NTL General Financial Assurance

UNITED STATES DEPARTMENT OF THE INTERIOR
BUREAU OF OCEAN ENERGY MANAGEMENT
NTL No. 2015-N04

Effective Date: August 17, 2015

NOTICE TO LESSEES AND OPERATORS OF FEDERAL OIL AND GAS,
AND SULPHUR LEASES, HOLDERS OF PIPELINE RIGHTS-OF-WAY AND RIGHT-OFUSE AND EASEMENT GRANTS, AND GEOLOGICAL AND GEOPHYSICAL TEST WELL
PERMITS IN THE OUTER CONTINENTAL SHELF
General Financial Assurance
I.

Introduction

This Notice to Lessees and Operators (NTL) supersedes NTL No. 2000-G16, dated September 7,
2000. This NTL provides updates to bureau names and citations that changed as a result of the
reorganization of the former Minerals Management Service (MMS), and broadens the scope of
the superseded NTL to a National NTL that covers all Bureau of Ocean Energy Management
(BOEM) general bond (financial assurance) requirements. This NTL clarifies BOEM’s
implementation of the requirements for general financial assurance applicable to oil and gas, and
sulphur leases, pipeline rights-of-way (ROW) and right-of-use-and-easement (RUE) grants and a
specific type of permit issued by BOEM. Such general financial assurance is necessary to ensure
that you fully comply with all financial and performance obligations arising from the lease,
grant, or permit and applicable regulations.
This NTL does not address additional security that the Regional Director (RD) may require
pursuant to 30 CFR § 556.53(d). Nor does this NTL address the requirements for oil spill
financial responsibility, which are set forth in 30 CFR Part 553.
II.

Authority and Background

The Outer Continental Shelf Lands Act (OCSLA), 43 U.S.C. § 1331 et seq., charges the
Department of the Interior (DOI) with administering leasing on the Outer Continental Shelf
(OCS). Under the delegated authority of the Secretary of the Interior, BOEM requires that
entities engaging in activities on the OCS demonstrate sufficient financial wherewithal to be able
to meet all of their legal obligations. The system set up by BOEM’s regulations allows entities to
use surety bonds and other means of financial assurance to guarantee compliance with these
obligations. Generally, there are three stages in the life of a lease when general financial
assurance is required: (1) at the time of lease issuance, (2) concurrent with the approval of an
Exploration Plan (EP), and (3) concurrent with the approval of a Development and Production
Plan (DPP) or a Development Operations Coordination Document (DOCD).
This NTL explains the procedures that BOEM Regional Directors will use when requiring
general financial assurance and applies to all OCS oil and gas, and sulphur leases, pipeline
ROWs (see 30 CFR § 550.1011(a)(1)), RUEs (see 30 CFR § 550.160(c) and § 550.166(a)), and

1

G&G (Geological and Geophysical) permits issued for test well drilling activities (see 30 CFR §§
551.7(d)(1) and (d)(3)).
III.

Definitions

General financial assurance means, as appropriate, the financial assurance required by the
following sections of BOEM’s regulations: 30 CFR §§ 550.166(a), 550.1011(a)(1), 551.7(d)(1),
556.52, 556.53(a), 556.53(b), and, when applicable, § 556.53(c), and that amount of financial
assurance that the RD may prescribe for a Federal lessee’s RUE under 30 CFR § 550.160(c) or
for a G&G permit for the drilling of a shallow test well under 30 CFR § 551.7(d)(3).
You means the owner of a record title interest in a lease, the owner of an operating rights interest
in a lease, a designated operator acting as an agent of a record title or operating rights interest
owner, a ROW holder, a RUE holder, and any individual or organization that requests a G&G
permit from BOEM and is required by BOEM’s regulations, or by the BOEM Regional Director,
to provide financial assurance as a condition of the permit’s approval.
IV.

Policy

When am I required to provide general financial assurance?
As provided in BOEM’s regulations, you are required to provide general financial assurance
before BOEM will issue you a new lease, grant, or a G&G permit for the drilling of a deep
stratigraphic test well; approve the assignment or transfer of an existing lease or grant interest; or
approve an operational activity plan (EP, DPP, or DOCD). The Regional Director may require
general financial assurance before the issuance of G&G permit for the drilling of a shallow test
well. BOEM will also review your general financial assurance coverage after any corporate
merger or consolidation, business conversion, and/or name change; and whenever you submit an
EP, a DPP, or a DOCD, or a revised, modified, resubmitted, or supplemental EP, DPP, or
DOCD. Where a designated operator has submitted the required general financial assurance on
your behalf, BOEM will review such financial assurance coverage if you submit a request for
approval, or change, of the designated operator.
The required general financial assurance must be in place before activities under a plan or
relevant permit may commence.
Who must provide general financial assurance?
With respect to a lease, a record title owner or operating rights owner must submit the required
general financial assurance. (See 30 CFR § 556.52(a)) A designated operator may submit the
required general financial assurance on the record title owner’s or operating rights owner’s
behalf, pursuant to 30 CFR § 556.52(c). With respect to a grant or permit, the general financial
assurance must be provided by the holder of the grant or permit.
The submittal of general financial assurance by a designated operator does not relieve a record
title owner, operating rights owner, or any other liable parties of their obligations to comply with
any of the terms and conditions of the lease.

2

How much general lease financial assurance coverage do I need to provide?
The level of activity on your lease will determine the amount of general financial assurance
coverage that is required. BOEM will designate each lease, grant, or permit as “PreOperational,” “Exploration,” or “Development” and will assign the appropriate amount of
required coverage, as follows:
1.
Pre-Operational - The general financial assurance required for leases, grants, and permits
on, or pursuant to, which there are no operations is established in 30 CFR § 556.52 (a)(1) and
(2). You do not need to provide general financial assurance if your lease, grant, or on-lease
G&G permit is already covered by lease-specific or area-wide lease financial assurance provided
in compliance with the regulations cited in items 2 or 3 below.
2.
Exploration - The general financial assurance required for leases included in an existing
or proposed EP is established in 30 CFR § 556.53(a). You do not need to provide general
financial assurance if the leases in that existing or proposed EP are already covered by financial
assurance provided in compliance with the regulation cited in item 3 below.
3.
Development - The general financial assurance required for leases covered by an existing
or proposed DPP or DOCD is established in 30 CFR § 556.53(b).
4.
ROW - The general lease financial assurance required for ROWs is established in 30
CFR § 550.1011.
5.
Federal Lessee’s RUE – The general financial assurance required under 30 CFR §
550.160(c) for a RUE on the OCS, held by a Federal lessee, will be determined by the RD on a
case-by-case basis, based on his/her consideration of the information provided to BOEM
pursuant to 30 CFR § 550.161.
6.
State Lessee’s RUE – The general financial assurance required for a RUE on the OCS
held by a State lessee is established in 30 CFR § 550.166.
7.
G&G Permits - If you are performing G&G activities on your lease, including the drilling
of test wells, no permit is required and your general financial assurance for your lease covers the
G&G activities. If you are performing off-lease G&G activities that include the drilling of test
wells, a permit is required for such drilling. The general financial assurance required for the
drilling of a deep stratigraphic test well is established under 30 CFR § 551.7(d)(1). The RD may
require general financial assurance, on a case-by-case basis, under 30 CFR § 551.7(d)(3), before
authorizing you to drill a shallow test well.
What type of general financial assurance do I need to provide?
To satisfy the requirement to provide general financial assurance, you may, pursuant to 30 CFR
§ 556.54(b), provide bonds issued by a surety certified by the U.S. Department of the Treasury
(see
Treasury
Circular
No.
570,
http://www.gpo.gov/fdsys/,
and
http://www.fiscal.treasury.gov/fsreports/ref/suretyBnd/c570.htm) or, in lieu of bonds, you may,
pursuant to 30 CFR § 556.52(f), provide U.S. Treasury securities that are negotiable at the time
of submission for an amount at least equal to the value of the required general financial
assurance.
3

The Regional Director may also approve the use of alternatives to U.S. Treasury-certified bonds
and U.S. Treasury securities provided the interests of the U.S. Government are protected to the
same extent as they would be with the use of the named financial instruments. (See 30 CFR §
556.52(g)).
Pursuant to 30 CFR § 556.52(f)(1), it is the obligation of any organization providing a U.S.
Treasury security to BOEM to ensure that the value of that security does not fall below the
required amount of general financial assurance, and if it does, to provide additional Treasury
securities to bring the value of all securities pledged to an amount equal to the required
amount of the general financial assurance.
The date the BOEM Regional Office receives the general financial assurance is the effective
date of that general financial assurance.
V.

Addresses

Where do I submit general financial assurance? And how can I obtain additional general
financial assurance information?
Alaska OCS Region
Bureau of Ocean Energy Management
Alaska OCS Region
Leasing and Financial Responsibility Section
3801 Centerpoint Drive, Suite 500
Anchorage, AK 99503-5823
Gulf of Mexico & Atlantic OCS Regions
Bureau of Ocean Energy Management
Gulf of Mexico OCS Region
Leasing and Financial Responsibility Section
1201 Elmwood Park Boulevard, Mail Stop GM 250E
New Orleans, LA 70123-2394
GOMR Leasing & Financial Responsibility Section at (504) 736-2435
Pacific OCS Region
Bureau of Ocean Energy Management
Pacific OCS Region
Lease Management Section
760 Paseo Camarillo, Suite 102, Mail Stop CM 215
Camarillo, CA 93010
You can also visit (http://www.fiscal.treasury.gov/fsreports/ref/suretyBnd/c570.htm), and print
all financial assurance forms from PDF documents located at this Internet web address
(http://www.boem.gov/Bonding/).

4

VI.

Guidance Document Statement

BOEM issues NTLs as guidance documents in accordance with 30 CFR § 550.103 to clarify and
provide more detail about certain BOEM regulatory requirements and to outline the information
to be provided in various submittals. Under that authority, this NTL sets forth a policy on, and
an interpretation of, regulatory requirements to provide a clear and consistent approach for
complying with those requirements.

Paperwork Reduction Act of 1995 Statement
The collection of information referred to in this NTL provides BOEM with information
necessary to implement the requirements contained in 30 CFR Part 556, 30 CFR Part 550
Subparts A and B, and 30 CFR Part 551. The Office of Management and Budget (OMB) has
approved the information collection requirements in these regulations and assigned OMB
Control Numbers 1010-0006, 1010-0114, and 1010-0151. This NTL does not impose additional
information collection requirements subject to the Paperwork Reduction Act of 1995.

Contact
Submit questions and comments concerning this NTL to [email protected].

5