSFR evidence must

I submit to MMS? This section describes

the forms that must be submitted as part

of the OSFR evidence. Designated

applicants are directed to submit a

single demonstration for all leases,

permits, and RUE’s for which they are

designated applicants.

§ 253.41 What terms must I include

in my OSFR evidence? The rule

specifies the terms and conditions

under which OSFR instruments can be

terminated. Notice to MMS of intent to

cancel and replacement of the

terminated instruments is required

unless the COF is permanently

abandoned. Requirements for including

in each OSFR instrument information

about direct action for claims and

service of process also is covered in this

section.

§ 253.42 How can I amend my OSFR

demonstration? This section describes

how to add or delete COF’s from an

existing OSFR demonstration. You must

submit information on additional leases,

permits, or RUE’s at least 30 days before

they are added or deleted.

§ 253.43 When is my OSFR

demonstration effective? This section

provides that MMS notify designated

applicants when it determines whether

the evidence submitted is adequate to

demonstrate OSFR. It also states how

long an OSFR demonstration is

effective.

§ 253.44 When must I comply with

this regulation? This section establishes

a schedule for complying with this rule.

You are allowed not more than 60 days

after the effective date of the final

regulation to submit to MMS your

evidence of OSFR for all the COF’s on

all the leases, permits, and RUE’s for

which you are the designated applicant.

§ 253.45 To whom do I submit my

OSFR evidence? Submissions are made

to the listed address of MMS Oil Spill

Financial Responsibility Program.

Subpart E

§ 253.50 How can my OSFR

evidence be refused or invalidated?

Generally, MMS would give a 15-day

notice of its intent to invalidate an

OSFR demonstration. However, we

could immediately invalidate an OSFR

demonstration if a person is no longer

the designated applicant or permits the

cancellation or termination of the

insurance policy, surety bond, or

guarantee on which your demonstration

is based.

§ 253.51 What are the penalties for

not complying with this part? Failure to

comply with these regulations could

result in penalties of up to $25,000 per

COF per day. The maximum civil

penalties are stated along with a

reference to the appeals process of 30

CFR part 250. MMS has considered the

civil penalty amounts that should be

applied to this part, and the amounts

may be those shown in the following

table.

AMOUNTS OF CIVIL PENALTIES PER COF FOR NONCOMPLIANCE WITH OIL SPILL FINANCIAL RESPONSIBILITY

REQUIREMENTS (OSFR) 1

Category of noncompliance

Period of noncompliance

First week Second and third

weeks After 3 weeks

Failure to submit OSFR evidence ....................................................................... $500 $750 per week ............. $250 per day.

Lapse in OSFR coverage .................................................................................... $750 $1,000 per week .......... $300 per day.

Cancellation of OSFR without alternative coverage ............................................ $2,500 $5,000 per week .......... $1,000 per day.

Failure to correct an erroneous or inadequate submission within 30 Days of

MMS request 2.

$100 $250 per week ............. $1,000 per week.

Notes:

1Penalties will be doubled each time there is an additional violation within 1 calendar year of the first violation, up to a maximum of $25,000

per day. The penalty amounts in this table will be updated periodically as needed to ensure compliance. 2 Includes under-subscribed insurance slips, use of insurers not rated ‘‘secure’’ or better, errors in lease, permit, or RUE identification and similar problems with the OSFR evidence submitted.

This section also provides for

penalties that are greater or less than the

amounts shown in the table, depending

on specific factors listed in OPA.

Subpart F

§ 253.60 How must a claim be

presented? This section prescribes the

process a claimant follows to recover

the costs of oil-spill removal and

damages from the designated applicant,

its guarantor, or the Fund. The general

approach is to present claims first to the

designated applicant and then, if

necessary, to the designated applicant’s

guarantor or the Fund.

§ 253.61 When is a guarantor subject

to direct action for claims? This section

specifies the situations in which a

designated applicant’s guarantor is

subject to suit on claims for oil spill

removal and damage costs directly by a

claimant. It also states the protections

from direct action a guarantor is allowed

under OPA.

The 1996 amendments to OPA limit

the assertion of a claim against a

guarantor to three circumstances: (1)

The United States makes a claim for

removal costs and damages for

compensation paid by the Fund; (2) the

responsible party denies or fails to pay

a claim on grounds of insolvency; and

(3) the responsible party has filed for

bankruptcy. OPA does not expressly

address the common circumstance of

numerous responsible parties for a

single offshore facility and whether all
Federal Register / Vol. 62, No. 57 / Tuesday, March 25, 1997 / Proposed Rules 14057

responsible parties must be insolvent

before the claimant may pursue the

guarantor. MMS believes that it should

be sufficient for the claimant to

demonstrate only that the designated

applicant is insolvent before it could

pursue the guarantor. The claimant

should not be required to pursue

multiple responsible parties in that

circumstance because, for some COF’s,

there could be over 20 responsible

parties. Thus, the proposed rule allows

recourse to a guarantor if the designated

applicant is insolvent or in bankruptcy.

MMS does not believe it would serve

OPA’s objective of prompt payment to

force a claimant to determine whether

each and every responsible party is

insolvent or in bankruptcy before a

claim could be asserted against a

guarantor.

MMS specifically invites comments

on this issue. We specifically invite

comments on whether the final rule

should instead adopt the alternative of

limiting action against a guarantor by

private claimants to cases where every

responsible party has denied or failed to

pay on grounds of insolvency, or where

every single responsible party has

petitioned for bankruptcy.

§ 253.62 What are the designated

applicant’s obligations regarding a

claim? This section specifies whom the

designated applicant must notify upon

receipt of a claim for oil discharge

removal and damages.

Appendix

This section presents the nine MMS

forms and a cover sheet the designated

applicant is required to use to submit

OSFR information to MMS. These forms

are referenced throughout the OSFR

regulations. You must submit to MMS

only those forms that apply to your

OSFR demonstration. You are not

allowed to alter a form in any way.

Author

Ray L. Beittel, Performance and

Standards Branch, MMS, prepared this

document.

E.O. 12886

This proposed rule does not meet the

criteria for a significant rule requiring

review by the Office of Management and

Budget (OMB) under E.O. 12866.

All of the oil and gas companies

currently operating in the OCS,

including those considered to be small

businesses, comply with the existing

OSFR regulations (i.e., 33 CFR part 135).

MMS does not expect that these

companies will incur any significant

operating cost increases from complying

with the proposed rule. Also, of the

estimated 20 oil and gas companies

operating in State coastal waters that

would be affected by the proposed rule,

all but three hold, have applied for, or

have held a Certificate of Financial

Responsibility under 30 CFR part 135. If

these three companies use insurance to

demonstrate OSFR under the proposed

rule, the estimated annual cost of the

insurance is $35,000 per company,

which represents an industry-wide cost

of $105,000.

The proposed rule should not

generate any adverse effects on

competition, investment, productivity,

innovation, or the ability of U.S.-based

enterprises to compete with foreignbased enterprises in domestic or export

markets. Therefore, OMB review of this

proposed regulation under E.O. 12866 is

unnecessary.

Regulatory Flexibility Act

The Small Business Administration

defines small business as a company

employing 500 or fewer people. There

are many small oil and gas exploration,

production, and transportation

businesses operating in the Federal OCS

and in State coastal waters. MMS

estimates that approximately 20 of the

oil and gas businesses operating in State

coastal waters are subject to this

proposed regulation. We consider 8 of

those 20 to be large businesses because

they each employ more than 500 people.

All but 3 of the 12 small businesses in

this group currently demonstrate or

have demonstrated $35 million in OSFR

under current regulation. We expect that

under the proposed regulation those

three businesses will be required to

demonstrate $10 million in OSFR. It is

reasonable to assume that each company

would use insurance as the means for

demonstrating OSFR, and the annual

premium for such insurance will be

about $35,000 per company. Thus, the

total annual economic impact on small

businesses under this proposed

regulation is estimated to be $105,000.

The amount of oil a company

produces is generally proportional to its

size. We do not expect smaller

companies to operate any individual

facilities that produce, store, or

transport more than 35,000 barrels of oil

per day. If a smaller company

undertakes a project with higher

production levels, such as the deepwater ventures in the Gulf of Mexico,

we expect it to do so in partnership with

a larger company that can demonstrate

OSFR by qualifying as a self-insurer. We

further expect that the larger company

will be selected as the designated

applicant under the proposed

regulations and demonstrate OSFR on

behalf of the smaller partner. Therefore,

we do not expect that implementing the

proposed regulations will require small

businesses to demonstrate OSFR for

amounts greater than $35 million.

MMS expects the proposed

regulations will have no adverse effect

on oil company service industries, such

as the supply vessel and service vessel

industries. The persons responsible for

such vessels already comply with

separate OSFR requirements under 33

CFR part 135.

Paperwork Reduction Act

This proposed rule contains a

collection of information which has

been submitted to OMB for review and

approval under section 3507(d) of the

Paperwork Reduction Act of 1995. As

part of our continuing effort to reduce

paperwork and respondent burden,

MMS invites the public and other

Federal agencies to comment on any

aspect of the reporting burden. Submit

your comments to the Office of

Information and Regulatory Affairs,

OMB, Attention Desk Officer for the

Department of the Interior (OMB control

number 1010–XXXX), 725 17th Street,

NW., Washington, DC 20503. Send a

copy of your comments to the Minerals

Management Service; Attention: Rules

Processing Team; Mail Stop 4700; 381

Elden Street; Herndon, Virginia 20170–

4817.

You may obtain a copy of the

proposed collection of information and

supporting statement by contacting the

Bureau’s Information Collection

Clearance Officer at (703) 787–1242.

The Paperwork Reduction Act of 1995

provides that an agency may not

conduct or sponsor, and a person is not

required to respond to, a collection of

information unless it displays a

currently valid OMB control number.

OMB may make a decision to approve

or disapprove this collection of

information after 30 days from receipt of

our request. Therefore, your comments

are best assured of being considered if

OMB receives them within that time

period. However, MMS will consider all

comments received during the comment

period for this notice of proposed

rulemaking.

The title of this collection of

information is ‘‘30 CFR Part 253, Oil

Spill Financial Responsibility for

Offshore Facilities.’’ The information

collected consists of the following, and

the estimated burden for each is shown

in parentheses:

• Form MMS 1016, Designated

Applicant Information Certification (1

hour)

• Form MMS 1017, Designation of

Applicant (9 hours)

• Form MMS 1018, Self-insurance or

Guarantee Information (1 hour)
14058 Federal Register / Vol. 62, No. 57 / Tuesday, March 25, 1997 / Proposed Rules

• Form MMS 1019, Insurance

Certificate (120 hours)

• Form MMS 1020, Surety Bond (24

hours)

• Forms MMS 1021, Lease Listing (3

hours)

• Form MMS 1022, Permit or Right of

Use and Easement Listing (3 hours)

• Form MMS 1023, Lease Changes (1

hour)

• Form MMS 1024, Permit or Right of

Use and Easement Changes (1 hour)

• Letter requesting a determination of

applicability of the regulation (2 hours)

• Proposal to accept an alternative

method to demonstrate OSFR (no

burden—we anticipate no requests but

have provided the option in the rule)

• Written notice to MMS of change in

ability to comply (1 hour)

• Claims (no burden-MMS will not be

involved in the claims process; the

regulations only provide procedures for

claimants to follow; MMS will not be

advised of claims activity, and we will

have no way of estimating the numbers).

MMS will use the information to

verify compliance with OPA, to confirm

that applicants possess the required

amounts of OSFR for a potential worst

case oil spill discharge of more than

1,000 barrels (or a lesser amount if MMS

determines the risk justifies it), and to

establish a reference source of names,

addresses, and telephone numbers of

parties responsible for COF’s and their

designated agents and guarantors for

claims associated with oil pollution.

Respondents will be approximately

600 holders of leases, permits, and

RUE’s in the OCS and in State coastal

waters who appoint approximately 200

designated applicants. Other

respondents will be the designated

applicants’ insurance agents and

brokers, bonding companies, and

indemnitors. MMS receives

approximately 2,631 responses each

year. The frequency of submission will

vary, but most will respond at least once

per year. We estimate the total annual

burden of this collection of information

to be 20,381 reporting hours and zero

recordkeeping hours. Based on $35 per

hour, the total burden hour cost to

respondents is estimated to be $713,335.

The public reporting burden for this

information will vary by form and

collection (as shown above). The burden

per response is averaged to be 8 hours,

including the time for reviewing

instructions, searching existing data

sources, gathering and maintaining the

data needed, and completing and

reviewing the information collection.

In addition to the hour burden, some

respondents will bear the cost of

demonstrating OSFR. The amount of

OSFR currently required in the OCS

under the OCSLA is $35 million, the

same as the minimum level of OSFR

required in the OCS under OPA. The

estimated annual cost to OCS operators

of providing evidence of OSFR for that

amount is $21.6 million. This cost is

already borne by all operators in the

OCS under the OCSLA provisions. No

additional costs to OCS operators are

attributable to the proposed rule. New

annual costs of approximately $850,000

will be imposed on persons operating in

State coastal waters. There is currently

no Federal requirement for

demonstrating OSFR in State coastal

waters, and the entire $850,000 is a new

cost imposed by the proposed rule.

Therefore, MMS estimates the total

annual cost for OSFR demonstrations to

be $22.5 million.

MMS will summarize written

responses to this notice and address

them in the final rule. All comments

will become a matter of public record.

1. MMS specifically solicits

comments on the following questions:

(a) Is the proposed collection of

information necessary for the proper

performance of MMS’s functions, and

will it be useful?

(b) Are the estimates of the burden

hours of the proposed collection

reasonable?

(c) Do you have any suggestions that

enhance the quality, clarity, or

usefulness of the information to be

collected?

(d) Is there a way to minimize the

information collection burden on those

who are to respond, including through

the use of appropriate automated

electronic, mechanical, or other forms of

information technology?

2. In addition, the Paperwork

Reduction Act of 1995 requires agencies

to estimate the total annual cost burden

to respondents or recordkeepers

resulting from the collection of

information. MMS needs your

comments on this item. Your response

should split the cost estimate into two

components: (a) Total capital and

startup cost and (b) annual operation,

maintenance, and purchase of services.

Your estimates should consider the

costs to generate, maintain, and disclose

or provide the information. You should

describe the methods you use to

estimate major cost factors, including

system and technology acquisition,

expected useful life of capital

equipment, discount rate(s), and the

period over which you incur costs.

Capital and startup costs include,

among other items, computers and

software you purchase to prepare for

collecting information; monitoring,

sampling, drilling, and testing

equipment; and record storage facilities.

Generally, your estimates should not

include equipment or services

purchased: before October 1, 1995; to

comply with requirements not

associated with the information

collection; for reasons other than to

provide information or keep records for

the Government; or as part of customary

and usual business or private practices.

Takings Implication Assessment

DOI has determined that this

proposed rule does not represent a

governmental action capable of

interfering with constitutionally

protected property rights. Thus, DOI

does not need to prepare a Takings

Implication Assessment under E.O.

12630, Governmental Actions and

Interference with Constitutionally

Protected Property Rights.

E.O. 12988

DOI has certified to OMB that the

proposed rule meets the applicable

reform standards provided in section

3(a) and 3(b)(2) of E.O. 12988.

Unfunded Mandates Reform Act of

1995

DOI has determined and certifies

under the Unfunded Mandates Reform

Act, 2 U.S.C. 1502 et seq., that this rule

will not impose a cost of $100 million

or more in any given year on State,

local, and tribal governments or the

private sector.

National Environmental Policy Act

DOI has determined that this action

does not constitute a major Federal

action significantly affecting the quality

of the human environment; therefore, an

environmental impact statement is not

required.

List of Subjects in 30 CFR Part 253

Continental shelf, Environmental

protection, Insurance, Oil and gas

exploration, Oil pollution, Penalties,

Pipelines, Public lands—mineral

resources, Public lands—rights-of-way,

Reporting and recordkeeping

requirements, and Surety bonds.

Dated: March 13, 1997.

Bob Armstrong,

Assistant Secretary, Land and Minerals

Management.

For the reasons stated above, MMS

proposes to add a new part 253 to

Chapter II of Title 30 of the CFR as

follows:
Federal Register / Vol. 62, No. 57 / Tuesday, March 25, 1997 / Proposed Rules 14059

PART 253—OIL SPILL FINANCIAL

RESPONSIBILITY FOR OFFSHORE

FACILITIES

Subpart A—General

Sec.

253.1 What is the purpose of this

regulation?

253.3 How are the terms used in this

regulation defined?

253.5 What is the authority for collecting

Oil Spill Financial Responsibility

(OSFR) information?

Subpart B—Applicability And Amount of

OSFR

253.10 What facilities does this regulation

cover?

253.11 Who must demonstrate OSFR?

253.12 Who determines whether I must

demonstrate OSFR?

253.13 How much OSFR must I

demonstrate?

253.14 How do I determine the worst case

oil-spill discharge volume?

253.15 What are my general OSFR

compliance responsibilities?

Subpart C—Methods for Evidencing OSFR

253.20 What are the methods for evidencing

OSFR?

253.21 How can I use self-insurance as

OSFR evidence?

253.22 How do I establish the amount of

self-insurance allowed as OSFR

evidence?

253.23 What information must I submit to

support my net worth qualifications?

253.24 When I submit audited financial

statements in connection with my net

worth, what standards must they meet?

253.25 What financial test procedures must

I use to evaluate the amount of selfinsurance allowed as OSFR evidence

based on net worth?

253.26 What information must I submit to

support my net assets qualifications?

253.27 When I submit audited financial

statements in connection with my net

assets, what standards must they meet?

253.28 What financial test procedures must

I use to evaluate the amount of selfinsurance allowed as OSFR evidence

based on net assets?

253.29 How can I use insurance as OSFR

evidence?

253.30 How can I use a guarantee as OSFR

evidence?

253.31 How can I use a surety bond as

OSFR evidence?

253.32 Are there alternative methods to

demonstrate OSFR?

Subpart D—Requirements for Submitting

OSFR Information

253.40 What OSFR evidence must I submit

to MMS?

253.41 What terms must I include in my

OSFR evidence?

253.42 How can I amend my OSFR

demonstration?

253.43 When is my OSFR demonstration

effective?

253.44 When must I comply with this

regulation?

253.45 To whom do I submit my OSFR

evidence?

Subpart E—Revocation and Penalties

253.50 How can my OSFR evidence be

refused or invalidated?

253.51 What are the penalties for not

complying with this part?

Subpart F—Claims for Oil-Spill Removal

Costs and Damages

253.60 How must a claim be presented?

253.61 When is a guarantor subject to direct

action for claims?

253.62 What are the designated applicant’s

obligations regarding a claim?

Appendix—Forms for Submitting OSFR

Information

Authority: 33 U.S.C. 2701 et seq.

Subpart A—General

§ 253.1 What is the purpose of this

regulation?

This part establishes the requirements

for demonstrating OSFR for covered

offshore facilities under Title I of the Oil

Pollution Act of 1990 (OPA), as

amended, 33 U.S.C. 2701 et seq.

§ 253.3 How are the terms used in this

regulation defined?

Claim means a request, made in

writing for a sum certain, for

compensation for damages or removal

costs resulting from an incident.

Claimant means any person or

government who presents a claim for

compensation under OPA.

Covered offshore facility (COF) means

a facility:

(1) Including any structure, group of

structures (including wells), mobile

offshore drilling unit, equipment,

pipeline, or device (other than a vessel

or other than a pipeline or deep water

port licensed under the Deepwater Port

Act of 1974 (33 U.S.C. 1501 et seq.))

used for exploring for, drilling for, or

producing oil (including storing,

handling, transferring, or processing oil

associated with such production

activities) or used for transporting oil

from such facilities. This includes a

well drilled by a MODU, but it does not

include the MODU;

(2) That is located in the area along

the coast that is affected by the tides and

is submerged when free from disturbing

influences or in the area offshore

therefrom; and

(3) That has a worst case oil-spill

discharge potential of more than 1,000

barrels of oil, or that has a worst case

oil-spill discharge potential of less than

1,000 barrels of oil if MMS determines

in writing that OSFR must be

demonstrated for the facility.

Designated applicant means a person

designated by the responsible parties to

demonstrate OSFR for COF’s on a lease,

permit, or right of use and easement.

Director means the Director of the

Minerals Management Service.

Fund means the Oil Spill Liability

Trust Fund established by section 9509

of the Internal Revenue Service Code of

1986 (26 U.S.C. 9509).

Guarantee means an agreement to

indemnify a designated applicant upon

its satisfaction of a claim.

Guarantor means a person other than

the designated applicant who provides

a guaranty.

Guaranty means any acceptable form

of OSFR evidence provided by a

guarantor including a guarantee,

insurance, or surety bond.

Incident means any occurrence or

series of occurrences having the same

origin resulting in the discharge or

substantial threat of discharge of oil.

Indemnitor means a person providing

a guarantee for a designated applicant

using self-insurance.

Independent accountant means a

certified public accountant who is

certified by one of the States or a

chartered accountant certified by the

country of incorporation.

Insolvent has the meaning set forth in

11 U.S.C. 101 and generally refers to a

financial condition in which the sum of

a person’s debts is greater than the value

of the person’s property.

Lease means any form of

authorization issued under the Outer

Continental Shelf Lands Act or State

law which allows oil and gas

exploration or production in the area

covered by the authorization.

Lessee means a person holding a

leasehold interest in an oil or gas lease

including an owner of record title or a

holder of operating rights (working

interest owner).

Oil means oil of any kind or in any

form, including but not limited to,

petroleum, fuel oil, sludge, oil refuse,

and oil mixed with wastes other than

dredged spoil but does not include

petroleum, including crude oil or any

fraction thereof, which is specifically

listed or designated as a hazardous

substance under subparagraphs (A)

through (F) of section 101(14) of the

Comprehensive Environmental

Response, Compensation, and Liability

Act (CERCLA) (42 U.S.C. 9601) and

which is subject to the provisions of

CERCLA. Oil includes hydrocarbons

produced at the wellhead in liquid

form. Condensate is oil, including

condensate that has been separated from

gas before pipeline injection.

Outer Continental Shelf (OCS) means

the term ‘‘Outer Continental Shelf’’ as

defined in section 2(a) of the OCS Lands

Act (OCSLA) (43 U.S.C. 1331(a)).
14060 Federal Register / Vol. 62, No. 57 / Tuesday, March 25, 1997 / Proposed Rules

Permit means an authorization,

license, or permit for geological

exploration issued under section 11 of

the OCSLA (43 U.S.C. 1340) or

applicable State law.

Person means an individual,

corporation, partnership, association,

State, municipality, commission, or

political subdivision of a State or any

interstate body.

Pipeline means all the pipeline

segments and any associated equipment

and appurtenances used or intended for

use in the transportation of oil or

natural gas. A pipeline segment is any

portion of a pipeline connecting two

COF’s, any COF to shore, a COF and a

subsea tie-in, or two subsea tie-ins.

Responsible party means for a COF:

(1) Other than a pipeline, the lessee or

permittee of the area in which the COF

is located, or the holder of a right of use

and easement granted under applicable

State law or the OCSLA (43 U.S.C.

1301–1356) for the area in which the

COF is located (if the holder is a

different person than the lessee or

permittee). A responsible party is not a

Federal agency, State, municipality,

commission, or political subdivision of

a State, or any interstate body that as

owner transfers possession and right to

use the property to another person by

lease, assignment, or permit;

(2) That is a pipeline, any person

owning or operating the pipeline; and

(3) That is abandoned, the persons

who would have been the responsible

parties for the COF immediately prior to

abandonment.

Right of use and easement (RUE)

means any authorization other than a

lease or permit to use the OCS or State

land seaward of the line of ordinary low

water along the coast. It includes

pipeline rights-of-way.

State means the several States of the

United States, the District of Columbia,

the Commonwealth of Puerto Rico,

Guam, American Samoa, the United

States Virgin Islands, the

Commonwealth of the Northern

Marianas, and any other territory or

possession of the United States.

§ 253.5 What is the authority for collecting

Oil Spill Financial Responsibility (OSFR)

information?

(a) The Office of Management and

Budget (OMB) has approved the

information collection requirements in

this part 253 under 44 U.S.C. 3501 et

seq. and assigned OMB control number

1010–XXXX.

(b) MMS collects the information to

ensure that a party responsible for a

COF has the financial resources

necessary to pay for cleanup and

damages that could be caused by oil

discharges from the COF. MMS uses the

information to ensure compliance of

offshore lessees, owners, and operators

of offshore facilities with OPA; to

establish eligibility of designated

applicants for OSFR certification; and to

establish a reference source of names,

addresses, and telephone numbers of

responsible parties for offshore facilities

and their designated agents and

guarantors for claims associated with oil

pollution from designated offshore

facilities. The requirement to provide

the information is mandatory. No

confidential or proprietary information

must be submitted. All information

collected will be treated according to

the requirements of the Freedom of

Information Act (5 U.S.C. 552).

(c) An agency may not conduct or

sponsor, and a person is not required to

respond to, a collection of information

unless it displays a currently valid OMB

control number.

(d) Send comments regarding any

aspect of the collection of information

under this part, including suggestions

for reducing the burden, to the

Information Collection Clearance

Officer, Minerals Management Service,

Mail Stop 2200, 381 Elden Street,

Herndon, Virginia 20170–4817; and to

the Office of Information and Regulatory

Affairs, Office of Management and

Budget, Attention: Desk Officer for the

Department of the Interior (1010–

XXXX), 725 17th Street NW.,

Washington, DC 20503.

Subpart B—Applicability and Amount

of OSFR

§ 253.10 What facilities does this

regulation cover?

(a) This part applies to any COF on

any lease or permit issued or on any

RUE granted under the OCSLA or

applicable State law.

(b) For a pipeline flowing landward

across the line of ordinary low water,

this part applies seaward of the point

the pipeline reaches the first accessible

flow shutoff device landward of the line

of ordinary low water.

§ 253.11 Who must demonstrate OSFR?

(a) A designated applicant must show

OSFR. A designated applicant may be a

responsible party or another person

authorized under this section. Every

lease, permit, or RUE with a COF must

have a single designated applicant.

(1) If there is more than one

responsible party, those responsible

parties must use Form MMS 1017 to

select a designated applicant. The

designated applicant must submit Form

MMS 1016 and agree to demonstrate

OSFR on behalf of all the responsible

parties.

(2) If you are a designated applicant

who is not a responsible party, you must

agree to be liable for claims under OPA

jointly and severally with the

responsible parties.

(b) If the land within a lease with a

COF includes a permit or RUE with a

COF, there must be a designated

applicant for:

(1) The lease;

(2) Each permit with a COF; and

(3) Each RUE with a COF.

(c) The designated applicant for a

lease with a COF must be either:

(1) A lessee; or

(2) The designated operator for the

OCS lease under 30 CFR 250.8; the unit

operator designated under a federally

approved unit including the OCS lease.

For a lease or unit not in the OCS, the

operator designated under the lease or

unit operating agreement for the lease

may be the designated applicant only if

the operating agreement provides that

the operator is responsible for

compliance with all the laws and

regulations applicable to the lease or

unit.

(d) The designated applicant for a

permit with a COF must be the

permittee.

(e) The designated applicant for a

RUE with a COF must be the holder of

the RUE or, if there is a pipeline on the

RUE, the owner or operator of the

pipeline.

(f) MMS may require the designated

applicant for a lease, permit, or RUE to

be a person other than a person

identified in paragraphs (c) through (e)

of this section if MMS determines there

is inadequate demonstration of OSFR.

§ 253.12 Who determines whether I must

demonstrate OSFR?

You may ask MMS whether this part

applies to you. You must submit a

request for a determination of OSFR

applicability according to § 253.45. You

must include in your request any

information that will assist MMS in

making the determination. MMS may

require you to submit other information

before making a determination of OSFR

applicability.

§ 253.13 How much OSFR must I

demonstrate?

(a) The following general parameters

apply to the amount of OSFR that you

must demonstrate:
Federal Register / Vol. 62, No. 57 / Tuesday, March 25, 1997 / Proposed Rules 14061

If you are the designated applicant for then you must demonstrate . . .

A lease, permit, or RUE with only one COF ............................................ The amount of OSFR that applies to the COF.

A lease, permit, or RUE with more than one COF .................................. The highest amount of OSFR that applies to any of the COF’s.

More than one lease, permit, or RUE with one or more COF’s .............. The highest amount of OSFR that applies to any of the COF’s on any

of the leases, permits, or RUE’s.

Leases, permits, and RUE’s located in both OCS and State lands with

one or more COF’s.

The highest amount of OSFR that applies to any of the COF’s located

on the leases, permits, or RUE’s.

(b) The amount of OSFR applicable to a lease, permit, or RUE is as follows:

(1) For a COF located wholly or partially in the OCS:

COF worst case oil-spill discharge volume

Applicable

amount of

OSFR

Up to 35,000 barrels ............................................................................................................................................................................ $35,000,000

Over 35,000 but not more than 70,000 barrels ................................................................................................................................... 70,000,000

Over 70,000 but not more than 105,000 barrels ................................................................................................................................. 105,000,000

Over 105,000 barrels ........................................................................................................................................................................... 150,000,000

(2) For a COF not located in the OCS:

COF worst case oil-spill discharge volume

Applicable

amount of

OSFR

Up to 10,000 barrels ............................................................................................................................................................................ $10,000,000

Over 10,000 but not more than 35,000 barrels ................................................................................................................................... 35,000,000

Over 35,000 but not more than 70,000 barrels ................................................................................................................................... 70,000,000

Over 70,000 but not more than 105,000 barrels ................................................................................................................................. 105,000,000

Over 105,000 barrels ........................................................................................................................................................................... 150,000,000

(3) The Director may determine that

you must demonstrate an amount of

OSFR greater than the amount in

paragraph (b)(1) and (2) of this section

based on the relative operational,

environmental, human health, and other

risks your COF poses. The amount that

the Director may require will be one or

more levels higher than the amount

indicated in paragraph (b)(1) or (2) of

this section for your COF. The Director

will not require an OSFR demonstration

that exceeds $150 million.

§ 253.14 How do I determine the worst

case oil-spill discharge volume?

(a) To calculate the amount of OSFR

you must demonstrate for a facility

under § 253.13(b), you must use the

worst case oil-spill discharge volume

that you determined under whichever of

the following regulations applies:

(1) 30 CFR part 254-Response Plans

for Facilities Located Seaward of the

Coast Line;

(2) 40 CFR part 112-Oil Pollution

Prevention; or

(3) 49 CFR part 194-Response Plans

for Onshore Oil Pipelines.

(b) If you are a designated applicant

and you choose to demonstrate $150

million in OSFR, you are not required

to determine any worst case oil-spill

discharge volumes, since that is the

maximum amount of OSFR required by

this part.

§ 253.15 What are my general OSFR

compliance responsibilities?

(a) You must maintain continuous

OSFR coverage for all your leases,

permits, and RUE’s with COF’s.

(b) You must ensure that new OSFR

evidence is bound before your current

evidence lapses or is canceled and that

coverage for a new COF is bound before

the COF goes into operation.

(c) You may use self-insurance to

demonstrate OSFR and find that you no

longer qualify for that amount of selfinsurance, based upon your latest

audited financial statements. If this

happens, you must demonstrate

supplemental means of OSFR

acceptable to MMS by whichever of the

following dates comes first:

(1) Sixty calendar days after you

receive your latest financial statement;

or

(2) The first calendar day of the 5th

month after the close of your fiscal year.

(d) You must notify MMS in writing

within 15 calendar days after a change

occurs (e.g., you or your indemnitor

petitions for bankruptcy under Title 11,

U.S.C.) that would prevent you or your

guarantors from complying with

requirements to accept direct action for

claims or meeting any other OSFR

obligations. You must take any action

MMS directs to ensure an acceptable

OSFR demonstration.

(e) If you deny payment of a claim

presented to you under § 253.60(b) or

(d), you must give the claimant a written

explanation for your denial.

Subpart C—Methods for evidencing

OSFR

§ 253.20 What are the methods for

evidencing OSFR?

You may satisfy your OSFR

requirements by using one or a

combination of the following methods

to demonstrate OSFR:

(a) Self-insurance under §§ 253.21

through 253.28;

(b) Insurance under § 253.29;

(c) A guarantee under § 253.30;

(d) A surety bond under § 253.31; or

(e) An alternative method the Director

approves under § 253.32.

§ 253.21 How can I use self-insurance as

OSFR evidence?

(a) If you use self-insurance to satisfy

all or part of your obligation to

demonstrate OSFR, you must annually

pass either a net worth test or an

unencumbered net asset test.
14062 Federal Register / Vol. 62, No. 57 / Tuesday, March 25, 1997 / Proposed Rules

(b) You must submit a complete and

unaltered Form MMS 1018 with each

application to demonstrate OSFR using

self-insurance.

(c) You may submit to MMS your

initial application to demonstrate OSFR

using self-insurance at any time.

(d) You must submit your application

to renew OSFR using self-insurance by

the first calendar day of the 5th month

after the close of your fiscal year.

§ 253.22 How do I establish the amount of

self-insurance allowed as OSFR evidence?

To establish the amount of selfinsurance allowed, you must submit

evidence of your net worth (see

§ 253.23) or your unencumbered assets

(see § 253.26).

§ 253.23 What information must I submit to

support my net worth qualifications?

You must support your net worth

qualifications with information

contained in your previous fiscal year’s

audited financial statements.

(a) Audited financial statements must

be in the form of:

(1) An annual report, prepared in

accordance with the generally accepted

accounting practices of the United

States or other international accounting

practices determined to be equivalent by

MMS; or

(2) A Form 10–K, prepared in

accordance with Securities and

Exchange Commission regulations.

(b) Audited financial statements must

be submitted together with a letter

signed by your treasurer highlighting:

(1) The State or the country of

incorporation;

(2) The total value of the stockholders’

equity as shown on the balance sheet;

(3) The net value of the plant,

property, and equipment shown on the

balance sheet; and

(4) The net value of the identifiable

U.S. assets and the identifiable total

assets in the auditor’s notes to the

financial statements (i.e., a geographic

segmented business note).

§ 253.24 When I submit audited financial

statements in connection with my net

worth, what standards must they meet?

(a) Your audited financial statements

must be bound.

(b) Your audited financial statements

must include the unqualified opinion by

an independent accountant that:

(1) The financial statements are free

from material misstatement, and

(2) The audit was conducted in

accordance with the generally accepted

auditing standards of the United States

or other international auditing standards

MMS determines to be equivalent.

(c) The financial information you

submit must be expressed in U.S.

dollars. If this information was

originally reported in another form of

currency, you must provide a

conversion factor to U.S. dollars that

was effective on the last day of the fiscal

year pertinent to your financial

statements. You also must identify the

market source of the currency exchange

rate.

§ 253.25 What financial test procedures

must I use to evaluate the amount of selfinsurance allowed as OSFR evidence based

on net worth?

(a) Divide the total value of the

stockholder’s/owners’ equity listed on

the balance sheet by 10.

(b) Divide the net value of the

identifiable U.S. assets by the net value

of the identifiable total assets.

(c) Multiply the net value of plant,

property, and equipment shown on the

balance sheet by the number calculated

under paragraph (b) of this section and

divide the resultant product by 10.

(d) The smaller of the numbers

calculated under paragraphs (a) or (c) of

this section is the maximum allowable

amount you may use to demonstrate

OSFR under this method.

§ 253.26 What information must I submit to

support my net assets qualifications?

You must support your net assets

qualifications with the information

required by § 253.23(a) and a list of

pledged, unencumbered, and

unimpaired U.S. assets whose value will

not be affected by an oil discharge from

a COF. The assets must be plant,

property, or equipment. You must

submit a letter signed by you or your

treasurer:

(a) Identifying which assets are

pledged;

(b) Certifying that the assets are

unencumbered, including contingent

encumbrances;

(c) Promising that the identified assets

will not be sold, subjected to a security

interest, or otherwise encumbered

throughout the specified fiscal year; and

(d) Specifying:

(1) The State of the country of

incorporation;

(2) The total value of the

stockholder’s/owners’ equity;

(3) The identification and location of

the pledged U.S. assets; and

(4) The value of the pledged U.S.

assets using the same valuation method

used in your audited financial

statements.

§ 253.27 When I submit audited financial

statements in connection with my net

assets, what standards must they meet?

Any audited financial statements that

you submit must:

(a) Meet the standards in § 253.24;

and

(b) Include a certification by the

independent accountant who audited

the financial statements that:

(1) The value of the unencumbered

assets is reasonable and

(2) There are no encumbrances on the

asset.

§ 253.28 What financial test procedures

must I use to evaluate the amount of selfinsurance allowed as OSFR evidence based

on net assets?

(a) Divide the total value of the

stockholders’/owners’ equity listed on

the balance sheet by 4.

(b) Divide the value of the

unencumbered U.S. assets by 2.

(c) The smaller number calculated

under paragraphs (a) or (b) of this

section is the maximum allowable

amount you may use to demonstrate

OSFR under this method.

§ 253.29 How can I use insurance as OSFR

evidence?

(a) If you use insurance to satisfy all

or part of your obligation to demonstrate

OSFR, you may use only insurance

certificates issued by insurers that are:

(1) Syndicates of Lloyds of London;

(2) Members of the Institute of

London Underwriters; or

(3) Other foreign or domestic insurers

that have achieved a ‘‘Secure’’ rating of

claims paying ability in their latest

review by A.M. Best’s Insurance

Reports, Standard & Poor’s Insurance

Rating Services, or other equivalent

rating made by a rating service

acceptable to MMS.

(b) You must submit information

about your insurers to MMS on a

completed and unaltered Form MMS

1019. The information you submit must:

(1) Include all the information

required by § 253.41 of this part; and

(2) Be executed on one original

insurance certificate showing all

participating insurers and their

respective percentage of participation in

this risk. The certificate must bear the

original signatures of each insurer’s

underwriter or of their lead

underwriters, underwriting managers, or

delegated brokers, depending on the

underwriting arrangement.

(3) For each insurance company on

the insurance certificate, indicate the

insurer’s rating of claims paying ability

and the rating service that issued the

rating.

(c) The insurance you provide to

MMS as OSFR evidence may be divided

into layers, subject to the following

restrictions:

(1) The total amount of insurance

must equal the total amount of OSFR

you must demonstrate as determined

under § 253.13 of this part;
Federal Register / Vol. 62, No. 57 / Tuesday, March 25, 1997 / Proposed Rules 14063

(2) No more than four insurance

layers may be used, including the base

layer;

(3) If the total amount of insurance is

$35 million or less, it must not be

layered. Insurance for greater amounts

may be layered in multiples of $35

million. If the amount of insurance is

$150 million, one $45 million layer is

allowed;

(4) Each insurer’s participation in the

covered insurance risk must be

expressed as a percentage of a whole

layer with no intermediate, horizontal

layering permitted;

(5) You may use an insurance

deductible. If your insurance is layered,

the deductible amount must apply only

to the base layer. You must use one or

more of the other MMS-approved OSFR

methods to establish an insurance

deductible; and

(6) Each insurance layer submitted as

OSFR evidence must be presented on a

separate Form MMS 1019.

§ 253.30 How can I use a guarantee as

OSFR evidence?

(a) You may use only one guarantee

issued by only one indemnitor to satisfy

all or part of your obligation to

demonstrate OSFR.

(b) Your indemnitor must complete an

unaltered Form MMS 1018 and provide

a guarantee that:

(1) Includes all the information

required by § 253.41 of this part; and

(2) Does not exceed the amounts

calculated using the net worth and net

assets tests specified under §§ 253.21

through 253.28 of this part.

(c) You may submit to MMS your

initial application to demonstrate OSFR

using a guarantee at any time. You must

submit your application to renew OSFR

using a guarantee by the first calendar

day of the 5th month after the close of

your indemnitor’s fiscal year.

§ 253.31 How can I use a surety bond as

OSFR evidence?

(a) Each bonding company that issues

a surety bond that you submit to MMS

as OSFR evidence must:

(1) Be licensed to do business in the

State in which the surety bond is

executed;

(2) Be certified by the U.S. Treasury

Department as an acceptable surety for

Federal obligations and listed in the

current Treasury Circular No. 570; and

(3) Provide the surety bond on Form

MMS 1020 without alteration specifying

the terms of your surety agreement for

claims filed against you under OPA; and

(4) Be in compliance with applicable

statutes regulating surety company

participation in insurance-type risks.

(b) A surety bond that you submit as

OSFR evidence must include all the

information required by § 253.41 of this

part.

§ 253.32 Are there alternative methods to

demonstrate OSFR?

The Director may accept other

methods to demonstrate OSFR that

provide equivalent assurance of timely

satisfaction of claims. This may include

pools of guarantors, letters of credit, or

other comparable methods. Submit your

proposal, together with all the

supporting documents, to the Director at

the address in § 253.45. The Director’s

decision whether to approve your

alternative method to evidence OSFR is

solely at the Director’s discretion and is

not subject to administrative appeal

under 30 CFR part 290 or 43 CFR part

4.

Subpart D—Requirements for

Submitting OSFR Information

§ 253.40 What OSFR evidence must I

submit to MMS?

(a) You must submit to MMS:

(1) A single demonstration of OSFR

that covers all the COF’s on all the

leases, permits, and RUE’s for which

you are the designated applicant;

(2) A completed and unaltered Form

MMS 1016;

(3) MMS forms that identify your

leases (MMS 1021), permits (MMS

1022), and RUE’s (MMS 1022), and the

methods you used to demonstrate OSFR

for any COF’s (forms are available from

the address in § 253.45); and

(4) Any insurance certificates,

guarantees, and surety bonds used as

OSFR evidence for the leases, permits,

and RUE’s for which you are the

designated applicant.

(b) You must sign each MMS form

submitted to MMS as part of an OSFR

demonstration. You also must attach to

Form MMS 1016 evidence of your

authority to sign if:

(1) You submit OSFR evidence on

behalf of a designated applicant; and

(2) You are not disclosed as an

individual (sole proprietor), designated

applicant, or a managing partner of a

partnership-designated applicant.

§ 253.41 What terms must I include in my

OSFR evidence?

Each instrument you submit as OSFR

evidence must specify:

(a) The effective date, and except for

a surety bond, the expiration date;

(b) That termination of the instrument

will not affect the liability of the

instrument issuer for claims arising

from an incident that occurred on or

before the effective date of termination;

(c) That the instrument will remain in

force until the termination date or until:

(1) Thirty calendar days after MMS

and the designated applicant receive

from the instrument issuer a notification

of intent to cancel;

(2) MMS receives from the designated

applicant other acceptable OSFR

evidence; or

(3) All the COF’s to which the

instrument applies are permanently

abandoned in compliance with 30 CFR

part 250 or equivalent State

requirements;

(d) That the instrument issuer agrees

to direct action for claims made under

OPA up to the guaranty amount, subject

to the defenses in paragraph (f) of this

section and following the procedures in

§ 253.60 of this part;

(e) An agent in the United States for

service of process; and

(f) That the instrument issuer will not

use any defenses against a claim made

under OPA except:

(1) All the rights and defenses that

would be available to a designated

applicant or responsible party for whom

the guaranty was provided; and

(2) The incident leading to the claim

for removal costs or damages was

caused by willful misconduct of a

responsible party for whom the

designated applicant demonstrated

OSFR.

§ 253.42 How can I amend my OSFR

demonstration?

(a) If you want to add lease, permit,

or RUE areas not included in your

initial OSFR demonstration, you must

submit to MMS a completed Form MMS

1023 or Form MMS 1024. If applicable,

you also must submit any additional

guarantees, surety bonds, insurance

certificates, or other instruments

required to extend the coverage of your

original OSFR demonstration to the

COF’s on the areas to be added. You do

not need to resubmit previously

accepted audited financial statements

for the current fiscal year. You must

ensure that MMS receives this

information at least 30 days before the

areas are to be added.

(b) If you want to drop lease, permit,

or RUE areas included in your initial

OSFR demonstration, you must submit

to MMS a completed Form MMS 1023

or Form MMS 1024. You must ensure

that MMS receives this information at

least 30 days before the leases, permits,

or RUE’s are to be dropped.

§ 253.43 When is my OSFR demonstration

effective?

(a) MMS will notify you in writing

after we determine whether your

evidence is acceptable to demonstrate

OSFR, and your demonstration is

effective upon MMS acceptance. If we
14064 Federal Register / Vol. 62, No. 57 / Tuesday, March 25, 1997 / Proposed Rules

find that you have not submitted all the

information needed to demonstrate

OSFR, we may require you to provide

additional information before we

determine whether your OSFR evidence

is acceptable.

(b) Except in the case of self-insurance

or guarantee, MMS acceptance of OSFR

evidence is valid until the surety bond,

insurance certificate, or other accepted

OSFR instrument expires. In the case of

self-insurance or guarantee, acceptance

is valid until the first day of the 5th

month after the close of your or your

indemnitor’s current fiscal year.

§ 253.44 When must I comply with this

regulation?

You must submit to MMS your

evidence of OSFR for all the COF’s on

all the leases, permits, and RUE’s for

which you are the designated applicant

no later than 60 days after May 21, 1997.

§ 253.45 To whom do I submit my OSFR

evidence?

All correspondence and required

submissions relative to this part must be

addressed to: U.S. Department of the

Interior, Minerals Management Service,

Gulf of Mexico Region, Oil Spill

Financial Responsibility Program, 1201

Elmwood Park Boulevard, New Orleans,

Louisiana 70123.

Subpart E—Revocation and Penalties

§ 253.50 How can my OSFR evidence be

refused or invalidated?

(a) If MMS determines that any OSFR

evidence you submit fails to comply

with the requirements of this part, we

may refuse to accept it. If we refuse to

accept your OSFR evidence, we will

notify you in writing. You must take any

corrective action included with that

notification.

(b) MMS may immediately and

without prior notice invalidate your

OSFR demonstration if you:

(1) Are no longer the designated

applicant for the COF included in your

demonstration; or

(2) Permit the cancellation or

termination of the insurance policy,

surety bond, or guarantee upon which

the continued validity of the

demonstration is based.

(c) If MMS determines you are not

complying with the requirements of this

part for any reason other than paragraph

(b) of this section, we may notify you of

our intent to invalidate your OSFR

demonstration. Unless you take the

corrective action MMS specifies within

15 calendar days from the date you

receive such a notice, we will invalidate

your OSFR demonstration.

§ 253.51 What are the penalties for not

complying with this part?

(a) If you fail to comply with the

requirements of OPA and this part, you

are subject to a civil penalty of up to

$25,000 per COF per day of violation

(that is, each day you operate a COF

without acceptable evidence of OSFR).

For any COF with more than one

responsible party, each responsible

party is subject to a civil penalty of up

to $25,000 per COF per day of violation.

(b) MMS will determine the date of a

noncompliance. MMS will assess

penalties in accordance with an OSFR

penalty schedule using the procedures

found at 30 CFR part 250, subpart N.

You may obtain a copy of the penalty

schedule from MMS at the address in

§ 253.45 of this part.

(c) MMS may assess a civil penalty

against you that is greater or less than

the amount in the penalty schedule after

taking into account the factors in section

4303(a) of OPA (33 U.S.C. 2716a).

(d) If you fail to correct a deficiency

in the OSFR evidence for a COF, the

Director may suspend operation of a

COF in the OCS under 30 CFR 250.10

or seek judicial relief, including an

order suspending the operation of any

COF.

Subpart F—Claims for Oil Spill

Removal Costs and Damages

§ 253.60 How must a claim be presented?

(a) You must present your claim for

removal costs and damages first to the

designated applicant for the COF that is

the source of the incident resulting in

your claim.

(b) If the designated applicant denies

your claim under paragraph (a) of this

section for a reason in § 253.61(b), you

may elect to present your claim to:

(1) The designated applicant’s

guarantor if there is a guarantor;

(2) The Fund using the procedures at

33 CFR part 136; or

(3) Any of the responsible parties for

the COF that is the source of the

incident resulting in your claim.

(c) If the designated applicant fails to

pay your claim under paragraph (a) of

this section for a reason in § 253.61(b),

you may elect to present your claim to:

(1) The designated applicant’s

guarantor if there is a guarantor;

(2) The Fund using the procedures at

33 CFR part 136 if at least 90 days have

passed since you first presented your

claim to the designated applicant; or

(3) Any of the responsible parties for

the COF that is the source of the

incident resulting in your claim.

(d) If the designated applicant denies

your claim under paragraph (a) of this

section for a reason not in § 253.61(b),

you may elect to:

(1) Start a court action against the

designated applicant and/or any of the

parties responsible for the COF that is

the source of the incident resulting in

your claim;

(2) Present your claim to the Fund

using the procedures found at 33 CFR

part 136; or

(3) Any of the responsible parties for

the COF that is the source of the

incident resulting in your claim.

(e) If the designated applicant fails to

pay your claim under paragraph (a) of

this section within 90 days for a reason

not in § 253.61(b), you may elect to:

(1) Start a court action against the

designated applicant and/or any of the

parties responsible for the COF that is

the source of the incident resulting in

your claim;

(2) Present your claim to the Fund

using the procedures at 33 CFR part 136;

or

(3) Any of the responsible parties for

the COF that is the source of the

incident resulting in your claim.

(f) If the guarantor denies your claim

under paragraph (b)(1) of this section,

you may elect to:

(1) Start a court action against the

guarantor; or

(2) Present your claim to the Fund

using the procedures at 33 CFR part 136.

(g) If the guarantor fails to pay your

claim under paragraph (c)(1) of this

section within 90 days after it was first

presented to the designated applicant,

you may elect to:

(1) Start a court action against the

guarantor; or

(2) Present your claim to the Fund

using the procedures at 33 CFR part 136.

(h) You may ask MMS for assistance

if you are uncertain whether the

guarantor is subject to your claim under

paragraphs (b)(1) or (c)(1) of this section.

Submit your request for assistance to the

address in § 253.45. You must include

with your request any information that

will assist MMS in determining whether

you may present your claim to the

guarantor.

§ 253.61 When is a guarantor subject to

direct action for claims?

You are subject to direct action for

any claim asserted by:

(a) The United States or for any

compensation paid by the Fund under

OPA, including compensation claim

processing costs; and

(b) A claimant other than the United

States if the designated applicant has:

(1) Denied or failed to pay a claim

because of being insolvent; or

(2) Filed a petition for bankruptcy

under Title 11, U.S.C.
Federal Register / Vol. 62, No. 57 / Tuesday, March 25, 1997 / Proposed Rules 14065

§ 253.62 What are the designated

applicant’s obligations regarding a claim?

When you receive a claim for removal

costs and damages, you must notify

within 15 calendar days of receipt of a

claim:

(a) Your guarantor(s); and

(b) The responsible parties for whom

you are acting as the designated

applicant.

Appendix—Forms for Submitting OSFR

Information

Minerals Management Service Oil

Pollution Act of 1990

Application for Certification of Oil Spill

Financial Responsibility

OMB Control Number 1010–XXXX

Expiration Date: llllllll

Paperwork Reduction Act Statement

The Paperwork Reduction Act of 1995

(44 U.S.C. 3501 et seq.) requires us to

inform you that the Minerals

Management Service (MMS) collects

this information to:

1. Provide a standard method for

establishing eligibility for certification

of oil spill financial responsibility

(OSFR) for offshore facilities;

2. Identify and maintain a record of

those offshore facilities that have a

potential oil-spill liability;

3. Establish and maintain a

continuous record, over the liability

term specified in Title I of the Oil

Pollution Act of 1990, of financial

evidence and instruments established to

pay claims for oil-spill cleanup and

damages resulting from operations

conducted on offshore facilities and the

transportation of oil from offshore

platforms and wells;

4. Establish and maintain a

continuous record of responsible

parties, as defined in Title I of the Oil

Pollution Act of 1990, and their agents

for certification of OSFR for offshore

facilities; and

5. Establish and maintain a

continuous record, over the liability

term specified in Title I of the Oil

Pollution Act of 1990, of persons to

contact and U.S. agents for service of

process for claims associated with oil

spills from offshore facilities.

The MMS will routinely use the

information to:

1. Ensure compliance of offshore

lessees and owners and operators of

offshore facilities with Title I of the Oil

Pollution Act of 1990;

2. Establish eligibility of applicants

for certification of OSFR; and

3. Establish a reference source of

names, addresses, and telephone

numbers of responsible parties for

offshore facilities and their designated

agents and guarantors for claims

associated with oil pollution from

designated offshore facilities.

Response to this request is mandatory

(33 U.S.C. 2716). No confidential or

proprietary information must be

submitted. OSFR demonstrations,

including supporting audited financial

statements, will be subject to review

under the Freedom of Information Act

(5 U.S.C. 552).

An agency may not conduct or

sponsor, and a person is not required to

respond to, a collection of information

unless it displays a currently valid

Office of Management and Budget

(OMB) Control Number. The combined

public reporting burden for an

application for certification of oil spill

financial responsibility is estimated to

average 8 hours per response, including

the time for reviewing instructions,

gathering and maintaining data, and

completing and reviewing the

application. The average burden for

each of the nine forms that could

comprise an application is:

Form MMS 1016, Designated

Applicant Information.....................1 hour

Form MMS 1017, Designation of

Applicant........................................9 hours

Form MMS 1018, Self-insurance or

Guarantee Information.....................1 hour

Form MMS 1019, Insurance Certificate

.................................................... 120 hours

Form MMS 1020, Surety Bond ..........24 hours

Form MMS 1021, Lease Listing ...........3 hours

Form MMS 1022, Permit or Right of

Use and Easement Listing..............3 hours

Form MMS 1023, Lease Changes...........1 hour

Form MMS 1024, Permit or Right of

Use and Easement Changes .............1 hour

Direct comments regarding the burden

estimate or any other aspect of this

collection to the Information Collection

Clearance Officer, Mail Stop 2200,

Minerals Management Service, 381

Elden Street, Herndon, VA 20170–4817;

and to the Office of Management and

Budget, Office of Information and

Regulatory Affairs, Desk Officer for the

Department of the Interior (OMB No.

1010–XXXX), 725 17th Street, NW,

Washington, DC 20503.

BILLING CODE 4310–MR–P
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[FR Doc. 97–7270 Filed 3–24–97; 8:45 am]

BILLING CODE 4310–MR–C

Office of Surface Mining Reclamation

and Enforcement

30 CFR Part 920

[MD–041–FOR]

Maryland Regulatory Program

AGENCY: Office of Surface Mining

Reclamation and Enforcement (OSM),

Interior.

ACTION: Proposed rule; public comment

period and opportunity for public

hearing.

SUMMARY: OSM is announcing receipt of

a proposed amendment to the Maryland

regulatory program (hereinafter the

‘‘Maryland program’’ under the Surface

Mining Control and Reclamation Act of

1977 (SMCRA). The proposed

amendment consists of changes to

provisions of the Maryland regulations

pertaining to bonding. The amendment

is intended to revise the Maryland

program to be consistent with the

corresponding Federal regulations and

SMCRA.

DATES: Written comments must be

received by 4:00 p.m. E.S.T. April 24,

1997. If requested, a public hearing on

the proposed amendment will be held

on April 21, 1997. Requests to speak at

the hearing must be received by 4:00

p.m., E.S.T., on April 9, 1997.

ADDRESSES: Written comments and

requests to speak at the hearing should

be mailed or hand delivered to George

Rieger, Program Manager, at the address

listed below.

Copies of the Maryland program, the

proposed amendment, a listing of any

scheduled public hearings, and all

written comments received in response

to this document will be available for

public review at the addresses listed

below during normal business hours,

Monday through Friday, excluding

holidays. Each requester may receive

one free copy of the proposed

amendment by contracting OSM’s

Appalachian Regional Coordinating

Center.

George Rieger, Program Manager, OSM,

Appalachian Regional Coordinating

Center, 3 Parkway Center, Pittsburgh,

PA 15220. Telephone: (412) 937–

2153.

Maryland Bureau of Mines, 160 South

Water Street, Frostburg, Maryland

21532. Telephone: (301) 689–4136.

FOR FURTHER INFORMATION CONTACT:

George Rieger, Program Manager,

Appalachian Regional Coordinating

Center, at (412) 937–2153.

SUPPLEMENTARY INFORMATION:

I. Background on the Maryland

Program

On December 1, 1980, the Secretary of

the Interior conditionally approved the

Maryland program. Background

information on the Maryland program,

including the Secretary’s findings, the

disposition of comments, and the

conditions of approval can be found in

the December 1, 1980, Federal Register

(45 FR 79449). Subsequent actions

concerning the conditions of approval

and program amendments can be found

at 30 CFR 920.12, 920.15, and 920.16.

II. Description of the Proposed

Amendment

By letter dated March 6, 1997

(Administrative Record No. MD–

552.18), Maryland submitted a proposed

amendment to its program pursuant to

SMCRA in response to required

amendments at 30 CFR 920.16 (h), (i),

(j), and (n). Maryland is revising the

Code of Maryland Regulations (COMAR)

at section 26.20.14.01B—Performance

Bonds and is formally submitting

actuarial study which reviews the

adequacy of its alternative bonding

system. Specifically, Maryland proposes

to require that a performance bond be

conditioned upon the permittee

faithfully performing every requirement

of Subtitle 5 of the Annotated Code of

Maryland, the Regulatory Program, the

permit, and the reclamation plan.