Federal Register / Vol. 60, No. 236 / Friday, December 8, 1995 / Proposed Rules 63011

Pursuant to 29 CFR 1320.8(d)(1), the

EEOC solicits public comment to enable

it to:

(1) Evaluate whether the proposed

collection of information is necessary

for the proper performance of the

EEOC’s functions, including whether

the information will have practical

utility;

(2) Evaluate the accuracy of the

EEOC’s estimate of the burden of the

proposed collection of information,

including the validity of the

methodology and assumptions used;

(3) Enhance the quality, utility, and

clarity of the information to be

collected; and

(4) Minimize the burden of the

collection of information on those who

are to respond, including through the

use of appropriate automated,

electronic, mechanical, or other

technological collection techniques or

other forms of information technology,

e.g., permitting electronic submission of

responses.

Regulatory Flexibility Act

The Commission certifies pursuant to

5 U.S.C. 605(b), enacted by the

Regulatory Flexibility Act, Pub. L. No.

96–354, that this proposed change will

not result in significant impact on small

employers or other entities because the

change involves elimination of reporting

requirements, and that a regulatory

flexibility analysis therefore is not

required. The Commission hereby

publishes this proposed rule for public

information and comment. The rule

appears below.

List of Subjects in 29 CFR Part 1602

Reporting and recordkeeping

requirements.

Dated: November 30, 1995.

For the Commission.

Gilbert F. Casellas,

Chairman.

Accordingly, it is proposed to amend

29 CFR Part 1602 as follows:

1. The authority citation for part 1602

continues to read as follows:

Authority: 42 U.S.C. 2000e–8, 2000e–12;

44 U.S.C. 3501 et seq.; 42 U.S.C. 12117.

§ 1602.41 [Amended]

2. Section 1602.41 is amended as

follows:

(a) In the introductory text, in the first

sentence, delete the phrase ‘‘and

individual schools within such systems

or district’’.

(b) In the concluding text, in the first

sentence, delete the phrase, ‘‘, or the

individual school which is the subject

of the report, where more convenient,’’

3. Section 1602.43 is revised to read

as follows:

§ 1602.43 Commission’s remedy for

school systems’ or districts’ failure to file

report.

Any school system or district failing

or refusing to file report EEO–5 when

required to do so may be compelled to

file by order of a U.S. district court,

upon application of the Commission or

the Attorney General.

4. Section 1602.44 is revised to read

as follows:

§ 1602.44 School systems’ or districts’

exemption from reporting requirements.

If it is claimed that the preparation or

filing of the report would create undue

hardship, the school system or district

may apply to the Commission for an

exemption from the requirements set

forth in this part by submitting to the

Commission or its delegate a specific

proposal for an alternative reporting

system prior to the date on which the

report is due.

[FR Doc. 95–29552 Filed 12–7–95; 8:45 am]

BILLING CODE 6750–01–M

DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR Part 250, 251, and 256

RIN 1010–AB92

Revision of Requirements Governing

Surety Bonds for Outer Continental

Shelf Leases

AGENCY: Minerals Management Service

(MMS), Interior.

ACTION: Notice of proposed rulemaking.

SUMMARY: The proposed rule would

establish a deadline of 2 years for all

Outer Continental Shelf (OCS) oil and

gas and sulphur lessees to bring their

bond coverage into compliance with the

new levels of coverage established in

1993; clarify MMS’s position that

assignees, assignors, and co-lessees are

jointly and severally liable for

compliance with OCS oil and gas and

sulphur leases; establish a regulatory

framework for lease-specific

abandonment accounts and acceptance

of a third-party guarantee; and update

the bond coverage required of right-ofway holders and Geological and

Geophysical (G&G) exploration

permittees. These changes are needed to

reduce the risk of default by an

underfunded company operating a lease

or holding a right-of-way.

DATES: Comments must be received or

postmarked no later than March 7, 1996

to be considered in this rulemaking.

ADDRESSES: Written comments must be

mailed or hand-carried to the

Department of the Interior; Minerals

Management Service; 381 Elden Street;

Mail Stop 4700; Herndon, Virginia

22070–4817; Attention: Chief,

Engineering and Standards Branch.

FOR FURTHER INFORMATION CONTACT:

Gerald D. Rhodes, Engineering and

Technology Division, telephone (703)

787–1609.

SUPPLEMENTARY INFORMATION: The MMS

regulations at 30 CFR Part 250, Subpart

G, Abandonment of Wells, Subpart I,

Platforms and Structures, and Subpart J,

Pipelines and Pipeline Rights-of-Way,

specify that OCS lessees, right-of-way

holders, and G&G exploration

permittees are liable for all end-of-lease

financial obligations including unpaid

royalties; costs of well plugging and

abandonment; removal of pipe,

equipment, platform(s), and facilities;

and clearance of obstructions to other

uses of the sea. The levels of bond

coverage required by the regulations do

not limit the obligations of OCS oil and

gas or sulphur lessees, holders of an

OCS pipeline right-of-way, or

exploration permittees conducting deep

stratigraphic tests.

The transfer of OCS leases from large

producing companies to smaller

producers, some of which are

marginally financed, has increased the

risk that the responsible party will not

be able to satisfy end-of-lease

obligations.

The MMS continues to investigate

ways to provide more flexibility to

lessees in meeting bonding

requirements. For example, MMS has

allowed third-party guarantees and

escrow accounts as alternatives to

traditional bonds. These methods would

be specifically addressed in regulations

to facilitate their use. The MMS

encourages lessees to suggest other

alternatives to traditional bonds. The

regulations provide flexibility to the

Regional Director to consider alternate

forms of surety.

Oil and Gas and Sulphur Lease Bond

Coverage Requirements: To reduce the

number of cases of underfunded

liabilities, MMS published revised rules

on August 27, 1993 (58 FR 45255),

increasing the bond coverage required

for OCS oil and gas or sulphur leases.

The MMS is phasing in the increases

in the minimum levels of bond coverage

as part of the process of reviewing

requests for approval of lease

assignments, Exploration Plans (EP),

Development and Production Plans
63012 Federal Register / Vol. 60, No. 236 / Friday, December 8, 1995 / Proposed Rules

(DPP), or Development Operations

Coordination Documents (DOCD). The

1993 regulation replaced the

requirement for a $50,000 bond for oil

and gas and sulphur leases with

requirements based upon the drilling or

production stage of a lease as follows:

State of developmentLease

bond

Areawide

bond

Issuance of lease .. $50,000 $300,000

EP approval .......... 200,000 1,000,000

DPP and DOCD

approval ............ 500,000 3,000,000

This proposed rule would require

lessees not already in compliance with

the higher bond levels to submit and

maintain the higher lease or areawide

bonds within 2 years of the

promulgation of a final rule.

Assignors, Assignees, and Co-Lessees

Liable for Compliance: When the

designated operator is unable to meet

end-of-lease obligations, MMS will

require any or all of the lessees to bring

the lease into compliance. If there is no

lessee able to perform, MMS will

require the prior lessee(s) to perform

these functions.

Relationship Between these

Regulations and The Liability

Regulations Published by MMS’s

Royalty Management Program: This

proposed rule clarifies MMS’s position

with respect to the liability of assignees,

assignors, and lessees (record title

owners) for the plugging and

abandonment of wells, removal of

platforms and other facilities, and

clearance of well and platform

locations. These obligations are joint

and several in nature. The obligations

are not divisible, and a degree of

residual liability is attached (i.e., an

assignor may be required to perform

lease and well abandonment and

clearance obligations when an assignee

refuses or is unable to carry out any or

all of these responsibilities).

The indivisible nature of these

obligations distinguishes them from the

royalty and other payment obligations

addressed in the regulations proposed

for modification by the notice of

proposed rulemaking (NPR) published

on June 9, 1995, by MMS’s Royalty

Management Program (RMP) (60 FR

30492). The provisions of that NPR

would establish liability for the

payment of royalty due on Federal and

Indian leases and establish

responsibility to pay and report royalty

and other payments.

The RMP’s NPR dated June 9, 1995,

proposes that royalty and other payment

obligations be treated as divisible

according to the division of the record

title interests in a lease and proposes

that a record title owner’s (lessee’s)

liability for the payment of royalty and

other payments be proportionate to

percentage of the record title interest

owned. That NPR also points out that

lease obligations such as leasehold and

well abandonment and reclamation are

not divisible.

Neither of these NPR’s address against

whom MMS will take enforcement

action if MMS discovers noncompliance

either in payments due or required

leases abandonment and reclamation

activities. In every instance, MMS

retains the discretion to determine

which person to pursue. Once the lease

has been brought into compliance, the

person MMS takes enforcement action

against could seek contributions from

other liable persons.

While these proposed rule should

make it easier to determine who the

liable parties are, it is not MMS’s

intention that these rules govern the

relationship or liabilities between and

among the affected parties other than

MMS.

Means for Financing Abandonment

and Clearance Obligations: Since no

revenues are being generated from a

lease at the time lease wells are to be

plugged and abandoned, platforms are

to be removed, and the seafloor cleared

of obstructions, MMS wants assurances

that OCS lessees establish some means

of funding their end-of-lease obligations.

Similarly, no revenues are generated

by pipeline operations at the time the

right-of-way holder is called upon to

remove all platforms, structures, domes

over valves, pipes, taps, and valves

along the right-of-way in compliance

with MMS regulations. The MMS wants

assurances that holders of OCS pipeline

right-of-way grants provide some means

of funding their right-of-way

abandonment obligations.

Supplemental bonds: The MMS’s

Regional Directors may require OCS

lessees, on a case-by-case basis. To

provide additional security in the form

of a supplemental bond or bonds or an

increase in the amount of coverage

under an existing bond. The additional

security is required when the Regional

director deems it necessary to ensure

that the lessee or its guarantor will be

able to comply with all end-of-lease

obligations. The Regional Director will

also consider the added liability created

when new leases are added to an

existing areawide bond.

The proposed rule would increase the

level of bond coverage for G&G

exploration permittees drilling a deep

stratigraphic test well and would

provide authority for MMS’s Regional

Directors to require right-of-way holders

and G&G exploration permittees, on a

case-by-case basis, to post additional

bonds or other security in the form of

a supplemental bond or bonds or an

increase in the amount of coverage

under an existing bond. These changes

recognize that the current bonding

requirements found in §§ 250.159(b) and

251.6–4 are inadequate and also

recognize the variation in costs

associated with the abandonment of

deep stratigraphic test wells and

pipelines constructed on OCS right-ofways.

Lease-Specific Abandonment

Accounts and Third-Party Guarantee:

Proposed § 256.56, Lease-specific

abandonment accounts, and § 256.57,

Third-party guarantee, would establish

specific regulatory authority under

which MMS’s Regional Director may

approve these alternate methods for

funding end-of-lease abandonment

obligations. Regional Directors already

accept lease-specific abandonment

accounts. A third-party guarantee or a

supplemental bond may cover specific

obligations, such as plugging and

abandonment of specified leases or

wells. However, the Regional Director’s

approval will depend on how well the

combination of all bonds and guarantees

is able to ensure that the lessee will

meet all obligations.

Section-by-Section Discussion

Part 250—Oil and Gas and Sulphur

Operations in the OCS

Section 250.110 General Requirements

Current rules at § 256.62(d) provide

that assignors remain ‘‘liable for all

obligations under the lease accruing

prior to the approval of the assignment.’’

The rule at § 250.110 of subpart G,

Abandonment of Wells, is being

amended to clarify existing

requirements that when a well is

drilled, a platform or other facility is

installed, or an obstruction is created,

the lessee’s obligation accrues to

properly plug and abandon the

wellbore, remove the platform or other

facility, and clear the ocean of

obstructions in accordance with

procedures specified in subpart G of 30

CFR part 250. When an assignment

occurs, the assignor continues to have

residual liability should the assignee fail

to fully perform obligations that accrued

before assignment with respect to wells

and structures in existence at the time

of the assignment.

The clarification also provides that

when there are several responsible

lessees, they are jointly and severally

liable for end-of-lease obligations.

Section 250.159, General

requirements for a pipeline right-of-way

grant, would be modified to add a
Federal Register / Vol. 60, No. 236 / Friday, December 8, 1995 / Proposed Rules 63013

provision under which the Regional

Director could require the holder of a

right-of-way to submit and maintain

additional security in the form of a

supplemental bond or bonds or by

increasing the amount of coverage

provided under an existing surety bond.

Part 251—G&G Explorations of the OCS

Section 251.6–4, Bonds, would be

modified to increase the bond coverage

required to $200,00 for drilling a deep

stratigraphic test well unless an

areawide bond is maintained. A

provision would be added under which

the Regional Director could require a

permittee under a G&G Exploration

permit to submit and maintain

additional security in the form of a

supplemental bond or bonds or by

increasing the amount of coverage

provided under an existing surety bond.

Compliance with the increased amount

of bond coverage would be required for

all permits granted after the effective

date of a final rule.

Part 256—Leasing of Sulphur or Oil

and Gas in the OCS

Subpart I—Bonding

Section 256.52 Requirement to File a

Bond

Proposed § 256.52, Requirement to

file a bond (current § 256.58, Acceptable

bonds/alternate security instruments),

expands upon the provisions of § 256.58

and establishes the bonding

requirements for lessees. This section

establishes the time at which a bond

must be provided and recognizes

alternate methods that a Regional

Director may approve for providing

additional security.

Proposed § 256.52(d) expands upon

the provisions of current § 256.58(d)

with regard to the results of a payment

of a claim in the face amount of the

surety.

Proposed § 256.52(f) expands upon

the provisions of current § 256.58(f)

with regard to the responsibility of the

lessee to monitor the value of U.S.

Department of the Treasury (U.S.

Treasury) instruments provided to MMS

and to submit additional U.S. Treasury

instruments if the value of the

instruments previously provided falls

below the level of bond required.

In § 256.52, new paragraph (i) requires

the lessee to give notice and to cease

operations if the lease ceases to be in

compliance with bonding requirements.

Paragraph (i) also authorizes the

Regional Director to allow continued

operations when ceasing operations

would pose a danger to the environment

or to the producing reservoir but with

all proceeds being paid into lease

abandonment accounts.

Section 256.53 Additional Bonds

Proposed § 256.53, Additional bonds

(existing § 256.61, Additional bonds),

expands the provisions of current

§ 256.61 to establish a deadline (2 years

after promulgation of a final rule) for

lessees of existing leases to provide the

required increased amounts of bond

coverage.

Proposed § 256.53(d) modifies the

generic criteria used by the Regional

Director to assess the ability of a lessee

to carry out its present and future

financial obligations and the need for

supplemental bond.

Proposed § 256.53(e) would expand

§ 256.61 to establish regulatory

provisions for determining the amount

of additional bond coverage to be

required.

Section 256.54 Bond Form

Section 256.59, Form of bond, would

be renumbered and renamed § 256.54,

Bond form. New § 256.54 establishes

certain required terms of surety bonds

including a requirement that the bond

be noncancellable.

Proposed § 256.54(d)(3) authorizes the

submission of U.S. Treasury securities

in lieu of surety bond, in accordance

with 31 U.S.C. 9303. It specifies that the

lessee using such Treasury securities

shall also submit authorization for the

Regional Director to sell such securities

upon the lessee’s default on its lease

obligations.

The MMS is concerned that, should

the lessee file for bankruptcy and MMS

merely have a security interest in the

Treasury securities, it will not be able to

obtain prompt access to funds to

provide for remediation of leaking wells

and or other critical environmental

problems. In that event, the Treasury

bills or notes will not give MMS the

same assurance of timely performance

of lease obligations that a surety bond

provides. Accordingly, MMS is

exploring with the Department of the

Treasury alternative procedures under

which the lessee would transfer title to

its book-entry Treasury bills to MMS or

a third-party escrow agent, so that the

bills would not be property of the

bankruptcy estate in the event of

insolvency. The MMS requests

comments on its alternative approach

which it may adopt in the final version

of this rule.

Section 256.55 General Terms and

Conditions of Bond

Proposed new § 256.55 would

establish general terms and conditions

of a bond and includes language which

specifies that bonds are to be payable to

the MMS Regional Director and

conditioned upon compliance with all

terms and conditions of the OCS oil and

gas or sulphur leases and governing

regulations. Lessees or sureties may

propose alternate forms of bond for the

Director’s approval but should submit

therewith an opinion of qualified

counsel that the proposed bond form

provides security equivalent to that of

the standard MMS bond forms.

Proposed § 256.55(d) adds a

requirement that the lessee give prompt

notice to the Regional Director of any

action alleging the insolvency or

bankruptcy of the surety or alleging any

matter which could result in suspension

or revocation of the surety’s charter or

license to do business.

Section 256.56 Lease-Specific

Abandonment Accounts

Proposed new § 256.56, Lease-specific

abandonment accounts, establishes

regulatory guidance for the

establishment of lease-specific

abandonment accounts in addition to

the Treasury pledge accounts currently

established to permit lessees to fund

end-of-lease abandonment and

clearance costs through scheduled

payments into a lease-specific escrow

account dedicated to lease abandonment

and cleanup.

Section 256.57 Third-Party Guarantee

The third-party guarantee provisions

of proposed § 256.57 would establish a

regulatory framework for identifying

some of the criteria that the Regional

Director would use to approve a thirdparty guarantee of a lessee’s compliance

with its lease obligations and for

establishing how MMS will obtain

needed information.

Section 256.58 Termination of the

Period of Liability and Cancellation of a

Bond

Proposed new § 256.58(a) provides for

termination of the period of liability

under a bond and allows the Regional

Director to permit a lessee to replace

existing bonds with other forms of

security that provide equivalent

protection. Replacement of a bond

pursuant to § 256.58(b) would

conditionally release the existing bond.

Section 256.59 Forfeiture of Bonds

and/or Other Securities

Proposed new § 256.59 specifies that

if a lessee refuses or is unable to comply
63014 Federal Register / Vol. 60, No. 236 / Friday, December 8, 1995 / Proposed Rules

with lease terms or if the lessee defaults

on the conditions under which a bond

and other security was accepted, the

Regional Director will take action to

forfeit all or part of a bond or other

security.

Section 256.62 Assignment of Leases

or Interests Therein

Under the proposed rulemaking,

§ 256.62 would be modified to clarify

and make explicit existing authority

that—

(1) The approval of a lease assignment

is subject to the lessee furnishing bond

coverage pursuant to the revised

bonding requirements.

(2) Having a lease assignment become

effective any date other than the first

day of the lease month following the

filing of documents is at the discretion

of the Regional Director.

(3) Approval of an assignment by the

Regional Director does not relieve the

assignor of accrued lease obligations if

the assignee subsequently fails to

perform.

(4) Approval of an assignment will

not be given until the assignee submits

an acceptable level of surety coverage.

(5) When the lessee is not the sole

lessee, the Regional Director will look

first to the designated operator to

perform lease obligations, but all lessees

are jointly and severally liable for their

performance.

(6) The assignee assumes a

responsibility to remedy all existing

environmental problems on the tract

and to properly abandon all wells and

reclaim the lease site.

Section 256.64 Requirements for Filing

Transfers

Under the proposed rulemaking,

§ 256.64 would be modified to clarify

that—

(1) Neither the transfer of operating

rights, nor the creation of a sublease(s),

releases the lessee from performance of

any obligation under any lease or under

any regulation.

(2) The lessee(s) are jointly and

severally liable with sublessees and

operating rights owners (to the extent of

their interests) for the performance of

each obligation under the lease and

under the governing regulations with

each party holding an interest at the

time the obligation was accruing.

The provisions of these proposed

rules have been designed to meet the

objectives to: (1) ensure lessee’s

financial capability to perform lease

obligations, (2) protect the environment

from threat of harm which might result

from a lessee’s failure to timely carry

out proper well abandonment and site

clearance operations on a lease, (3)

achieve a reasonable degree of

protection at a minimum increase in

costs to the lessee or lease operator, and

(4) select a method of attaining these

goals which impact equitably on all

parties who would be affected.

The MMS does not have authorized

funds available to use to correct a

noncompliance or default when the cost

of corrective action exceeds the funds

available under a forfeited bond and

other security.

Author: This document was prepared

by Gerald D. Rhodes, Engineering and

Technology Division, MMS.

Executive Order (E.O.) 12866

This proposed rule is not a significant

rule under E.O. 12866.

Regulatory Flexibility Act

The Department of the Interior (DOI)

has determined that this proposed rule

will not have a significant effect on a

substantial number of small entities

because, in general, the entities that

engage in offshore exploration,

development, and production activities

including pipeline transportation across

the OCS are not considered small due to

the technical expertise, financial

resources, and experience necessary to

safely conduct such activities in an

environmentally responsible manner.

Paperwork Reduction Act

This proposed rule does not contain

new information collection

requirements which require approval by

the Office of Management and Budget

(OMB). The information collection

requirements in 30 CFR part 256 are

approved by OMB under approval No.

1010–0006.

Takings Implication Assessment

The DOI certifies that this proposed

rule does not represent a governmental

action capable of interference with

constitutionally protected property

rights. Thus, a Takings Implication

Assessment need not be prepared

pursuant to E.O. 12630, Government

Action and Interference with

Constitutionally Protected Property

Rights.

E.O. 12778

The DOI has certified to OMB that

this proposed rule meets the applicable

civil justice reform standards provided

in Sections 2(a) and 2(b)(2) of E.O.

12778.

National Environmental Policy Act

The DOI determined that this action

does not constitute a major Federal

action significantly affecting the quality

of the human environment; therefore, an

Environment Impact Statement is not

required.

List of Subjects

30 CFR Part 250

Continental shelf, Environmental

impact statements, Environmental

protection, Government contracts,

Incorporation by reference,

Investigations, Mineral royalties, Oil

and gas development and production,

Oil and gas exploration, Oil and gas

reserves, Penalties, Pipelines, Public

lands—mineral resources, Public

lands—rights-of-way, Reporting and

recordkeeping requirements, Sulphur

development and production, Sulphur

exploration, Surety bonds.

30 CFR Part 251

Continental shelf, Freedom of

information, Oil and gas exploration,

Public lands—mineral resources,

Reporting and recordkeeping

requirements, Research.

30 CFR Part 256

Administrative practice and

procedure, Continental shelf,

Government contracts, Incorporation by

reference, Oil and gas exploration,

Public lands—mineral resources,

Reporting and recordkeeping

requirements, Surety bonds.

Dated: September 5, 1995.

Bob Armstrong,

Assistant Secretary, Land and Minerals

Management.

For the reasons set forth in the

preamble, MMS proposes to amend 30

CFR parts 250, 251, and 256 as follows:

PART 250—OIL AND GAS AND

SULPHUR OPERATIONS IN THE

OUTER CONTINENTAL SHELF

1. The authority citation for part 250

is revised to read as follows:

Authority: 43 U.S.C. 1334.

2. In § 250.110, the existing paragraph

is designated as paragraph (a) and a new

paragraph (b) is added to read as

follows:

§ 250.110 General requirements.

* * * * *

(b) The obligations to plug and

abandon wellbores, remove platforms or

other facilities, and to clear the ocean of

obstructions accrue when the well is

drilled, the platform or other facility is

installed, or the obstruction is created

and continue until the requirements of

subpart G are fully accomplished. These

obligations are the joint and several

responsibility of all lessees.

3. In § 250.159, paragraph (b)(1) is

revised to read as follows:
Federal Register / Vol. 60, No. 236 / Friday, December 8, 1995 / Proposed Rules 63015

§ 250.159 General requirements for a

pipeline right-of-way grant.

* * * * *

(b) (1) When applying for a right-ofway grant, the applicant or the right-ofway holder shall provide the surety

bonds described in this section in

addition to the bonds required of a

lessee in 30 CFR part 256.

(i) Each applicant or holder of a rightof-way shall furnish the Regional

Supervisor a $300,000 corporate surety

bond conditioned on compliance with

the terms of all right-of-way grants held

by the applicant in the Outer

Continental Shelf (OCS) area in which

the right-of-way is located.

(ii) If the Regional Director determines

that a surety bond in excess of $300,000

is necessary to cover the costs and

liabilities of compliance with the terms

of the right-of-way, he/she may require

the applicant or the holder of the rightof-way to submit additional security in

the form of a supplemental bond or an

increase in the amount of the existing

surety bond.

* * * * *

PART 251—GEOLOGICAL AND

GEOPHYSICAL (G&G) EXPLORATIONS

OF THE OUTER CONTINENTAL SHELF

4. The authority citation for part 251

is revised to read as follows:

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

5. Section 251.6–4 is revised to read

as follows:

§ 251.6–4 Bonds.

(a) Before the Minerals Management

Service (MMS) will issue a permit

authorizing the drilling of a deep

stratigraphic test well, the applicant

must either:

(1) Furnish MMS a bond of not less

than $200,000 conditioned on

compliance with the terms of the

permit; or

(2) Maintain with or furnish to MMS

a $1 million bond conditioned on

compliance with the terms of the permit

issued to him/her for the area of the

OCS where the applicant proposes to

drill a deep stratigraphic test.

(b) If the Regional Director determines

that security in excess of $1 million is

needed, he/she may require the

permittee to provide additional security

in the form of a supplemental bond or

bonds or an increase in the amount of

the existing surety bond.

(c) The Director of MMS may require

the submission of a bond before

authorizing shallow test drilling.

(d) Any bond furnished shall be on a

form approved or prescribed by the

Director, MMS.

PART 256—LEASING OF SULPHUR OR

OIL AND GAS IN THE OUTER

CONTINENTAL SHELF

6. The authority citation for part 256

is revised to read as follows:

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

7. Section 256.58 is redesignated as

§ 256.52.

8. Newly designated § 256.52 is

amended by revising the heading and

paragraphs (a), (c), (d), (f), and (g); and

by adding a new paragraph (i) to read

as follows:

§ 256.52 Requirement to file a bond.

(a) Before an oil and gas or sulphur

lease will be issued the successful

bidder must:

(1) Furnish the Regional Director a

$50,000 lease surety bond, conditioned

on compliance with all the terms and

conditions of the lease;

(2) Maintain or furnish a $300,000

areawide bond, issued by a qualified

surety and conditioned on compliance

with all the terms and conditions of oil

and gas and sulphur leases held by the

bidder in the OCS for the area in which

the lease to be issued is situated;

(3) Maintain or furnish an areawide

bond under § 256.53 (a)(2) or (b)(2) of

this part; or

(4) Furnish a substitute security

instrument in accordance with

paragraphs (f) and (g) of this section.

* * * * *

(c) The lessee shall maintain a

separate areawide surety bond as

required by paragraph (a) of this section

for each of the areas identified in

paragraph (b) of this section.

(1) If the Regional Director approves,

the lessee may substitute for its bond

either:

(i) An operator’s bond in the same

amount as the lease bond required

under paragraph (a); or

(ii) Alternate security instruments as

provided in paragraphs (f) and (g) of this

section.

(2) The lessee(s)’ substitution of an

operator’s bond or an alternate form of

security for its bond does not relieve the

lessee(s) of its (their) obligation to

comply with all the terms and

conditions of the lease.

(d) If a default causes the surety or

other guarantor to pay the United States

any indebtedness under a lease secured

by a bond or alternate form of security,

the face amount of the bond or alternate

form of security and the surety’s

liability will be reduced by the amount

of the payment.

* * * * *

(f) U.S. Department of the Treasury

(Treasury) securities (U.S. Bonds or

Notes) may be submitted in lieu of a

bond, provided the Treasury instrument

or legal tender submitted is negotiable at

the time of submission for an amount of

cash equal to the value of the required

bond. The entity submitting Treasury

instruments under this paragraph is

responsible for monitoring the value of

those instruments. If the value of those

instruments falls below the level of

bond required, the entity must submit

additional Treasury instruments or legal

tender to raise the value of the securities

held by MMS to the value of the

required bond.

(g) As provided in § 256.54, the

Regional Director may accept alternate

types of security instruments in lieu of

the surety bonds required by this

section if he/she determines that the

interests of the Government are

protected to the same extent that these

interests would be protected by the

required surety bond.

* * * * *

(i) Any time that a lease is not in

compliance with bonding requirements

of this subpart, the Regional Director

will notify the lessee in writing and

specify a reasonable period, not to

exceed 90 days, to post an adequate

bond.

(1) If an adequate bond or other

guarantee is not provided by the end of

the period allowed, the lessee shall

cease mineral production, unless the

Regional Director authorizes continued

production from the lease to avoid

premature lease abandonment or

damage to the environment or to the

producing reservoir(s).

(2) The lessee shall immediately begin

preparation for lease abandonment and

clearance and shall submit to the

Regional Director its plans for paying

outstanding royalty underpayments and

for meeting all regulatory and lease

requirements.

(3) Mineral production shall not

resume until the Regional Director

determines that an adequate bond has

been posted or other guarantee

provided.

(4) When the Regional Director

authorizes continued production under

this section, the net proceeds from that

production, less the royalties paid to the

United States, shall be paid into one or

more lease-specific abandonment

accounts approved by the Regional

Director.

9. Section 256.61 is redesignated as

§ 256.53; paragraphs (a)(1), (b)(1), and

(d) are revised; and paragraphs (a)

introductory text, (b) introductory text,

(e), (f), and (g) are added to read as

follows:
63016 Federal Register / Vol. 60, No. 236 / Friday, December 8, 1995 / Proposed Rules

§ 256.53 Additional bonds.

(a) Activities under an Exploration

Plan (EP).

(1) When submitting a proposed EP,

when submitting a proposed assignment

of a lease with an approved EP, or 2

years after publication of a final rule,

whichever is earliest, a lessee must

submit a $200,000 surety bond issued

by a qualified surety and conditioned on

compliance with all the terms and

conditions of the lease shall be

furnished to the Regional Director.

Approval of the EP or assignment shall

be conditioned upon receipt of a

$200,000 lease surety bond, unless the

Regional Director authorizes the

submission of the $200,000 lease

exploration bond after the submission of

the EP but before approval of drilling

activities under the EP. This bond

coverage may be provided by increasing

the bond coverage provided in

§ 256.52(a) of this part.

(2) * * *

(b) Operations under a Development

and Production Plan (DPP) or a

Development Operations Coordination

Document (DOCD).

(1) When submitting a proposed DPP

or DOCD, when submitting a proposed

assignment of a lease with an approved

DPP or DOCD, or 2 years after

publication of a final rule, whichever is

earliest, a lessee must submit a $500,000

surety issued by a qualified surety and

conditioned on compliance with all the

terms and conditions of the lease shall

be furnished to the Regional Director.

Approval of a DPP, a DOCD, or an

assignment of a lease with an approved

DPP or DOCD shall be conditioned on

receipt of a $500,000 lease surety bond,

unless the Regional Director authorizes

the submission of the $500,000 lease

development bond after the submission

of the DPP or DOCD, but prior to the

approval of platform installation or

drilling activities under the approved

DPP or DOCD. The lessee may provide

this additional bond by submission of a

new bond or by increasing the lease

bond coverage provided under

paragraph (a) of this section.

(2) * * *

* * * * *

(d) The Regional Director may require

additional security (i.e., security over

and above the amounts prescribed in

§§ 256.52(a) and 256.53 (a) and (b) of

this part) in the form of a supplemental

bond or bonds or increased amount of

coverage of an existing surety bond

when he/she determines that additional

security is necessary to cover royalty

due the Government, penalties and

interest assessed against the lessee, and/

or costs and liabilities of the lessee for

regulatory compliance. The Regional

Director shall base the decision on an

evaluation of the ability of the lessee to

carry out its present and future financial

obligations as demonstrated by factors

such as:

(1) Financial capacity substantially in

excess of existing and anticipated lease

and other obligations (e.g., costs of well

abandonment and platform removal,

amount of underpaid royalties, and

penalties and interest assessed by the

Government), as evidenced by audited

financial statements (including auditor’s

certificate, balance sheet, and profit and

loss sheet);

(2) Projected financial strength as

evidenced by existing OCS production

and proven reserves of future

production valued significantly in

excess of existing and future lease

obligations;

(3) Business stability as evidenced by

5 years of continuous operation and

production of oil and gas or sulphur in

the OCS or in the onshore oil and gas

industry;

(4) Reliability in meeting obligations

as evidenced by:

(i) Credit rating; or

(ii) Trade references including names

and addresses of other lessees, drilling

contractors, and suppliers with whom

lessee has dealt; and

(5) Record of compliance with laws,

regulations, and lease terms.

(e) The amount of the bond shall be

sufficient to ensure the compliance with

all lease terms and conditions,

including any outstanding

underpayment of royalty and

cumulative end-of-lease obligations to

abandon wells, remove platforms and

facilities, and clear the seafloor in the

event of default. The Regional Director

will determine the amount of

supplemental bond required based on

an analysis conducted by MMS. The

lessee may submit data for

consideration by MMS.

(f) The Regional Director may adjust

the amount of supplemental bond or

deposit required and the terms for the

acceptance of the lessee’s bond if the

liability for outstanding underpaid

royalties and end-of-lease abandonment

and clearance either increases or

decreases. The Regional Director shall:

(1) Notify the lessee and the surety of

any proposed adjustment to the amount

of bond required; and

(2) Give the lessee an opportunity to

submit written or oral comment on the

adjustment.

(g) A lessee may request a reduction

of the amount of supplemental bond

required by submitting to the Regional

Director evidence demonstrating that

the projected royalties and costs of endof-lease abandonment and clearance of

the seafloor are less than the specified

bond coverage.

10. Section 256.59 is redesignated as

§ 256.54 and revised to read as follows:

§ 256.54 Bond form.

(a) All bonds must be on a form or in

a form approved by the Director. Bonds

submitted after November 26, 1993,

must be issued by a qualified surety

certified by the U.S. Treasury as an

acceptable surety on Federal bonds and

listed in the current U.S. Treasury

Circular No. 570 which is available from

the Surety Bond Branch, Financial

Management Service, Department of the

Treasury, 401 14th Street SW.,

Washington, D.C. 20227.

(b) A surety bond must be executed by

the lessee and a qualified surety.

(c) Surety bonds must be

noncancellable.

(d) Lease bonds must be:

(1) A surety bond;

(2) A lease-specific abandonment

account in accordance with § 256.56;

(3) United States Treasury securities

negotiable for an amount equal to the

amount of bond required, accompanied

by a conveyance of full authority to the

Secretary to sell the securities in case of

default;

(4) A combination of these security

methods; or

(5) Another form of security approved

by the Regional Director.

11. Sections 256.55, 256.56, 256.57,

256.58, and 256.59 are added to read as

follows:

§ 256.55 General terms and conditions of

bond.

(a) The Regional Director shall

determine the amount of the lease bond

as provided in §§ 256.52 and 256.53 of

this part.

(b) A lease bond must be payable to

MMS.

(c) A lease bond shall be conditioned

upon compliance with all the terms and

conditions of the lease and governing

regulations.

(d) Lessees must notify the Regional

Director of any action filed alleging the

insolvency or bankruptcy of the lessee,

a surety company, or a third-party

guarantor. The lessee shall notify the

Regional Director within 72 hours of

any such action filed or within 72 hours

of learning of an action that involves a

company other than the lessee. Lease

bonds must require the surety to

provide this information to the lessee

and directly to MMS.

(e) Upon the incapacity of a surety

company by reason of bankruptcy,

insolvency, or suspension or revocation

of its charter or license, the lessee is

deemed to be without bond coverage
Federal Register / Vol. 60, No. 236 / Friday, December 8, 1995 / Proposed Rules 63017

and must promptly notify the Regional

Director.

§ 256.56 Lease-specific abandonment

accounts.

(a) The Regional Director may

authorize the lessee or guarantor to

supplement its bond(s) by establishing a

lease(s)-specific abandonment account

in one or more federally insured

accounts made payable upon demand to

the Regional Director. The total security,

including the lease-specific

abandonment account(s), shall not be

less than the amount required to meet

outstanding underpayments of royalty

and lessee’s end-of-lease abandonment

and clearance obligations.

(b) Any interest paid on an

abandonment account shall be retained

in the account unless the Regional

Director approves the payment of the

interest to the lessee or guarantor.

(c) When authorized by the Regional

Director, U.S. Treasury obligations may

be substituted for payments into an

abandonment account.

(d) An individual abandonment

account shall not contain more than

$100,000 or the maximum insurable

amount as determined by the Federal

Deposit Insurance Corporation or the

Federal Savings and Loan Insurance

Corporation.

(e) The Regional Director may require

the lessee to make an overriding royalty

or production payment into an escrow

account. The required overriding royalty

or payment out of production may be

associated with production from a

lease(s) other than the lease(s) bonded

through the escrow account.

§ 256.57 Third-party guarantee.

(a) The Regional Director may accept

a third party’s written guarantee as

surety for a lessee’s lease obligations,

following a review of:

(1) The period of time that the

guarantor has been in continuous

operation as a business entity;

(i) Continuous operation is the time

that business was conducted

immediately preceding the posting of a

guarantee.

(ii) Continuous operation excludes

periods of interruption in operations

that were beyond the guarantor’s control

and that do not affect the guarantor’s

likelihood of remaining in business

during lease exploration, development,

production, abandonment, and

clearance operations.

(2) Financial information available in

the public record or submitted by the

guarantor, on its own initiative, in

sufficient detail to show to the Regional

Director’s satisfaction that the guarantor

is qualified based on:

(i) The guarantor’s current rating for

its most recent bond issuance by either

Moody’s Investor Service or Standard

and Poor’s Corporation;

(ii) The guarantor’s net worth taking

into account liabilities under this and

other guarantees.

(iii) The guarantor’s ratio of current

assets to current liabilities taking into

account liabilities under this and other

guarantees; and

(iv) The guarantor’s unencumbered

fixed assets in the United States.

(3) When the information required by

paragraph (2) is not publicly available,

the guarantor may submit the

information voluntarily. If this is done,

the guarantor must update the

information annually within 90 days of

the end of the fiscal year or as otherwise

approved by the Regional Director. The

information should include:

(i) Financial statements for the most

recently completed fiscal year

accompanied by a report prepared by an

independent certified public accountant

in conformance with generally accepted

accounting principles and containing

the accountant’s audit opinion or review

opinion of the financial statements, with

no adverse opinion;

(ii) Financial statements, certified to

be correct by the guarantor’s financial

officer, for completed quarters in the

current fiscal year; and

(iii) Additional information, certified

to be correct by the guarantor’s financial

officer, as requested by the Regional

Director.

(b) The terms of a third-party

guarantee shall provide for the

following:

(1) If the lessee fails to comply with

any governing lease term, the guarantor

shall take corrective actions or be liable

under the indemnity agreement to

provide funds to the Regional Director

sufficient to complete the required

corrective action.

(2) If the guarantor wishes to

terminate the period of liability under a

third-party guarantee it must:

(i) Notify the Regional Director and

the lessee at least 90 days before the

proposed termination date; and

(ii) Obtain the Regional Director’s

approval for the termination of the

period of liability for all or a specified

portion of its guarantee.

(3) The lessee must obtain a suitable

replacement security instrument before

the proposed termination date or if no

activities have taken place on the

lease(s) for which the guarantee was

approved, before any activities take

place.

(c) The total amount of all outstanding

and proposed guarantees by the

guarantor must not exceed 25 percent of

that guarantor’s unencumbered net

worth in the United States.

(d) If the Regional Director approves

a third-party guarantee, the guarantor

must submit an indemnity agreement.

(1) The indemnity agreement shall be

executed by all persons and parties who

are to be bound by it, including the

guarantor, and shall bind each jointly

and severally.

(2) Two corporate officers who are

authorized to bind their corporation

must sign the indemnity agreement.

(3) The guarantor must provide the

Regional Director copies of:

(i) The authorization of the signatory

officials to bind the corporation;

(ii) An affidavit certifying that the

agreement is valid under all applicable

laws; and

(iii) The corporate authorization,

demonstrating that the corporation can

guarantee the obligation and execute the

indemnity agreement.

(4) if the third-party guarantor is a

partnership, joint venture, or syndicate,

the agreement shall:

(i) Bind each partner or party who has

a beneficial interest, directly or

indirectly, in the guarantor; and

(ii) Provide that, if the third-party

guarantee is forfeited, each partner or

party shall be jointly and severally

liable for compliance with all terms and

conditions of the lease(s).

(5) Pursuant to § 256.59 of this

chapter, the guarantor shall bring the

lease into compliance or pay the

Regional Director the amount necessary

to bring the lease into compliance. The

indemnity agreement, upon default by

the lessee or operator, shall operate as

a judgment against those parties liable

under the indemnity agreement.

(e) If during the life a third-party

guarantee the guarantor no longer meets

the criteria of paragraphs (a)(3) and (c)

of this section, the lessee must:

(i) Notify the Regional Director

immediately; and

(ii) Bring the lease into compliance

with the requirements of this subpart

within 90 days.

§ 256.58 Termination of the period of

liability and cancellation of a bond.

(a) The Regional Director shall

terminate the period of liability under a

bond upon the request of the surety and

demand a replacement bond of

equivalent amount from the lessee. The

termination of the period of liability

under a bond does not constitute release

of the bond. The surety continues to be

responsible for all obligations and

liabilities accruing before the effective

date of the termination of the period of

liability.

(b) The Regional Director will cancel

or release a bond as to obligations that
63018 Federal Register / Vol. 60, No. 236 / Friday, December 8, 1995 / Proposed Rules

accrued before the cancellation only

upon:

(1) Being furnished a replacement

bond in which the surety agrees to

assume all outstanding liabilities under

the bond to be cancelled, in an amount

equal to or greater than the amount of

the bond to be cancelled; or

(2) The determination that all

outstanding obligations have been

fulfilled. Such cancellation shall be by

a written instrument that subjects the

bond to automatic reinstatement, as if

no cancellation had occurred, if at any

time within 6 years of such cancellation:

(i) Any payment made by the

principal(s) is rescinded or must be

restored due to insolvency, bankruptcy,

reorganization, or receivership; or

(ii) The principal’s representation to

MMS that it has paid its financial

obligations or performed the other

obligations of the lease in accordance

with MMS specifications is materially

false at the time of cancellation.

(c) Failure of the lessee to replace a

deficient bond could result in penalties

under subpart N of part 250 of this Title

or suspension of production or other

operations in accordance with § 250.10.

§ 256.59 Forfeiture of bonds and/or other

securities.

(a) If a lessee refuses or is unable to

comply with lease terms or defaults on

the conditions under which a bond,

third-party guarantee, and/or other form

of security was accepted, the Regional

Director shall:

(1) Notify in writing the lessee, thirdparty guarantor, and any surety on the

bond or other form of guarantee of the

determination to call or forfeit all or part

of the bond or guarantee, the reasons for

the forfeiture, and the amount to be

forfeited. The amount shall be based on

the estimated total cost of correcting the

lessee’s noncompliance or default.

(2) Advise the lessee, third-party

guarantor, and any surety that they can

avoid forfeiture by:

(i) Agreeing to correct the

noncompliance or default and

demonstrating that they have the ability

to do so; or

(ii) Agreeing that the surety will

complete actions required for

compliance in accordance with a

schedule that meets the conditions of

the lease and governing regulations if

the surety can demonstrate the ability to

carry out the action required.

(b) If there is a default, the Regional

Director may cause the forfeiture of any

and all bonds or other security

deposited on condition of compliance

with all the terms and conditions of the

lease or leases.

(c) If forfeiture of the bond or security

is required by this section, the Regional

Director shall:

(1) Collect the forfeited amount, and

(2) Use funds collected from bond or

security forfeiture to correct the

noncompliance or default.

(d) If the amount forfeited is

insufficient to pay for the full cost of

corrective actions:

(1) the lessee(s) and any third-party

guarantor(s) are jointly and severally

liable for the remaining costs of

obtaining full compliance with the

terms and conditions of the lease, and

(2) The Regional Director may take or

authorize required corrective action to

obtain full compliance and may recover

from the lessee(s) and any third-party

guarantor(s) all costs in excess of the

amount forfeited.

(3) If the amount of bond or security

forfeited exceeds the total costs of the

corrective actions required to obtain

compliance, the Regional Director shall

return the excess amount to the party

from whom it was collected.

12. In § 256.62, paragraphs (a), (d),

and (e) are revised, and paragraph (f) is

added to read as follows:

§ 256.62 Assignment of leases or interests

therein.

(a) Subject to the approval of the

Regional Director and the furnishing of

bond coverage pursuant to the

requirements of subpart I of this part,

leases, or any undivided interests

therein, may be assigned in whole, or as

to any officially designated subdivision,

to anyone qualified under § 256.35(b) of

this part to hold a lease.

* * * * *

(d) The assignor is liable for all

obligations under the lease accruing

before the approval of the lease

assignment. Approval of the assignment

by the Regional Director does not relieve

the assignor of accrued lease obligations

which the assignee subsequently fails to

perform.

(e) After the Regional Director

approves a lease assignment, the

assignee is liable for all obligations

under the lease and must comply with

all regulations issued under the Act.

The assignee must remedy all existing

environmental problems on the tract,

properly abandon all wells, and reclaim

the lease site in accordance with part

250, subpart G. Before MMS approves

an assignment, the assignee must submit

acceptable bond coverage as required by

§§ 256.52 and 256.53 of this part.

(f) Where there is more than one

lessee, the lessees are jointly and

severally responsible for performing the

obligations of the lease, unless provided

otherwise in these regulations. The

Regional Director will look to the

designated operator to perform lessee

obligations under any lease and under

any regulations in this chapter. Should

the operator fail or be unable to perform

any obligation of the lessee(s), the

Regional Director will require any or all

the lessee(s) to bring the lease into

compliance. If there is no lessee able to

perform, the Regional Director will

require prior lessees to bring the lease

into compliance to the extent that the

obligation accrued before assignment.

13. In § 256.64, paragraphs (a)(1), (c),

and (g) are revised to read as follows:

§ 256.64 Requirements for filing transfers.

(a) All instruments of transfer of a

lease or of an interest therein as to any

officially designated subdivision,

including operating rights, subleases

and record title interests, shall be

submitted in duplicate to the Regional

Director for approval within 90 days

from the date of final execution.

Instruments of transfer shall include a

statement over the transferee’s own

signature with respect to citizenship

and qualifications similar to that

required of a lessee and shall contain all

of the terms and conditions agreed upon

by the parties thereto.

(1) Neither the transfer of operating

rights or creation of a sublease(s)

releases the lessee from any obligation

under the lease or regulations.

(2) The assignment of record title

interests does not release the lessee from

any accrued obligation under any lease

or regulations.

(3) Carried working interests,

overriding royalty interests, or payments

out of production may be created or

transferred without filing an approval.

* * * * *

(c) Where an assignment is of all the

lease title interest in a lease or creates

a segregated lease, the assignee must

furnish a bond in the amount prescribed

in §§ 256.52 and 256.53 of this part.

Where an assignment is of less than all

the lease title and the assignment does

not create separate leases, the assignee,

if the assignment provides and the

surety consents, may become a joint

principal on the bond with the assignor.

* * * * *

(g) Each obligation under any lease

and under the regulations in this part

binds the heirs, executors,

administrators, successors, and

assignees of the lessee. Except as

otherwise provided in the regulations in

this chapter, the lessee(s) (and to the

extent of their interests, sublessees and

operating rights owners) are jointly and

severally liable for the performance of

each obligation under the lease and
Federal Register / Vol. 60, No. 236 / Friday, December 8, 1995 / Proposed Rules 63019

1The 1990 Amendments to the Clean Air Act

made significant changes to the Act. See Pub. L.

101–549, 104 Stat. 2399. References herein are to

the Clean Air Act, as amended (‘‘the Act’’). The

Clean Air Act is codified, as amended, in the U.S.

Code at 42 U.S.C. sections 7401, et seq.

2Subpart 1 contains provisions applicable to

nonattainment areas generally and subpart 4

contains provisions specifically applicable to PM–

10 nonattainment areas. At times, subpart 1 and

subpart 4 overlap or conflict. EPA has attempted to

clarify the relationship among these provisions in

the ‘‘General Preamble’’ and, as appropriate, in

today’s notice and supporting information.

under the governing regulations with

each prior lessee and operating rights

owner holding an interest when the

obligation was accruing.

* * * * *

[FR Doc. 95–29864 Filed 12–07–95; 8:45 am]

BILLING CODE 4310–MR–M

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Part 52

[WA7–1–5542; FRL–5343–2]

Approval and Promulgation of State

Implementation Plans: Washington

AGENCY: Environmental Protection

Agency.

ACTION: Notice of proposed rulemaking.

SUMMARY: In this action, Environmental

Protection Agency (EPA) invites public

comment on its proposed granting of a

temporary waiver of the attainment date

for the Wallula, Washington particulate

nonattainment area. This is based on

EPA’s review of the State

implementation plan (SIP) revision

submitted by the State of Washington

for the purpose of bringing about

attainment of the national ambient air

quality standards (NAAQS) for

particulate matter with an aerodynamic

diameter less than or equal to a nominal

10 micrometers (PM–10). The

implementation plan was submitted by

the State to satisfy certain federal Clean

Air Act requirements for an approvable

moderate nonattainment area PM–10

SIP for a geographic area referred to as

Wallula, Washington due on November

15, 1991.

DATES: Comments on this proposed

action must be postmarked by January 8,

1996.

ADDRESSES: Written comments should

be addressed to: Montel Livingston, SIP

Manager, United States Environmental

Protection Agency, Air Programs Branch

(AT–082), 1200 Sixth Avenue, Seattle,

Washington 98101.

Copies of the State’s submittals and

other information supporting this

proposed action are available for

inspection during normal business

hours at the following locations: United

States Environmental Protection

Agency, Office of Air, 1200 Sixth

Avenue (AT–082), Seattle, Washington

98101, and the State of Washington

Department of Ecology, 4450 Third Ave.

SE, Lacey, Washington 98504.

FOR FURTHER INFORMATION CONTACT:

George Lauderdale, Office of Air (AT–

082), US Environmental Protection

Agency, 1200 Sixth Avenue, Seattle,

Washington 98101, (206) 553–6511.

SUPPLEMENTARY INFORMATION:

I. Background

The Wallula, Washington, area was

designated nonattainment for PM–10

and classified as moderate under

sections 107(d)(4)(B) and 188(a) of the

Clean Air Act, by operation of law upon

enactment of the Clean Air Act

Amendments of 1990.1 See 56 FR 56694

(Nov. 6, 1991) (official designation

codified at 40 CFR 81.348). The air

quality planning requirements for

moderate PM–10 nonattainment areas

are set out in subparts 1 and 4 of Part

D, Title I of the Act.2 The EPA has

issued a ‘‘General Preamble’’ describing

EPA’s preliminary views on how EPA

intends to review SIP’s and SIP

revisions submitted under Title I of the

Act, including those State submittals

containing moderate PM–10

nonattainment area SIP requirements

[see generally 57 FR 13498 (April 16,

1992) and 57 FR 18070 (April 28,

1992)]. Because EPA is describing its

interpretations here only in broad terms,

the reader should refer to the General

Preamble for a more detailed discussion

of the interpretations of Title I advanced

in this proposal and the supporting

rationale. In this rulemaking action on

the Washington moderate PM–10 SIP for

the Wallula nonattainment area, EPA is

proposing to apply its interpretations,

taking into consideration the specific

factual issues presented. Additional

information supporting EPA’s action on

this particular area is available for

inspection at the address indicated

above. EPA will consider any timely

submitted comments before taking final

action on today’s proposal.

Those States containing initial

moderate PM–10 nonattainment areas

(those areas designated nonattainment

under section 107(d)(4)(B)) were

required to submit, among other things,

the following provisions by November

15, 1991:

1. Provisions to assure that reasonably

available control measures (RACM)

(including such reductions in emissions

from existing sources in the area as may

be obtained through the adoption, at a

minimum, of reasonably available

control technology—RACT) shall be

implemented no later than December

10, 1993;

2. Either a demonstration (including

air quality modeling) that the plan will

provide for attainment as expeditiously

as practicable but no later than

December 31, 1994, or a demonstration

that attainment by that date is

impracticable;

3. Quantitative milestones which are

to be achieved every 3 years and which

demonstrate reasonable further progress

(RFP) toward attainment by December

31, 1994; and

4. Provisions to assure that the control

requirements applicable to major

stationary sources of PM–10 also apply

to major stationary sources of PM–10

precursors except where the

Administrator determines that such

sources do not contribute significantly

to PM–10 levels which exceed the

NAAQS in the area. See sections 172(c),

188, and 189 of the Act.

Some provisions were due at a date

later than November 15, 1991. States

with initial moderate PM–10

nonattainment areas were required to

submit a permit program for the

construction and operation of new and

modified major stationary sources of

PM–10 by June 30, 1992 (see section

189(a)). Such States also were to submit

contingency measures by November 15,

1993 which become effective without

further action by the State or EPA, upon

a determination by EPA that the area

has failed to achieve RFP or to attain the

PM–10 NAAQS by the applicable

statutory deadline (see section 172(c)(9)

and 57 FR 13543–44).

II. Today’s Action

Section 110(k) of the Act sets out

provisions governing EPA’s review of

SIP submittals (see 57 FR 13565–66).

For PM–10 nonattainment areas Section

188(f), Waivers for Certain Areas, can

apply as well.

In this action, EPA is proposing to

grant a temporary waiver of the

attainment date for the Wallula

nonattainment area. Discussion of EPA’s

requirements for a temporary waiver are

detailed in 59 FR 41998–42017 (August

16, 1994). In this guidance EPA

provides certain flexibility for areas

where the significance of anthropogenic

and nonanthropogenic sources is

unknown. The Washington Department

of Ecology (Ecology) has presented

preliminary data, based on a crude

emission inventory of eastern

Washington, indicating that

nonanthropogenic sources may be

significant in the Wallula situation. EPA