[Federal Register Volume 63, Number 216 (Monday, November 9, 1998)]
[Notices]
[Pages 60380-60383]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-29914]
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DEPARTMENT OF THE INTERIOR
Minerals Management Service
Notice of Revision of Form MMS-2005, Oil and Gas Lease of
Submerged Lands Under the Outer Continental Shelf Lands Act
AGENCY: Minerals Management Service, Interior.
ACTION: Notice.
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SUMMARY: MMS has determined that Form MMS-2005, the lease document,
needs revision due to changes in regulations since it was last reviewed
in 1986. MMS has revised the form to reflect plain language and has
rewritten it for clarity and organization. To reduce the need for
future revisions to the document due to changes in regulations, MMS
refers the Lessee to applicable laws, and rules and regulations of the
Department. Much of the wording of existing Form MMS 2005 that
specifically cites, incorporates by reference, or restates statutory
and regulatory requirements is therefore deleted from the proposed
revision.
DATES: MMS will accept comments on this document on or before December
24, 1998, and will schedule a workshop during the comment period.
ADDRESSES: Comments may be sent to Terry Holman, Minerals Management
[[Page 60381]]
Service, Mail Stop 4230, 1849 C Street, NW, Washington, D.C. 20240.
SUPPLEMENTARY INFORMATION: The Lease Sale Document form MMS-2005, is
the written contract between the U.S. Government and those wishing to
lease the submerged lands of the Outer Continental Shelf for
exploration, development and production of oil and natural gas
resources. Section 1 explicitly states that the lease is subject to the
Notice of Lease Sale, the Outer Continental Shelf Lands Act, and all
applicable rules and regulations of the Secretary of the Interior and
Executive Orders issued by the President. Provisions that restate
regulations have been deleted from the document. A section-by-section
description of the proposed changes is presented below.
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Old form New form
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Top of the form above the double line.. The statement concerning
information collection has
been revised to indicate that
the form contains information
collection requirements that
have been approved by the
Office of Management and
Budget. Headings in the upper
right are revised for clarity.
The Net Profit Share heading
is replaced with Other to
accommodate the recording of a
broader range of special terms
that might pertain to a lease.
Section 1: Statutes and Regulations.... This section was rewritten to
clarify that the lease is
subject to the OCS Lands Act,
the Lease Sale Notice, and all
applicable laws, rules,
regulations, and Executive
Orders issued by the President
as of the date of the lease
and in the future. The revised
section contains a specific
reference to the Notice of
Sale which was not included in
the previous version of the
document. Since many sections
have been removed from the
lease document because the
requirements exist in various
regulations, this statement
affirms that the lessee
remains responsible for
elements not expressly stated
in the lease.
Section 2: Rights of Lessee............ Retitled Rights Granted to the
Lessee. Rewritten in plain
language.
Section 3: Term........................ Rewritten in plain language.
Section 4: Rental...................... Four sections combined in one
renumbered and retitled
Section 7 Payment of Rent and
Royalty. Provisions deleted
because they are redundant of
43 USC 1337; 30 CFR part 206,
subpart C, 30 CFR 202.100; and
30 CFR part 218, subparts B
and D. Rewritten in plain
language.
Section 5: Minimun Royalty............. See note on section 4 above.
Section 6: Royalty on Production....... See note on section 4 above.
Section 7: Payments.................... See note on section 4 above.
Clarifies when payments are
due and how value of
production is calculated. We
added additional language to
make express the existing
implied covenant to market
production for the mutual
benefit of the Lessee and the
Lessor. We also added that
delivery of resources taken in
kind shall be made to a point
designated by the Lessor.
Section 8: Bonds....................... Provision deleted because it is
redundant of 30 CFR part 256,
subpart I.
Section 9: Plans....................... Provision deleted because it is
redundant of 30 CFR part 250,
subpart B.
Section 10: Performance................ Renumbered and retitled Section
8 Diligent Operations.
Rewritten in plain language.
Section 11: Directional Drilling....... Provision deleted because it is
redundant of 30 CFR 256.71.
Section 12: Safety Requirements........ Provision deleted because it is
redundant of 30 CFR 250.120-
122 22 and 43 U.S.C. 1347 and
1348.
Sectioni 13: Suspension and Provision deleted because it is
Cancellation. redundant of 30 CFR 250.110,
250.112 and 43 U.S.C. 1334.
Section 14: Indemnification............ Renumbered section 4. Rewritten
in plain language. Clarifies
that only successful appeal of
an MMS order, not mere pursuit
of an appeal, could exempt the
lessee from liability for loss
or damage to property or
injury to persons resulting
from compliance with the
order.
Section 15: Disposition of Production.. Provision deleted because it is
redundant of 43 U.S.C. 1353
and 43 U.S.C. 1337.
Section 16: Unitization, Pooling, and Provision deleted because it is
Drilling Agreements. redundant of 30 CFR part 250,
subpart M.
Section 17: Equal Opportunity Clause... Provision deleted because it is
redundant of 41 CFR 6-1.4(a)
and Executive Order 11246.
Section 18: Certification of Effective September 18, 1997,
Nonsegregated Facilities. the Labor Department amended
its regulations and 41 CFR 60-
1.8(b) has been deleted. (See
rulemaking at 62 FR 44174
(Aug. 19, 1997). The amended
60-1.8 requires the contractor
maintain a non-segregated
workplace, but no longer
relies on certification of the
contractor.
Section 19: Reservations to Lessor..... Renumbered section 6. Rewritten
in plain language.
Section 20: Transfer of Lease.......... Provision deleted because it is
redundant of 30 CFR part 256,
subpart J and 43 U.S.C. 1334.
Section 21: Surrender of Lease......... Provision deleted because it is
redundant of 30 CFR part
256.76 and 43 U.S.C. 1334.
[[Page 60382]]
Section 22: Removal of Property on Renumbered section 9. Rewritten
Termination of Lease. to specify time for submission
of a plan for well abandonment
and platform removal (within 3
months of lease termination).
Also would authorize lessor to
take title to property not
removed within the prescribed
time.
Section 23: Remedies in Case of Default Renumbered section 10 and
retitled Remedies for Lessee
Non-Compliance. Rewritten in
plain language.
Section 24: Unlawful Interest.......... Provision deleted because it is
redundant of 41 U.S.C. 22 and
18 U.S.C. 431-433.
Section 5 Access to Records is
a new section. It implements
and clarifies the requirements
of 30 CFR 207.5, 212.51 and
250.121 and implements section
103 of the Federal Oil and Gas
Royalty Management Act. In
particular, it would require
disclosure to authorize
representatives of the lessor
of documents in the possession
of ``affiliates,'' which have
been found to be covered
``other persons'' under 30 CFR
212.51 in Shell Oil Co. v.
Babbitt, 125 F.3d 172 (3rd
Cir. 1997), affirming 945
F.Supp. 792, and Santa Fe
Mineral v. McCutcheon, 90 F.3d
409 (10th Cir. 1996).
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The revised form is included below:
Form MMS-2005 ( 1998)
(Supersedes MMS-2005 March 1986)
United States Department of the Interior Minerals Management Service
Oil and Gas Lease of Submerged Lands Under the Outer Continental Shelf
Lands Act
This form contains information collection requirements that have
been approved by the Office of Management and Budget. These
approvals are found at 30 CFR 210.10, and 30 CFR 250.100.
Office
Serial Number
Cash Bonus
Rent per acre of fraction thereof________
Rent per hectare or fraction thereof________
$
Minimum royalty rate per acre or fraction thereof________
Minimum royalty rate per hectare or fraction thereof________
Royalty Rate
Other
This lease contains approximately acres hectares (the
``leased area''), described as follows:
It is effective as of (the ``Effective Date'') and will
continue for an initial period of years (the ``Initial Period'')
by and between the United States of America (the ``Lessor''), by the
Minerals Management Service (``MMS''), its authorized officer, and
(the ``Lessee''). In consideration of any payment made by the Lessee
to the Lessor and in consideration of the promises, terms,
conditions, and covenants contained herein, including the attached
Stipulation(s) numbered , the Lessee and Lessor agree as
follows:
Sec. 1. Statutes and Regulations. This lease is issued under the
Outer Continental Shelf Lands Act 43 U.S.C. 1331 et seq., as amended
(the ``Act''), and the Notice of Sale ________dated ________.
This lease is subject to the terms of that Notice, the Act, all
applicable laws, and the rules and regulations of the Secretary of
the Interior now or hereafter in effect, when not inconsistent with
any express provision of this lease. This lease is also subject to
all applicable Executive Orders issued by the President now or
hereafter in effect.
Sec. 2. Rights Granted to the Lessee. The Lessor grants to the
Lessee the exclusive right to explore for, develop, and produce oil
and gas resources, except helium gas, in the submerged lands of the
Outer Continental Shelf. This right is subject to the Lessor's
approval of plans and permits required under the Act and
regulations.
The Lessee also has the following rights:
(a) the nonexclusive right to conduct geological and geophysical
explorations according to applicable regulations;
(b) the nonexclusive right to drill water wells, except wells in
geopressured-geothermal and other geothermal reservoirs, and to use
the water produced for operations under the Act free of cost.
Drilling must be conducted according to procedures approved by the
Lessor.
(c) the right to construct and maintain devices and structures
necessary to the full exercise of rights under the lease, subject to
compliance with applicable laws and regulations.
Sec. 3. Term. This lease will continue from the Effective Date
of the lease for the Initial Period and as long as oil or gas is
produced from the leased area in paying quantities, or drilling or
well reworking operations (as approved by the Lessor) are conducted,
or as otherwise extended under regulation.
Sec. 4. Indemnification. The Lessee must indemnify the Lessor
for any claim, including claims for loss or damage to property or
injury to persons resulting from any operation on the leased area
conducted by or on behalf of the Lessee. However, the Lessee is not
responsible to the Lessor under this section for any loss, damage,
or injury caused by or resulting from:
(a) the Lessor's negligence, other than the commission or
omission of a discretionary function or duty, or
(b) the Lessee's compliance with an order of the Lessor against
which the Lessee filed an administrative appeal if the appeal is
filed before the cause of action for the claim arose and if the
Lessee prevails in the administrative appeal or subsequent action
for judicial review.
Sec. 5. Access to Records. In accordance with regulations, if
requested by the Lessor, the Lessee agrees to provide within a
reasonable time to any authorized representative of the Department
of the Interior all books, accounts, maps and any other records in
the possession or under the control of the Lessee, its affiliates,
or agents, that are relevant to operations, payments, disposition of
the production, or any other activity occurring under this lease.
The Lessee also agrees to keep these records open for inspection by
any authorized representative at all reasonable times. This clause
applies regardless of whether the records were prepared by or are
under the control of the Lessee, or its affiliates, or agents.
Information regarding disposition of the production includes, but is
not limited to, all records regarding the sale or other disposition
of oil or gas produced from the leased area by the Lessee or any of
its affiliated or related entities.
Sec. 6. Reservations to Lessor. All rights in the leased area
not expressly granted to the Lessee by the Act, the regulations, or
this lease are reserved to the Lessor. Reserved rights include, but
are not limited to:
(a) authorizing geological and geophysical exploration in the
leased area which does not unreasonably interfere with or endanger
actual operations under this lease;
(b) granting easements or rights-of-way;
(c) granting leases for any minerals other than oil and gas,
provided that operations under such leases do not unreasonably
interfere with or endanger operations under this lease; and
(d) suspending operations under this lease during war or
national emergency as provided in section 12(c) or 12(d) of the Act.
If the Lessor suspends operations or restricts activities under
those sections of the Act, rent and royalty payments will be
suspended and the term of this lease will be extended by adding the
suspension period. The Lessor will pay the Lessee just compensation
for such suspension as provided by the Act.
Section. 7. Payment of Rent and Royalty. The Lessee must pay the
rent, minimum royalty, or royalty on the value of production saved,
removed or sold at the rate specified on the face of this lease. The
Lessor may require payment of the royalty in kind.
[[Page 60383]]
Payment must comply with applicable regulations and the following
provisions:
(a) The Lessee must pay rent for each lease year which begins
before determination of oil or gas in paying quantities in the
leased area. Rent for the first year is due by the eleventh business
day after receipt of this lease, and for subsequent years on or
before the anniversary date of this lease.
(b) The Lessee must pay minimum royalty for each year which
begins after a determination of oil or gas in paying quantities on
the lease area is made by the Lessor. Minimum royalty is due by the
day before the next anniversary of the lease. If production occurs,
the Lessee must pay the greater of minimum royalty or royalty.
(c) The Lessor reserves authority to establish reasonable value
of all production for royalty purposes. To establish the value of
production, the Lessor may use dispositions by the Lessee, its
affiliates, and others related to the Lessee, or the Lessor may use
other considerations specified under applicable regulations.
(d) The Lessee must place production in marketable condition and
market the production at no cost to the Lessor.
(e) The Lessee shall deliver royalty oil and gas resources taken
in kind to a delivery point designated by the Lessor.
Sec. 8. Diligent Operations. The Lessee must properly and timely
develop and produce this lease. Under normal conditions, the Lessee
will explore and commence development within the primary term of
this lease. After due notice in writing from the Lessor, the Lessee
must drill such wells and produce at such rates consistent with
sound operating principles as the Lessor may require.
Sec. 9. Removal of Property on Termination of Lease. In
accordance with regulations, the Lessee must submit for approval a
plan for well abandonment and platform decommissioning within three
months after termination in whole or in part unless the Lessor
approves a longer period. The Lessee must provide for the removal of
all devices, works, and structures from the premises no longer
subject to the lease, according to applicable regulations and orders
of the Lessor. All abandonment and removal operations must be
completed within one year after termination of this lease unless
otherwise approved by the Lessor. Failure to comply will result in
penalties under the regulations. The Lessor may take title to any
property not removed within such time. With the written approval of
the Lessor under a right of use and easement, the Lessee may
continue to maintain devices, works, and structures on the leased
area for drilling or producing on other leases or for other
purposes.
Sec. 10. Remedies for Less Non-Compliance.
(a) Whenever the Lessee fails to comply with any provisions of
the Act, the regulations issued under the Act, or the terms of this
lease, the Lessor's remedies include, but are not limited to:
(1) Penalties under section 24 of the Act;
(2) Suspension or cancellation under Section 5 of the Act;
(3) Demands for payment or forfeiture of bond; or
(4) Other remedies for nonperformance of a contract available
under common law or statutes.
(b) The Lessor's nonenforcement of a remedy for any violation
does not prevent the Lessor from exercising any other remedies for
any other violation or from exercising any other remedies for the
same violation occurring at any other time.
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(Lessee)
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(Signature of Authorized Officer)
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(Name of Signatory)
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(Title)
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(Date)
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(Address of Lessee)
The United States of America, Lessor
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(Signature of Authorized Officer)
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(Name of Signatory)
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(Title)
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(Date)
If this lease is executed by a corporation, it must bear the
corporate seal.
Dated: November 2, 1998.
Cynthia Quarterman,
Director.
[FR Doc. 98-29914 Filed 11-6-98; 8:45 am]
BILLING CODE 4310-MR-M
