§ 550.1011 - Financial assurance requirements for pipeline right-of-way (ROW) grant holders.

§ 550.1011 Bond Financial assurance requirements for pipeline right-of-way holders.

Cross Reference

Link to an amendment published at 89 FR 31590, Apr. 24, 2024.

Cross Reference

Link to an amendment published at 89 FR 47081, May 31, 2024.

(a) When you apply for,

(ROW) grant holders.

(a) Except as provided in paragraph (b) of this section, when you apply for, attempt to assign, or are the holder of , a pipeline right-of-way (ROW) grant, you must :

(1) Provide

furnish and maintain

a

$300,000

bond (in addition to the bond coverage required in 30 CFR part 256 and 30 CFR part 556)

of area-wide financial assurance that guarantees compliance with

all

the regulations and the terms and conditions of

the rights-of-way

all the pipeline ROW grants you hold in an OCS area

; and

(2) Provide additional security if the Regional Director determines that a bond in excess of $300,000 is needed.

(b) For the purpose of this paragraph, there are three areas:

(1) The Gulf of Mexico and the area offshore the Atlantic Coast;

(2) The areas offshore the Pacific Coast States of California, Oregon, Washington, and Hawaii; and

(3) The area offshore the Coast of Alaska.

(c) If, as the result of a default, the surety on a right-of-way grant bond makes payment to the Government of any indebtedness under a grant secured by the bond, the face amount of such bond and the surety's liability shall be reduced by the amount of such payment.

(d) After a default, a new bond in the amount of $300,000 shall be posted within 6 months or such shorter period as the Regional Supervisor may direct. Failure to post a new bond shall be grounds for forfeiture of all grants covered by the defaulted bond.

as defined in § 556.900(b) of this subchapter. The requirement to furnish and maintain area-wide financial assurance for a pipeline ROW grant is separate and distinct from the requirement to provide financial assurance for a lease or right-of-use and easement (RUE).

(b) The requirement to furnish and maintain area-wide pipeline ROW financial assurance under paragraph (a) of this section may be satisfied if your operator or a co-grant holder provides such financial assurance in the required amount that guarantees compliance with the regulations and the terms and conditions of the grant.

(c) The requirements for lease financial assurance in §§ 556.900(d) through (g) and 556.902 of this subchapter apply to the area-wide financial assurance required in paragraph (a) of this section.

(d) The Regional Director, using the criteria set forth in § 556.901(d)(1) through (3) of this subchapter, will evaluate your financial ability to carry out present and future obligations, and as a result, may require supplemental financial assurance (i.e., above the amount required by paragraph (a) of this section) to ensure compliance with the obligations under your pipeline right-of-way grant.

(e) The supplemental financial assurance required under paragraph (d) of this section must:

(1) Meet the requirements of §§ 556.900(d) through (g) and 556.902 of this subchapter, and

(2) Cover costs and liabilities for compliance with the obligations of your ROW grants and with applicable BOEM and BSEE orders.

(f) If you fail to replace any deficient financial assurance upon demand or fail to provide supplemental financial assurance upon demand, the Regional Director may:

(1) Assess penalties under subpart N of this part;

(2) Request BSEE to suspend operations on your pipeline ROW; and/or

(3) Initiate action for forfeiture of your pipeline ROW grant in accordance with § 250.1013 of this title.

[89 FR 31590, Apr. 24, 2024]