Bureau of Ocean Energy Management August 2014 – Federal Register Recent Federal Regulation Documents

BOEM is seeking comments and information regarding its effort to update its regulations and program oversight for Outer Continental Shelf (OCS) financial assurance requirements. When BOEM's existing bonding regulations were originally drafted and first implemented, the principal risks associated with OCS leases were non-payment of rents and royalties, noncompliance with laws and regulations, and potential problems due to bankruptcy. While potentially significant, such risks were generally well-known and of limited complexity, size and scope. Due to increasingly complex business, functional, organizational and financial issues and vast differences in costs associated with expanded and varied offshore activities, BOEM has recognized the need to develop a comprehensive program to assist in identifying, prioritizing, and managing the risks associated with industry activities on the OCS. BOEM intends to design and implement a more robust and comprehensive risk management, financial assurance and loss prevention program to address these complex issues and cost differences associated with offshore operations. To do so, BOEM is seeking stakeholder comments regarding various risk management and monitoring activities pertaining to financial risks to taxpayers that may result from activities on the OCS. This notice specifically discusses the bonding and financial assurance program for BOEM's offshore oil and gas program. However, we also welcome the submission of comments on the analogous bonding and financial assurance program for BOEM's offshore renewable energy and hard minerals programs. BOEM currently requires lessees to provide performance bonds and/or one of various alternative forms of financial assurance to ensure compliance with the terms and conditions of leases, Rights-of-Use and Easements (RUEs) and Pipeline Rights-of-Way (ROWs). BOEM is seeking comments on who is best suited to mitigate risks and whether the correct parties are providing guarantees and other forms of financial assurance, as well as whether, or to what extent, the current forms of financial assurance are adequate and appropriate. Because costs and damages associated with oil spill financial responsibility (OSFR) are covered separately in the regulations, which is the subject of other proposed rulemakings on BOEM's regulatory agenda, BOEM is not soliciting comments on those regulations and their associated risk mitigation measures at this time.