[Federal Register Volume 74, Number 100 (Wednesday, May 27, 2009)]
[Proposed Rules]
[Pages 25177-25200]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-12155]


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DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR Parts 250, 256, and 260

RIN 1010-AD06
[Docket ID MMS-2007-OMM-0069]


Leasing of Sulphur or Oil and Gas and Bonding Requirements in the 
Outer Continental Shelf

AGENCY: Minerals Management Service (MMS), Interior.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The MMS proposes to update and streamline the existing Outer 
Continental Shelf leasing regulations, and to clarify implementation of 
the Federal Oil and Gas Royalty Simplification and Fairness Act of 
1996. The rule would reorganize and reorder leasing requirements to 
reflect the leasing process more efficiently, as it has evolved over 
the last 26 years. The rule also proposes changes to parts 250 and 260 
that relate to the proposed revisions to part 256.

DATES: Submit comments by September 24, 2009. The MMS may not fully 
consider comments received after this date. Submit comments to the 
Office of Management and Budget on the information collection burden in 
this proposed rule by June 26, 2009. This does not affect the deadline 
for the public to comment to MMS on the proposed regulations.

ADDRESSES: You may submit comments on the rulemaking by any of the 
following methods. Please use the Regulation Identifier Number (RIN) 
1010-AD06 as an identifier in your message. See also Public 
Availability of Comments under Procedural Matters.
    <bullet> Federal eRulemaking Portal: http://www.regulations.gov. 
Under the tab ``More Search Options,'' click ``Advanced Docket 
Search,'' then select ``Minerals Management Service'' from the agency 
drop-down menu, then click the submit button. In the Docket ID column, 
select MMS-2007-OMM-0069 to submit public comments and to view 
supporting and related materials available for this rulemaking. 
Information on using Regulations.gov, including instructions for 
accessing documents, submitting comments, and viewing the docket after 
the close of the comment period, is available through the site's ``User 
Tips'' link. The MMS will post all comments.
    <bullet> Mail or hand-carry comments to the Department of the 
Interior; Minerals Management Service; Attention: Regulations and 
Standards Branch (RSB); 381 Elden Street, MS-4024, Herndon, Virginia 
20170-4817. Please reference ``Leasing of Sulphur or Oil and Gas and 
Bonding Requirements in the Outer Continental Shelf, 1010-AD06'' in 
your comments and include your name and return address.
    <bullet> Send comments on the information collection in this 
proposed rule to: Interior Desk Officer 1010-AD06, Office of Management 
and Budget; 202-395-5806 (fax); e-mail: <a href="/cdn-cgi/l/email-protection#97f8fee5f6c8f3f8f4fcf2e3d7f8faf5b9f2f8e7b9f0f8e1"><span class="__cf_email__" data-cfemail="4c23253e2d1328232f2729380c23212e6229233c622b233a">[email protected]</span></a>. 
Please also send a copy to MMS.

FOR FURTHER INFORMATION CONTACT: For comments or questions on 
procedural issues, contact Kumkum Ray, Regulations and Standards 
Branch, at <a href="/cdn-cgi/l/email-protection#107b657d7b657d3e627169507d7d633e777f66"><span class="__cf_email__" data-cfemail="6d061800061800431f0c142d00001e430a021b">[email protected]</span></a>, or at (703) 787-1604. For questions on 
technical issues, contact Jane Roberts, Leasing Division, at 
<a href="/cdn-cgi/l/email-protection#3258535c571c405d5057404641725f5f411c555d44"><span class="__cf_email__" data-cfemail="ea808b848fc49885888f989e99aa878799c48d859c">[email protected]</span></a>, or at (805) 389-7836.

SUPPLEMENTARY INFORMATION: This proposed rule completely rewrites the 
existing regulations at 30 CFR part 256, Leasing of Sulphur or Oil and 
Gas and Bonding Requirements in the Outer Continental Shelf (OCS). The 
major components of part 256 include: (1) The 5-Year Leasing Program 
mandated by section 18 of the OCS Lands Act, 43 U.S.C. 1344; (2) 
preparing for a lease sale; (3) issuing, maintaining, and ending a 
lease; and (4) bonding requirements. The MMS is proposing to reorganize 
and reorder the regulations

[[Page 25178]]

last rewritten in 1982 to reflect the leasing process more efficiently, 
as it has evolved over the past 26 years. This proposal would eliminate 
several sections of existing text as redundant or unnecessary. 
Redundant sections include subpart D, Joint Bidding, of 30 CFR part 
260. We do not intend these proposed changes to alter existing 
requirements concerning joint bidders. Some new sections would 
standardize or clarify practices that may not have been uniform in all 
three OCS regional offices. A new section (Sec.  256.621) on lease term 
pipelines was added using the language in 30 CFR part 250, subpart J, 
final rule at Sec.  256.62(g). Other sections clarify processes 
required by legislation, enacted since these regulations were last 
rewritten, such as the Federal Oil and Gas Royalty Simplification and 
Fairness Act of 1996, concerning pro rata liability for monetary 
obligations; or by recently promulgated regulations, such as the 
Department of the Interior's (DOI) non-procurement debarment rules. 
There are also changes that will assist MMS in meeting its stewardship 
responsibilities and its role as a regulator. Other changes include: 
(1) Stating in the rule at Sec.  256.500(b) that for the purposes of an 
area-wide bond, ``area-wide'' refers to the limits of a planning area 
as defined and administered by MMS; and (2) information from lessees is 
now required to help assess bonding for decommissioning of OCS 
facilities and to assess other liabilities associated with 
decommissioning.
    The MMS published a final rule in the Federal Register on September 
12, 2008 (73 FR 52917), to implement section 104(c) of the Gulf of 
Mexico Energy Security Act of 2006 (GOMESA), Public Law 109-432. It was 
designated subpart N, Sec. Sec.  256.90 through 256.95. We have 
redesignated subpart N to subpart I, Sec. Sec.  256.900 through 
256.905. We have added GOMESA definitions for Bonus or royalty credit, 
Central planning area, Coastline, Desoto Canyon OPD, Destin Dome OPD, 
Eastern planning area, and Pensacola OPD. We have included a table in 
Sec.  256.401 for ease in determining what evidence MMS requires to 
qualify a bidder and/or lessee from various entities, including several 
additional business organizational forms that now exist in the offshore 
industry.
    We propose to retain tables related to bonding for the same reason. 
The following derivation tables track the current regulations, section 
by section, to the proposed rule sections. Most of the proposed changes 
clarify regulatory language. The tables also list other reasons for 
changes.

Derivation Table for 30 CFR Part 250--Oil and Gas and Sulphur Operations
                     in the Outer Continental Shelf
------------------------------------------------------------------------
                                  Proposed rule
  Current regulations section        section          Nature of change
------------------------------------------------------------------------
                                250.1717(e)......  New requirement for
                                                    submission of
                                                    expense information
                                                    on plugging and
                                                    abandonment.
                                250.1729(d)......  New requirement for
                                                    submission of
                                                    expense information
                                                    on platform removal.
                                250.1743(b)(8)...  New requirement for
                                                    submission of
                                                    expense information
                                                    on site clearance.
------------------------------------------------------------------------


 Derivation Table for 30 CFR Part 256--Leasing of Sulphur or Oil and Gas
         and Bonding Requirements in the Outer Continental Shelf
------------------------------------------------------------------------
                                  Proposed rule
  Current regulations section        section          Nature of change
------------------------------------------------------------------------
Subpart A--Outer Continental    Subpart A--        Redesignated.
 Shelf Oil, Gas, and Sulphur     General
 Management, General.            Provisions.
256.0.........................  256.100(a).......  Updated.
                                256.101..........  New section.
256.1.........................  256.102..........  Simplified.
256.2.........................  .................  Eliminated as
                                                    unnecessary to state
                                                    policy from the Act.
256.4.........................  .................  Eliminated as
                                                    redundant to the
                                                    Act.
256.5.........................  256.103..........  Eliminated
                                                    unnecessary terms.
256.7.........................  .................  Eliminated as
                                                    unnecessary, as any
                                                    cross-references are
                                                    included in the
                                                    appropriate section.
256.8.........................  256.202..........  Simplified language.
256.10(a).....................  256.100(b).......  Simplified language.
256.10(b) through (d).........  .................  Eliminated as
                                                    repetitive with 30
                                                    CFR part 252.
256.11........................  256.630..........  Simplified language
                                                    and reorganized.
256.12........................  256.206..........  Simplified language.
Subpart B--Oil and Gas Leasing  Subpart B--Oil     Clarified name.
 Program.                        and Gas 5-Year
                                 Leasing Program.
256.16........................  256.200-202......  Simplified language
                                                    and reorganized.
256.17........................  256.203-205......  Simplified.
256.19........................  256.201..........  Simplified.
256.20........................  256.202(c).......  Simplified.
Subpart C--Reports From         .................  Eliminated as
 Federal Agencies.                                  repetitive with the
                                                    Act.
256.22........................
Subpart D--Call for             Subpart C--        Reorganized, see
 Information and Nominations.    Preparing for a    below.
                                 Lease Sale.
256.23........................  256.300..........  Reorganized.
256.25........................  256.302..........  Simplified.
Subpart E--Area Identification  Subpart C--        Reorganized in
 and Tract Size.                 Preparing for a    proposed subpart C.
                                 Lease Sale.

[[Page 25179]]

 
256.26........................  256.301..........  Reorganized.
256.28........................  256.306..........  Reorganized.
Subpart F--Lease Sales........  Subpart C--        Reorganized in
                                 Preparing for a    proposed subpart C.
                                 Lease Sale.
256.29........................  256.303..........  Simplified.
256.31........................  256.304, 305.....  Reorganized.
256.32........................  256.306..........  Simplified language.
256.32(e).....................  .................  Eliminated as
                                                    relevant time period
                                                    has passed.
Subpart G--Issuance of Leases.  Subpart D--        Reorganized, see
                                 Issuance of a      below.
                                 Lease..
256.35........................  256.400..........  Simplified language
                                                    and reorganized.
256.35(c).....................  256.402(b), (c)..  Simplified language
                                                    and reorganized.
                                256.402(a), 403..  New sections to
                                                    require compliance
                                                    with new government-
                                                    wide/DOI non-
                                                    procurement
                                                    debarment rules
                                                    covering principals.
256.37(a), (b)................  256.600,601......  Simplified language,
256.37(c).....................  256.602,603......   clarified
                                                    terminology, and
                                                    reorganized. The 5-
                                                    year requirement
                                                    codifies provision
                                                    in Form MMS-2006 (12/
                                                    87).
256.38........................  .................  Eliminated as
                                                    unnecessary section
                                                    title.
256.40........................  .................  Eliminated as
                                                    redundant. Any
                                                    definitions will be
                                                    in Sec.   256.103,
                                                    Definitions.
256.41........................  256.411,412......  Simplified and
                                                    eliminated
                                                    unnecessary
                                                    language,
                                                    reorganized.
256.41(d).....................  256.414..........  Simplified language.
256.43........................  256.411-413......  Simplified language
                                                    and reorganized.
256.43(a).....................  .................  Eliminated
                                                    unnecessary
                                                    definitions.
256.44........................  256.402..........  Simplified language.
256.46(a), (b)................  256.410..........  Simplified language.
256.46(c) through (g).........  256.401..........  Simplified language,
                                                    added detail for
                                                    clarity, and
                                                    included additional
                                                    business
                                                    organizational forms
                                                    that exist offshore.
256.46(h).....................  256.402(b).......  Simplified language.
                                256.402(a), 403..  New sections to
                                                    require compliance
                                                    with new government-
                                                    wide/DOI non-
                                                    procurement
                                                    debarment rules
                                                    covering
                                                    transactions at tier
                                                    below principals.
                                256.404..........  New section with
                                                    timeframe for
                                                    notification of
                                                    certain business
                                                    changes to keep
                                                    lease records
                                                    accurate and up-to-
                                                    date.
256.47........................  256.411(c), (d);   Simplified language
                                 416; 420.          and eliminated some
                                                    as unnecessary.
256.47(c).....................  256.416(c).......  Simplified language
                                                    and added two
                                                    options with respect
                                                    to high bids, if
                                                    tied.
256.47(e)(1), (e)(3)..........  256.417..........  Simplified language
                                                    and reorganized
                                                    delegation of
                                                    authority from the
                                                    Secretary to the
                                                    Director for
                                                    reconsideration of
                                                    rejected bids.
256.47(f).....................  256.420(b).......  Clarified that
                                                    deferred bonuses
                                                    must be paid within
                                                    5 years per 43
                                                    U.S.C. 1337(a)(2).
256.47(g).....................  256.420(c).......  Clarified that
                                                    successful bidder
                                                    may be held liable
                                                    for full bid amount
                                                    under certain
                                                    circumstances.
256.49........................  256.420..........  Discussion of form
                                                    for other minerals
                                                    eliminated as
                                                    redundant within 30
                                                    CFR part 281.
256.50........................  256.421..........  Simplified.
Subpart H--Rentals and          .................  Eliminated as
 Royalties [Reserved].                              unnecessary as never
                                                    used.
Subpart I--Bonding............  Subpart E--        Reorganized, see
                                 Financial          below.
                                 Accountability
                                 and Risk
                                 Management.
256.52........................  256.500..........  The MMS may adjust
                                                    the amount of
                                                    general bonds in the
                                                    future by using the
                                                    Implicit Price
                                                    Deflator for Gross
                                                    Domestic Product.
256.52(e).....................  256.521..........  Changed period for
                                                    providing additional
                                                    bond coverage from 6
                                                    months to 45 days.
256.52(f), (g)................  256.502..........  Requires 115 percent
                                                    of bond value if
                                                    using Treasury
                                                    securities to meet
                                                    new value
                                                    fluctuation
                                                    requirements from
                                                    Treasury Department.
256.53........................  256.501..........  Clarified minimum
                                                    level of bond for
                                                    specific activity.
256.53(d).....................  256.510..........  Separated provisions
                                                    concerning
                                                    supplemental bond
                                                    from those
                                                    concerning bond
                                                    level changes due to
                                                    leave activity. New
                                                    provision to allow
                                                    MMS to require
                                                    demonstration of
                                                    bond sufficiency.
256.54........................  256.503..........  Specified that the
                                                    bond guarantees all
                                                    non-monetary lease
                                                    obligations.
                                256.503(b).......  New section to retain
                                                    right to require
                                                    electronic filing of
                                                    bonds after 90-day
                                                    notice.
                                256.504..........  New section clarifies
                                                    whose non-monetary
                                                    lease obligations
                                                    must be covered.
                                256.505..........  New section clarifies
                                                    lessee/operator
                                                    bond.
256.55........................  256.520..........  Simplified.
256.56........................  256.512..........  Simplified.
256.57........................  256.511..........  Clarified language
                                                    and eliminated
                                                    imprecise use of
                                                    term, indemnity.
256.58........................  256.522..........  Clarified and
                                                    separated
                                                    termination of
                                                    period of liability
                                                    and cancellation of
                                                    a bond.

[[Page 25180]]

 
                                256.523..........
256.59........................  256.524, 525.....  Reorganized.
256.59(e) and (g).............  256.526..........
Subpart J--Assignments,         Subpart F--        Reorganized, see
 Transfers, and Extension.       Maintaining a      below.
                                 Lease.
                                256.605..........  New section to
                                                    clarify obligations
                                                    of record title
                                                    owners.
                                256.606..........  New section to
                                                    clarify obligations
                                                    of operating rights
                                                    owners.
                                256.610..........  New section to
                                                    iterate statutory
                                                    requirement for
                                                    approval prior to
                                                    sale, exchange,
                                                    assignment or
                                                    transfer of a lease.
256.62(a).....................  256.611..........  Simplified language
                                                    and clarified that
                                                    can disapprove
                                                    assignment if
                                                    assignor and/or
                                                    assignee has
                                                    unsatisfied
                                                    obligations.
256.62(b).....................  256.412..........  Included in section
                                                    on joint bidding.
256.62(c).....................  256.617..........  Simplified language.
256.62(d).....................  256.616..........  Simplified language.
256.62(e).....................  256.618..........  Simplified language.
256.62(f).....................  256.616..........  Simplified language.
256.62(g).....................  256.621..........  New section on lease
                                                    term pipelines.
256.63........................  256.104..........  Redesignated in
                                                    Subpart A.
256.64, 256.68................  256.613..........  Reorganized and
                                                    clarified.
256.64(a).....................  256.612..........  Clarified that
                                                    subleases restricted
                                                    to 2-depth levels.
256.64(a)(7)..................  256.620(a).......
256.64(a)(8)..................  256.620(b).......
256.64(e) through (h).........  256.614..........
256.64(i).....................  256.619..........
256.65........................  256.612(b).......  Reorganized and
                                                    clarified.
256.67........................  256.614..........  Reorganized and
                                                    clarified.
256.68........................  256.613(a).......  Reorganized and
                                                    clarified
256.70........................  256.601(a).......  Reorganized and
                                                    clarified.
256.71........................  256.601(b).......  Reorganized and
                                                    clarified.
256.72........................  256.601(c).......  Reorganized and
                                                    clarified.
                                256.601(d).......  New section to
                                                    clarify effect of
                                                    production from a
                                                    unitized lease.
256.73........................  256.601(a).......  Reorganized and
                                                    clarified.
Subpart K--Termination of       Subpart G--Ending  Reorganized, see
 Leases.                         a Lease.           below
                                256.700..........  New section to
                                                    clarify what happens
                                                    if you do not take
                                                    certain actions to
                                                    maintain a lease.
256.76........................  256.701..........  Simplified.
256.77........................  256.702..........  Simplified.
Subpart L--Section 6 Leases...  .................  Eliminated as
                                                    unnecessary
                                                    repetition of 43
                                                    U.S.C. 1335(b).
                                                    Leases of other
                                                    minerals covered in
                                                    30 CFR part 281.
256.79, 256.80
Subpart M--Studies............  .................  Eliminated as
                                                    unnecessary
                                                    recitation of
                                                    internal procedures.
256.82
                                Subpart H
                                 [RESERVED].
Subpart N--Bonus or Royalty     Subpart I--Bonus   Redesignated.
 Credits for Exchange of         or Royalty
 Certain Leases.                 Credits for
                                 Exchange of
                                 Certain Leases.
256.90--256.95................  256.900--256.905.
Appendix A to part 256--Oil     .................  Eliminated as
 and Gas Cash Bonus Bid.                            unnecessary
                                                    repetition of bid
                                                    form.
------------------------------------------------------------------------


  Derivation Table for 30 CFR Part 260--Outer Continental shelf Oil and
                         Gas Leasing, Subpart D
------------------------------------------------------------------------
                                  Proposed rule
  Current regulations section        section          Nature of change
------------------------------------------------------------------------
  Part 260--Outer Continental   256.411..........  Removed subpart D
  Shelf Leasing, Subpart D--                        from part 260.
  Joint Bidding. 260.301-303                        Proposed Sec.
                                                    256.411 simplified
                                                    language and
                                                    eliminated
                                                    duplicative
                                                    provisions of
                                                    current Sec.  Sec.
                                                    256.38-256.44.
------------------------------------------------------------------------

Procedural Matters: Regulatory Planning and Review (Executive Order 
(E.O.) 12866)

    This proposed rule is not a significant rule as determined by the 
Office of Management and Budget (OMB) and is not subject to review 
under E.O. 12866. This proposed rule primarily rewrites existing 
regulations that govern the offshore Federal leasing process for 
sulphur and oil and gas subject to the exclusive jurisdiction of the 
United States. The rule is rewritten in simple, clear language, and 
reorganized to reflect the steps in the leasing process as they have 
evolved. Minor changes are proposed to make certain practices uniform 
among the three OCS regional offices.
    (1) This proposed rule would not have an effect of $100 million or 
more on the economy. It would not adversely affect in a material way 
the economy,

[[Page 25181]]

productivity, competition, jobs, the environment, public health or 
safety, or State, local, or tribal governments or communities. The 
proposed rule would rewrite 30 CFR part 256 in plain language, and 
would contain virtually the same reporting and recordkeeping 
requirements and attendant costs as the current regulations. A cost-
benefit and economic analysis is not required.
    (2) This proposed rule would not create a serious inconsistency or 
otherwise interfere with an action taken or planned by another agency.
    (3) This proposed rule would not alter the budgetary effects of 
entitlements, grants, user fees, or loan programs or the rights or 
obligations of their recipients. Nominal user fees are not material in 
size or nature. The rule proposes a new fee for recording certain 
secondary lease interests, $27; continues existing fees for submitting 
non-required documents, $27; and for requesting an approval of the 
assignments or transfers of certain lease interests, $186.
    (4) This proposed rule would not raise novel legal or policy 
issues. The rule largely rewrites existing regulations.

Regulatory Flexibility Act

    The Department of the Interior certifies that this proposed rule 
would not have a significant economic effect on a substantial number of 
small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.).
    This proposed rule would affect lessees and potential lessees, of 
which there are approximately 130 different companies. These companies 
are generally classified under the North American Industry 
Classification System (NAICS) Code 211111, which includes companies 
that extract crude petroleum and natural gas. For this NAICS code 
classification, a small company is one with fewer than 500 employees. 
The MMS estimates that of the 130 lessees and operators that explore 
for and produce oil and gas on the OCS, approximately 90 are small 
businesses (70 percent).
    The primary economic effect of this rule on small businesses would 
be the cost associated with information collection (IC) activities. The 
rule proposes to rewrite 30 CFR part 256 and would add three new 
requirements for 30 CFR part 250, subpart Q. The proposed rule contains 
virtually the same burden hour requirements and non-hour cost burdens 
as the current regulations. The changes in reporting requirements would 
not significantly increase the IC burden on respondents--large or 
small. The MMS estimates an annual increase of 2,396 hours in the 
paperwork burden from that imposed by the current regulations. There 
would also be one new $27 non-hour cost burden for recording certain 
secondary lease interests resulting in an annual increase of $18,900 
($27 x an estimated 700 filings). A Regulatory Flexibility Analysis is 
not required. Accordingly, a Small Entity Compliance Guide is not 
required.
    Your comments are important. The Small Business and Agriculture 
Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards were 
established to receive comments from small businesses about Federal 
agency enforcement actions. The Ombudsman will annually evaluate the 
enforcement activities and rate each agency's responsiveness to small 
business. If you wish to comment on the actions of MMS, call 1-888-734-
3247. You may comment to the Small Business Administration without fear 
of retaliation. Allegations of discrimination/retaliation filed with 
the Small Business Administration will be investigated for appropriate 
action.

Small Business Regulatory Enforcement Fairness Act

    The proposed rule is not a major rule under 5 U.S.C. 804(2) the 
Small Business Regulatory Enforcement Fairness Act. This proposed rule:
    a. Would not have an annual effect on the economy of $100 million 
or more.
    b. Would not cause a major increase in costs or prices for 
consumers, individual industries, Federal, State, or local government 
agencies, or geographic regions.
    c. Would not have significant adverse effects on competition, 
employment, investment, productivity, innovation, or the ability of 
U.S.-based enterprises to compete with foreign-based enterprises.

Unfunded Mandates Reform Act

    This proposed rule would not impose an unfunded mandate on State, 
local, or tribal governments or the private sector of more than $100 
million per year. The proposed rule would not have a significant or 
unique effect on State, local, or tribal governments or the private 
sector. A statement containing the information required by Unfunded 
Mandates Reform Act (2 U.S.C. 1531 et seq.) is not required.

Takings Implication Assessment (E.O. 12630)

    Under the criteria in E.O. 12630, this proposed rule does not have 
significant takings implications. The proposed rule is not a 
governmental action capable of interference with constitutionally 
protected property rights. A Takings Implication Assessment is not 
required.

Federalism (E.O. 13132)

    Under the criteria in E.O. 13132, this proposed rule does not have 
sufficient Federalism implications to warrant the preparation of a 
Federalism Assessment. This proposed rule would not substantially and 
directly affect the relationship between the Federal and State 
governments. To the extent that State and local governments have a role 
in OCS activities, this proposed rule would not affect that role. A 
Federalism Assessment is not required.

Civil Justice Reform (E.O. 12988)

    This rule complies with the requirements of E.O. 12988. 
Specifically, this rule:
    (a) Meets the criteria of section 3(a) requiring that all 
regulations be reviewed to eliminate errors and ambiguity and be 
written to minimize litigation; and
    (b) Meets the criteria of section 3(b)(2) requiring that all 
regulations be written in clear language and contain clear legal 
standards.

Consultation With Indian Tribes (E.O. 13175)

    Under the criteria in E.O. 13175, we have evaluated this proposed 
rule and determined that it has no potential effects on Federally 
recognized Indian tribes. There are no Indian or tribal lands in the 
OCS.

Paperwork Reduction Act (PRA) of 1995

    The proposed rule contains a collection of information that is 
being submitted to OMB for review and approval under 44 U.S.C. 3501 et 
seq. As part of our continuing effort to reduce paperwork and 
respondent burdens, MMS invites the public and other Federal agencies 
to comment on any aspect of the reporting and recordkeeping burden. If 
you wish to comment on the Information Collection (IC) aspects of 
revised 30 CFR parts 250 and 256, you may send your comments directly 
to OMB (see the ADDRESSES section of this notice). Please identify your 
comments with Docket ID: MMS-2007-OMM-0069 in the subject line. Send a 
copy of your comments to the Regulations and Standards Branch (RSB), 
Attn: Comments; 381 Elden Street, MS-4024; Herndon, Virginia 20170-
4817. You may obtain a copy of the supporting statement for the IC by 
contacting the Bureau's Information Collection Clearance Officer at 
(202) 208-7744.
    The PRA provides that an agency may not conduct or sponsor, and a 
person is not required to respond to, an IC unless it displays a 
currently valid OMB

[[Page 25182]]

control number. The OMB is required to make a decision concerning the 
IC contained in these proposed regulations between 30 to 60 days after 
publication of this document in the Federal Register. Therefore, a 
comment to OMB is best assured of having its full effect if OMB 
received it by June 26, 2009. This does not affect the deadline for the 
public to comment to MMS on the proposed regulations.
    The title of the IC for this proposed rule is 30 CFR Part 256, 
Leasing of Sulphur or Oil and Gas and Bonding Requirements in the Outer 
Continental Shelf, 30 CFR Part 250, Subpart Q, and 30 CFR Part 260, 
Outer Continental Shelf Oil and Gas Leasing. The MMS estimates there 
are approximately 130 respondents (Federal oil and gas or sulphur 
lessees and/or operators). Responses to this IC are required to obtain 
or retain a benefit and are mandatory. The frequency of response 
varies, but is primarily on occasion. The IC does not include questions 
of a sensitive nature. The MMS will protect proprietary information 
according to section 26 of the OCS Lands Act; 30 CFR 256.100(b) of the 
proposed regulation; the Freedom of Information Act (5 U.S.C. 552), its 
implementing regulations at 43 CFR part 2; and 30 CFR 250.197, Data and 
information to be made available to the public or for limited 
inspection.
    This IC is a total rewrite of 30 CFR part 256, Leasing of Sulphur 
or Oil and Gas and Bonding Requirements in the Outer Continental Shelf 
and adds three new requirements to 30 CFR part 250, subpart Q, 
Decommissioning.
    The IC required by the current 30 CFR part 250, subpart Q, 
Decommissioning, is approved under OMB Control Number 1010-0142. There 
are three new proposed requirements that affect subpart Q, for a total 
of 820 burden hours. The MMS will use the information collected for 
these proposed requirements to help MMS assess the abandonment 
liability for each lease. This abandonment liability will be used to 
set supplemental bond requirements for each operator, and these 
supplemental bonds are used to protect the Federal Government against 
defaults should an operator go into bankruptcy. When final regulations 
are promulgated, the IC burdens for the 30 CFR part 250, subpart Q 
requirements will be incorporated into its respective IC for that 
regulation (1010-0142, 17,991 burden hours, expiration 11/30/10).
    The IC required by the current 30 CFR part 256 regulations is 
approved under OMB Control Number 1010-0006. There are several new 
requirements that will impose an additional 1,576 burden hours and 
$18,900 in non-hour cost burdens to the already approved hours under 
1010-0006 (17,103 burden hours, $603,125 non-hour cost burdens, 
expiration 5/31/2010). The MMS will use the information collected under 
30 CFR part 256 to determine if applicants are qualified to hold leases 
in the OCS. Specifically, MMS uses the information to:
    <bullet> Verify the qualifications of a bidder on an OCS lease 
sale. Once the required information is filed with MMS, a qualification 
number is assigned to the bidder so that duplicate information is not 
required on subsequent filings.
    <bullet> Develop the semiannual List of Restricted Joint Bidders. 
This identifies parties ineligible to bid jointly with each other on 
OCS lease sales, under limitations established by the Energy Policy and 
Conservation Act of 1975.
    <bullet> Ensure the qualification of assignees and track operators 
on leaseholds. Once a lease is awarded, the transfer of a lessee's 
interest to another qualified party must be approved by an MMS regional 
director, regional supervisor, or regional manager (Pacific Region 
only). Also, a lessee may designate an operator to act on the lessee's 
behalf. This designation must be approved by MMS before the designated 
operator may begin operations.
    <bullet> Document that a leasehold or geographical subdivision has 
been surrendered by the record title holder.
    <bullet> Keep track of who owns which lease term pipeline since 
they are not currently documented on submitted information. Also, 
during the decommissioning process, if operators have changed since the 
beginning of the lease--decommissioning operations are worked between 
the companies. But, after all decommissioning activities are complete, 
if a safety hazard still remains, then MMS will need to know that the 
responsibility for compliance lies with the original operator.
    <bullet> Update the corporate database that is used to determine 
what leases are available for a lease sale and the ownership of all OCS 
leases. Non-proprietary information is also publicly available from the 
MMS corporate database via the Internet.
    The MMS also uses various forms relating to this subpart. The forms 
allow lessees to submit the required information in a standardized 
format that helps MMS process the data in a more timely and efficient 
manner. There are five forms associated with this IC, MMS-150, MMS-151, 
MMS-152, MMS-2028, and MMS-2028A. The first three forms are used for 
assignment purposes and the last two forms are used to hold the surety 
liable for the obligations and liability of the principal/lessee or 
operator.
    The proposed rule imposes changes to the existing IC hour burdens. 
These changes are:
    <bullet> Submit expense information on plugging and abandonment 
(+520 hours).
    <bullet> Submit expense information on platform removal (+150 
hours).
    <bullet> Submit expense information on site clearance (+150 hours).
    <bullet> Notify MMS if you or your principals are excluded, 
disqualified, or convicted of a crime--Federal non-procurement 
debarment; request exception (+75 hours).
    <bullet> Provide acceptable bond for payment of a deferred bonus 
(+\1/4\ hour).
    <bullet> Submit statement excluding payment obligations of co-
lessee or designated operator (+1 hour).
    <bullet> Submit report to MMS listing remaining lease term 
pipelines, including decommissioned pipelines on lease and indicate 
which pipelines remain as lease term (+1,500 hours).
    When the rule becomes effective, the new collection will replace 
the current one for 30 CFR part 256.
    On August 25, 2008 (73 FR 49943), we also updated cost recovery 
fees. Therefore, non-hour cost burdens have increased by $55,450.
    We estimate the total combined (30 CFR parts 250 and 256) annual 
burden and non-hour cost burdens for this proposed rule to be 19,499 
burden hours and $677,475 non-hour cost burdens. Therefore, the rule 
adds a net 2,396 burden hours and $18,900 non-hour cost burdens to the 
already approved IC burdens. Except for the items identified as NEW in 
the following chart, the burden estimates shown are those that are 
estimated for the current 30 CFR part 256 regulations. The public has 
had numerous opportunities to comment on the current estimates during 
the process to renew the OMB approval of the IC requirements in current 
regulations.
    The following table details the IC burden for the proposed 
rulemaking requirements.

[[Page 25183]]



----------------------------------------------------------------------------------------------------------------
                                  Reporting and
  30 CFR part 250, subpart Q      recordkeeping        Hour burden     Average number of    Annual burden hours
                                   requirements                         annual responses
----------------------------------------------------------------------------------------------------------------
NEW 250.1717(e)...............  NEW Submit         1.................  520 responses....  520
                                 expense
                                 information on
                                 plugging and
                                 abandonment.
NEW 250.1729(d)...............  NEW Submit         1.................  150 responses....  150
                                 expense
                                 information on
                                 platform removal.
NEW 250.1743(b)(8)............  NEW Submit         1.................  150 responses....  150
                                 expense
                                 information on
                                 site clearance.
                                                  --------------------------------------------------------------
    Total.....................  .................  ..................  820 responses....  820
----------------------------------------------------------------------------------------------------------------


 
                                  Reporting and
  Citation 30 CFR part 256 *      recordkeeping        Hour burden     Average number of    Annual burden hours
                                   requirements                         annual responses
----------------------------------------------------------------------------------------------------------------
                                                                       Non-Hour Cost Burdens
----------------------------------------------------------------------------------------------------------------
                                                Subparts A and B
----------------------------------------------------------------------------------------------------------------
Subpart A 256.104.............  Service Fees.....   Fees covered individually throughout  0
                                                                  subpart.
----------------------------------------------------------------------------------------------------------------
Subpart B: 201; 202; 203; 204.  Submit             4.................  1 response.......  4
                                 nominations,
                                 suggestions, and
                                 relevant
                                 information in
                                 response to
                                 request for
                                 comments on
                                 proposed 5-year
                                 leasing program,
                                 including
                                 information from
                                 States & local
                                 governments/
                                 industry/Federal
                                 agencies and
                                 others.
                                                  --------------------------------------------------------------
    Subtotal..................  .................  ..................  1 response.......  4
----------------------------------------------------------------------------------------------------------------
                                                    Subpart C
----------------------------------------------------------------------------------------------------------------
300...........................  Submit response    4.................  1 response.......  4
                                 to Calls for
                                 Information and
                                 Nominations on
                                 areas proposed
                                 for leasing in
                                 the 5-year
                                 program,
                                 including
                                 information from
                                 States/local
                                 governments.
304(a)........................  States or local    4.................  10 responses.....  40
                                 governments
                                 submit comments/
                                 recommendations
                                 on size, timing,
                                 or location of
                                 proposed lease
                                 sale.
                                                  --------------------------------------------------------------
    Subtotal..................  .................  ..................  11 responses.....  44
----------------------------------------------------------------------------------------------------------------
                                                    Subpart D
----------------------------------------------------------------------------------------------------------------
400; 401......................  Establish company  2.................  104 responses....  208
                                 file for
                                 qualification;
                                 submit
                                 qualifications
                                 for lessee/
                                 bidder.
NEW 402(a); 403...............  NEW Notify MMS if  1.5...............  50...............  75
                                 you or your
                                 principals are
                                 excluded,
                                 disqualified, or
                                 convicted of a
                                 crime--Federal
                                 non-procurement
                                 debarment and
                                 suspension
                                 system; request
                                 exception.
----------------------------------------------------------------------------------------------------------------
404...........................  Notify MMS of all  Requirement not considered IC under 5  0
                                 mergers, name                CFR 1320.3(h)(1)
                                 changes, or
                                 change of
                                 business.
----------------------------------------------------------------------------------------------------------------
410...........................  Submit bids and    5.................  2,000 bids.......  10,000
                                 required
                                 information.
----------------------------------------------------------------------------------------------------------------
410(d); 417...................  Request            Requirement not considered IC under 5  0
                                 reconsideration              CFR 1320.3(h)(9).
                                 of bid decision.
----------------------------------------------------------------------------------------------------------------
411(a)(2); 412................  File statement or  2.................  100 responses....  200
                                 detailed report
                                 of production.
----------------------------------------------------------------------------------------------------------------
411(b)........................  Submit appeal due  Requirement not considered IC under 5  0
                                 to restricted                CFR 1320.3(h)(9).
                                 joint bidders
                                 list.
414...........................  Request exemption  Requirement not considered IC under 5  0
                                 from bidding                 CFR 1320.3(h)(9).
                                 restrictions;
                                 submit
                                 appropriate
                                 information.
----------------------------------------------------------------------------------------------------------------
416(c)........................  Notify MMS of tie  3.5...............  2 agreements.....  7
                                 bid decision;
                                 file agreement
                                 to accept joint
                                 lease on tie
                                 bids.
420; 421......................  Execute lease      1.................  852 leases.......  852
                                 (includes
                                 submission of
                                 evidence of
                                 authorized agent
                                 and request for
                                 dating of
                                 leases); submit
                                 supporting data.
NEW 420(b)....................  NEW Provide        15 mins...........  1 response.......  15 mins.
                                 acceptable bond
                                 for payment of a
                                 deferred bonus.
                                 We do not expect
                                 this to occur,
                                 hence minimal
                                 burden.
                                                  --------------------------------------------------------------

[[Page 25184]]

 
    Subtotal..................  .................  ..................  3,109 responses..  11,342 (rounded) hours
----------------------------------------------------------------------------------------------------------------
                                                    Subpart E
----------------------------------------------------------------------------------------------------------------
500(a); 501; 503;.............  Submit OCS         .25...............  124 forms........  31
                                 Mineral Lessee's
                                 and Operator's
                                 Bond (Form MMS-
                                 2028), required
                                 information, and
                                 surety
                                 notifications.
501; 505; 510.................  Demonstrate        3.5...............  165 submissions..  578 (rounded)
                                 financial worth/
                                 ability to carry
                                 out present and
                                 future financial
                                 obligations,
                                 request approval
                                 of another form
                                 of security, or
                                 request
                                 reduction in
                                 amount of
                                 supplemental
                                 bond required.
502...........................  Provide U.S.       2.................  10 submissions...  20
                                 Treasury
                                 securities or
                                 other types of
                                 security
                                 instruments,
                                 including
                                 authority for
                                 MMS to sell
                                 securities,
                                 relevant
                                 information, and
                                 related or
                                 subsequent
                                 actions.
NEW 504.......................  NEW Submit         1.................  1 exclusion        1
                                 statement                              statement.
                                 excluding
                                 payment
                                 obligations of
                                 co-lessee(s) or
                                 designated
                                 operator(s).
510...........................  Submit OCS         .25...............  136 forms........  34
                                 Mineral Lessee's
                                 and Operator's
                                 Supplemental
                                 Plugging and
                                 Abandonment Bond
                                 (Form MMS-2028A)
                                 w/required
                                 information;
                                 upon request,
                                 demonstrate
                                 sufficiency;
                                 request
                                 reduction.
511...........................  Provide third-     19................  45 submissions...  855
                                 party indemnity;
                                 financial
                                 information/
                                 statements;
                                 additional bond
                                 info; executed
                                 guarantor
                                 agreement and
                                 supporting
                                 information/
                                 documentation.
511(c)(6); 522(b); 523........  Notify MMS and     \1/2\.............  378 requests.....  189
                                 others, and
                                 request MMS
                                 approval to
                                 terminate period
                                 of liability or
                                 cancel bond or
                                 other form of
                                 security.
----------------------------------------------------------------------------------------------------------------
511(d); 520; 521; 522(b);         Furnish replacement bond or provide alternate form of   0
 523(a)(2);.                      security. Burden included above with bond or alternate
                                                    forms of security
----------------------------------------------------------------------------------------------------------------
512...........................  Request approval   12................  1 abandonment      12
                                 to withdraw                            account.
                                 funds from RUE/
                                 ROW
                                 decommissioning
                                 account.
520...........................  Notify MMS and     1.................  3 notices........  3
                                 others of bond
                                 lapse or action
                                 filed alleging
                                 lessee, surety,
                                 or guarantor is
                                 insolvent or
                                 bankrupt.
525(b)........................  Provide            16................  5 responses......  80
                                 information to
                                 demonstrate
                                 lease will be
                                 brought into
                                 compliance.
                                                  --------------------------------------------------------------
    Subtotal..................  .................  ..................  868 responses....  1,803
----------------------------------------------------------------------------------------------------------------
                                                    Subpart F
----------------------------------------------------------------------------------------------------------------
Subparts E and F: 501; 601;      Request approval for various operations or submit plans  0
 603.                              or applications. Burden included with other approved
                                  collections for 30 CFR Part 250 (1010-0114/subpart A,
                                   1010-0151/subpart B, 1010-0141/subpart D, 1010-0142/
                                           subpart Q, and 1010-0149/subpart I)
----------------------------------------------------------------------------------------------------------------
Subpart F: 610; 611; 613(a);    File application   1 hour............  2,063 forms......  2,063
 614; 615; 617; 619.             and required
                                 information for
                                 assignment of
                                 record title
                                 interest (Form
                                 MMS-150)
                                 (includes sell,
                                 exchange,
                                 transfer);
                                 specify
                                 effective date.
----------------------------------------------------------------------------------------------------------------
                                                                 $186 fee x 2,063 forms = $383,718
----------------------------------------------------------------------------------------------------------------
611; 612; 613(a); 614; 615;     File application   1 hour............  937 forms........  937
 617; 619.                       and required
                                 information for
                                 assignment of
                                 operating
                                 interest (Form
                                 MMS-151)
                                 (includes sell,
                                 exchange,
                                 transfer);
                                 specify
                                 effective date.
----------------------------------------------------------------------------------------------------------------
                                                                  $186 fee x 937 forms = $174,282
----------------------------------------------------------------------------------------------------------------
620(a)........................  File required      1 hour............  700 filings......  700
                                 instruments
                                 creating or
                                 transferring
                                 working
                                 interests, etc.,
                                 for record
                                 purposes.
----------------------------------------------------------------------------------------------------------------
NEW FEE....................................NEW $27 fee x 700 filings = $18,900
----------------------------------------------------------------------------------------------------------------

[[Page 25185]]

 
620(b)........................  Submit ``non-        Accepted on behalf of lessees as a   0
                                 required''          service, MMS doesn't require/need.
                                 documents, for
                                 record purposes
                                 that respondents
                                 want MMS to file
                                 with the lease
                                 document.
----------------------------------------------------------------------------------------------------------------
                                                                 $27 fee x 3,725 filings = $100,575
----------------------------------------------------------------------------------------------------------------
NEW 256.621...................  NEW After          1.................  1,500 L/T P/L      1,500
                                 assignment of                          listing reports.
                                 lease or new
                                 designation of
                                 operator, submit
                                 report to MMS
                                 listing
                                 remaining Lease
                                 Term P/Ls,
                                 including
                                 decommissioned P/
                                 Ls, on lease;
                                 indicate which P/
                                 Ls remain as
                                 Lease Term P/Ls.
                                                  --------------------------------------------------------------
    Subtotal..................  .................  ..................  5,200 responses..  5,200
----------------------------------------------------------------------------------------------------------------
                                                                             $677,475 non-hour cost burdens
----------------------------------------------------------------------------------------------------------------
                                                    Subpart G
----------------------------------------------------------------------------------------------------------------
701; 902(a)(5)................  File Form MMS-152  1.................  240                240
                                 to request                             relinquishment
                                 relinquishment                         forms.
                                 of lease.
702...........................  Comment on lease   1.................  1 submission.....  1
                                 cancellation
                                 (MMS expects 1
                                 in 10 years).
                                                  --------------------------------------------------------------
    Subtotal..................  .................  ..................  241 responses....  241
----------------------------------------------------------------------------------------------------------------
                                                    Subpart I
----------------------------------------------------------------------------------------------------------------
902(a)........................  Request a bonus    1.................  30...............  30
                                 or royalty
                                 credit and
                                 submit
                                 supporting
                                 documentation.
905...........................  Request approval   1.................  15...............  15
                                 to transfer
                                 bonus or credit
                                 to another party
                                 with supporting
                                 information.
                                                  --------------------------------------------------------------
    Subtotal..................  .................  ..................  45 responses.....  45
                                                  --------------------------------------------------------------
    Total Burdens.............  .................  ..................  10,295 Responses.  19,499
                                                                      ------------------------------------------
                                                                             $677,475 Non-Hour Cost Burdens
----------------------------------------------------------------------------------------------------------------
*A few sections in 30 CFR part 260 also contain references to IC requirements in 30 CFR part 256 that are
  detailed in this table.

    The MMS specifically solicits comments on the following questions:
    (1) Is the IC useful and necessary for MMS to perform its functions 
properly?
    (2) Are the estimates of the burden hours of the IC reasonable?
    (3) Do you have any suggestions that would enhance the quality, 
clarity, or usefulness of the information to be collected?
    (4) Is there a way to minimize the IC burden on those who respond, 
including the use of appropriate automated electronic, mechanical, or 
other forms of information technology?
    In addition, the PRA requires agencies to estimate the total annual 
reporting and recordkeeping non-hour cost burden resulting from the IC. 
With the exception of the two currently approved service fees--record 
title and/or operating rights (transfer), and non-required document 
filing fees--MMS has identified one new non-hour cost burden for $27, 
filing required instruments creating or transferring working interests 
(see the burden table). This fee would only be a requirement if 
respondents want to submit documents for record purposes to file with 
the lease document. We consider this a service to the respondent. We 
have identified no other non-hour paperwork cost burdens and we solicit 
your comments on this item. For reporting and recordkeeping only, your 
response should split the cost estimate into two components: (a) Total 
capital and start-up cost component and (b) annual operation, 
maintenance, and purchase of services component. 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 start-up 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: (1) Before October 1, 1995; (2) to 
comply with requirements not associated with the IC; (3) for reasons 
other than to provide information or keep records for the Government; 
or (4) as part of customary and usual business or private practices.

National Environmental Policy Act

    This rule does not constitute a major Federal action significantly 
affecting the quality of the human environment. The MMS has analyzed 
this proposed rule under the criteria of the National Environmental 
Policy Act and 516 Departmental Manual 15. This proposed rule meets the 
criteria set forth in 516 Departmental Manual 2 (Appendix 1.10) for a 
Departmental ``Categorical Exclusion'' in that this proposed rule is 
``* * * of an administrative, financial, legal, technical, or 
procedural nature and whose environmental effects are too broad, 
speculative, or conjectural to lend themselves to meaningful analysis * 
* *.'' This proposed rule also meets the criteria set forth in 516 
Departmental Manual 15.4(C)(1) for an MMS ``Categorical Exclusion'' in 
that its impacts are limited to administration, economic or 
technological effects. Further, the MMS has analyzed this

[[Page 25186]]

proposed rule to determine if it meets any of the extraordinary 
circumstances that would require an environmental assessment or an 
environmental impact statement as set forth in 516 Departmental Manual 
2.3, and Appendix 2. The MMS concluded that this rule does not meet any 
of the criteria for extraordinary circumstances as set forth in 516 
Departmental Manual 2 (Appendix 2).

Data Quality Act

    In developing this proposed rule, we did not conduct or use a 
study, experiment, or survey requiring peer review under the Data 
Quality Act (Pub. L. 106-554, app. C Sec.  515, 114 Stat. 2763, 2763A-
153-154).

Effects on the Energy Supply (E.O. 13211)

    This rule is not a significant energy action under the definition 
in E.O. 13211. A Statement of Energy Effects is not required.

Clarity of This Regulation

    We are required by E.O. 12866, E.O. 12988, and by the Presidential 
Memorandum of June 1, 1998, to write all rules in plain language. This 
means that each rule we publish must:
    (a) Be logically organized;
    (b) Use the active voice to address readers directly;
    (c) Use clear language rather than jargon;
    (d) Be divided into short sections and sentences; and
    (e) Use lists and tables wherever possible.
    If you feel that we have not met these requirements, send us 
comments by one of the methods listed in the ADDRESSES section. To 
better help us revise the rule, your comments should be as specific as 
possible. For example, you should tell us the numbers of the sections 
or paragraphs that you find unclear, which sections or sentences are 
too long, the sections where you feel lists or tables would be useful, 
etc.

Public Availability of Comments

    Before including your address, phone number, e-mail address, or 
other personal identifying information in your comment, you should be 
aware that your entire comment--including your personal identifying 
information--may be made publicly available at any time. While you can 
ask us in your comment to withhold your personal identifying 
information from public review, we cannot guarantee that we will be 
able to do so.

List of Subjects

30 CFR Part 250

    Administrative practice and procedure, Continental shelf, 
Environmental impact statements, Environmental protection, Pipelines, 
Public lands--mineral resources, Public lands--rights-of-way, Reporting 
and recordkeeping requirements.

30 CFR Part 256

    Administrative practice and procedure, Continental shelf, 
Environmental protection, Government contracts, Intergovernmental 
relations, Oil and gas exploration, Public lands--mineral resources, 
Public lands--rights-of-way, Reporting and recordkeeping requirements, 
Surety bonds.

30 CFR Part 260

    Continental shelf, Government contracts, Mineral royalties, Oil and 
gas exploration, Public lands--mineral resources, Reporting and 
recordkeeping requirements.

    Dated: May 11, 2009.
 Ned Farquhar,
Acting Assistant Secretary--Land and Minerals Management.
    For the reasons stated in the preamble, MMS proposes to amend 30 
CFR parts 250, 256, and 260 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: 31 U.S.C. 9701, 43 U.S.C. 1334.

    2. Amend Sec.  250.1717 by:
    (A) Revising paragraphs (c) and (d), and
    (B) Adding paragraph (e) to read as follows:


Sec.  250.1717  After I permanently plug a well, what information must 
I submit?

* * * * *
    (c) Nature and quantities of material used in the plugs;
    (d) If you cut and pull away any casing string, you must submit:
    (1) A description of the methods used, including information on 
explosives used;
    (2) Size and amount of casing removed; and
    (3) Casing removed depth.
    (e) Expenses of plugging and abandonment with supporting 
documentation.
    3. Amend Sec.  250.1729 by:
    (A) Revising paragraphs (b) and (c), and
    (B) Adding paragraph (d) to read as follows:


Sec.  250.1729  After I remove a platform or other facility, what 
information must I submit?

* * * * *
    (b) A description of any mitigation measures you took;
    (c) A statement signed by your authorized representative that 
certifies that the types and amount of explosives you used in removing 
the platform or other facility were consistent with those set forth in 
the approved removal application; and
    (d) Expenses of removal of the platform or other approved 
decommissioning of the platform with supporting documentation.
    3. Amend Sec.  250.1743 by:
    (A) Revising paragraphs (b)(6) and (b)(7), and
    (B) Adding paragraph (b)(8) to read as follows:


Sec.  250.1743  How do I certify that a site is clear of obstructions?

* * * * *
    (b) * * *
    (6) The results of the survey, including a list of any debris 
removed or a statement from the trawling contractor that no objects 
were recovered;
    (7) A post-trawling job plot or map showing the trawled area; and
    (8) Expenses of site clearance with supporting documentation.
    4. Revise part 256 to read as follows:

PART 256--LEASING OF SULPHUR OR OIL AND GAS AND BONDING 
REQUIREMENTS IN THE OUTER CONTINENTAL SHELF

Subpart A--General Provisions
Sec.
256.100 Information collection and proprietary information.
256.101 What are the consequences if I provide false information?
256.102 What does this part cover?
256.103 Definitions.
256.104 Service fees.
Subpart B--Oil and Gas 5-Year Leasing Program
256.200 What is the 5-year program?
256.201 Does MMS consult with interested parties while preparing the 
5-year program?
256.202 How does MMS start the 5-year program preparation process?
256.203 What does MMS do before publishing a proposed program?
256.204 How do Governments and citizens comment on the proposed 
program?
256.205 What does MMS do before approving a final program or a 
significant revision?
256.206 Does MMS offer blocks in a sale that is not on the 5-year 
program schedule?

[[Page 25187]]

Subpart C--Preparing for a Lease Sale
256.300 What is a call for information?
256.301 What does MMS do with the information from the call?
256.302 What does MMS do if identified areas are within 3 miles of 
the seaward boundary of a coastal State?
256.303 What happens with an approved proposed notice of sale?
256.304 What role do affected States have?
256.305 What does MMS do with comments and recommendations received 
on the proposed notice?
256.306 How does MMS conduct a lease sale?
Subpart D--Issuance of a Lease

Qualifications

256.400 Who may become a lessee?
256.401 How do I show that I am qualified to be a lessee?
256.402 Who may not become a lessee or acquire an interest in a 
lease?
256.403 What do the non-procurement debarment rules require that I 
do?
256.404 When must I notify MMS of mergers, name changes, or changes 
of business form?

How To Bid

256.410 How do I submit a bid?

Restrictions on Joint Bidding

256.411 Are there restrictions on bidding with others and do they 
affect my ability to bid?
256.412 When must I file a statement of production?
256.413 How do I determine my production for purposes of the 
restricted joint bidders list?
256.414 Are exemptions from the bidding restrictions possible?

How Does MMS Act on Bids?

256.416 What does MMS do with my bid?
256.417 What may I do if my bid is rejected?

Awarding the Lease

256.420 What happens if I am the successful high bidder?
256.421 When is my lease effective?
Subpart E--Financial Accountability and Risk Management

General Bonds

256.500 What security must I provide when I obtain my lease?
256.501 Do my general bonding requirements change as activities 
progress on my lease?
256.502 What instruments other than a surety bond may I use to 
provide the required security?
256.503 What general requirements must my bond or other security 
meet?
256.504 Must my surety bond cover the payment obligations of my co-
lessees and designated operators?
256.505 What happens if my co-lessees or designated operators 
exclude my payment obligations from their bond?

Supplemental Bonds

256.510 Can MMS require that I post a supplemental bond?
256.511 May I use a third-party guaranty to meet the supplemental 
bonding requirement?
256.512 May I use a lease, right-of-way (ROW), or right-of-use and 
easement (RUE)-specific decommissioning account to meet the 
supplemental bonding requirement?

Changes in Bonding or Security

256.520 What do I do if my bond lapses?
256.521 What happens if the value of my bond or other security is 
reduced?
256.522 What happens if my surety wants to terminate the period of 
liability of my bond?
256.523 What happens if my surety wants to cancel my bond?
256.524 Why might MMS call for forfeiture of my bond?
256.525 How will I know about this forfeiture?
256.526 What if correcting my default requires a change in the 
amount of my bond?
Subpart F--Maintaining a Lease

Initial Period of a Lease

256.600 What is the initial period of my oil and gas lease?
256.601 How may I maintain my oil and gas lease beyond the initial 
period?
256.602 What is the initial period of my sulphur lease?
256.603. How may I maintain my sulphur lease beyond the initial 
period?

Lease Obligations

256.605 What are my obligations as a record title holder?
256.606 What are my rights and obligations as an operating rights 
owner?

Transferring Interest in All or Part of a Lease

256.610 May I sell, exchange, assign, or otherwise transfer my 
lease?
256.611 May I assign all or part of my lease interest?
256.612 May I assign operating rights?
256.613 How do I seek approval of an assignment?
256.614 How do I transfer the interest of a deceased leaseholder?
256.615 What if I want to assign interests in more than one lease at 
the same time?
256.616 What is the effect of an assignment on an assignor's 
liability?
256.617 May I specify an effective date of the assignment?
256.618 What is the effect of an assignment on an assignee's 
liability?
256.619 As a restricted joint bidder, may I assign interest to 
another restricted joint bidder?
256.620 Are there any interests I may assign without MMS approval?
256.621 What reports must I submit for lease term pipelines when MMS 
approves a lease assignment?

Helium

256.630 What must a lessee do if MMS elects to extract helium from a 
lease?
Subpart G--Ending a Lease
256.700 How does a lease end?
256.701 May I end the lease myself?
256.702 Will MMS end my lease?
Subpart H--[Reserved]
Subpart I--Bonus or Royalty Credits for Exchange of Certain Leases
256.900 Which leases may I exchange for a bonus or royalty credit?
256.901 How much bonus or royalty credit will MMS grant in exchange 
for a lease?
256.902 What must I do to obtain a bonus or royalty credit?
256.903 How is the bonus or royalty credit allocated among multiple 
lease owners?
256.904 How may I use the bonus or royalty credit?
256.905 How do I transfer a bonus or royalty credit to another 
person?

    Authority: 31 U.S.C. 9701, 42 U.S.C. 6213, 43 U.S.C. 1334, Pub. 
L. 109-432.

Subpart A--General Provisions


Sec.  256.100  Information collection and proprietary information.

    (a) Information collection (IC). (1) The Office of Management and 
Budget (OMB) approved the collection of information under 44 U.S.C. 
3501 et seq., and assigned OMB Control Number 1010-xxxx. The title of 
this IC is 30 CFR part 256, Leasing of Sulphur or Oil and Gas and 
Bonding Requirements in the Outer Continental Shelf and 30 CFR part 
260, Outer Continental Shelf Oil and Gas Leasing. The MMS collects the 
information to determine if applicants seeking to obtain a lease on the 
Outer Continental Shelf (OCS) are qualified to hold such a lease and 
can meet the monetary and non-monetary requirements of a lease. 
Responses to this collection are required to obtain or retain a benefit 
or are mandatory under 43 U.S.C. 1331 et seq. The MMS will protect 
proprietary information collected according to section 26 of the OCS 
Lands Act (OCSLA), 43 U.S.C. 1352, and this section.
    (2) The Paperwork Reduction Act of 1995 requires us to inform the 
public that an agency may not conduct or sponsor, and you are not 
required to respond to, a collection of information unless it displays 
a currently valid OMB control number.
    (3) Send comments regarding any aspect of the collection of 
information under this part, including suggestions for reducing the 
burden, to the IC Clearance Officer, Minerals Management Service, Mail 
Stop 5438, 1849 C Street, NW., Washington, DC 20240.
    (b) Proprietary information. Specific indications of interest in an 
area by industry received in response to a Call

[[Page 25188]]

for Information issued by the Secretary is proprietary information.
    (1) The MMS will handle requests for indications of interest in an 
area and any other proprietary or privileged information you submit, 
according to the regulations in 43 CFR part 2.
    (2) Upon request, MMS will provide relative summary indications of 
interest in areas to a Call for Information for a proposed sale.


Sec.  256.101  What are the consequences if I provide false 
information?

    Under 18 U.S.C. 1001, it is a crime to knowingly and willfully make 
any false, fictitious, or fraudulent statements or representations to 
any U.S. governmental entity regarding any matter within its 
jurisdiction.


Sec.  256.102  What does this part cover?

    These regulations establish the procedures the Secretary of the 
Interior and MMS will use to administer a leasing program for minerals 
on the submerged lands of the OCS, under the OCSLA, 43 U.S.C. 1331 et 
seq.


Sec.  256.103  Definitions.

    As used in this part, the term:
    Act means the OCS Lands Act as amended (43 U.S.C. 1331 et seq.).
    Affected State means, with respect to any program, plan, lease 
sale, or other activity, proposed, conducted, or approved pursuant to 
the provisions of the Act, any State:
    (1) The laws of which are, pursuant to section 4(a)(2) of the Act, 
43 U.S.C. 1333(a)(2), to be the law of the United States for the 
portion of the OCS on which such activity is, or is proposed to be, 
conducted;
    (2) Which is, or is proposed to be, directly connected by 
transportation facilities to any artificial island or structure 
referred to in section 4(a)(1) of the Act, 43 U.S.C. 1333(a)(1);
    (3) Which is receiving, or in accordance with the proposed activity 
will receive, oil for processing, refining, or transshipment which was 
extracted from the OCS and transported directly to such State by means 
of vessels or by a combination of means including vessels;
    (4) Which is designated by the Secretary of the Interior as a State 
in which there is a substantial probability of significant impact on or 
damage to the coastal, marine, or human environment; or a State in 
which there will be significant changes in the social, governmental, or 
economic infrastructure, resulting from the exploration, development, 
and production of oil and gas anywhere on the OCS; or
    (5) In which the Secretary of the Interior finds that because of 
such activity, there is, or would be, a significant risk of serious 
damage to the marine or coastal environment in the event of any oil 
spill, blowout, or release of oil or gas from vessels, pipelines, or 
other transshipment facilities due to factors such as prevailing winds 
and currents.
    Bidding Unit means portions of two or more blocks combined for 
bidding purposes that may be bid upon as a single administrative unit 
and will become a single lease. The term tract, as defined in this 
section, may also be used.
    Bonus or royalty credit means a legal instrument or other written 
documentation, or an entry in an account managed by the Secretary that 
a bidder or lessee may use in lieu of any other monetary payment for--
    (1) A bonus due for a lease on the OCS; or
    (2) A royalty due on oil or gas production from any lease located 
in the Gulf of Mexico.
    Central planning area means the Central Gulf of Mexico Planning 
Area of the OCS, as designated in the document entitled, ``Draft 
Proposed Program Outer Continental Shelf Oil and Gas Leasing Program 
2007-2012,'' dated February 2006.
    Coastal environment means the physical, atmospheric, and biological 
components, conditions, and factors that interactively determine the 
state, condition, and quality of the terrestrial ecosystem from the 
shoreline inward to the boundaries of the coastal zone.
    Coastal zone means the coastal waters (including the lands therein 
and thereunder) and the adjacent shorelands (including the water 
therein and thereunder), strongly influenced by each other and in 
proximity to the shorelines of several coastal States, and includes 
islands, transition and intertidal areas, salt marshes, wetlands, and 
beaches, whose zone extends seaward to the outer limit of the U.S. 
territorial sea and extends inland from the shore lines to the extent 
necessary to control shorelands; the uses of which have a direct and 
significant impact on the coastal waters, and the inward boundaries of 
which may be identified by several coastal States, under section 
305(b)(1) of the Coastal Zone Management Act (CZMA) of 1972, 16 U.S.C. 
1454(b)(1).
    Coastline means the line of ordinary low water along that portion 
of the coast in direct contact with the open sea and the line marking 
the seaward limit of inland waters.
    Desoto Canyon OPD means the official protraction diagram designated 
as Desoto Canyon which has a western edge located at the universal 
transverse mercator (UTM) X coordinate 1,346,400 in the North American 
Datum of 1927 (NAD 27).
    Destin Dome OPD means the official protraction diagram designated 
as Destin Dome which has a western edge located at the universal 
transverse mercator (UTM) X coordinate 1,393,920 in the NAD 27.
    Director means the Director of MMS of the U.S. Department of the 
Interior, or an official authorized to act on the Director's behalf.
    Eastern planning area means the Eastern Gulf of Mexico Planning 
Area of the OCS, as designated in the document entitled ``Draft 
Proposed Program Outer Continental Shelf Oil and Gas Leasing Program 
2007-2012,'' dated February 2006.
    General bond means a bond with the amount fixed by regulations. The 
amount of the bond required is determined by the level of activity on 
the lease, right-of-way, or right-of-use and easement.
    Human environment means the physical, social, and economic 
components, conditions, and factors that interactively determine the 
state, condition, and quality of living conditions, employment, and 
health of those affected, directly or indirectly, by activities 
occurring on the OCS.
    Marine environment means the physical, atmospheric, and biological 
components, conditions, and factors which interactively determine the 
productivity, state, conditions, and quality of the marine ecosystem, 
including the waters of the high seas, the contiguous zone, 
transitional and intertidal areas, salt marshes, and wetlands within 
the coastal zone and on the OCS.
    Mineral means oil, gas, and sulphur; it also includes sand, gravel, 
and salt used to facilitate the development and production of oil, gas, 
or sulphur.
    OCS means the Outer Continental Shelf, as that term is defined in 
section 2(a) of the Act, 43 U.S.C. 1331(a).
    Pensacola OPD means the official protraction diagram designated as 
Pensacola which has a western edge located at the universal transverse 
mercator (UTM) X coordinate 1,393,920 in the NAD 27.
    Person means, in addition to a natural person, an association, a 
State, a political subdivision of a State, or a private, public, or 
municipal corporation.
    Secretary means the Secretary of the Interior or a designated 
employee.

[[Page 25189]]

    Supplemental bond means a bond required by MMS based upon potential 
lease decommissioning liabilities and/or other lease obligations that 
exceed the general bond.
    Tract means an area of the OCS that is offered for sale as a single 
lease. The area may be a whole block, a portion of a block, or combined 
portions from multiple blocks. The term bidding unit, as defined 
previously, may also be used.
    We, us, and our means the Minerals Management Service (MMS) of the 
Department of the Interior.
    You means a lessee, the holder or owner of operating rights, a 
designated operator or agent of the lessee(s), a right of use and 
easement holder, State or Federal, and a pipeline right-of-way holder.


Sec.  256.104  Service fees.

    (a) The table in this paragraph shows the fees that you must pay to 
MMS for the services listed. The fees will be adjusted periodically 
according to the Implicit Price Deflator for Gross Domestic Product by 
publication of a document in the Federal Register. If a significant 
adjustment is needed to arrive at the new actual cost for any reason 
other than inflation, then a proposed rule containing the new fees will 
be published in the Federal Register for comment.

                            Service Fee Table
------------------------------------------------------------------------
                                                              30 CFR
  Service--processing of the following:     Fee amount       citation
------------------------------------------------------------------------
(1) Assignment of record title or                   $186  Sec.   256.613
 operating rights (transfer) for MMS
 approval...............................
(2) Required document filing for record               27            Sec.
 purpose, but not for MMS approval......                      256.620(a)
(3) Non-required document filing for                  27            Sec.
 record purposes........................                      256.620(b)
------------------------------------------------------------------------

    (b) Payment of the fees listed in paragraph (a) of this section 
must accompany the submission of the document for approval or filing, 
or be sent to an office identified by the Regional Director. Once a fee 
is paid, it is nonrefundable, even if your service request is 
withdrawn. If your request is returned to you as incomplete, you are 
not required to submit a new fee with the amended submission.

Subpart B--Oil and Gas 5-Year Leasing Program


Sec.  256.200  What is the 5-year program?

    Section 18(a) of the Act, 43 U.S.C. 1344(a), requires the Secretary 
to prepare an oil and gas leasing program that consists of a 5-year 
schedule of proposed lease sales to best meet national energy needs, 
showing the size, timing, and location of leasing activity as precisely 
as possible. The MMS prepares the schedule to obtain the proper balance 
between the potential for environmental damage, the potential for 
discovery of oil and gas, and the potential for adverse impact on the 
coastal zone.


Sec.  256.201  Does MMS consult with interested parties while preparing 
the 5-year program?

    In preparing the 5-year program, MMS will consult with States and 
local governments, industry, and any other interested parties, 
primarily through public notice and comment procedures, as described in 
the sections that follow.


Sec.  256.202  How does MMS start the 5-year program preparation 
process?

    To begin preparation of the 5-year leasing program, MMS invites and 
considers nominations for any areas to be included or excluded from 
leasing, by doing the following:
    (a) The MMS prepares and makes public, official protraction 
diagrams and leasing maps of OCS areas. Any area properly included on 
the official 5-year diagrams and maps may be offered for lease for any 
mineral not already leased.
    (b) The MMS invites and considers any other suggestions and 
relevant information from Governors of affected States, local 
Governments, industry, Federal agencies, and other interested parties, 
through a publication of a request for information in the Federal 
Register. Local Governments must first submit their comments to their 
State Governor, before sending them to MMS.
    (c) The MMS sends letters to the Governor of each affected State 
asking them to identify specific laws, goals, and policies that we 
should consider. We ask each State Governor as well as the Department 
of Commerce to identify the relationship between any oil and gas 
activity and the State coastal zone management program under sections 
305 and 306 of the CZMA, 16 U.S.C. 1454 and 1455. The MMS will consider 
the coastal zone management program being developed or administered by 
an affected State under the CZMA.
    (d) The MMS asks the Department of Energy for information on 
regional and national energy markets, OCS production goals, and 
transportation networks.


Sec.  256.203  What does MMS do before publishing a proposed program?

    After considering the solicited comments and information described 
in Sec.  256.202, we prepare a proposed leasing program.
    (a) At least 60 days before publication of a proposed program, we 
send a draft of the proposed program to the Governor of each affected 
State, who may solicit comments from local Governments that may be 
affected by the proposed program.
    (b) The MMS replies in writing to any comment from a Governor that 
is received at least 15 days before submission of the proposed program 
to Congress and its publication for comment in the Federal Register.


Sec.  256.204  How do Governments and citizens comment on the proposed 
program?

    The MMS publishes the proposed program in the Federal Register for 
comment by the public. At the same time, we send the proposed program 
to the Governors of the affected States and to Congress and the 
Attorney General for review and comment.
    (a) Governors are responsible for providing a copy of the proposed 
program to affected local Governments in their State. Local Governments 
may comment directly to us, but must also send their comments to the 
Governor of their State.
    (b) All comments from any party are due within 90 days after 
publication in the Federal Register.


Sec.  256.205  What does MMS do before approving a final program or a 
significant revision?

    At least 60 days before approval, we submit a proposed final 
program or significant revision to the President and Congress. The MMS 
also submits any comments received and explains the reasons why we did 
not accept any specific recommendation of the Attorney General, or of a 
State or local Government.

[[Page 25190]]

Sec.  256.206  Does MMS offer blocks in a sale that is not on the 5-
year program schedule?

    (a) The MMS may offer blocks within a planning area included in the 
5-year program in an otherwise unscheduled sale, if the block either:
    (1) Received a bid that was rejected in an earlier sale;
    (2) Had a high bid that was forfeited in a scheduled sale; or
    (3) Is a development block subject to drainage.
    (b) For an unscheduled sale, we may disclose the classification of 
the block as a development block. However, blocks in the Central or 
Western Gulf of Mexico (GOM) planning areas cannot be offered in a sale 
that is not on the schedule.

Subpart C--Preparing for a Lease Sale


Sec.  256.300  What is a call for information?

    The MMS issues a call for information on areas proposed for leasing 
in the 5-year program, through publication in the Federal Register and 
other publications as desired. A call may include more than one 
proposed sale. We request comments on:
    (a) Industry interest in the areas proposed for leasing;
    (b) Geological conditions, including bottom hazards;
    (c) Archaeological sites on the seabed or near shore;
    (d) Multiple uses of the proposed leasing area including 
navigation, recreation, and fisheries;
    (e) Other socioeconomic, biological, and environmental information; 
and
    (f) Industry's nominations or indications of interest in specific 
blocks within areas proposed for leasing in the 5-year program for each 
sale.


Sec.  256.301  What does MMS do with the information from the call?

    In consultation with appropriate Federal agencies, we develop a 
proposal to recommend areas to the Secretary for further consideration 
for leasing and environmental analysis.
    (a) The MMS considers all available environmental information, 
conflicts with other uses, resource potential, industry interest, and 
other relevant information, including comments received from State and 
local Governments and other interested parties in response to the call.
    (b) The MMS evaluates the area identified for further consideration 
for the potential effects of leasing on the human, marine, and coastal 
environments, and to develop measures to mitigate adverse impacts for 
all the options to be analyzed. We inform the public of any additions 
or deletions from the area proposed for leasing in the 5-year program 
that result from the call process.
    (c) The MMS prepares appropriate documentation under the National 
Environmental Policy Act (NEPA).


Sec.  256.302  What does MMS do if identified areas are within 3 miles 
of the seaward boundary of a coastal State?

    For areas proposed for leasing that are within 3 geographical miles 
seaward of the seaward boundary of a coastal State, as defined in and 
governed by section 1337(g)(2) of the Act, we provide the Governor of 
the coastal State, pursuant to the confidentiality requirements in part 
251 of this chapter, the following:
    (a) A schedule for leasing;
    (b) All geographical, geological, and ecological characteristics of 
the areas proposed for leasing;
    (c) An estimate of the oil and gas resources; and
    (d) An identification of any field, geological structure, or trap 
that lies within 3 miles of the State's seaward boundary.


Sec.  256.303  What happens with an approved proposed notice of sale?

    The MMS sends an approved proposed notice of sale to the Governors 
of affected States and publishes the notice of its availability in the 
Federal Register. The notice includes appropriate stipulations and 
conditions to mitigate potential adverse impacts on the environment, 
the Director's findings, and all comments and recommendations received 
on the proposal.


Sec.  256.304  What role do affected States have?

    (a) Within 60 days after receiving the proposed notice of sale, 
Governors of affected States may submit comments and recommendations to 
MMS regarding the size, timing, and location of the proposed sale. 
Local Governments may comment to us directly, but must also send their 
comments to the Governor of their State.
    (b) The MMS will provide a consistency determination to affected 
States that will indicate whether the proposed sale is consistent, to 
the maximum extent practicable, with the enforceable policies of the 
applicable coastal zone management programs.


Sec.  256.305  What does MMS do with comments and recommendations 
received on the proposed notice?

    The MMS considers all comments and recommendations received in 
response to the proposed notice of sale. We accept comments and 
recommendations from States and local Governments if we determine, 
after providing opportunity for consultation, that they provide for a 
reasonable balance between the national interest and the well being of 
the citizens of the State or locality. We send to each Governor written 
reasons for rejecting or adopting alternatives on how to address that 
Governor's recommendations.


Sec.  256.306  How does MMS conduct a lease sale?

    (a) The MMS publishes a final notice of sale in the Federal 
Register and in other publications, as appropriate, at least 30 days 
before the date of the sale. The notice:
    (1) States the place, time, and method for filing bids and the 
place, date, and hour for opening bids; and
    (2) Contains or references a description of the area offered for 
lease and any stipulations, terms, and conditions of the sale.
    (b) Tracts are offered for lease by competitive sealed bid in 
accordance with the terms and conditions in the final notice of sale 
and applicable laws and regulations. Tracts comprise an area not 
exceeding 5,760 acres, unless we find that a larger area is necessary 
for reasonable economic production.

Subpart D--Issuance of a Lease

Qualifications


Sec.  256.400  Who may become a lessee?

    You may become a lessee if you are:
    (a) A citizen or national of the U.S.;
    (b) An alien lawfully admitted for permanent residence in the U.S., 
as defined in 8 U.S.C. 1101(a)(20);
    (c) A private, public, or municipal corporation organized under the 
laws of any State of the U.S., the District of Columbia, or any 
territory or insular possession subject to U.S. jurisdiction;
    (d) An association of such citizens, nationals, resident aliens, or 
corporations;
    (e) A State; or
    (f) A political subdivision of States.


Sec.  256.401  How do I show that I am qualified to be a lessee?

    (a) Provide your MMS qualification number if you have qualified 
with us, in which case you will not need to provide the information in 
paragraph (b) or (c) of this section, unless we require it.
    (b) An individual must submit a written statement of citizenship 
status attesting to U.S. citizenship. It need not be notarized nor give 
the age of the individual. A resident alien must submit an original or 
a photocopy of the Immigration and Naturalization Service form 
evidencing legal status of the resident alien.
    (c) A corporation, association, or other entity must submit 
evidence (refer to the

[[Page 25191]]

table in paragraph (d) of this section) acceptable to MMS that:
    (1) It is qualified to hold mineral leases under this subpart;
    (2) It is authorized to conduct business under the laws of its 
State;
    (3) It is authorized to hold mineral leases in the OCS under the 
operating rules of its business; and
    (4) The persons holding the titles listed are authorized to bind 
the corporation or association when conducting business with us.
    (d) Acceptable evidence under paragraph (c) of this section 
includes, but is not limited to:

----------------------------------------------------------------------------------------------------------------
  Requirements to qualify as a lessee to
          hold leases in the OCS:               Corp.     Ltd. prtnsp.  Gen. prtnsp.       LLC          Trust
----------------------------------------------------------------------------------------------------------------
(1) Certified statement by Secretary, over           XX   ............  ............  ............  ............
 corporate seal, certifying that the
 corporation is authorized to hold OCS
 leases...................................
(2) Evidence of authority of titled                  XX   ............  ............  ............  ............
 positions to bind corporation, certified
 by Secretary, over corporate seal,
 including the following:.................
    (i) Certified copy of resolution of
     the board of directors with titles of
     officers authorized to bind
     corporation.
    (ii) Certified copy of resolutions
     granting corporate officer authority
     to issue a power of attorney.
    (iii) Certified copy of power of
     attorney or certified copy of
     resolution granting power of
     attorney.
(3) Certificate of partnership or           ............           XX            XX            XX   ............
 organization paperwork registering with
 the appropriate State official...........
(4) Copy of articles of partnership or      ............           XX            XX            XX   ............
 organization evidencing filing with
 appropriate Secretary of State, certified
 by Secretary of partnership or is a
 member or manager of a LLC...............
(5) Certificate evidencing State where      ............           XX            XX            XX   ............
 partnership or LLC is registered.
 Statement of authority to hold OCS
 leases, certified by Secretary OR
 original paperwork registering with the
 appropriate State official...............
(6) Statements from each partner or LLC     ............           XX            XX            XX   ............
 member indicating the following:.........
    (i) If a corporation or partnership,
     statement of State of organization
     and authorization to hold OCS leases,
     certified by Secretary over corporate
     seal, if a corporation.
    (ii) If an individual, a statement of
     citizenship.
(7) Statement from general partner,         ............           XX   ............  ............  ............
 certified by Secretary that:.............
    (i) Each individual limited partner is
     a U.S. citizen and;
    (ii) Each corporate limited partner or
     other entity is incorporated or
     formed and organized under the laws
     of a U.S. State or territory.
(8) Evidence of authority to bind           ............           XX            XX            XX   ............
 partnership or LLC, if not specified in
 partnership agreement, articles of
 organization, or LLC regulations, i.e.,
 certificates of authority from Secretary
 reflecting authority of officers.........
(9) Listing of members of LLC certified by  ............  ............  ............           XX   ............
 Secretary or any member or manager of LLC
(10) Copy of trust agreement or document    ............  ............  ............  ............           XX
 establishing the trust and all
 amendments, properly certified by the
 trustee with reference to where the
 original documents are filed.............
(11) Statement indicating the law under     ............  ............  ............  ............           XX
 which the trust is established and that
 the trust is authorized to hold OCS
 leases...................................
----------------------------------------------------------------------------------------------------------------

Sec.  256.402  Who may not become a lessee or acquire an interest in a 
lease?

    You may not become a lessee or acquire an interest in a lease if:
    (a) You or your principals are excluded or disqualified from 
participating in transactions covered by the Federal non-procurement 
debarment and suspension system (2 CFR parts 180 and 1400), unless MMS 
explicitly has approved an exception for this transaction;
    (b) You or your principals fail to meet or exercise due diligence 
under section 8(d) of the Act, 43 U.S.C. 1337(d) on any other OCS 
lease; or
    (c) The MMS determines after notice and opportunity for a hearing 
under 30 CFR part 290, subpart A, that your operating performance is 
unacceptable under 30 CFR part 250 on any other OCS lease.


Sec.  256.403  What do the non-procurement debarment rules require that 
I do?

    You must comply with the Department of the Interior's non-
procurement debarment regulations at 2 CFR parts 180 and 1400.
    (a) You must notify MMS if you know that you or your principals are 
excluded, disqualified, or convicted of crime as described in 2 CFR 
part 180 subpart I. You must make this notification before you sign a 
lease, assignment of record title interest, or transfer (assignment) of 
operating rights interest; or become a lease or unit operator. This 
paragraph does not apply if you have previously provided a statement 
disclosing this information, and we have received an exception from the 
Department of the Interior as described in 2 CFR 180.135.
    (b) If you wish to enter into a covered transaction with another 
person at the next lower tier, you must first:
    (1) Verify that the person is not excluded or disqualified under 
the requirements in 2 CFR part 180; and
    (2) Require the person to:
    (i) Comply with this subpart; and
    (ii) Include the obligation to comply with this subpart in their 
contracts and other transactions.
    (c) After you enter into a covered transaction, you must 
immediately notify MMS in writing if you learn that:
    (1) You failed to disclose information earlier; or
    (2) Due to changed circumstances, you or your principals now meet 
any of the criteria in 2 CFR 180.800.

[[Page 25192]]

Sec.  256.404  When must I notify MMS of mergers, name changes, or 
changes of business form?

    You must immediately notify us of any merger, name change, or 
change of business form. The latest you may make this notification is 1 
year after the earliest effective date or the date of filing the change 
or action with the Secretary of the State or other authorized official 
in the State of original registry.

How to Bid


Sec.  256.410  How do I submit a bid?

    (a) You must submit a separate sealed bid for each tract or bidding 
unit to the address provided and by the time specified in the notice of 
sale. You may not bid on less than an entire tract or bidding unit.
    (b) You must include a deposit to cover all bids submitted. The 
notice of sale specifies the amount and method of payment.
    (c) You may not submit a bid on an OCS lease if, after notice and 
hearing under 30 CFR part 290, the Secretary finds that you are not 
meeting the diligence requirements on any other OCS lease.
    (d) If your high bid is rejected, then the decision of the 
authorized officer on bids must be the final decision of the 
Department, subject only to reconsideration by the Secretary, upon your 
written request as set out in Sec.  256.417.

Restrictions on Joint Bidding


Sec.  256.411  Are there restrictions on bidding with others and do 
they affect my ability to bid?

    The Energy Policy and Conservation Act of 1975, 42 U.S.C. 6213, 
prohibits joint bidding by major oil and gas producers under the 
following circumstances:
    (a) The MMS publishes a restricted joint bidders list twice yearly 
in the Federal Register. Persons appearing on this list are limited in 
their ability to submit joint bids (see paragraph (c) of this section). 
The list:
    (1) Consists of the persons chargeable with an average worldwide 
daily production in excess of 1.6 million barrels of crude oil, 
liquefied petroleum products, or the Btu equivalent in natural gas, for 
the prior production period; and
    (2) Is based upon the statement of production that you must file as 
required by Sec.  256.412.
    (b) If we place you on the restricted joint bidders list, we will 
send you a copy of the order placing you on the list. You may appeal 
this order to the Interior Board of Land Appeals under 30 CFR part 290, 
subpart A.
    (c) If you are listed in the Federal Register in any group of 
restricted bidders, you may not bid:
    (1) Jointly with another person in any other group of restricted 
bidders for the applicable 6-month bidding period; or
    (2) Separately during the 6-month bidding period if you have an 
agreement with another restricted bidder that would result in joint 
ownership in an OCS lease.
    (d) As a bidder, you are prohibited from unlawful combination with, 
or intimidation of, bidders under 18 U.S.C. 1860.


Sec.  256.412  When must I file a statement of production?

    (a) You must file a statement of production if you had an average 
worldwide daily production of over 1.6 million barrels for the prior 
production period (determine your production using the method in Sec.  
256.413). Your statement must specify that you were chargeable with an 
average daily production in excess of 1.6 million barrels for the prior 
production period.
    (b) The prior production periods are as follows:

------------------------------------------------------------------------
 For the bidding period of  The prior production period is the preceding
           . . .                                . . .
------------------------------------------------------------------------
(1) May through October,    July through December.
(2) November through        January through June.
 April,
------------------------------------------------------------------------

    (c) You must file the statement of production by the following 
deadlines:

------------------------------------------------------------------------
 For the bidding period of
           . . .                You must file the statement by . . .
------------------------------------------------------------------------
(1) May through October,    March 17.
(2) November through        September 17.
 April,
------------------------------------------------------------------------

    (d) If you file a statement of production, MMS may require you to 
submit a detailed report of production.
    (1) The detailed report must list crude oil, liquefied petroleum 
products, or Btu equivalent in natural gas chargeable for the prior 
production period.
    (2) You must submit this report within 30 days after receiving the 
MMS request.
    (3) The MMS may inspect and copy such documents, records of 
production, analyses, and other material to verify the accuracy of any 
earlier statements of production.
    (e) If you submit a statement of production that misrepresents your 
chargeable production, we may cancel any of your leases that were 
awarded in reliance upon such statement.


Sec.  256.413  How do I determine my production for purposes of the 
restricted joint bidders list?

    (a) To determine the amount of production chargeable to you, add 
together:
    (1) Your average daily production in barrels of crude oil, 
liquefied petroleum products, or the Btu equivalent in natural gas 
worldwide; and
    (2) Your proportionate share of the average daily production owned 
by any entity which has an interest in you as the reporting person, and 
in which you have an interest.
    (b) For the purpose of this section, average daily production 
includes production owned by:
    (1) You;
    (2) Every subsidiary of yours;
    (3) Every person of which you are a subsidiary; and
    (4) Every subsidiary of any person of which you are a subsidiary.
    (c) For purposes of this section, interest means at least 5 percent 
ownership or control of you or the reporting person and includes any 
interest:
    (1) From ownership of securities or other evidence of ownership; or
    (2) By participation in any contract, agreement, or understanding 
regarding control of the person or their production of crude oil, 
liquefied petroleum products, or the Btu equivalent in natural gas.
    (d) For purposes of this section, entity means a person that meets 
both of the following criteria:
    (1) The entity is, in addition to a natural person, a corporation, 
partnership, association, joint-stock company, trust, fund, or any 
receiver, trustee in bankruptcy, or similar official acting for such a 
company; and
    (2) Fifty (50) percent or more of the entity's stock or other 
interest having power to vote for the election of a controlling body, 
such as directors or trustees, is directly or indirectly owned, 
controlled, or held with the power to vote by another person.


Sec.  256.414  Are exemptions from the bidding restrictions possible?

    The MMS may exempt you from the bidding restrictions if, after an 
opportunity for a hearing, we find that extremely high costs in an area 
would preclude exploration and development without an exemption.

How Does MMS Act on Bids?


Sec.  256.416  What does MMS do with my bid?

    (a) The MMS opens the sealed bids at the place, date, and hour 
specified in

[[Page 25193]]

the notice of sale for the sole purpose of publicly announcing and 
recording the bids. We do not accept or reject any bids at that time.
    (b) The MMS accepts or rejects all bids within 90 days, although we 
may extend that time if necessary. We reserve the right to reject any 
and all bids, regardless of the amount offered. If your bid is 
rejected, we will refund any money deposited with your bid plus any 
interest accrued.
    (c) If the highest bids are tied, MMS will notify the tied bidders. 
Within 15 days after notification, the tied bidders may agree to accept 
the lease jointly, if not otherwise prohibited from bidding together. 
The tied bidders must notify MMS of their decision and submit a copy of 
their agreement to accept the lease jointly. Or, they may decide 
between themselves which bidder(s) will become the lessee, and notify 
MMS of their decision. If there is no such agreement, we will award the 
lease to the high bidder selected by lot.
    (d) The MMS offers the Attorney General the opportunity to review 
the results of the sale before we accept the bids and issue the leases.


Sec.  256.417  What may I do if my bid is rejected?

    You may ask MMS in writing for reconsideration within 15 days of 
bid rejection. You will receive a written response either affirming or 
reversing the rejection.

Awarding the Lease


Sec.  256.420  What happens if I am the successful high bidder?

    If you are the successful bidder, you will receive the appropriate 
number of copies of the lease on a form approved by MMS.
    (a) When you receive the lease copies, within 11-business days 
after receipt, you must:
    (1) Execute the lease;
    (2) Pay the first year's rental;
    (3) Pay the balance of the bonus, unless deferred under (b) below; 
and
    (4) File a bond under subpart E of this part.
    (b) If provided for in the notice of sale, we may defer any part of 
the bonus payment for up to 5 years after the sale according to a 
schedule included in the notice of sale. You must provide a bond 
acceptable to us for payment of a deferred bonus.
    (c) If you do not execute and return the lease within 11 business 
days after receipt, or if you otherwise fail to comply with applicable 
regulations, your deposit will be forfeited and MMS may take 
appropriate action to collect the full amount bid, if so provided for 
in the notice of sale. However, we will return any deposit with 
interest if the tract is withdrawn from leasing before you execute the 
lease.
    (d) If you use an agent to execute the lease, you must include 
evidence with the executed copies of the lease form that you authorized 
the agent to act for you. After you comply with all requirements in 
this section, and after we have executed the lease, we will send you an 
executed copy.


Sec.  256.421  When is my lease effective?

    Your lease is effective on the first day of the month following the 
date that MMS executes the lease. You may request in writing, before we 
execute the lease, that your lease be effective as of the first day of 
the month in which we execute it.

Subpart E--Financial Accountability and Risk Management

General Bonds


Sec.  256.500  What security must I provide when I obtain my lease?

    (a) Before MMS will issue your lease or approve an assignment of an 
existing lease, you must provide one of the following general bonds on 
Form MMS-2028:
    (1) A lease-specific $50,000 general bond that guarantees 
compliance with all terms and conditions of the lease; or
    (2) An area-wide $300,000 general bond that guarantees compliance 
with all terms and conditions of all your leases in the area where your 
lease is located; or
    (3) A lease-specific or area-wide general bond as required for 
exploration or development and production activities as specified in 
Sec.  256.501.
    (b) For the purpose of an area-wide bond, the areas are each 
planning area as administered by MMS.
    (c) You have met the bonding requirement under this section if your 
designated lease operator provides a lease-specific or area-wide 
general bond that guarantees compliance with all terms and conditions 
of the lease, as required under Sec.  256.501.
    (d) The MMS may adjust the dollar amount of the general bonds 
described in this section by using the Implicit Price Deflator for 
Gross Domestic Product or a substantially equivalent index.


Sec.  256.501  Do my general bonding requirements change as activities 
progress on my lease?

    The table in this paragraph contains the general bond requirements 
for each stage of activity on your lease. Each bond must guarantee 
compliance with all terms and conditions of the lease. You may satisfy 
these bond requirements with a new bond or by increasing the amount of 
your existing bonds required under Sec.  256.500.

----------------------------------------------------------------------------------------------------------------
                                         Amount of
         Stage of  activity            general bond      Deadline for submission             Exceptions
----------------------------------------------------------------------------------------------------------------
(a) Before lease exploration                $200,000  Earlier of either of the      The Regional Director may
 activities begin.                                     following: The date you       authorize you to submit the
                                                       submit an Exploration Plan    $200,000 bond after you
                                                       (EP) for approval; or the     submit an EP, but before we
                                                       date you, as an assignee,     approve drilling activities
                                                       submit a request for          under the EP. You need not
                                                       approval of assignment of a   submit and maintain a
                                                       lease with an approved EP     $200,000 lease exploration
                                                                                     bond if you furnish and
                                                                                     maintain either:
                                                                                    (1) A $1 million area-wide
                                                                                     bond issued by a certified
                                                                                     surety and conditioned on
                                                                                     compliance with all the
                                                                                     terms and conditions of all
                                                                                     leases in the area; or
                                                                                    (2) A $3 million area-wide
                                                                                     bond under paragraph (b) of
                                                                                     this table.

[[Page 25194]]

 
(b) Before lease development and            $500,000  Earlier of either of the      The Regional Director may
 production activities begin.                          following: The date you       authorize you to submit the
                                                       submit a Development and      $500,000 lease development
                                                       Production Plan (DPP) or      bond after you submit a DPP
                                                       Development Operations        or DOCD, but before we
                                                       Coordination Document         approve the installation of
                                                       (DOCD) for approval; or the   a platform or the
                                                       date you, as an assignee,     commencement of drilling
                                                       submit a request for          activities under the DPP or
                                                       approval of assignment of a   DOCD. You need not submit
                                                       lease with an approved DPP    and maintain a $500,000
                                                       or DOCD                       lease development bond if
                                                                                     you furnish and maintain a
                                                                                     $3 million area-wide bond
                                                                                     that is issued by a
                                                                                     certified surety and
                                                                                     conditioned on compliance
                                                                                     with all the terms and
                                                                                     conditions of all leases in
                                                                                     the area. We may accept a
                                                                                     bond of less than $500,000
                                                                                     if:
                                                                                    (1) You can demonstrate that
                                                                                     wells and platforms can be
                                                                                     abandoned and removed and
                                                                                     drilling and platform sites
                                                                                     cleared of obstructions for
                                                                                     less than $500,000; and
                                                                                    (2) The bond is at least
                                                                                     equal to the cost of well
                                                                                     abandonment, platform
                                                                                     removal, and site
                                                                                     clearance.
----------------------------------------------------------------------------------------------------------------

Sec.  256.502  What instruments other than a surety bond may I use to 
provide the required security?

    You may pledge U.S. Department of Treasury securities or other 
types of security instruments if MMS determines that such security 
protects us to the same extent as the required bond. If you use a 
Treasury security:
    (a) You must post 115 percent of your bonding amount.
    (b) You must daily monitor the collateral value of your security. 
If the collateral value of your security, as determined in accordance 
with the 31 CFR part 225 Collateral Margins Table (which can be found 
at http://www.treasurydirect.gov) falls below the required level of 
coverage, you must within 10-business days, pledge additional security 
to provide the required amount.
    (c) You must include with your pledge, authority for us to sell the 
security and use the proceeds if we determine that you have failed to 
comply with any of the terms and conditions of your lease, right-of-way 
(ROW), or right-of-use and easement (RUE), any subsequent approval or 
authorization, or applicable regulations.


Sec.  256.503  What general requirements must my bond or other security 
meet?

    (a) Any bond or other security that you provide must:
    (1) Be payable to MMS upon demand;
    (2) Guarantee compliance under the lease and regulations of all of 
your non-monetary obligations and those of all lessees, operating 
rights owners, and operators on the lease; and
    (3) Guarantee all of your monetary obligations.
    (b) All surety bonds and Treasury notes must be on an official form 
approved by MMS. You may submit a bond on an approved form that you 
have reproduced. If the document you submit either advertently or 
inadvertently omits any terms and conditions that are included on the 
approved form, your bond is deemed to contain the omitted terms and 
conditions of the official form.
    (c) The MMS reserves the right to require electronic filing with a 
90-day notice published in the Federal Register.
    (d) Surety bonds must be issued by a surety that the Treasury 
certifies as acceptable to provide bonds to Federal agencies by listing 
in the current Treasury Circular 570, as required by 31 CFR 223.16. You 
may obtain a copy of Circular 570 from the Treasury Web site at http://www.fms.treas.gov.
    (e) You and a certified surety must execute your bond. When the 
surety is a corporation, an authorized corporate officer must sign the 
bond and attest to it over the corporate seal, and include the power of 
attorney authorizing said officer to bind the security.
    (f) You may not terminate the period of liability of, or cancel 
your bond, except as provided in this subpart. Bonds must continue in 
full force and effect even though an event has occurred that could 
diminish, terminate, or cancel a surety's obligation under State law.


Sec.  256.504  Must my surety bond cover the payment obligations of my 
co-lessees and designated operators?

    You may exclude from coverage the payment obligations of a co-
lessee or designated operator from your bond by giving MMS a written 
statement specifying which co-lessees and designated operators are to 
be excluded. The exclusion of payment obligations from coverage does 
not exclude the non-payment obligations of the lease.


Sec.  256.505  What happens if my co-lessees or designated operators 
exclude my payment obligations from their bond?

    You must post a bond at the level specified in this subpart for the 
level of activity on the lease. We may require a lesser amount if you 
can demonstrate that your payment obligations are less than the bond 
amounts required.

Supplemental Bonds


Sec.  256.510  Can MMS require that I post a supplemental bond?

    (a) To ensure coverage of potential lease, ROW, or RUE 
decommissioning liabilities and/or other obligations, MMS may determine 
that you need to provide a supplemental bond as security in addition to 
the requirements under Sec. Sec.  256.500 and 256.501 for general 
bonds. The Regional Director may require you to demonstrate the 
sufficiency of your bond to accomplish your lease obligations. You must 
submit supplemental bonds on Form MMS-2028A.
    (b) A requirement to post a supplemental bond(s) will be based on 
the Regional Director's determination of the cost to meet all accrued 
and anticipated obligations of your lease(s), ROW(s), or RUE(s), 
including those arising from operating rights interests, and an 
evaluation of the probability that you will be able to carry out 
present and future financial obligations as demonstrated by:
    (1) Financial capacity substantially in excess of existing and 
anticipated lease and other obligations, as evidenced by audited 
financial statements (including

[[Page 25195]]

auditor's certificate, balance sheet, and profit and loss sheet);
    (2) Projected financial strength significantly in excess of 
existing and future lease and other obligations based on the estimated 
value of your existing OCS lease production;
    (3) Business stability based on 5 years of continuous operation and 
production of oil and gas or sulphur in the OCS or onshore;
    (4) Reliability in meeting obligations based on credit ratings or 
trade references, including names and addresses of other lessees, 
drilling contractors, and suppliers with whom you have dealt; and
    (5) A record of compliance with laws, regulations, and lease, ROW, 
or RUE terms.
    (c) The MMS determines the amount of supplemental bond required to 
guarantee compliance. The Regional Director performs a case-specific 
analysis and considers such items as the potential underpayment of 
royalties; the cumulative obligations to abandon wells and remove 
platforms and facilities; and the requirement to clear the seafloor of 
obstructions.
    (d) If your cumulative potential obligations and liabilities 
increase or decrease, MMS may adjust the amount of the supplemental 
bond required.
    (1) The MMS will notify you of any proposed adjustment to your bond 
amount and give you an opportunity to comment.
    (2) If you request a reduction, you must submit evidence to the 
Regional Director that the projected amount of royalties due the 
Government over the next 12 months, any past due royalties, other 
payment obligations, and the estimated costs of your required 
decommissioning and cleanup, are less than the required bond amount. If 
MMS agrees, we will reduce the amount of the supplemental bond 
required.
    (e) Your supplemental bond must meet the requirements specified for 
general bonds under Sec.  256.503. You may utilize U.S. Department of 
the Treasury securities or other types of security instruments that MMS 
determines protect us to the same extent as the required bond. If you 
use a Treasury security, you must meet the requirements specified for 
general bonds in Sec.  256.502.


Sec.  256.511  May I use a third-party guaranty to meet the 
supplemental bonding requirement?

    (a) You may use a third-party guaranty if the guarantor meets the 
criteria prescribed in paragraph (b) of this section and submits an 
agreement meeting the criteria prescribed in paragraph (c) of this 
section. The agreement must guarantee compliance with the obligations 
of all lessees, operating rights owners, and operators on the lease(s), 
ROW(s), and RUE(s).
    (b) The MMS will consider the following factors in deciding whether 
to accept an agreement:
    (1) The length of time that your guarantor has been in continuous 
operation as a business entity. You may exclude periods of interruption 
that are beyond the guarantor's control by demonstrating, to the 
satisfaction of the Regional Director, that the interruptions do not 
affect the likelihood of your guarantor remaining in business during 
exploration, development, production, and decommissioning operations on 
your lease(s), ROW(s), and RUE(s) covered by the indemnity agreement.
    (2) Financial information available in the public record or 
submitted by your guarantor in sufficient detail to show us that your 
guarantor meets the criteria stated in paragraph (b)(4) of this 
section. Such detail includes:
    (i) The current rating for its most recent bond issuance by a 
generally recognized bond rating service such as Moody's Investor 
Service or Standard and Poor's Corporation;
    (ii) Your guarantor's net worth, taking into account liabilities 
for compliance with all terms and conditions of your lease, 
regulations, and other guarantees;
    (iii) Your guarantor's ratio of current assets to current 
liabilities, taking into account liabilities for compliance with all 
terms and conditions of your lease, regulations, and other guarantees; 
and
    (iv) Your guarantor's unencumbered domestic fixed assets.
    (3) If the information in paragraph (b)(2) of this section is not 
publicly available, your guarantor must submit the information in the 
following table, to be updated annually within 90 days of the end of 
the fiscal year (FY) or as otherwise prescribed.

------------------------------------------------------------------------
     Your guarantor must submit . . .                That . . .
------------------------------------------------------------------------
(i) Financial statements for the most       Include a report by an
 recently completed FY                       independent certified
                                             public accountant
                                             containing the accountant's
                                             audit or review opinion of
                                             the statements. The report
                                             must be prepared in
                                             conformance with generally
                                             accepted accounting
                                             principles and contain no
                                             adverse opinion.
(ii) Financial statement for completed      Your guarantor's financial
 quarter in the current FY                   officer certifies to be
                                             correct.
(iii) Additional information related to     Your guarantor's financial
 bonds, if requested by the Regional         officer certifies to be
 Director                                    correct.
------------------------------------------------------------------------

    (4) Your guarantor's total outstanding and proposed guarantees must 
not exceed 25 percent of its unencumbered domestic net worth.
    (c) Your guarantor must submit an agreement executed by the 
guarantor and all parties bound by the agreement. All parties are bound 
jointly and severally and must meet the qualifications set forth in 
Sec. Sec.  256.400 and 256.401.
    (1) When any party is a corporation, two corporate officers 
authorized to execute the indemnity agreement on behalf of the 
corporation must sign the agreement.
    (2) When any party is a partnership, joint venture, or syndicate, 
the indemnity agreement must bind each party who has a beneficial 
interest in your guarantor and provide that, upon MMS demand under your 
guaranty, each party is jointly and severally liable for compliance 
with all terms and conditions of your lease(s), ROW(s), and RUE(s) 
covered by the agreement.
    (3) When forfeiture of the guaranty is called for, the agreement 
must provide that your guarantor will either bring your lease(s), 
ROW(s), and RUE(s) into compliance or provide, within 7-calendar days, 
sufficient funds to permit MMS to complete corrective action.
    (4) The guaranty agreement must contain a confession of judgment, 
providing that, if we determine that you are, or your operator or 
operating rights owner is, in default, the guarantor must not challenge 
the determination and must remedy the default.
    (5) If you fail, or your operator or operating rights owner fails, 
to comply with any law, term, or regulation, your guarantor must either 
take corrective action or provide, within 7-calendar days or other 
agreed upon time period, sufficient funds for MMS to complete 
corrective action. Such compliance must not reduce your guarantor's 
liability.

[[Page 25196]]

    (6) If your guarantor wants to terminate the period of liability, 
your guarantor must notify you and us at least 90 days before the 
proposed termination date, obtain our approval for termination of all 
or a specified portion of the guarantee for liabilities arising after 
that date, and remain liable for all your work performed during the 
period the agreement is in effect.
    (7) Each guaranty submitted pursuant to this section is deemed to 
contain all the above terms, even if they are not actually in the 
agreement.
    (d) If your guaranty is to be terminated, you must provide an 
acceptable replacement in the form of a bond or other security before 
the termination.


Sec.  256.512  May I use a lease, right-of-way (ROW), or right-of-use 
and easement (RUE)-specific decommissioning account to meet the 
supplemental bonding requirement?

    (a) The MMS may authorize you to establish a lease, ROW, or RUE-
specific decommissioning account in a Federally-insured institution in 
lieu of a supplemental bond. The funds must not be withdrawn from the 
account without written approval by MMS.
    (1) The funds must be payable to MMS and pledged to meet your 
decommissioning obligations.
    (2) You must fully fund the account to cover all costs of 
decommissioning, including site clearance within the time we prescribe. 
The MMS will estimate the cost of decommissioning and site clearance.
    (b) Any interest paid on the account will be treated as account 
funds unless MMS authorizes in writing that any interest be paid to the 
depositor.
    (c) The Regional Director may allow you to pledge Treasury 
securities payable to MMS on demand to satisfy your obligation to make 
payments into the account. Acceptable Treasury securities and their 
collateral value are defined in 31 CFR part 380.
    (d) The MMS may require you to create an overriding royalty or 
production payment obligation for the benefit of the account. The 
obligation may be associated with production from another lease.

Changes in Bonding or Security


Sec.  256.520  What do I do if my bond lapses?

    (a) If your surety is decertified by the Treasury, becomes bankrupt 
or insolvent, or if your surety's charter or license is suspended or 
revoked, you must provide alternate security immediately. You must 
promptly inform MMS about the bond lapse and provide a new bond to us 
in the amount required under this subpart.
    (b) You and your surety must notify MMS within 72 hours after you 
learn of any action filed alleging that you are, or your surety or 
guarantor is, insolvent or bankrupt, or has been decertified by the 
U.S. Treasury.


Sec.  256.521  What happens if the value of my bond or other security 
is reduced?

    If the value of your bond or other security is reduced because of a 
default or any other reason, you must provide additional bond coverage 
sufficient to meet the requirements of this subpart within 45 days; 
however, MMS may specify a shorter period of time.


Sec.  256.522  What happens if my surety wants to terminate the period 
of liability of my bond?

    (a) Terminating the period of liability of a bond ends the period 
during which obligations continue to accrue, but does not relieve the 
surety of the responsibility for obligations and liabilities that 
accrued during the period of liability and before the date on which MMS 
terminates the period of liability under paragraph (b) of this section. 
The liabilities that accrue during a period of liability include:
    (1) Obligations that started to accrue prior to the beginning of 
the period of liability and had not been met, and
    (2) Obligations that began accruing during the period of liability.
    (b) Your surety must submit its request to MMS to terminate the 
period of liability under its bond and notify you of that request. We 
will terminate that period of liability within 90 days after we receive 
the request. If you intend to continue operations, or have not met all 
end-of-lease obligations, we will require you to provide a replacement 
bond of equivalent value.
    (c) If the period of liability is terminated but the bond is not 
cancelled under Sec.  256.523, the surety that provided the bond must 
continue to be liable for accrued obligations until all obligations are 
satisfied.


Sec.  256.523  What happens if my surety wants to cancel my bond?

    (a) The MMS will cancel or release a bond and relieve the surety 
from accrued obligations only if:
    (1) The MMS determines that there are no outstanding obligations; 
or
    (2) You furnish a replacement bond or an alternative form of 
security in an amount equal to or greater than the bond to be cancelled 
to cover the terminated period of liability and:
    (i) Before MMS will cancel a general bond prescribed under 
Sec. Sec.  256.500 or 256.501 on the basis of a replacement bond, the 
surety issuing the new bond must expressly agree to assume all 
outstanding liabilities that accrued during the period of liability 
that was terminated.
    (ii) Before MMS will cancel a supplemental bond on the basis of a 
replacement bond, the surety issuing the new bond must agree to assume 
that portion of the outstanding liabilities that accrued during the 
terminated period of liability that exceeds the coverage of the bond 
prescribed under Sec. Sec.  256.500 or 256.501 and of which you were 
notified.
    (b) When your lease ends, your surety(s) remain(s) responsible and 
MMS will retain any pledged security as shown in the table below:

------------------------------------------------------------------------
                                  The period of      Your bond will be
          Bond type:             liability ends:         cancelled:
------------------------------------------------------------------------
(1) General bonds submitted     When MMS           Seven years after the
 under Sec.  Sec.   256.500 or   determines that    lease ends, 6 years
 256.501.                        you have met all   after completion of
                                 of your            all bonded
                                 obligations        obligations, or at
                                 under the lease.   the conclusion of
                                                    any appeals or
                                                    litigation related
                                                    to your bonded
                                                    obligation,
                                                    whichever is the
                                                    latest. The MMS will
                                                    reduce the amount of
                                                    your bond or return
                                                    a portion of your
                                                    security, if we
                                                    determine that you
                                                    need less than the
                                                    full amount of the
                                                    bond to meet any
                                                    possible future
                                                    obligations.
(2) Supplemental bonds          When MMS           When you meet your
 submitted under this subpart.   determines that    bonded obligations,
                                 you have met all   unless MMS:
                                 your obligations  (i) Determines that
                                 covered by the     the future potential
                                 supplemental       liability resulting
                                 bond.              from any undetected
                                                    obligations is
                                                    greater than the
                                                    amount of the base
                                                    bond; and
                                                   (ii) Notifies the
                                                    provider of the bond
                                                    that we will wait 7
                                                    years before
                                                    canceling all or a
                                                    part of the bond, or
                                                    a longer period as
                                                    necessary to
                                                    complete any appeals
                                                    or judicial
                                                    litigation related
                                                    to your bond
                                                    obligation.
------------------------------------------------------------------------


[[Page 25197]]

Sec.  256.524  Why might MMS call for forfeiture of my bond?

    (a) The MMS may call for forfeiture of all or part of the bond or 
pledged security or performance by your guarantor if:
    (1) After notice and demand for performance by MMS, you refuse or 
fail, within the timeframe we prescribe, to comply with any term or 
condition of your lease; or
    (2) You default on one of the conditions under which we accepted 
your bond.
    (b) The MMS may pursue forfeiture without first making demands for 
performance against any other lessee, operating rights owner, or other 
person approved to perform lease obligations.


Sec.  256.525  How will I know about this forfeiture?

    (a) The MMS will notify you and your surety or guarantor in writing 
of the call for forfeiture and provide the reasons for the forfeiture 
and the amount to be forfeited. We will base the amount upon our 
estimate of the total cost of corrective action to bring your lease 
into compliance.
    (b) The MMS would advise you, your guarantor, and any surety that 
you may avoid forfeiture if, within 5 business days:
    (1) You, or your guarantor, agree(s) to and demonstrate(s) that you 
will bring your lease into compliance within the timeframe we 
prescribe; or
    (2) Your surety agrees to, and demonstrates that, it will bring 
your lease into compliance within the timeframe we prescribe, even if 
the cost of compliance exceeds the face amount of the bond.


Sec.  256.526  What if correcting my default requires a change in the 
amount of my bond?

    (a) If MMS demands forfeiture of your bond, we will collect the 
forfeited amount and use the funds to bring your lease(s) into 
compliance and correct any default.
    (b) If the amount collected under your bond is insufficient to pay 
the full cost of corrective action, MMS may take or direct action to 
obtain full compliance and recover all costs in excess of the forfeited 
bond from you, any co-lessee, operating rights owner, or responsible 
guarantor.
    (c) If the amount collected under your bond exceeds the full cost 
of corrective action to bring your lease(s) into compliance, MMS will 
return the excess funds to the party from whom they were collected.

Subpart F--Maintaining a Lease

Initial Period of a Lease


Sec.  256.600  What is the initial period of my oil and gas lease?

    (a) The initial period of your oil and gas lease may range from 5 
to 10 years. The MMS will specify the initial period in the notice of 
sale and in the lease instrument.
    (b) For leases in water depths of 400 to 799 meters, unless 
otherwise provided for in the notice of sale, the initial period will 
be 8 years but you must begin an exploratory well within the first 5 
years. Your lease will be subject to administrative cancellation after 
5 years if you have not begun an exploratory well.


Sec.  256.601  How may I maintain my oil and gas lease beyond the 
initial period?

    (a) You may maintain your oil and gas lease beyond the initial 
period as long as you are producing oil or gas in paying quantities, 
you are granted a suspension, or you are conducting approved drilling 
or well reworking operations, in accordance with 30 CFR part 250.
    (b) You may maintain your oil and gas lease by producing from, or 
drilling or reworking approved directional wells under your lease that 
originates from the surface of the seabed adjacent to or adjoining your 
lease.
    (c) You may maintain your oil and gas lease if your lease is being 
drained by a well on another lease and you are paying compensatory 
royalty.
    (d) You may maintain your oil and gas lease if the lease, or part 
of the lease, is part of an MMS-approved unit agreement, and there 
either is production allocated to your lease, a suspension of unit 
operations, or the unit is conducting approved drilling or well-
reworking operations in accordance with 30 CFR part 250.


Sec.  256.602  What is the initial period of my sulphur lease?

    Your sulphur lease will have an initial period of not more than 10 
years. The MMS will announce the initial period prior to the lease 
sale. Your lease will be subject to administrative cancellation after 5 
years if you have not begun an exploratory well.


Sec.  256.603  How may I maintain my sulphur lease beyond the initial 
period?

    You may maintain your sulphur lease after the initial period as 
long as you are producing sulphur in paying quantities; granted a 
suspension; or conducting drilling, reworking, plant construction, or 
other operations necessary to the production of sulphur.

Lease Obligations


Sec.  256.605  What are my obligations as a record title owner?

    (a) As a record title owner, you are responsible for all 
performance on the lease, including paying any rent and royalty due. If 
there is more than one record title or operating rights owner, each of 
you are jointly and severally liable for non-monetary lease 
obligations, including the obligation to protect the lease from 
drainage and to pay compensatory royalty that may be owed. You are also 
jointly and severally liable for plugging and abandonment obligations 
that accrue while you hold record title interest. For example, this 
means that if you own 50 percent record title interest, MMS may hold 
you responsible for 100 percent of the non-monetary obligations, if 
your joint owner(s) default(s).
    (b) For monetary obligations, such as paying rent and royalty, your 
obligation is proportionate to your interest. For example, if you own 
25 percent of the record title interest, you are liable for only 25 
percent of the rent or royalty on production. As a record title owner, 
you also are secondarily liable for monetary obligations of any 
operating rights holders on the lease.


Sec.  256.606  What are my rights and obligations as an operating 
rights owner?

    (a) As an operating rights owner, you have the right to enter the 
leased area to conduct drilling and related operations including 
production according to the lease terms and applicable regulations.
    (b) You have the right to authorize another party to conduct 
operations on the lease.
    (c) You are jointly and severally liable with other record title 
owners and operating rights holders in the lease for all non-monetary 
lease obligations pertaining to that portion of the lease subject to 
your operating rights.
    (d) You are liable for monetary obligations pertaining to that 
portion of the lease subject to your operating rights with other 
operating rights holders in proportion to your share of such operating 
rights.

Transferring Interest in All or Part of a Lease


Sec.  256.610  May I sell, exchange, assign, or otherwise transfer my 
lease?

    No lease issued under this part may be sold, exchanged, assigned, 
or otherwise transferred except with the approval of MMS.


Sec.  256.611  May I assign all or part of my lease interest?

    You may assign all or part of your lease interest subject to MMS 
approval.

[[Page 25198]]

Each instrument that creates or transfers an interest must describe the 
entire tract or describe, by officially designated subdivisions, the 
interest you propose to create or transfer. Officially designated 
subdivisions, or aliquot parts, are a half (\1/2\), a quarter (\1/4\), 
a quarter of a quarter (\1/4\\1/4\), and a quarter of a quarter of a 
quarter (\1/4\\1/4\\1/4\). We may disapprove an assignment when the 
assignor or assignee has outstanding or unsatisfied obligations under 
this chapter.


Sec.  256.612  May I assign operating rights?

    You may assign your operating rights in all or part of your lease 
subject to MMS approval. However, you may create subleases of only two 
depth levels per aliquot part. Operating rights must be described by 
officially designated subdivisions, or aliquot parts, and limited to 
specific depths within those subdivisions.


Sec.  256.613  How do I seek approval of an assignment?

    (a) You must request approval of each assignment and submit to MMS 
two originals of each instrument that creates or transfers ownership of 
record title or operating rights within 90 days after the last party 
executes the transfer agreement. You must pay the service fee listed in 
Sec.  256.104 with your request.
    (1) All assignments must be on the appropriate form approved by 
MMS.
    (i) Form MMS-150 entitled, Assignment of Record Title Interest in 
Federal OCS Oil and Gas Lease.
    (ii) Form MMS-151 entitled, Assignment of Operating Rights Interest 
in Federal OCS Oil and Gas Lease.
    (2) When an assignment is made of 100 percent of the record title 
interest in an officially designated subdivision of your lease, that 
assignment creates a new lease. Your assignee becomes the leaseholder 
of the newly segregated lease that is subject to all the terms and 
conditions of your original lease, including the requirement to furnish 
a bond in the amount required in subpart E of this part.
    (b) Before MMS approves an assignment, we will consult with and 
consider the views of the Attorney General.


Sec.  256.614  How do I transfer the interest of a deceased 
leaseholder?

    (a) If any of the leaseholders are deceased, you as heir or devisee 
must provide evidence as to who are the lawful successors in interest.
    (b) You as heir or devisee must submit a certified copy of an 
appropriate court order or decree; or if no court action is necessary, 
a certified copy of the will or the statements of two disinterested 
parties with knowledge of the facts.
    (c) You as heir or devisee must submit statements that you are the 
person named as successor in interest along with evidence of your 
qualifications to hold a lease under subpart D of this part.
    (d) If you do not qualify to hold a lease under subpart D of this 
part, you will be recognized as the successor in interest, but must 
divest your interest in the lease within 2 years.


Sec.  256.615  What if I want to assign interests in more than one 
lease at the same time?

    To assign interests in more than one lease at the same time, you 
must file a separate form and two originals of the instrument that 
creates or transfers ownership for each lease assigned. However, if all 
leases are being transferred to the same entity, you need submit only 
one application letter of request for approval.


Sec.  256.616  What is the effect of an assignment on an assignor's 
liability?

    As assignor, you are liable for all obligations, monetary and non-
monetary, that accrued under your lease before MMS approves your 
assignment. Our approval of the assignment does not relieve you of 
these accrued obligations if your assignee, or any subsequent assignee, 
fails to perform. In addition, MMS may require you to bring the lease 
into compliance to the extent the obligation accrued before approval of 
your assignment, if your assignee or any subsequent assignee, fails to 
perform any obligation under the lease. You remain liable for all 
obligations if you create a sublease of operating rights only.


Sec.  256.617  May I specify an effective date of the assignment?

    The MMS will record the assignment as effective on the date you 
specify. If you do not specify a date, the assignment is effective on 
the first day of the month following your request to assign. Regardless 
of the effective date, the date that we approve the assignment 
determines when the assignor's liabilities cease to accrue.


Sec.  256.618  What is the effect of an assignment on an assignee's 
liability?

    As assignee, you and any subsequent assignees are liable for all 
obligations that have accrued or will accrue after MMS approves the 
assignment. As assignee, you must comply with all the terms and 
conditions of the lease and regulations issued under the Act, remedy 
all existing environmental and operational problems on the lease, 
properly abandon all wells, and reclaim the site as required under 30 
CFR part 250.


Sec.  256.619  As a restricted joint bidder, may I assign interest to 
another restricted joint bidder?

    If you are a restricted joint bidder, you may assign all or part of 
your interest in a lease to another restricted joint bidder. However, 
if you want to assign less than your entire interest to another 
restricted joint bidder, you must submit to MMS a copy of any 
agreements relating to your acquisition of the lease or interest. The 
MMS may ask the Attorney General to review your request.


Sec.  256.620  Are there any interests I may assign without MMS 
approval?

    (a) You may create or transfer carried working interests, 
overriding royalty interests, or payments out of production without MMS 
approval. However, you must send us a copy of each instrument creating 
or transferring such interests for record purposes. For each lease 
affected, you must pay the service fee listed in Sec.  256.104 with 
your documents submitted for record.
    (b) If you submit documents for record purposes that are not 
required by these regulations, for each lease affected, you must pay 
the service fee listed in Sec.  256.104 with your document submissions. 
The MMS may decline to accept for filing such documents and the service 
fee will not be refunded.


Sec.  256.621  What reports must I submit for lease term pipelines when 
MMS approves a lease assignment?

    Within 30 calendar days after MMS approves an assignment of a 
lease, or approves a new designation of operator for a lease under 
Sec.  250.143 or Sec.  250.144, you (the new lessee or designated lease 
operator) must submit a report to the Regional Supervisor that:
    (a) Lists every lease term pipeline (see definition at Sec.  
250.105), including decommissioned pipelines on the lease; and
    (b) Indicates which pipelines remained as lease term pipelines 
after the lease assignment was approved by MMS.

Helium


Sec.  256.630  What must a lessee do if MMS elects to extract helium 
from a lease?

    (a) The MMS reserves the ownership of, and the right to extract, 
helium from all gas produced from your OCS lease. Under section 12(f) 
of the Act, 43 U.S.C. 1341(f), upon our request, you must deliver all 
or a specified portion of the gas containing helium to us at a point on 
the lease or an onshore processing facility that we designate.
    (b) The MMS will determine reasonable compensation and pay you for 
any loss caused by the extraction of

[[Page 25199]]

helium, except for the value of the helium itself. We may erect, 
maintain, and operate on your lease any reduction work and other 
equipment necessary for helium extraction. Our extraction of helium 
will be conducted in a manner to not cause substantial delays in the 
delivery of gas to your purchaser.

Subpart G--Ending a Lease


Sec.  256.700  How does a lease end?

    Your lease will expire by its own terms at the end of its initial 
period, if you have not taken actions to extend the lease through 
production in paying quantities, drilling operations, workover 
operations, or a suspension under 30 CFR part 250.


Sec.  256.701  May I end the lease myself?

    You may join with all record title owners to relinquish all or any 
officially designated subdivision of your lease at any time by filing 
three original copies of your request with MMS on Form MMS-152 
entitled, Relinquishment of Federal OCS Oil and Gas Lease. The 
relinquishment is effective on the date of filing. Relinquishing your 
lease does not relieve you of any accrued obligations, either monetary 
or non-monetary.


Sec.  256.702  Will MMS end my lease?

    (a) The MMS may cancel your lease under section 5(a) of the Act, 43 
U.S.C. 1334(a), if we find that continued activity would probably cause 
serious harm or damage to life, property, any mineral, National 
security or defense, or to the marine, coastal, or human environment; 
that the threat or harm or damage will not disappear or decrease to an 
acceptable level within a reasonable period of time; and that the 
advantages of cancellation outweigh the advantages of continuing the 
lease. Refer to 30 CFR part 250, subpart A, for procedures on lease 
cancellation and compensation.
    (b) The MMS may cancel your non-producing lease if you fail to 
comply with any provision of the Act, lease, or applicable regulations, 
if the failure continues for 30 days after we send you written notice 
of such failure. Cancellation is subject to judicial review under 
section 23(b) of the Act, 43 U.S.C. 1349(b).
    (c) The MMS may cancel your producing lease if you fail to comply 
with any provision of the Act, lease, or applicable regulations, only 
after the judicial proceedings required under section 5(d) of the Act, 
43 U.S.C. 1334(d).
    (d) The MMS may cancel your lease if we find proof that the lease 
was obtained by fraud or misrepresentation. You will have notice and an 
opportunity to be heard prior to lease cancellation.

Subpart H--[Reserved]

Subpart I--Bonus or Royalty Credits for Exchange of Certain Leases


Sec.  256.900  Which leases may I exchange for a bonus or royalty 
credit?

    You may exchange a lease for a bonus or royalty credit if it:
    (a) Was in effect on December 20, 2006, and
    (b) Is located in:
    (1) The Eastern planning area and within 125 miles of the coastline 
of the State of Florida, or
    (2) The Central planning area and within the Desoto Canyon OPD, the 
Destin Dome OPD, or the Pensacola OPD and within 100 miles of the 
coastline of the State of Florida.


Sec.  256.901  How much bonus or royalty credit will MMS grant in 
exchange for a lease?

    The amount of the bonus or royalty credit for an exchanged lease 
equals the sum of:
    (a) The amount of the bonus payment; and
    (b) All rental paid for the lease as of the date the lessee submits 
the request to exchange the lease under Sec.  256.902 to MMS.


Sec.  256.902  What must I do to obtain a bonus or royalty credit?

    (a) To obtain the bonus or royalty credit, all of the record title 
interest owners in the lease must submit the following to the MMS 
Regional Supervisor for Leasing and Environment for the GOM on or 
before October 12, 2010:
    (1) A written request to exchange the lease for the bonus or 
royalty credit, signed by all record title interest owners in the 
lease.
    (2) The name and contact information for a person who will act as a 
contact for each record title interest owner.
    (3) Documentation of each record title interest owner's percentage 
share in the lease.
    (4) A list of all bonus and rental payments for that lease made by, 
or on behalf of, each of the current record title owners.
    (5) A written relinquishment of the lease as described in Sec.  
256.701. Notwithstanding Sec.  256.701, the relinquishment will become 
effective when the credit becomes effective under paragraph (b) of this 
section.
    (b) The credit becomes effective when MMS issues a certification to 
the record title interest owners that the lease has qualified for the 
credit.


Sec.  256.903  How is the bonus or royalty credit allocated among 
multiple lease owners?

    The MMS will allocate the bonus or royalty credit for an exchanged 
lease to the current record title interest owners in the same 
percentage share as each owner has in the lease as of the date of the 
request to exchange the lease.


Sec.  256.904  How may I use the bonus or royalty credit?

    (a) You may use a credit issued under this part in lieu of a 
monetary payment due under any lease in the Gulf of Mexico not subject 
to the revenue distribution provisions of section 8(g)(2) of the OCSLA 
(43 U.S.C. 1337(g)(2)) for either:
    (1) A bonus for acquisition of an interest in a new lease; or
    (2) Royalty due on oil and gas production after October 12, 2010.
    (b) You may not use a bonus or royalty credit in lieu of delivering 
oil or gas taken as royalty-in-kind.
    (c) If you have any credit that remains unused after 5 years from 
the date MMS issued the credit, MMS reserves the right to apply the 
remaining credit to your ongoing obligations.


Sec.  256.905  How do I transfer a bonus or royalty credit to another 
person?

    (a) You may transfer your bonus or royalty credit to any other 
person by submitting to the MMS Adjudication Unit for the Gulf of 
Mexico two originally executed transfer letters of agreement.
    (b) Authorized officers of all companies involved in transferring 
and receiving the credit must sign the transfer letters of agreement as 
indicated on the qualification card filed with MMS.
    (c) A transfer letter of agreement must include:
    (1) The effective date of the transfer,
    (2) The OCS-G number for the lease that originally qualified for 
the credit,
    (3) The amount of the credit being transferred,
    (4) Company names punctuated exactly as filed on the qualification 
card at MMS, and
    (5) A corporate seal, only if MMS used a corporate seal 
qualification process for your corporation.
    (d) The transferee of a credit transferred under this section may 
use it in accordance with Sec.  256.904 as soon as MMS sends a 
confirmation of the transfer to the transferee.

[[Page 25200]]

PART 260--OUTER CONTINENTAL SHELF OIL AND GAS LEASING

    5. The authority citation for 30 CFR part 260 is revised to read as 
follows:

    Authority: 43 U.S.C. 1334.

    6. Amend 30 CFR part 260 by removing Subpart D.

[FR Doc. E9-12155 Filed 5-26-09; 8:45 am]
BILLING CODE 4310-MR-P


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