[Federal Register Volume 61, Number 81 (Thursday, April 25, 1996)]
[Proposed Rules]
[Pages 18309-18310]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-10059]



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DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR Part 250

RIN 1010-AC07


Flexibility in Keeping Leases in Force Beyond Their Primary Term

AGENCY: Minerals Management Service (MMS), Interior.

ACTION: Proposed rule.

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SUMMARY: MMS proposes to amend regulations that specify how Outer 
Continental Shelf (OCS) lessees can continue their leases beyond their 
primary term. Changes in industry exploration practices have increased 
the time necessary to collect and analyze data associated with drilling 
operations. The proposed changes would increase from 90 to 180 days the 
time allowed between operations for a lease continued beyond its 
primary term.

DATES: MMS will consider all comments we receive by June 24, 1996. We 
will begin reviewing comments at that time and may not fully consider 
comments we receive after June 24, 1996.

ADDRESSES: Mail or hand-carry comments to the Department of the 
Interior; Minerals Management Service; Mail Stop 4700; 381 Elden 
Street; Herndon, Virginia 22070-4817; Attention: Chief, Engineering and 
Standards Branch.

FOR FURTHER INFORMATION CONTACT:
Lawrence H. Ake or John Mirabella, Engineering and Standards Branch, 
telephone (703) 787-1600.
    Author: The principal author of this rule is Lawrence H. Ake, 
Engineering and Standards Branch, MMS, Herndon, Virginia.

SUPPLEMENTARY INFORMATION:

I. Background

    On March 1, 1994, the Department of the Interior (DOI) published a 
notice in the Federal Register (59 FR 9718-9719), requesting comments 
and suggestions on DOI agency regulations. In its notice, DOI announced 
its intention to periodically review its regulations and asked the 
public to participate in the review. Over 40 responses were received 
concerning MMS regulations from the public, industry, and Government.
    Several comments suggested that MMS make changes to Subpart A of 30 
CFR Part 250. These comments suggested allowing 180 days between 
drilling, well-reworking, or other operations in order to keep a lease 
in effect beyond its primary term.
    MMS held a public meeting in New Orleans on June 12, 1995, to 
discuss this and other issues. Based on the comments heard at that 
meeting, as well as those previously received, this notice of proposed 
rulemaking has been prepared for public comment.

II. Discussion of the Proposed Rule

    Under current statute (43 U.S.C. 1337(b)(2)) and MMS regulations 
(30 CFR 250.13 and 256.37(b)), if no production, drilling, or well-
reworking activities occur on the lease during the last 90 days prior 
to lease expiration and no suspension of operations or production is in 
effect on the lease, the lease expires by operation of law and lease 
terms.
    Current Sec. 250.13 gives lessees several methods to keep leases in 
effect beyond their primary term. The most common method is through 
production of resources and payment of a royalty. Continuous drilling 
or well-reworking activities without a break of more than 90 days will 
also keep a lease in effect beyond its primary term. Other methods for 
extending a lease include receiving a suspension of production (30 CFR 
250.10); a suspension of operations (30 CFR 250.10); or participation 
in a unit which has another lease that is being held beyond its primary 
term by one of these operations (30 CFR 250.190 (e) and (f)).
    Commentors told MMS that although many OCS operations can be ended 
and recommenced within the present 90-day time allowance, many require 
considerably more time. The search for oil and gas resources in the OCS 
has reached a mature phase. Most of the easily found resources have 
been produced. Industry is now focusing its efforts in deeper waters, 
subsalt projects, and other areas of extremely complex geology. The 
proposed changes will allow more time for efficient and expedient 
production, drilling, and well-reworking operations.
    With this rulemaking MMS proposes to increase from 90 to 180 days 
the time allowed between production, drilling, or well-reworking 
operations for leases continued beyond their primary term. For example, 
under the current rule if a lessee ceases production, drilling or well-
reworking operations on a lease 60 days before the lease expiration 
date, he must resume operations within 90 days (i.e., within 30 days 
after the original lease expiration date). Under this proposed rule, 
the lessee would have 180 days (i.e., 120 days after the original lease 
expiration date) within which to resume operations.
    Leases that have been continued past their primary term, will 
remain in force as long as the break in operations is no longer than 
180 days. This contrasts with 90 days provided by the current rule.
    The proposed changes will allow MMS regulations to more accurately 
reflect the realities of exploration and production of minerals on the 
OCS. The proposed changes will also allow the Regional Supervisor to 
give more flexibility to lessees who are diligently exploring their 
leases.

Executive Order (E.O.) 12866

    This is a significant rule under E.O. 12866 and has been reviewed 
by the Office of Management and Budget.

Regulatory Flexibility Act

    The DOI determined that this proposed rule will not have a 
significant effect on a substantial number of small entities. Most 
entities that engage in offshore activities as operators are not small 
because of the technical and financial resources and experience needed 
to conduct offshore activities. Small entities are more likely to 
operate onshore or in State Waters--areas not covered by the proposed 
regulation. When small entities work in the OCS, they are more likely 
to be contractors rather than operators. For example, a company that 
collects geologic and geophysical data might be a small entity. While 
these contractors must follow the rules governing OCS operations, we 
are not changing the rules that govern the actual operations on a 
lease. We are only proposing to modify the rules governing the extent 
of a lease beyond the primary term. The rule could have a secondary 
affect. By extending the time available to the lessee, more leases may 
be active and this could result in an increase in

[[Page 18310]]

opportunities for small entities to collect data or perform other 
services. The added time could also work to benefit smaller companies 
who may have slower computers and could benefit from a longer time 
period for review of data.

Paperwork Reduction Act

    This proposed rule does not contain any information collection 
requirements.

Takings Implication Assessment

    The DOI determined that this proposed rule does not represent a 
governmental action capable of interference with constitutionally 
protected property rights. Thus, DOI does not need to prepare a Takings 
Implication Assessment pursuant to E.O. 12630, Government Action and 
interference with constitutionally Protected Property Rights.

Unfunded Mandate Reform Act of 1995

    This rule does not contain any unfunded mandates to State, local, 
or tribal governments or the private sector.

E.O. 12778

    The DOI 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 Environmental Impact Statement is not 
required.

List of Subjects in 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.

    Dated: April 3, 1996.
Bob Armstrong,
Assistant Secretary, Land and Minerals Management.

    For the reasons set forth in the preamble, Minerals Management 
Service (MMS) proposes to amend 30 CFR Part 250 as follows:

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

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

    Authority: 43 U.S.C. 1334.

    2. Section 250.13 is revised to read as follows:


Sec. 250.13  How Does Production, Drilling, or Well-reworking Affect 
Your Lease Term?

    Continuous production or drilling or well-reworking operations on 
the lease will allow you to keep a lease past its primary term. The 
drilling or well-reworking programs must be part of a plan that has as 
its objective continuous production on the lease. Throughout the 
remainder of this section (250.13), the term ``operations'' will refer 
to continuous production, drilling, or well-reworking.
    (a) How can I keep my lease in effect if I stop conducting 
continuous operations during the last 180 days of the primary lease 
term? If you stop conducting operations during the last 180 days of the 
primary lease term, you must:
    (1) Resume operations on the lease no later than 180 days after the 
operations ended; or
    (2) Ask us for a suspension of operations or production under 30 
CFR 250.10, before the 180th day after you stop operations. The 
Regional Supervisor must approve this request; or
    (3) Receive a directed suspension of operations or production from 
the Regional Supervisor under 30 CFR 250.10 before the 180th day after 
you stop operations.
    (b) How can I keep my lease in effect if I stop conducting 
operations on a lease that has been continued beyond its primary term? 
If you stop conducting operations on the lease, you must comply with 
either paragraph (a) (1), (2), or (3) of this section.
    (c) Can I have more than 180 days to resume operations? You may ask 
the Regional Supervisor in writing to allow you more time to resume 
operations on a lease continued beyond its primary term, when warranted 
by operating conditions. In allowing additional time, the Regional 
Supervisor must determine that the longer period is in the national 
interest and that it conserves resources, prevents waste, or protects 
correlative rights.

[FR Doc. 96-10059 Filed 4-24-96; 8:45 am]
BILLING CODE 4310-MR-M