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BOEM Updates, Streamlines OCS Oil, NatGas Leasing Rules

Streamlined rules that update federal oversight of oil, natural gas and sulfur leasing in the Outer Continental Shelf (OCS) are to take effect at the end of May, the Department of Interior’s Bureau of Ocean Energy Management (BOEM) said.

The updates, published Wednesday in the Federal Register (FR), reflect that the former U.S. Minerals Management Service (MMS) was reorganized and divided into three separate organizations.

The revisions by MMS were underway in May 2009 through the proposed “Leasing of Sulphur or Oil and Gas and Bonding Requirements in the Outer Continental Shelf” (74 FR 25177).

The overhaul of the scandal-ridden MMS began in mid-2010, resulting in Interior creating BOEM, the Bureau of Safety and Environmental Enforcement and the Office of Natural Resources Revenue (see Daily GPI, Jan. 20, 2011; May 19, 2010). That overhaul led to some rulemakings taking longer than originally anticipated.

“The final rule reorganizes and reorders regulations for clarity, eliminates redundant or otherwise unnecessary text, and adds new definitions and sections to standardize or clarify practices in all three BOEM OCS regional offices,” BOEM said.

The final rulemaking also clarifies filing requirements to transfer economic interests in leases that would enable officials to track and maintain information that may be used to assess a company’s financial strength and reliability.

The updates would be codified in 30 Code of Federal Regulations (CFR) Parts 550, 556, 559 and 560. The effort to revise the leasing regulations, Part 256, actually began as part of the Clinton administration’s initiative in the late 1990s to write regulations in “plain English.”

The rulemaking:

  • Reorganizes leasing requirements to more effectively communicate the leasing process, policies and procedures as they evolved over the years, clarify requirements, and add statutory/departmental requirements instituted since the last major rewrite;
  • Completely replaces 30 CFR 556 and revises parts 550 and 560, which relate to sulfur or oil/gas leasing requirements;
  • Removes prior Part 559 and incorporates its provisions into the final rule Part 560;
  • Excludes substantive changes to Part 556, Subpart I, Bonding, which is to be the subject of a separate rulemaking as the risk management program is developed;
  • Codifies many existing bureau policies and practices; and
  • Corrects some errors that occurred when regulations were reorganized after the MMS was split into three separate agencies.

BOEM received only eight comments from industry representatives and two citizens, who commented to show their support of the OCS oil and gas leasing program. Each comment was considered and some resulted in changes to the proposed rule, officials said. 

“This final rule reorganizes leasing requirements to more effectively reflect existing leasing processes, policies and procedures that have evolved over the years,” BOEM said. “Changes incorporated in the final rule will assist BOEM in meeting its stewardship responsibilities and performing its role as regulator, while providing industry with clear regulations on a variety of topics, including lease sales, definitions of ownership interests, designations of operators, transfers of lease interest and corresponding monetary and nonmonetary rights, and obligations.”

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