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9 July 2008


[Federal Register: July 9, 2008 (Volume 73, Number 132)]
[Proposed Rules]               
[Page 39375-39504]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09jy08-29]                         
 

[[Page 39375]]

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Part II





Department of the Interior





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 Minerals Management Service



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30 CFR Parts 250, 285, and 290



Alternative Energy and Alternate Uses of Existing Facilities on the 
Outer Continental Shelf; Proposed Rule


[[Page 39376]]


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DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR Parts 250, 285, and 290

[Docket ID: MMS-2008-OMM-0012]
RIN 1010-AD30

 
Alternative Energy and Alternate Uses of Existing Facilities on 
the Outer Continental Shelf

AGENCY: Minerals Management Service (MMS), Interior.

ACTION: Proposed rule; notice of availability of the draft 
environmental assessment.

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SUMMARY: The MMS is proposing regulations that would establish a 
program to grant leases, easements, and rights-of-way (ROW) for 
alternative energy project activities on the Outer Continental Shelf 
(OCS) as well as for certain previously unauthorized activities that 
involve the alternate use of existing facilities located on the OCS; 
and would establish the methods for sharing revenues generated by this 
program with nearby coastal States. These regulations are also intended 
to ensure the orderly, safe, and environmentally responsible 
development of alternative energy sources on the OCS. The MMS is 
developing this program and proposed regulations under the authority 
granted the Secretary of the Interior (Secretary) by the Energy Policy 
Act of 2005 (EPAct), which amended the Outer Continental Shelf Lands 
Act (OCS Lands Act). Under this new authority, the Secretary maintains 
discretionary authority to issue leases, easements or ROWs on the OCS 
for previously unauthorized activities that: Produce or support 
production, transportation, or transmission of energy from sources 
other than oil and gas; or use, for energy-related or other authorized 
marine-related purposes, facilities currently or previously used for 
activities authorized under the OCS Lands Act.
    The MMS has prepared a Draft Environmental Assessment (EA) 
analyzing this proposed rule. The Draft EA incorporates by reference 
the Programmatic Environmental Impact Statement (EIS) Programmatic 
Environmental Impact Statement for Alternative Energy Development and 
Production and Alternate Use of Facilities on the Outer Continental 
Shelf, Final Environmental Impact Statement, October 2007. This Draft 
EA was prepared to assess any impacts of this proposed rule. We are 
furnishing this notification to allow other agencies and the public an 
opportunity to review and comment on the Draft EA.
    All comments received on this proposed rulemaking and the Draft EA 
will become part of the public record and will be available for review.

DATES: Submit comments on the proposed regulation by September 8, 2008. 
The MMS may not fully consider comments received after this date. 
Submit comments to the Office of Management and Budget on the 
information collection burden in this rule by August 8, 2008. This does 
not affect the deadline for the public to comment to MMS on the 
proposed regulations. Submit comments on the Draft Environmental 
Assessment by September 8, 2008.

ADDRESSES: You may submit comments on the rulemaking by any of the 
following methods. Please use the Regulation Identifier Number (RIN) 
1010-AD30 as an identifier in your message. See also Public 
Availability of Comments under Procedural Matters.
     Federal eRulemaking Portal: http://www.regulations.gov. 
Under the tab ``More Search Options,'' click Advanced Docket Search, 
then select ``Minerals Management Service'' from the agency drop-down 
menu, then click ``submit.'' In the Docket ID column, select MMS-2008-
OMM-0012 to submit public comments and to view supporting and related 
materials available for this rulemaking. Information on using 
Regulations.gov, including instructions for accessing documents, 
submitting comments, and viewing the docket after the close of the 
comment period, is available through the site's ``User Tips'' link. The 
MMS will post all comments.
     Mail or hand-carry comments to the Department of the 
Interior, Minerals Management Service, Attention: Regulations and 
Standards Branch (RSB), 381 Elden Street, MS-4024, Herndon, Virginia 
20170-4817. Please reference ``Alternative Energy and Alternate Uses of 
Existing Facilities on the Outer Continental Shelf, 1010-AD30'' in your 
comments and include your name and return address. The MMS will post 
all comments on Regulations.gov.
     Send comments on the information collection in this rule 
to: Interior Desk Officer 1010-AD30, Office of Management and Budget; 
202-395-6566 (fax); e-mail oira_docket@omb.eop.gov. Please also send a 
copy to MMS.
     The Draft EA is available on the MMS Web site at: http://
www.mms.gov/offshore/AlternativeEnergy/RegulatoryInformation.htm. You 
may submit comments on the Draft Environmental Assessment in one of the 
following two ways:
    [cir] In written form enclosed in an envelope labeled ``Alternative 
Energy Program Rulemaking Draft Environmental Assessment'' and mailed 
(or hand carried) to the Branch Chief, Environmental Assessment Branch, 
Minerals Management Service, Mail Stop 4042, 381 Elden Street, Herndon, 
Virginia 20170.
    [cir] Electronically to the MMS e-mail address: 
alternative@mms.gov.
    MMS is requesting comments on specific items identified throughout 
the preamble. For your convenience in commenting, we have compiled a 
list of these items at the end of the preamble.

FOR FURTHER INFORMATION CONTACT: Proposed rule: Maureen Bornholdt, 
Program Manager, Offshore Alternative Energy Programs, at 703-787-1300 
or maureen.bornholdt@mms.gove or Amy C. White, Regulations and 
Standards Branch, at (703) 787-1665 or amy.white@mms.gov.
    Draft Environmental Assessment: James F. Bennett, Chief, Branch of 
Environmental Assessment, at (703) 787-1660.

SUPPLEMENTARY INFORMATION:

Background

Statement of Purpose

    Sufficient domestic sources of energy are vital to expanding the 
Nation's economy and enhancing Americans' quality of life. However, an 
imbalance exists between our energy consumption and domestic energy 
production that makes it vital to find ways to narrow the gap between 
the amount of energy used and the amount domestically produced. There 
is no single solution for narrowing this gap, but there are several 
means available. Increasing the Nation's supply of renewable energy 
produced from domestic sources will be a key part of any strategy to 
meet this goal.
    According to the Department of Energy's Energy Information 
Administration (EIA) 2007 Annual Energy Outlook, public and private 
wind and other renewable energy generating sectors of our economy are 
the fastest growing energy sources in the United States (US). The EIA 
estimates that in 2030 renewable energy will account for over 10 
percent of domestic energy production and about 7 percent of 
consumption. The Energy Policy Act of 2005 (EPAct) encourages the 
development of renewable energy resources as part of an overall 
strategy to develop a diverse portfolio of domestic energy supplies for 
the future. Section 388 of the EPAct gave the Department of the 
Interior new

[[Page 39377]]

authority to grant leases, easements, and ROWs for the development of 
promising new energy sources such as offshore wind, wave, current, and 
solar energy and for ensuring that alternative energy development on 
the OCS proceeds in a safe and environmentally responsible manner. The 
Secretary of the Interior delegated to the MMS the new authority that 
was conferred by the EPAct.
    Enactment of the EPAct recognized the need for an unambiguous 
outline of authorities pertaining to energy-related activities on the 
OCS. Before the EPAct, as various agencies of the Federal government 
received proposals for innovative, non-traditional energy-related 
projects on the OCS, it became evident that--with limited exceptions--
there existed no clear Federal authority for granting rights to use the 
seabed for such projects. This lack of clearly outlined authority was a 
significant impediment to the development of renewable energy on the 
OCS, and dampened efforts by potential energy developers and Federal 
regulators to seriously develop and consider offshore projects. 
Congress recognized that management of alternative energy and alternate 
use activities would require comprehensive authority to permit access 
in a fair and equitable manner, to ensure environmental and operational 
compliance, and to achieve a fair return to the Nation. As the Federal 
government's primary manager of offshore energy development, the 
Department of the Interior, MMS, was given this comprehensive new 
authority.

Mandate of Energy Policy Act of 2005 (EPAct)

    The EPAct amended the OCS Lands Act to authorize the Secretary to 
issue leases, easements, or rights-of-way on the OCS for activities 
that:
    (i) Support exploration, development, production, or storage of oil 
or natural gas, except that a lease, easement, or right-of-way shall 
not be granted in an area in which oil and gas preleasing, leasing, and 
related activities are prohibited by a moratorium;
    (ii) Support transportation of oil or natural gas, excluding 
shipping activities;
    (iii) Produce or support production, transportation, or 
transmission of energy from sources other than oil and gas; or
    (iv) Use, for energy-related or other authorized marine-related 
purposes, facilities currently or previously used for activities 
authorized under the OCS Lands Act.
    This new authority does not apply to activities that are otherwise 
authorized by law, including those covered by the OCS Lands Act, the 
EPAct, the Deepwater Port Act of 1974, and the Ocean Thermal Energy 
Conversion Act of 1980. On March 20, 2006, the Secretary of the 
Interior delegated to the MMS the new authority that was conferred by 
the EPAct.
    In addition, the EPAct of 2005 requires the Secretary to share with 
nearby coastal States a portion of the revenues received by the Federal 
Government from authorized alternative energy and alternate use 
projects on certain areas of the OCS. This proposed rule would 
implement this mandate and describe the methods to be used for 
identifying what projects are covered by this requirement, for 
determining which States are eligible to receive shares of the 
revenues, and--if two or more States are eligible to receive revenues 
from the same project--for allocating the appropriate share to each 
eligible State.
    The EPAct included a requirement that the Secretary develop any 
necessary regulations to implement the new authority. This Notice of 
Proposed Rulemaking applies to the activities described in (iii) and 
(iv) above (i.e., those relating to production, transportation, or 
transmission of energy from sources other than oil and gas and to the 
use of existing OCS facilities for energy-related or other authorized 
marine-related purposes). Regulations for activities described in (i) 
and (ii) above (i.e., those relating to oil and gas) will be 
promulgated separately in appropriate parts of the existing MMS oil and 
gas regulations.
    While the MMS will have the lead in authorizing OCS alternative 
energy and alternate use activities, we recognize that other Federal 
government agencies have regulatory responsibility in such activities 
and the need to consider them fully. The new authority does not 
expressly supersede or modify existing Federal laws, and all activities 
must comply fully with such laws. As directed by the EPAct provision 
calling for promulgation of regulations, the MMS consulted with other 
Federal agencies, as appropriate, throughout the rulemaking process, 
and, to the extent provided by established DOI rulemaking procedures. 
We also consulted with the governors of affected States and others in 
the promulgation of this rule.
    In addition to providing the authority to issue leases, easements, 
and rights-of-way, the EPAct included a requirement that any activity 
permitted under this authority be ``carried out in a manner that 
provides for--
    (A) Safety;
    (B) Protection of the environment;
    (C) Prevention of waste;
    (D) Conservation of the natural resources of the outer Continental 
Shelf;
    (E) Coordination with relevant Federal agencies;
    (F) Protection of national security interests of the United States;
    (G) Protection of correlative rights in the outer Continental 
Shelf;
    (H) A fair return to the United States for any lease, easement, or 
right-of-way under this subsection;
    (I) Prevention of interference with reasonable uses (as determined 
by the Secretary) of the exclusive economic zone, the high seas, and 
the territorial seas;
    (J) Consideration of--
    (i) The location of, and any schedule relating to, a lease, 
easement, or right-of-way for an area of the outer Continental Shelf; 
and
    (ii) Any other use of the sea or seabed, including use for a 
fishery, a sealane, a potential site of a deepwater port, or 
navigation;
    (K) Public notice and comment on any proposal submitted for a 
lease, easement, or right-of-way under this subsection; and
    (L) Oversight, inspection, research, monitoring, and enforcement 
relating to a lease, easement, or right-of-way under this subsection.''

The MMS addresses these items, as appropriate, in this rulemaking.

Summary of Advance Notice of Proposed Rulemaking (ANPR) Comments

Background
    On December 30, 2005, the MMS issued an ANPR (70 FR 77345) 
requesting comments on the program requirements. Comments pertaining to 
specific subparts of the proposed regulations are summarized in the 
subpart-by-subpart discussion, as appropriate.
    The ANPR requested public comments on five major program areas:
    (1) Access to OCS lands and resources;
    (2) Environmental information, management, and compliance;
    (3) Operational activities;
    (4) Payments and revenues; and
    (5) Coordination and consultation.
    The MMS received 149 comments from 26 States and the District of 
Columbia. Comments came from private citizens (60), alternative energy 
industries and associations (27), environmental organizations (19), 
State and local governments (19), Federal agencies (8), non-government 
organizations (6), universities (5), congressional representatives (3), 
small business (1), and the oil and gas industry (1).

[[Page 39378]]

    The vast majority of comments addressed OCS alternative energy 
activities, and we received a few comments on use of existing 
facilities. No single issue dominated the comments, and responses 
within a given program area were wide-ranging. The comments generally 
were supportive of alternative energy development on the OCS and 
activities that use existing OCS facilities. Many advised the MMS to 
proceed with caution as we develop the program and supporting 
regulations and advocated early stakeholder involvement with both the 
program and the individual project permitting. Those familiar with the 
OCS oil and gas program often suggested we use that program as a model 
for consultation and environmental compliance. Some alternative energy 
industry and environmental organizations suggested that the MMS 
establish a structured, rigid process, citing the need for 
predictability and for compliance and timeliness in reviews. Others 
advocated a flexible approach in view of the fledgling nature of 
offshore alternative energy technologies and suggested that the MMS 
address each project on a case-by-case basis. A majority of comments 
identified preparation of a programmatic environmental impact statement 
(PEIS) under the National Environmental Policy Act (NEPA) as a 
necessary and constructive first step.
    Comments addressing the major program areas often were 
interrelated. For example, comments on access and operations were often 
directly linked with concerns for the environment (e.g., access should 
not be permitted in areas of environmental sensitivity). Views on 
payments appeared to be influenced by the perspective of the commenter 
on access issues (e.g., fee structure suggestions depended on whether 
MMS used the project's actual footprint or a lease block system). 
Coordination and consultation suggestions centered on the opportunity 
to address environmental concerns (e.g., focused on input during the 
program and individual project NEPA process).
    More information on the ANPR, its respondents, and their comments 
is available at the MMS OCS Public Connect Web site, at https://
ocsconnect.mms.gov/pcs-public/do/
ProjectDetailView?objectId=0b011f8080050473.
Access for OCS Lands
    Comments on area identification described the entire spectrum of 
access: from MMS conducting in-depth studies to select specific areas 
to lease to MMS opening most of the OCS. While comments recommended MMS 
fashioning our program after the Bureau of Land Management (BLM), the 
European, or the Federal Energy Regulatory Commission model, comments 
were consistent about MMS requiring due diligence from any developer.
    Some commenters suggested that we use the PEIS to identify 
environmentally sensitive areas to be permanently excluded from 
development, and some expressed concerns that we would lease any area 
without considering the full range of possible impacts and 
alternatives. While others opined that if MMS initially excluded areas, 
those areas may never become available even if technology and uses 
changed in the future. MMS decided not to propose limiting areas 
available for possible development. As we begin to better understand 
the impacts, limitations, and benefits of renewable energy projects, we 
will be in a better position to select appropriate sites for 
development. MMS does not want to exclude potential sites, since the 
future technology may be different from the technology available today, 
with different impacts.
    Other commenters advocated that all U.S. waters should be candidate 
areas for the development of renewable energy projects and that 
potential developers, who are in the best position to propose sites, 
should be given the widest possible latitude to identify potential 
resources and sites. One commenter pointed out that Congress already 
identified those OCS areas that should be categorically excluded from 
renewable energy development: ``any unit of the National Park System, 
National Wildlife Refuge System, or National Marine Sanctuary System, 
or any National Monument.''
    As some responders expressed the belief that renewable energy 
production does less damage to the environment than oil and gas 
production, they suggested that MMS subject the renewable projects to 
less rigorous environmental review and open more areas to development, 
regardless of other impacts. Others commented MMS should consider all 
impacts on existing resources and uses citing fisheries, public safety, 
shipping lanes, aircraft, migratory routes (bird and mammal), and 
access to sand and gravel and oil and gas resources. These comments 
were often coupled with the suggestion that any fees for the renewable 
energy development should compensate for impacts and possible loss of 
future uses. The MMS will strictly adhere to the statutory requirements 
such as NEPA, CZMA, etc. All projects will undergo appropriate review.
    Many comments expressed concern that a competitive bidding process 
would limit access to large energy companies, effectively shutting out 
small businesses, or add to the considerable economic and financial 
uncertainties associated with the developing industry, rendering it 
very difficult to finance projects. Others supported using a 
competitive basis for awarding permits for resource and site assessment 
with an ``option to lease'' or other guaranteed development rights 
provided that site-specific requirements were met. Others felt that 
given the emerging nature of offshore renewable energy technologies and 
the public and private benefits that could be derived from energy 
resources development on the OCS, MMS should make the process as simple 
and efficient as possible with a clear schedule for processing and 
decision-making. The proposed rule lays out the steps in the processes 
for acquiring leases, both competitively and noncompetitively.
    Some commenters suggested that competing projects or proposals be 
evaluated using quantitative factors such as financial strength, 
experience and operational performance of the developers. However, 
there was considerable support for using criteria that would allow 
small and medium size businesses, local communities, and local utility 
districts the opportunity to initiate projects. It was also suggested 
that proposals be evaluated on the basis of how each best serves the 
public interest.
Environmental Information, Management, and Compliance Programs
    Comments fell into two broad points of view: (1) Require detailed 
studies years prior to building a project or (2) waive or reduce 
environmental requirements and other safeguards that are incorporated 
into our normal permitting processes.
    While most comments suggested that MMS should prepare a PEIS as a 
first step, comments were divided as to how MMS should use the 
document. Some suggested that the PEIS identify areas open for 
renewable development, either advocating that certain areas be excluded 
from leasing/permitting or matching the type of renewable energy 
development with a particular area. The thought behind this approach is 
that by strategically reviewing ``preferred'' locations for renewable 
development, the PEIS could reduce the residual project risk that 
project developers face, help to ensure State and community input on 
identifying more or less desirable locations, and ensure that impacts 
remain acceptable. Some

[[Page 39379]]

commenters disagreed with this approach, recommending that access 
remain flexible to allow renewable energy developers to select 
potential areas and citing the concern that any areas deferred at this 
stage may be permanently excluded from future development. Others 
stated that the PEIS should identify and analyze programmatic issues 
leaving specific environmental evaluation to the project stage.
    MMS prepared a PEIS for the Alternative Energy and Alternate Use 
Program. The PEIS provides a basic understanding of the possible 
impacts of various types of alternative energy and alternate use 
projects. However, MMS will develop additional, site specific EISs as 
appropriate.
    Some comments raised the issue of responsibility for preliminary 
site-specific studies. It was suggested that MMS should conduct these 
studies to maintain objectivity. Other commenters stated that 
conducting these studies is the responsibility of the applicant working 
with MMS and potential affected State(s) on study design. Another 
recommendation advocated using independent third-party contractors 
selected pursuant to the Council on Environmental Quality procedures to 
ensure unbiased environmental assessments.
    In the ANPR we requested specific comments on types and levels of 
environmental information that MMS should require for alternative 
energy and alternate use projects; the types of site-specific studies 
should MMS require; when these studies should be conducted; and who 
should be responsible for conducting these studies. We also requested 
input on identifying design and installation requirements associated 
with new projects and modification of existing facilities and 
identifying technology assessment and research needs. Commenters 
consistently supported the development of a Programmatic EIS, followed 
by project specific EIS. They also were consistent about requiring 
compliance with CZMA and developing an approach that respects local and 
State laws and requirements. The MMS developed a PEIS, as suggested, as 
was discussed previously. Each individual project will require NEPA 
compliance. In the near term we anticipate the NEPA compliance for 
development will be project specific EIS. These regulations would 
require that the applicant provide the information needed for MMS to 
develop the NEPA document. In addition, these regulations detail CZMA 
compliance requirements.
    Generally, commenters agreed that MMS should conduct and pay for 
the PEIS, but the applicant should pay for site-specific NEPA. However, 
some commenters stated that it should be the agency's responsibility to 
gather and provide information for the project-specific NEPA and to 
meet other requirements. Others suggested that MMS can get most of the 
required data from other Federal government agencies including: 
Department of Energy (DOE), Bureau of Land Management (BLM), and Army 
Corps of Engineers (ACOE).
    Commenters consistently mentioned that offshore alternative energy 
engineering issues are similar to those issued faced by the offshore 
oil and gas industry and the MMS should use its experience with oil and 
gas when evaluating the engineering aspects of these projects.
    Some commenters suggested that MMS use the existing oil and gas 
regulations (30 CFR part 250) for the plan requirements. We reviewed 
and considered the oil and gas regulations and patterned many of these 
roles on those basic requirements if they were appropriate for the 
alternative energy program.
    Commenters reminded us to recognize that specific data requirements 
will vary by the type of project and the location. We addressed this by 
not including standards in these regulations. Instead we are requiring 
applicants to submit the project design and the data and information 
that were the basis for the design, so we can evaluate each project on 
a case-by-case basis. As we gain experience with offshore alternative 
energy, we may set more specific project requirements. A number of 
commenters suggested that the responsibility for determining 
engineering requirements for offshore alternative energy projects 
should fall on project developers. Some commenters stated that these 
projects should meet the same engineering criteria as oil and gas 
facilities. However, others felt that the consequences of an incident 
would likely not be as great as an incident with an oil and gas 
facility, therefore these structures need not meet the same criteria as 
do those for oil and gas.
    As with environmental impacts, many commenters believed that, at 
this time, it would be best to address the engineering requirements of 
these projects on a case-by-case basis, instead of detailing 
requirements in the regulations. The requirements of these projects 
would vary based on location (sea conditions, water depth, anticipated 
weather events) and type of project. Research and development and or 
demonstration projects are smaller scale activities that take place for 
a short duration and in a limited, discrete area.
    Some commenters included suggestions for the type of data and 
information MMS should require, both for environment and engineering 
assessments. However few provided details on the design standards for 
projects. Those that provided details suggested the use of various 
standards that have already been developed, such as those used in 
Europe.
Regulation of Operational Activities
    A common message from the commenters was that MMS should recognize 
that renewable energy is a young industry so our regulatory approach 
for operations should remain flexible yet predictable. Comments 
recommended that the OCS oil and gas program should be used as the 
model for addressing renewable energy operational activities. Comments 
suggested MMS require operators to submit plans similar to the Deep 
Water Operations Plan, use Certified Verification Agents, adopt 
Occupational Safety and Health Administration requirements as a basis 
for ensuring safety, schedule frequent inspections, and assess 
penalties for noncompliance. Adaptive management approach and use of 
pilot projects to study operations were also recommended. There were 
several suggestions that MMS set production requirements to ensure due 
diligence of the operators, while others wanted us to be flexible early 
on or have no production requirements.
Payments, Royalties, Fees and Bonds
    Issues with payments and revenues generated a great deal of 
discussion with most comments against using bonus bids as part of the 
competitive lease issuance process but supportive of rentals and 
royalties. Some respondents requested a payment honeymoon or holiday 
until it is determined that OCS renewable activities are profitable or 
the industry matures. Commenters requested an orderly, simple, and 
predictable financial system where potential investors are certain of 
government fees. Many respondents stated that renewable wind, wave and 
current resources are not finite like extractable oil and gas 
hydrocarbons, there is no removal of a public resource and alternative 
energy operations only use a limited amount of public OCS lands; 
therefore, we should either not charge a royalty or set a low fee, 
especially on pilot projects. Supporters of renewable energy expressed 
concern that if the government's financial regimen were onerous it 
would discourage development and give large

[[Page 39380]]

energy companies an unfair advantage. Citing the benefits of renewable 
energy, most comments supported a financial system structured in a 
manner which stimulates growth of offshore renewable generation and 
provides incentive for developers to invest in OCS projects with the 
hope that it will achieve cost competitiveness with other energy 
sources. One Federal agency commenter stated that the perception of 
fairness and cooperation is important and opponents of offshore 
alternative energy development may claim that wind power facilities are 
unfairly using public commons for profit. MMS has considered all 
comments on an OCS alternative energy financial system and we propose a 
financial regime that we have determined is fair to the American 
public, meets Congress' and the Administration's intent with respect to 
EPAct and will permit development of offshore alternative energy.
Bonus
    Even though most respondents wrote against a system of lease 
bonuses, EPAct requires competition and MMS is proposing the cash bonus 
as either a bid variable or a fixed element in the alternative energy 
leasing regulations. In certain cases where multiple expressions of 
interest are received, MMS is proposing to use the cash bonus bidding 
system as the basis for determining the winning bidder. Where no 
competitive interest exists, a marginal acquisition fee is proposed.
Rentals
    There was generally strong support for using rentals in any OCS 
alternative energy leasing financial system. Respondents differed on 
the rate of rentals that should be charged and the method for 
calculating rental acreage. A few commenters felt that no rental fee 
should be collected or rental waived until production commenced. Some 
commenters proposed rental payments only be collected on the seabed 
footprint while others suggested following the Federal oil and gas 
model where rentals are paid on the entire OCS leased acreage. MMS is 
proposing that a rental fee be collected on the entire leased acreage 
with rental rates of $3 to $5 per acre for commercial leases, project 
easements and rights-of-way. This rate is below the current prevailing 
rates for oil and gas leases. We propose lower rental rates because 
during the initial lease period and before the approval of the 
Construction and Operations Plan (COP), there is no permanent 
disturbance of the OCS. Following approval of the COP, a royalty-based 
operating fee is proposed. Additionally, unlike oil and gas projects, 
alternative energy projects do not extract a non-renewable energy 
source from the leased tract. Thus, the underlying value of the 
project's acreage is less affected by an alternative energy project 
than it would be for an oil and gas project, so the rental charge for 
use of the land can be set appropriately lower for alternative energy 
projects.
Royalties
    Most respondents supported some element of royalties based on gross 
revenue. Comments about royalties covered the full spectrum from 
setting no royalties; very low royalties (3% royalty that BLM charges); 
to a phased royalty system designed so that the financial terms would 
facilitate the emergence of a viable industry. A three-phased example 
might include a pilot phase with no royalty and minimal rental fees, 
followed by an industry ``wildcatter'' development phase with higher 
rental rates and royalties after 5 years. The third is a commercial 
phase in which a mature industry is paying yet higher rental and 
royalty rates. Unless otherwise specified in the Final Sale Notice, MMS 
is proposing a royalty regime in which an operating fee rate would 
apply at a rate of one percent in the first two years following 
approval of the Construction and Operations Plan on commercial 
alternative energy leases, and at two percent thereafter. The operating 
fee would be an annual payment that continues through the duration of 
the operations term of a commercial lease. Where competition exists for 
a lease, MMS may offer bidders the opportunity to bid a constant or 
sliding operating fee rate above 2 percent subject to a fixed cash 
bonus. The sliding scale operating fee rate could depend on one or more 
of the variables which compose the operating fee itself, or on some 
other variables, such as time. In this auction format, MMS would 
provide a baseline sliding scale function, and the operating fee rate 
bid variable would be some multiplier of that function. MMS does not 
expect royalties at this level to deter investment in a meaningful 
number of otherwise, prospective alternative energy projects.
    A limited number of comments were received related to alternative 
energy research, testing and pilot projects. These comments stated that 
lease fees should be waived for research facilities and some pilot 
projects that are limited in scope and intended for testing, 
development or experimental evaluation of new systems. MMS has proposed 
a ``limited lease'' with a restricted term of five years and minimal 
rental for these types of projects.
    There were divergent views on what constituted ``fair return.'' 
Some wanted us to include the benefits of renewable energy as part of 
fair return, while others supported requiring additional compensation 
for lost uses and social costs. Most commenters strongly rejected 
opportunity-cost based valuation because of the complex and burdensome 
nature of subjective value-based judgments required to determine 
appropriate payment levels. Some respondents stated that only a small 
proportion of the sea bottom and surface will be displaced and that 
current users can adjust to any new structures. Some pointed out that 
if Congress intended that such costs should be addressed, they would 
have stated so in the EPAct language. On the other hand, two commenters 
proposed to base a portion of the financial regimen on interference 
with other uses by charging for the use of the sea floor in 
compensation for displacing the pelagic zone and the atmosphere above 
the water surface. MMS is not aware of precedents in other Federal or 
State statutes that support an opportunity-cost based approach. 
Moreover, it is not required by the authorizing legislation. At the 
same time, MMS does consider selected aspects of opportunity cost in 
some of its bid adequacy assessments for oil and gas leases. 
Accordingly, while MMS does not intend to rely heavily on an 
opportunity cost framework, for either setting payment sizes or for bid 
adequacy purposes, there may be some circumstances in which 
consideration of selected aspects of opportunity cost would be 
appropriate for helping to set the sizes of certain fees, minimum bids, 
or reservation prices.
    A single commenter pointed out that since Congress already 
subsidizes the development of alternative sources of energy through 
production tax credits, MMS lacks the prerogative to encourage 
development offshore through favorable financial terms. This commenter 
also stated that MMS should not reduce the charge below the true 
economic value of the resource. If MMS were to encourage development of 
a resource with financial terms below those that private landowners 
would be anticipated to charge, development could occur too quickly and 
early developers might not make the best use of emerging technologies.
    MMS has considered this reasoning in our proposal for the 
authorized financial terms and durations of the lease and grant 
periods. If future economics of alternative energy technology on the 
OCS support different or improved

[[Page 39381]]

technologies, the flexibility which MMS has built into these 
regulations will allow for appropriate specification of lease terms and 
conditions upon subsequent renewals or in new offerings. Moreover, MMS 
is confident that the actual financial terms and length of lease 
conditions that it will apply, in conjunction with a myriad of other 
administrative and regulatory requirements, strike the proper balance 
between ensuring receipt of a fair return and providing the proper 
inducement for alternative energy activities to proceed at the proper 
pace.
    There were differing opinions about charging cost recovery fees for 
processing of applicant initiated actions. Most respondents felt that 
cost recovery fees for MMS program efforts is appropriate, with some 
advocating management costs be recovered from permit applicants through 
fees, royalties, and/or a combination of both. Others expressed 
concerns that charging cost recovery fees would impact the economics of 
the projects and discourage development. To clarify, rentals and 
royalties are designed to compensate the American public for use of the 
Federal OCS, while cost recovery fees are to be implemented by a 
Federal agency when a service (or privilege) provides special benefits 
to an identifiable recipient, beyond those that accrue to the general 
public. The MMS is proposing case-by-case fees to recover unique 
processing costs such as the preparation of Environmental Impact 
Statements. We do not have data for our costs of processing lease 
applications for this new program, so we are not otherwise proposing 
processing fees in this rule. As the program matures, and we acquire 
processing cost data, we expect to propose fees to recover our costs of 
processing. While we have not included filing fees in this proposed 
rule, in the final rule, we may add nominal filing fees for competitive 
and noncompetitive lease applications, and for applications for ROWs 
and RUEs, to aid in limiting filings to serious applicants.
    Comments generally supported MMS using a surety bond or other type 
of security to cover the costs associated with non-compliance of lease 
terms; lease default; decommissioning and removing wind turbines and 
towers at the end of the lease term; and appropriate site remediation 
at the end of the lease term. Respondents acknowledged that companies 
operating on the OCS should be able to demonstrate appropriate levels 
of financial capability. The types of financial securities mentioned 
included letters of credit, a test of credit-worthiness, assigned 
interest bearing annuity, funding a trust (comparable to a nuclear 
decommissioning trust), escrow, insurance policy, or corporate 
guarantee. MMS is proposing minimum financial assurance requirements of 
$300,000 for the holder of any lease with actual surety levels to be 
determined by MMS based on the complexity, number and location of all 
planned OCS facilities by the lessee. We feel that this financial 
assurance requirement will protect the taxpayer from any default by a 
lessee.
    The ANPR did not address revenue sharing with States.
Coordination and Consultation
    Commenters encouraged MMS to coordinate and consult with affected 
government agencies and stakeholders, and viewed the ANPR and the MMS 
webpage on renewable energy as solid first efforts. Most comments 
suggested consultation early in the process, both in the program 
development and for individual projects. Other comments suggested: 
allowing the States to ban renewable projects sited adjacent to state 
waters that have negative environmental, economic, or public safety 
impacts; conducting targeted surveys of coastal states and the industry 
to identify potential concerns and objections; providing an opportunity 
to identify areas of the OCS to include in the program; working with 
Federal and State cooperatives; and requiring developers to include 
outreach programs in their application. Many comments supported the use 
of existing offshore program coordination mechanisms and suggested 
expanding the OCS Policy Committee membership to include 
representatives from the offshore renewable energy industry and 
affected coastal states. Some comments expressed concern that the 
coordination and consultation process would create burdensome 
requirements, slow down the application review process, and/or create 
artificial conflicts by giving too much visibility to marginal groups/
perspectives.
    One commenter suggested that MMS establish a Joint Ocean Renewables 
Office, co-locating representatives from each of the agencies 
responsible for permitting and authorizing portions of the alternative 
ocean energy projects, while another suggested that it was too early, 
given the infancy of the offshore renewable energy industry, to rigidly 
structure the relationships between regulators and project developers. 
Other comments called for MMS to create a ``one-stop shop'' for the 
permitting process, in which MMS would coordinate with other agencies 
and be the primary point of contact for the industry.
Use of Existing Facilities
    A few comments covered issues associated with use of existing 
facilities, with the majority focusing on liability, environmental 
impacts, and implementation of a rigs-to-reef program. Comments 
generally supported leaving facilities in place, at the end of life, 
for offshore aquaculture or to serve as artificial reefs. Concerns were 
submitted that removing facilities would destroy essential fish 
habitats. Some commenters wanted liability to be the responsibility of 
the original owners (usually oil and gas operations), while others 
wanted to allow for the shedding of liability by an oil and gas 
producer if an alternative use of existing infrastructure is approved. 
MMS is proposing to require an allocation of responsibilities between 
the existing lessee and facility owner (e.g., the oil and gas lessee 
and/or operator) and the holder of the Alternate Use RUE.

Programmatic Environmental Impact Statement Summary

    The MMS prepared a final PEIS in support of the establishment of a 
program for authorizing alternative energy and alternate use activities 
on the OCS. The final PEIS examines the potential environmental effects 
of the program on the OCS and identifies policies and best management 
practices that may be adopted for the program. The PEIS examined three 
alternatives as well as the no action alternative. The three 
alternatives were: (1) The proposed action which would establish the 
program; (2) a case-by-case alternative that would evaluate each 
project individually without the benefit of a comprehensive program 
and; (3) the preferred alternative, which consisted of a combination of 
the first two alternatives, allowing MMS to review projects during the 
interim while the program and regulations are being established.
    Given the rapidly evolving nature of this nascent industry, the MMS 
cannot reasonably anticipate and assess the potential environmental 
impacts of all of the various technologies and potential OCS locations 
where these alternative energy and alternate use projects could someday 
be proposed. Accordingly, this PEIS is focused on alternative energy 
technologies and areas on the OCS that industry has expressed a 
potential interest in and ability to develop or evaluate from 2007 to 
2014. The PEIS proposed policies and best management practices based on 
the analyses in the PEIS. As the program

[[Page 39382]]

evolves and more is learned, the mitigation measures may be modified or 
new measures developed. Each project developed under this new program 
will be subject to environmental reviews under the National 
Environmental Policy Act (NEPA), and each project may have additional 
project-specific mitigation measures.
    A Record of Decision (ROD) was published on January 10, 2008. The 
preferred alternative was selected as well as interim policies and best 
management practices that were recommended in the PEIS. The PEIS and 
ROD are available at: ocsenergy.anl.gov. A Draft Environmental 
Assessment of the regulations, which tiers off the PEIS, is being 
released for review and comment along with the proposed rules.

Overview of the MMS Alternative Energy and Alternate Use Program

    To accommodate the regulations to support the Alternative Energy 
and Alternate Use Program, MMS is proposing to add a new part to 
subchapter B of title 30 of the CFR. The new part 285 would be titled 
``Alternative Energy and Alternate Uses of Existing Facilities on the 
Outer Continental Shelf'' and would address the requirements of section 
388(a) of the EPAct, which amended the OCS Lands Act to add section 
8(p).
Approach to Rulemaking
    These regulations were developed to provide a regulatory framework 
for leasing and managing OCS alternative energy project activities and 
authorizing activities that involve the alternate use of OCS Lands Act-
permitted facilities. These regulations are also intended to encourage 
orderly, safe, and environmentally responsible development of 
alternative energy sources on the Outer Continental Shelf. The MMS 
expects that alternative energy projects in the near term will involve 
the production of electricity from wind, wave, and ocean current. In 
the future, other types of alternative energy projects may be pursued 
on the OCS, including solar energy and hydrogen production projects. 
These regulations were developed to allow for a broad spectrum of 
alternative energy development, without specific requirements for each 
type of energy production. However, as we gain experience with 
alternative energy development on the OCS, we may update our 
regulations to include energy resource-specific provisions and 
incorporate by reference appropriate documents.
    This proposed rule (30 CFR part 285) applies to all aspects of the 
alternative energy and alternate use program; except for the procedures 
applying to appeals of MMS decisions or orders, which are covered in 30 
CFR part 290, Subpart A. We are also proposing to revise 30 CFR part 
290.2 to clarify the MMS decisions on bids under this program are 
exempt from the appeals process at 30 CFR part 290 and covered under 
Sec.  285.118(c). This section describes the procedures for an 
unsuccessful bidder to apply for reconsideration by the Director for 
alternative energy leases, Right-of-way (ROW) grants, rights-of-use and 
easement (RUE) grants, or alternate use rights-of-use and easements 
(Alternate Use RUE).
Overview of the Project Development Process
General Overview
    Figure 1 depicts the general process that the MMS proposes for 
managing OCS alternative energy program activities under the proposed 
rule.
BILLING CODE 4310-MR-P

[[Page 39383]]

[GRAPHIC] [TIFF OMITTED] TP09JY08.000

BILLING CODE 4310-MR-C
Types of Access Rights
    MMS will issue lease access rights for commercial development and 
site assessment and technology testing. ROW grant and RUE grants will 
be issued for the support of alternative energy activities. MMS will 
use a special grant, the Alternate Use RUE, for activities that use an 
existing facility.
Commercial and Limited Leases
    The MMS would issue two types of leases: (1) Commercial or (2) 
limited. A Commercial lease would convey the access and operational 
rights necessary to produce, sell, and deliver power on a commercial 
scale, through spot market transactions or a long-term power purchase 
agreement. A commercial lease provides the lessee full rights to apply 
for and receive the authorizations needed to assess, test, and produce

[[Page 39384]]

alternative energy on a commercial scale over the long term 
(approximately 30 years). A commercial lease would include the right to 
a project easement, which would be issued to allow the lessee to 
install gathering, transmission and distribution cables, to transmit 
electricity; pipelines to transport other energy products (i.e. 
hydrogen); and appurtenances on the OCS as necessary for the full 
enjoyment of the lease. The project easement would be issued upon 
approval of the Construction and Operations Plan (for Commercial 
Leases) or General Activities Plan (for Limited Leases).
    A limited lease would convey access and operational rights for 
activities on the OCS that support the production of energy, but do not 
result in the production of electricity or other energy product for 
sale, distribution, or other commercial use. This would include leases 
issued for site assessment or to develop and test new alternative 
energy technology. Limited leases would be issued for a short term, 5 
years. Under the provisions of these regulations limited leases could 
be renewed, but they cannot be converted to commercial leases. If the 
holder of a limited lease wished to pursue commercial development on 
the OCS, it would need to obtain a new commercial lease through the 
leasing process, as defined in these regulations.
RUE Grants and ROW Grants
    Right-of-use and Easement (RUE) grants would be issued by MMS to 
authorize the use of a designated portion of the OCS to support 
alternative energy activities on a lease or other approval not issued 
under this part, e.g. on a State issued lease.
    Right-of-way (ROW) grants would be issued by MMS to allow for the 
construction and use of a cable or pipeline for the purpose of 
gathering, transmitting, distributing or otherwise transporting 
electricity or other energy product generated or produced from 
alternative energy not generated on a lease issued under this part. A 
ROW grant could be used to transport electricity from a State lease to 
shore or from one state to another state through a transmission line 
that must cross the Federal OCS. A ROW is not the same as a project 
easement issued with an alternative energy lease under this part.
Alternate Use RUEs
    MMS would issue an alternative use RUE for the energy- or marine-
related use of an existing OCS facility for activities not otherwise 
authorized by this subchapter or other applicable law.
Obtaining Access Rights
    The EPAct requires MMS to award leases, ROW grants and RUE grants 
competitively, unless we make a determination of no competitive 
interest. In conjunction with the competitive leasing process, MMS 
would prepare NEPA and other environmental compliance documents. The 
MMS would put forth a call for interest, designate the lease or grant 
area, and publish in the Federal Register all other notices and calls 
relating to the sale. If, after putting forth a call for interest, MMS 
determines that there is no competitive interest in that particular OCS 
area, MMS may proceed in issuing a lease or grant noncompetitively. 
Whether a company acquires a lease or grant competitively or non-
competitively it must comply with all MMS lease stipulations or 
conditions in the grant. The steps in the competitive leasing process 
are shown in Figure 2.

BILLING CODE 4310-MR-P

[[Page 39385]]

[GRAPHIC] [TIFF OMITTED] TP09JY08.001

BILLING CODE 4310-MR-C
Federal Compliance for the Leasing Process
    All activities permitted under this part must comply with all 
relevant Federal laws, regulations, and statutes, including, but not 
limited to the following:

------------------------------------------------------------------------
 Responsible Federal  agency/   Statute/Executive   Summary of pertinent
           agencies                   Order              provisions
------------------------------------------------------------------------
Council on Environmental        National           Requires Federal
 Quality (CEQ).                  Environmental      agencies to prepare
                                 Policy Act of      an EIS to evaluate
                                 1969, as amended   the potential
                                 (NEPA) (42         environmental
                                 U.S.C. 4321 et     impacts of any
                                 seq.).             proposed major
                                                    Federal action that
                                                    would significantly
                                                    affect the quality
                                                    of the human
                                                    environment, and to
                                                    consider
                                                    alternatives to such
                                                    proposed actions.

[[Page 39386]]


U.S. Fish and Wildlife Service  Endangered         Requires Federal
 (USFWS); National Oceanic and   Species Act of     agencies to consult
 Atmospheric Administration      1973, as amended   with the USFWS and
 (NOAA); National Marine         (16 U.S.C. 1531    the NMFS to ensure
 Fisheries Service (NMFS).       et seq.).          that proposed
                                                    Federal actions are
                                                    not likely to
                                                    jeopardize the
                                                    continued existence
                                                    of any species
                                                    listed at the
                                                    Federal level as
                                                    endangered or
                                                    threatened, or
                                                    result in the
                                                    destruction or
                                                    adverse modification
                                                    of critical habitat
                                                    designated for such
                                                    species.
USFWS (walruses; sea and        Marine Mammal      Prohibits, with
 marine otters; polar bears;     Protection Act     certain exceptions,
 manatees and dugongs); NMFS     of 1972, as        the take of marine
 (seals, sea lions, whales,      amended (16        mammals in U.S.
 dolphins, and porpoises).       U.S.C. 1361-       waters and by U.S.
                                 1407).             citizens on the high
                                                    seas, and the
                                                    importation of
                                                    marine mammals and
                                                    marine mammal
                                                    products into the
                                                    United States.
NMFS..........................  Magnuson-Stevens   Requires Federal
                                 Fishery            agencies to consult
                                 Conservation and   with the NMFS on
                                 Management Act     proposed Federal
                                 (also known as     actions that may
                                 the Fishery        adversely affect
                                 Conservation and   Essential Fish
                                 Management Act     Habitats that are
                                 of 1976, as        necessary for
                                 amended by the     spawning, breeding,
                                 Sustainable        feeding, or growth
                                 Fisheries Act)     to maturity of
                                 (16 U.S.C. 1801    federally managed
                                 et seq.).          fisheries.
U.S. Environmental Protection   Marine             Prohibits, with
 Agency (USEPA); U.S. Army       Protection,        certain exceptions,
 Corps of Engineers (USACE);     Research, and      the dumping or
 NOAA.                           Sanctuaries Act    transportation for
                                 of 1972 (MPRSA),   dumping of
                                 as amended (33     materials,
                                 U.S.C. 1401 et     including, but not
                                 seq.).             limited to, dredged
                                                    material, solid
                                                    waste, garbage,
                                                    sewage, sewage
                                                    sludge, chemicals,
                                                    biological and
                                                    laboratory waste,
                                                    wrecked or discarded
                                                    equipment, rock,
                                                    sand, excavation
                                                    debris, and other
                                                    waste into ocean
                                                    waters without a
                                                    permit from the
                                                    USEPA. In the case
                                                    of ocean dumping of
                                                    dredged material,
                                                    the USACE is given
                                                    permitting
                                                    authority.
NOAA..........................  National Marine    Prohibits the
                                 Sanctuaries Act    destruction, loss
                                 (NMSA) (16         of, or injury to,
                                 U.S.C. 1431 et     any sanctuary
                                 seq.).             resource managed
                                                    under the law or
                                                    permit and requires
                                                    Federal agency
                                                    consultation on
                                                    Federal agency
                                                    actions, internal or
                                                    external to national
                                                    marine sanctuaries,
                                                    that are likely to
                                                    destroy, injure, or
                                                    cause the loss of
                                                    any sanctuary
                                                    resource.
USFWS.........................  Migratory Bird     Requires that Federal
                                 Treaty Act of      agencies taking
                                 1918, as amended   actions likely to
                                 (16 U.S.C. 703-    negatively affect
                                 712); Executive    migratory bird
                                 Order 13186,       populations enter
                                 ``Responsibiliti   into Memoranda of
                                 es of Federal      Understanding with
                                 Agencies to        the USFWS, which,
                                 Protect            among other things,
                                 Migratory          ensure that
                                 Birds'' (January   environmental
                                 10, 2001).         reviews mandated by
                                                    NEPA evaluate the
                                                    effects of agency
                                                    actions on migratory
                                                    birds, with emphasis
                                                    on species of
                                                    concern.
NOAA's Office of Ocean and      Coastal Zone       Specifies that
 Coastal Resource Management     Management Act     coastal States may
 (NOAA OCRM).                    of 1972, as        protect coastal
                                 amended (16        resources and manage
                                 U.S.C. 1451 et     coastal development.
                                 seq.).             A State with a
                                                    coastal zone
                                                    management program
                                                    approved by NOAA
                                                    OCRM can deny or
                                                    restrict development
                                                    off its coast, if
                                                    the reasonably
                                                    foreseeable effects
                                                    of such development
                                                    would be
                                                    inconsistent with
                                                    the State's coastal
                                                    zone management
                                                    program.
USEPA; MMS....................  Clean Air Act, as  Prohibits Federal
                                 amended (CAA)      agencies from
                                 (42 U.S.C. 7401    providing financial
                                 et seq.).          assistance for, or
                                                    issuing a license or
                                                    other approval to,
                                                    any activity that
                                                    does not conform to
                                                    an applicable,
                                                    approved
                                                    implementation plan
                                                    for achieving and
                                                    maintaining the
                                                    National Ambient Air
                                                    Quality Standards
                                                    (NAAQS).
                                .................  Requires USEPA (or an
                                                    authorized State
                                                    agency) to issue a
                                                    permit before
                                                    construction of any
                                                    new major stationary
                                                    source or major
                                                    modification of a
                                                    stationary source of
                                                    air pollution. The
                                                    permit--called a
                                                    Prevention of
                                                    Significant
                                                    Deterioration (PSD)
                                                    permit for
                                                    stationary sources
                                                    located in areas
                                                    that comply with
                                                    NAAQS and a
                                                    Nonattainment Area
                                                    Permit in areas that
                                                    do not comply with
                                                    NAAQS--must control
                                                    emissions in the
                                                    manner prescribed by
                                                    USEPA regulations to
                                                    either prevent
                                                    significant
                                                    deterioration of air
                                                    quality (in
                                                    attainment areas),
                                                    or contribute to
                                                    reducing ambient air
                                                    pollution in
                                                    accordance with an
                                                    approved
                                                    implementation plan
                                                    (in nonattainment
                                                    areas).
                                .................  Requires the owner or
                                                    operator of a
                                                    stationary source
                                                    that has more than a
                                                    threshold quantity
                                                    of a regulated
                                                    substance in a
                                                    process to submit a
                                                    Risk Management Plan
                                                    to USEPA.
                                .................  In the western
                                                    portion of the Gulf
                                                    of Mexico, MMS has
                                                    authority pursuant
                                                    to the OCS Lands Act
                                                    for clean air
                                                    regulations.
USEPA; U.S. Coast Guard         Clean Water Act    Prohibits discharges
 (USCG); MMS.                    (CWA), Section     of oil or hazardous
                                 311, as amended    substances into or
                                 (33 U.S.C.         upon the navigable
                                 1321); Executive   waters of the United
                                 Order 12777,       States, adjoining
                                 ``Implementation   shorelines, or into
                                 of Section 311     or upon the waters
                                 of the Federal     of the contiguous
                                 Water Pollution    zone, or in
                                 Control Act of     connection with
                                 October 18,        activities under the
                                 1972, as           OCS Lands Act, or
                                 Amended, and the   which may affect
                                 Oil Pollution      natural resources
                                 Act of 1990''.     belonging to the
                                                    U.S.

[[Page 39387]]


                                .................  Authorizes USEPA and
                                                    the USCG to
                                                    establish programs
                                                    for preventing and
                                                    containing
                                                    discharges of oil
                                                    and hazardous
                                                    substances from non-
                                                    transportation-
                                                    related facilities
                                                    and transportation-
                                                    related facilities,
                                                    respectively.
                                .................  Directs the Secretary
                                                    of the Interior
                                                    (MMS) to establish
                                                    requirements for
                                                    preventing and
                                                    containing
                                                    discharges of oil
                                                    and hazardous
                                                    substances from
                                                    offshore facilities,
                                                    including associated
                                                    pipelines, other
                                                    than deepwater
                                                    ports.
USEPA.........................  CWA, Sections 402  Requires a National
                                 and 403, as        Pollutant Discharge
                                 amended (33        Elimination System
                                 U.S.C. 1342 and    (NPDES) permit from
                                 1343).             USEPA (or an
                                                    authorized State)
                                                    before discharging
                                                    any pollutant into
                                                    territorial waters,
                                                    the contiguous zone,
                                                    or the ocean from an
                                                    industrial point
                                                    source, a publicly
                                                    owned treatment
                                                    works, or a point
                                                    source composed
                                                    entirely of storm
                                                    water.
USACE; USEPA..................  CWA, Section 404,  Requires a permit
                                 as amended (33     from the USACE
                                 U.S.C. 1344).      before discharging
                                                    dredged or fill
                                                    material into waters
                                                    of the United
                                                    States, including
                                                    wetlands.
USCG..........................  Ports and          Authorizes the USCG
                                 Waterways Safety   to implement, in
                                 Act, as amended    waters subject to
                                 (33 U.S.C. 1221    the jurisdiction of
                                 et seq.).          the U.S., measures
                                                    for controlling or
                                                    supervising vessel
                                                    traffic or for
                                                    protecting
                                                    navigation and the
                                                    marine environment.
                                                    Such measures may
                                                    include but are not
                                                    limited to:
                                                    Reporting and
                                                    operating
                                                    requirements,
                                                    surveillance and
                                                    communications
                                                    systems, routing
                                                    systems, and
                                                    fairways.
USACE.........................  Rivers and         Section 10 (33 U.S.C.
                                 Harbors            403) delegates to
                                 Appropriation      the USACE the
                                 Act of 1899 (33    authority to review
                                 U.S.C. 401 et      and regulate certain
                                 seq.).             structures and work
                                                    that are located in
                                                    or that affect
                                                    navigable waters of
                                                    the U.S. The OCS
                                                    Lands Act extends
                                                    the jurisdiction of
                                                    the USACE, under
                                                    Section 10 to the
                                                    seaward limit of
                                                    Federal
                                                    jurisdiction.
USEPA.........................  Resource           Requires waste
                                 Conservation and   generators to
                                 Recovery Act, as   determine whether
                                 amended by the     they generate
                                 Hazardous and      hazardous waste, and
                                 Solid Waste        if so, to determine
                                 Amendments of      how much hazardous
                                 1984 (RCRA) (42    waste they generate
                                 U.S.C. 6901 et     and notify the
                                 seq.).             responsible
                                                    regulatory agency.
                                .................  Requires hazardous
                                                    waste treatment,
                                                    storage, and
                                                    disposal facilities
                                                    (TSDFs) to
                                                    demonstrate in their
                                                    permit applications
                                                    that design and
                                                    operating standards
                                                    established by the
                                                    USEPA (or an
                                                    authorized State)
                                                    will be met.
                                .................  Requires hazardous
                                                    waste TSDFs to
                                                    obtain permits.
National Park Service (NPS);    National Historic  Requires each Federal
 Advisory Council on Historic    Preservation Act   agency to consult
 Preservation; State or Tribal   of 1966, as        with the Advisory
 Historic Preservation Officer.  amended (16        Council on Historic
                                 U.S.C. 470-        Preservation and the
                                 470t);             State or Tribal
                                 Archaeological     Historic
                                 and Historical     Preservation Officer
                                 Preservation Act   before allowing a
                                 of 1974 (16        federally licensed
                                 U.S.C. 469-469c-   activity to proceed
                                 2).                in an area where
                                                    cultural or historic
                                                    resources might be
                                                    located; authorizes
                                                    Interior Secretary
                                                    to undertake salvage
                                                    of archaeological
                                                    data that may be
                                                    lost due to a
                                                    Federal project.
NPS; Advisory Council on        American Indian    Requires Federal
 Historic Preservation; State    Religious          agencies to
 or.                             Freedom Act of     facilitate Native
                                 1978 (42 U.S.C.    American access to
                                 1996); Executive   and ceremonial use
                                 Order 13007,       of sacred sites on
                                 ``Indian Sacred    Federal lands, to
                                 Sites''(May 24,    promote greater
                                 1996).             protection for the
                                                    physical integrity
                                                    of such sites, and
                                                    to maintain the
                                                    confidentiality of
                                                    such sites, where
                                                    appropriate.
Federal Aviation                Federal Aviation   Requires that, when
 Administration (FAA).           Act of 1958 (49    construction,
                                 U.S.C. 44718);     alteration,
                                 14 CFR 77.         establishment, or
                                                    expansion of a
                                                    structure is
                                                    proposed, adequate
                                                    public notice be
                                                    given to the FAA as
                                                    necessary to promote
                                                    safety in air
                                                    commerce and the
                                                    efficient use and
                                                    preservation of the
                                                    navigable airspace.
------------------------------------------------------------------------

National Environmental Policy Act Compliance
    The NEPA process helps public officials make decisions based on an 
understanding of environmental consequences and take actions that 
protect, restore, and enhance the environment. It provides the tools to 
carry out these goals by mandating that every Federal agency prepare an 
in-depth study of the impacts of ``major federal actions significantly 
affecting the quality of the human environment'' and alternatives to 
those actions, and requiring that each agency make that information an 
integral part of its decisions. NEPA also requires that agencies make a 
diligent effort to involve the interested and affected public before 
they make decisions affecting the environment.
    The MMS is the lead Federal agency for NEPA compliance for 
alternative energy and alternate use activities on the OCS. Some of the 
information MMS requests under this part is in support of other Federal 
agencies information requirements associated with compliance with the 
laws and regulations that they enforce.
Coastal Zone Management Act (CZMA) Compliance
    Each coastal state has a Federally-approved coastal management plan 
(CMP). In compliance with CZMA mandates found at section 307(c)(1), 
when the MMS conducts a competitive lease sale for leases or grants 
under this part, MMS will determine if the sale activity is reasonably 
likely to affect any land or water use of natural resource of a State's 
coastal zone. If such effects are reasonably foreseeable, the MMS must 
submit a consistency determination to the affected State(s) at least 90 
days before the lease sale. This CD will include a detailed description 
of the

[[Page 39388]]

proposed activity, its expected coastal effects, and an evaluation of 
how the proposed activity is consistent with applicable enforceable 
policies in the State's CMP. If the affected State(s) agree with MMS' 
determination, MMS may proceed with the competitive sale. If the 
affected State(s) disagree, MMS will follow the procedures as outlined 
in 15 CFR part 930, subpart C.
    In the CMP, the States list Federal licenses and permits which are 
reasonably likely to affect coastal uses or resources and require a 
Federal consistency review. Listed activities must be conducted in a 
manner that is consistent with the enforceable policies of the State's 
CMP and the applicant must submit a Federal consistency certification 
to the State and approving Federal agency. Also, the State may ask the 
Ocean and Coastal Resource Management office within the National 
Oceanic and Atmospheric Administration (NOAA) for permission to review, 
for consistency, activities that are not listed in its CMP. If NOAA 
approves the request, the applicant is required to submit a consistency 
certification for the unlisted Federal license/permit. In compliance 
with CZMA mandates, the MMS would not issue noncompetitive leases or 
approve noncompetitive grants or plans under this part, if: (1) 
Consistency has not been conclusively presumed, or (2) the State 
objects to the applicant's consistency certification and the Secretary 
of Commerce has not found that the permitted activities are consistent 
with the objectives of the CZMA or are otherwise necessary in the 
interest of national security. Table 1 summarizes the NEPA and CZMA 
compliance requirements for leases and grants.

                                                     Table 1
----------------------------------------------------------------------------------------------------------------
                                                                            Lease or grant
            Activity                  MMS process     NEPA documentation      conditions             CZMA
----------------------------------------------------------------------------------------------------------------
                                                     Leases
----------------------------------------------------------------------------------------------------------------
Competitive lease sale..........  Conduct             Covers lease sale   Stipulations,       A Federal agency
                                   competitive lease   area.               mitigation, and     activity and must
                                   sale and issue                          conditions          comply with 15
                                   leases.                                 established in      CFR part 930
                                                                           lease contract.     subpart C
Non-competitive lease...........  Negotiate           Covers identified   Stipulations,       Non-Federal
                                   noncompetitive      noncompetitive      conditions,         activity that
                                   lease and issue     lease area and      mitigation, and     requires a
                                   decision on the     proposed            monitoring          Federal license
                                   Site Assessment     activities in the   established in      or permit and
                                   Plan or General     Site Assessment     lease and Site      must comply with
                                   Activities Plan.    Plan or General     Assessment Plan     15 CFR part 930,
                                                       Activities Plan.    or General          subpart D
                                                                           Activities Plan.
----------------------------------------------------------------------------------------------------------------
                                                     Grants
----------------------------------------------------------------------------------------------------------------
Competitive ROW grants and RUE    Conduct             Covers ROW grant    Stipulations and    A Federal agency
 grants.                           competitive ROW     and RUE grant-      conditions          activity and must
                                   grant or RUE        specific sale       established in      comply with 15
                                   grant sale and      area.               grant award.        CFR part 930
                                   issue grants.                                               subpart C
Non-competitive ROW grants and    Negotiate           Covers identified   Stipulations,       Non-Federal
 RUE grants.                       noncompetitive      noncompetitive      conditions,         activity that
                                   ROW grants or RUE   grant site and      mitigation, and     requires a
                                   grants and          proposed            monitoring          Federal license
                                   evaluate General    activities in the   established in      or permit and
                                   Activities Plan.    General             grant award and     must comply with
                                                       Activities Plan.    General             15 CFR part 930,
                                                                           Activities Plan.    subpart D
----------------------------------------------------------------------------------------------------------------

Development Process
Developing Leases and Grants
    Once a company acquires a lease, ROW grant, or RUE grant, it must 
submit certain plans to MMS for development of the lease or grant. The 
various plans serve as a blueprint for site development, construction, 
operations, and decommissioning. The MMS has specific requirements for 
each phase of your lease, grant, and plan. The MMS will not allow 
development without proper plan submission and approval. Site 
assessment activities on a commercial lease would require the applicant 
to submit a Site Assessment Plan (SAP) and receive MMS approval of that 
plan before beginning those activities. The SAP would undergo the 
appropriate NEPA reviews and may require either an Environmental Impact 
Statement (EIS) or an Environmental Assessment (EA). The SAP must 
demonstrate how you will conduct the proposed activities to comply with 
relevant Federal statutes such as the Coastal Zone Management Act 
(CZMA), Endangered Species Act (ESA), Marine Mammal Protection Act 
(MMPA), and Clean Water Act (CWA).
    For a commercial lease, after you perform site assessment 
activities, you would be required to submit and receive MMS approval of 
a Construction and Operations Plan (COP) before you may begin any 
development and production activities on your lease. Like the SAP, the 
COP would undergo the appropriate NEPA reviews and may require either 
an EIS or an EA. Like the SAP, the COP must also comply with relevant 
Federal statutes.
    For limited leases, ROW grants, and RUE grants, you would be 
required to submit a General Activities Plan (GAP), which covers all 
activities on the lease or the grant including site assessment, 
development, operations, and decommissioning. Like the SAP and COP, the 
GAP would undergo the appropriate NEPA reviews and must comply with 
relevant Federal Statutes.
Revenue Sharing
    The new subsection 8(p)(2)(B) of the OCS Lands Act (43 U.S.C. 
1337(p)(2)(B)) requires payment to certain coastal States of 27 percent 
of the revenues received by the Federal Government from any projects 
under this section that are located wholly or partially within the area 
extending 3 nautical miles seaward of State submerged lands. (For ease 
of description, this 3-mile-wide area adjoining State submerged lands 
will be referred to in this preamble as the ``8(g) zone,'' a term 
widely used to refer to the identical 3-mile area described in section 
8(g) of the OCS Lands Act. (43 U.S.C. 1337(g)) In addition, when a 
project extends into

[[Page 39389]]

the 8(g) zone of at least one State, subsection extends eligibility for 
a share of the revenues to any other State with a coastline that is 
located within 15 miles of the geographic center of the project. The 
Secretary is required to establish a formula by rulemaking that 
provides for the equitable distribution of payments to eligible States 
based on the proximity of each State's coastline to the geographic 
center of the project.
Operations
    The regulations that address operations cover environmental 
management, safety management, inspections, facility assessments, and 
decommissioning. The regulations on operations are designed to prevent 
or minimize the likelihood of harm or damage to the marine and coastal 
environments. The structure of the regulations is based on adaptive 
management. The operator would be required to monitor activities and 
demonstrate that its performance satisfies specified standards in its 
approved plans. In addition, the operator would be required to comply 
with regulations regarding air quality, safety, maintenance and 
shutdowns, equipment failure, adverse environmental affects, 
inspections, facility assessments, and incident reporting.
Alternate Use of Existing Facilities
    These regulations establish general requirements for how MMS will 
consider proposals for activities that involve the alternate use of 
existing OCS facilities. This includes general provisions that explain 
how MMS will approve and regulate such alternate use activities on the 
OCS. We are proposing to authorize such activities through the issuance 
of an Alternate Use RUE.
    These regulations explain how applicants can request an Alternate 
Use RUE; how MMS will decide whether to issue Alternate Use RUEs; how 
Alternate Use RUEs will be competitively issued (if MMS determines that 
competitive interest exists); the terms of such authorizations; 
required payments to MMS; necessary financial assurance; other 
administrative issues such as assignment, suspension, and termination; 
and decommissioning of approved alternate use structures.
    In addition to the proposed provisions in subpart J, MMS has 
proposed associated revisions to MMS's existing oil and gas 
decommissioning regulations found in 30 CFR part 250, subpart Q, that 
clarify the oil and gas platform owner's obligations for 
decommissioning, in the event MMS approves alternate uses of the 
platform.

Subpart-by-Subpart Discussion

Part 285--Alternative Energy and Alternate Uses of Existing Facilities 
on the Outer Continental Shelf

Subpart A--General Provisions
Subpart B--Issuance of OCS Alternative Energy Leases
Subpart C--Rights-of-Way Grants and Rights-of-Use and Easement 
Grants for Alternative Energy Activities
Subpart D--Lease and Grant Administration
Subpart E--Payments and Financial Assurance Requirements
Subpart F--Plans and Information Requirements
Subpart G--Facility Design, Fabrication, and Installation
Subpart H--Environmental and Safety Management, Inspections, and 
Facility Assessments
Subpart I--Decommissioning
Subpart J--Rights of Use and Easement for Energy and Marine-Related 
Activities Using Existing OCS Facilities

Subpart A--General Provisions

Overview

    Subpart A establishes MMS's authority and the purpose for the 
regulations. It also addresses the general requirements that apply to 
all activities regulated under this part, for example, the 
qualifications for holding leases, ROW grants and RUE grants on the OCS 
and the appeals process. The definitions for these regulations are also 
in subpart A.

Other Options and Approaches

    Most of the subjects addressed in subpart A are included to provide 
general information on these regulations to the applicants and 
operators. Some items are governed by other authorities, such as 
information collection requirements that are established by the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). These are not 
issues that have a direct impact on the development of alternative 
energy resources or on alternate use of the OCS.

Selected Approaches

    The EPAct requires MMS to ensure that the activities permitted 
under these regulations are carried out in a manner that provides for 
safety, protection of the environment, oversight, and enforcement (43 
U.S.C. 1333(p)(4)). This subpart lays the foundation for these 
responsibilities. The responsibilities of the lessee, applicant, 
operator, or holder of a ROW grant, RUE grant, or Alternate Use RUE 
grant were based on ensuring that projects under these regulations are 
designed and conducted in a safe and environmentally sound manner.
    Departures from operating requirements were selected as a way of 
allowing MMS to maintain flexibility within the program and to be able 
to adapt to this new and changing industry. Requirements and 
qualifications for lessees and grant holders are based on section 8 of 
the OCS Lands Act. Appeal rights are based on those established for 
offshore oil and gas operations.
    This subpart provides for participation of State and local 
governments in task forces or other joint planning agreements with MMS. 
The joint planning provision is modeled after section 281.13 of this 
subchapter, which pertains to task forces for considering leasing of 
minerals in the OCS other than oil, gas, and sulphur. We envision that 
such task forces could be useful and applicable to any phase of the OCS 
alternative energy program, from preliminary studies and lease sale 
formulation through site assessment and construction to 
decommissioning. We may invite any affected State Governor or local 
government executive to join in establishing a task force or other 
joint planning or coordination agreement if we are considering offering 
or issuing leases (or grants) under this part. Participation in a task 
force will give the parties opportunities to contribute to the planning 
process and access to nonproprietary information. The task force or 
other such arrangements will be constituted and conducted as agreed to 
by the participants consistent with Federal law and these regulations. 
The task forces may make recommendations and may be requested to 
conduct or oversee research, studies, or reports.

Comments

    The MMS seeks comment on all items in subpart A. In general we wish 
to know if this subpart is informative, makes it easy to locate needed 
information, is easy to read and follow, and includes the appropriate 
topics.

Section by Section Discussion of Subpart A

Section 285.100 Authority

    This section establishes MMS's authority to issue regulations and 
oversee access and development on the OCS for alternative energy and 
alternate use of existing facilities. The MMS includes the authority 
statement to inform the affected public and other interested parties of 
the basis for establishing these regulations. MMS's authority for these 
regulations comes from amendments to Subsection 8 of the Outer 
Continental Shelf Lands Act (OCS Lands Act) (43 U.S.C. 1337), as set 
forth

[[Page 39390]]

in Section 388(a) of the Energy Policy Act of 2005 (Pub. Law 109-58).

Section 285.101 What is the purpose of this part?

    This section describes MMS's objectives for this rule. Our 
objectives include: (1) Establishing procedures for issuance of leases, 
ROW grants, and RUE grants and administration of operations for 
activities permitted under this part; (2) informing applicants and 
third parties of their obligations under this part; and (3) ensuring 
that these activities are conducted in a safe and environmentally sound 
manner, in conformance with applicable laws and regulations, and the 
terms of the lease or grant. However, this part does not convey access 
rights for oil, gas, or other minerals.

Section 285.102 What are MMS's responsibilities under this part?

    This section describes MMS's responsibilities, which are derived 
from Subsection 8(p)(4) of the OCS Lands Act, as amended by EPAct. 
These responsibilities include ensuring activities are carried out in a 
manner that provides for:
     Safety;
     Protection of the environment;
     Prevention of waste;
     Conservation of the natural resources of the OCS;
     Coordination with relevant Federal agencies;
     Protection of national security interests of the United 
States;
     Protection of the rights of other authorized users of the 
OCS;
     A fair return to the United States;
     Prevention of interference with reasonable uses (as 
determined by the Secretary or Director) of the exclusive economic 
zone, the high seas, and the territorial seas;
     Consideration of the location of and any schedule relating 
to a lease or grant under this part for an area of the OCS, and any 
other use of the sea or seabed;
     Public notice and comment on any proposal submitted for a 
lease or grant under this part; and
     Oversight, inspection, research, monitoring, and 
enforcement of activities authorized by a lease or grant under this 
part.
    To enforce these responsibilities, MMS will require compliance with 
all applicable laws, regulations, other requirements, the terms of your 
lease or grant under this part, and approved plans. The MMS will also 
establish practices and procedures to govern the collection of all 
payments due to the Federal Government, including any cost recovery 
fees, rentals, operating fees, and other fees or payments. The MMS will 
coordinate and consult with the Governor of any affected State and 
executive of any affected local government. As part of coordination and 
consultation with State and local governments, MMS may invite any 
affected State Governor and affected local government executive to join 
a task force or other joint planning or coordination agreement.

Section 285.103 When may MMS prescribe or approve departures from the 
regulations governing operations?

    This section establishes times when MMS may approve departures from 
the requirements established in the regulations. The MMS will consider 
a departure when it is needed to:
     Facilitate the proper development of a lease or grant 
under this part;
     Conserve natural resources;
     Protect life (including human and wildlife), property, or 
the marine, coastal, or human environment; or
     Protect sites, structures, or objects of historical or 
archaeological significance.
    A departure must be consistent with Subsection 8(p) of the Outer 
Continental Shelf Lands Act and must protect the environment and safety 
to the same degree as if there was no approved departure from the 
regulations.

Section 285.104 Do I need an MMS lease or other authorization to 
produce or support the production of electricity or other energy 
product from an alternative energy resource on the OCS?

    This section explains that except as otherwise authorized by law, 
it is unlawful for any person to construct, operate, or maintain any 
facility to produce, transport or support generation of electricity or 
other energy product derived from alternative energy resource on any 
part of the Outer Continental Shelf except under and in accordance with 
the terms of a lease, easement or right-of-way issued pursuant to the 
OCS Lands Act.

Section 285.105 What are my responsibilities under this part?

    This section describes the general responsibilities of a lessee, 
applicant, operator, or holder of a ROW grant, RUE grant, or Alternate 
Use RUE grant under these regulations. These responsibilities include:
     Designing projects and conducting operations in a safe 
manner and to minimize adverse effects to the coastal and marine 
environments, including their physical, atmospheric, and biological 
components to the extent practicable;
     Submitting requests, applications, plans, notices, 
modifications, and supplemental information as required by this part; 
following up any oral request or notification in writing within 3 
business days;
     Complying with the terms and conditions of the 
applications, plans, notices, and modifications; making payments on 
time;
     Complying with the Department of the Interior's non-
procurement debarment regulations; and including the requirement to 
comply with 43 CFR part 42 in all contracts and transactions related to 
a lease or grant under this part; and
     Responding to requests from the Director in a timely 
manner.

Section 285.106 Who can hold a lease or grant under this part?

    This section details the qualifications of a lessee or grant 
holder. To qualify for a lease or grant you must be either a citizen or 
a national of the United States; an alien lawfully admitted for 
permanent residence in the United States; a private, public, or 
municipal corporation organized under the laws of the United States any 
of its States or territories, or the District of Columbia; or an 
association of any of the parties described previously. In addition, 
you may be excluded from becoming a lessee or grant holder if you are 
excluded or disqualified from participating in transactions covered by 
the Federal non-procurement debarment and suspension system, you have 
failed to meet or exercise due diligence under any OCS lease or grant, 
or you remained in violation of the terms and conditions of any lease 
or grant issued under the OCS Lands Act for a period extending longer 
than 30-calendar days after MMS directed you to comply.

Section 285.107 How do I show that I am qualified to be a lessee or 
grant holder?

    This section describes the evidence you must submit to MMS to 
establish qualification to hold a lease, ROW grant, or RUE grant. For 
an individual, this evidence includes documents that demonstrate 
citizenship or lawful admittance of permanent residence. For an 
association, the acceptable evidence includes a certified statement 
indicating the State in which it is registered and that it is 
authorized to hold leases and grants on the OCS, or appropriate 
reference to statements or records previously submitted to an MMS OCS 
office. Corporations must submit a statement certified by the corporate 
Secretary or Assistant Secretary over the corporate seal showing the 
State in

[[Page 39391]]

which it was incorporated, and that it is authorized to hold leases and 
grants on the OCS, or appropriate reference to statements or records 
previously submitted to an MMS OCS office (including material submitted 
in compliance with prior regulations), and evidence of the authority of 
persons signing to bind the corporation.

Section 285.108 When must I notify MMS if an action has been filed 
alleging that I am insolvent or bankrupt?

    If any action is filed alleging that a company, operating under 
these regulations, is insolvent or bankrupt, the company must notify 
MMS within 3 days of learning of the action.

Section 285.109 When must I notify MMS of mergers, name changes, or 
changes of business form?

    This section requires you to notify MMS of any merger, name change, 
or change of business form. This must be done no later than 120-
calendar days after either the effective date or the date of filing the 
change or action with the Secretary of the State in the State of 
registry.

Section 285.110 Where do I submit plans, applications, or notifications 
required by this part?

    You must send all plans, application, or notifications to MMS at 
the address provided in this section.

Section 285.111 When and how does MMS charge me processing fees on a 
case-by-case basis?

    This section provides that MMS may charge processing fees for 
applications or requests filed under this part, on a case-by-case 
basis. The MMS may charge processing fees if the preparation of a 
document or study is necessary for MMS to evaluate or process an 
application or request. For example, MMS may charge processing fees for 
the preparation of a project-specific Environmental Impact Statement.
    In cases where MMS may charge a case-by-case processing fee, we 
will provide the applicant with a written estimate of the proposed fee 
for reasonable processing costs. The applicant may comment on the 
proposed fee or request approval to directly pay a contractor for the 
document, study, or other activity. We will re-estimate our reasonable 
processing costs following the procedure established in this section.

Section 285.112 Definitions.

    This section provides definitions of terms used throughout the 30 
CFR part 285 regulations. Some of the definitions used in this part are 
definitions that were established in legislation or previously in 
regulations (i.e., 30 CFR part 250). The definition for archaeological 
resource is almost identical to the definition used by MMS for oil and 
gas operations, in the 30 CFR part 250 regulations. This definition 
mirrors that in the Archaeological Resource Protection Act, and was 
instituted in response to comments from the Advisory Council on 
Historic Preservation and the Departmental Consulting Archaeologist on 
our original rule on archaeology. It is consistent with the definitions 
in other Federal laws and regulations.
    Proposed Sec.  285.112 would add definitions for the revenue 
sharing program. The proposed definitions are for coastline, miles, 
distance, income, project (for the purpose of revenue sharing), project 
area, qualified project, qualified project area, geographic center of a 
project, eligible State, and revenues.
    The term coastline would have the same meaning given to the term 
``coast line'' in section 2 of the Submerged Lands Act, 43 U.S.C. 
1301(c). Added subsection 8(p)(2) of the OCS Lands Act refers to 
coastal States that have a coastline ``within 15 miles of the 
geographic center of the project.'' In this context, and wherever not 
otherwise specified, miles would mean nautical miles. The term distance 
would mean the minimum great circle distance.
    Income, unless clearly specified to the contrary, would refer to 
the money received by the project owner or holder of the lease, 
easement, or other equivalent agreement (e.g., rights-of-way). As such, 
use of the term income would not imply that project receipts exceeded 
project expenses (profitability) but rather would serve to distinguish 
money received by the project owner from money received by the Federal 
Government (referred to as revenues, defined below).
    The term project, for the purposes of revenue sharing, would mean 
the activities necessary to develop, produce, and transmit energy--or 
to create some other product or service authorized under 30 CFR part 
285--in, or from, the OCS within a specific geographic area; the 
facilities used to develop and produce that energy or create some other 
product or service; or both. (As necessary, a different definition of 
``project'' may be used for other purposes, such as complying with the 
provisions of the National Environmental Policy Act.) The term project 
also could be used to refer to the project area.
    While the language of the EPAct refers only to a project, for the 
purposes of clarity in this regulation, use of the term project area 
would allow specific reference to the geographic area for which project 
rights have been granted via a lease, group of leases, or equivalent 
agreement.
    If a project area is located wholly or partially within the 8(g) 
zone, and the project is subject to 30 CFR part 285, the project for 
which that area has been granted would be a qualified project for the 
purposes of subsection 8(p)(2)(B). A qualified project area would be 
the MMS-determined project area for a qualified project. A project 
easement issued under this part would not be considered part of the 
qualified project's area, primarily because to do so would make all OCS 
alternative energy projects qualified projects, no matter how far the 
actual alternative energy activity is located offshore. Project 
easements on the OCS would typically serve to bring power to onshore 
distribution grids, so they must pass through areas within 3 miles of 
State submerged lands. A secondary reason is that including project 
easements in the qualified project's area would both complicate and 
distort calculation of the geometric center of the project's area. 
However, we propose to allow any fees paid for project easement acreage 
to constitute part of the revenues from the qualified project.
    The geographic center of a project would be the ``centroid'' of the 
project area; i.e., the balancing point of the acreage of a regularly 
shaped project area if plotted in two-dimensional space. For example, 
in the simple case of a project area comprising a 9-square-mile lease 
block, 3 miles on each side, the centroid would be the middle point 
inside that square: 1\1/2\ miles inward from the midpoint of each side 
and equidistant from each corner of the square. For irregularly shaped 
project areas including those that might involve non-contiguous 
geometric shapes, MMS would determine the geographic center of such 
projects as the ``geometric center'' calculated by the Geographical 
Information System software, in conjunction with the methodology and 
standard mapping data, employed by MMS for identifying OCS boundaries 
and locations for other purposes.
    An eligible State would be a coastal State that has submerged lands 
within 3 miles of any part of a qualified project area, a coastline 
within 15 miles of the geographical center of a qualified project, or 
both.
    Revenues, for the purpose of revenue sharing on projects covered by 
the new subsection 8(p)(2)(B) in the OCS Lands Act, are defined to 
include bonuses, rents, license fees, operating fees, other

[[Page 39392]]

fees, and any similar payments paid in connection with a qualified 
project or qualified project area. These revenues include receipts 
collected by the Federal Government from the entire project area, not 
just from the portion of the project or project area extending into the 
8(g) zone. Administrative fees, such as those for cost recovery, are 
not included under this definition of revenues and would not be subject 
to the 27-percent share.

Section 285.113 How will data and information obtained by MMS under 
this part be disclosed to the public?

    This section describes how MMS will handle data and information 
submitted to the MMS, including public disclosure and nondisclosure. 
The MMS will follow the applicable requirements of the Freedom of 
Information Act (5 U.S.C.) and protect data and information to the 
extent allowed by law.

Section 285.114 Paperwork Reduction Act Statements--Information 
Collection

    These provisions cover Paperwork Reduction Act statements and 
information collection requirements pertaining to this part.

Section 285.115 Documents Incorporated by Reference

    This section is a listing of the industry standard documents MMS is 
proposing to incorporate by reference into the 30 CFR part 285 
regulations.

Section 285.116 Requests for Information on the State of the Offshore 
Alternative Energy Industry

    This section would allow the Director to request information from 
industry and other relevant stakeholders (including state and local 
agencies) as necessary to evaluate the state of the offshore 
alternative energy industry, including the identification of potential 
challenges or obstacles to its continued development and require the 
applicant, lessee, or grant holder to respond to a request in a timely 
manner. These requests could relate to the identification of 
environmental, technical, or economic matters that promote or detract 
from continued development of alternative energy technologies on the 
OCS. The MMS would use the information received to evaluate potential 
refinements to the OCS Alternative Energy Program that promote 
development of the industry in a safe and environmentally responsible 
manner, and that ensures fair value for use of the Nation's OCS. The 
MMS would publish these requests for information in the Federal 
Register.

Section 285.117 [Reserved]

Section 285.118 What are my appeal rights?

    This section describes when a decision made by MMS under this part 
may be appealed and who may appeal. Most decisions made under this part 
may be appealed according to the regulations found in 30 CFR part 290, 
subpart A. An unsuccessful bidder may apply for reconsideration by the 
Director of MMS (Director).

Subpart B--Issuance of OCS Alternative Energy Leases

A. Overview for Subpart B

    This subpart proposes a process for issuing alternative energy 
leases, both for commercial production activities and for assessment or 
technology testing activities. That process will be competitive, unless 
there is a determination of noncompetitive interest. In addition, this 
subpart describes how we will determine when to use a competitive 
process for issuing an alternative energy lease and identifies auction 
formats and bidding systems and variables that we may use when that 
determination is affirmative. Finally, this subpart discusses the terms 
under which we will issue alternative energy leases. To establish a 
framework, we begin with a discussion of various types of leases that a 
prospective alternative energy developer may consider.
    Types of Leases. Leases would be required for any type of 
alternative energy activity on the OCS. We propose to issue two types: 
(1) commercial leases; and (2) limited leases. Although we also are 
proposing to convey access to areas of the OCS to the Department of 
Energy for research under some form of negotiated lease agreement as 
provided in Sec.  285.238, this discussion of types of leases focuses 
on the commercial or limited leases that we would issue directly to 
lessees on a competitive or noncompetitive basis.
    A commercial lease would provide the access and operational rights, 
subject to necessary approvals, to produce, sell, and deliver power on 
a commercial scale, through spot market transactions or a long-term 
power purchase agreement. A commercial lease would be issued over the 
long term (i.e., up to approximately 30 years, with possible renewals) 
and convey preferential rights to project easements on the OCS for the 
purpose of installing transmission and distribution systems.
    A limited lease would provide the access rights necessary to 
conduct activities such as site assessment and technology testing that 
support production of alternative energy but do not themselves result 
in the commercial sale, use or distribution of electricity or other 
produced power. A limited lease would be issued for a shorter term 
(i.e., up to 5 years, with possible renewals), and would not convey any 
preferential rights to obtain a commercial lease to develop the leased 
area.
    We anticipate that offshore alternative energy companies will 
prefer to acquire commercial leases rather than limited leases. 
However, we believe that providing for the issuance of limited leases 
will give all companies, including smaller entities, an opportunity to 
pursue alternative energy activities without the commitments and 
expenses entailed by a long-term commercial lease. For example, it is 
likely that a limited lease would entail less expense for bidding and 
lease acquisition, because the rights to assess a site or test 
technology would have less value than full commercial development 
rights. Also, there likely would be less effort and cost needed in 
overall project formulation, planning, and authorizations, as NEPA and 
CZMA reviews and associated coordination and consultation would focus 
on smaller-scale and shorter-term activities than would be needed for a 
commercial lease.
    With a limited lease, we expect that a company could acquire a 
lease relatively inexpensively and test an energy generating device or 
collect data and information for resource assessment for up to five 
years. At the end of the limited lease term, if the technology proves 
successful or the data is promising, the company could apply for a 
commercial lease encompassing the site or apply for multiple leases in 
various OCS locations where it wishes to pursue commercial production 
with its now proven technology. The limited lease in this case would 
have the effect of promoting collection of resource information or the 
development of new technology that could be commercially applied in the 
future.
    A limited lease would not offer any preferential right or option to 
future commercial development of the lease site. The competition 
requirements of subsection 8(p) of the OCS Lands Act would apply if the 
lessee of a limited lease subsequently requests a commercial lease. We 
expect that, if pursued, the majority of limited leases would be issued 
noncompetitively to small businesses in areas of the OCS that are not 
otherwise in demand for commercial alternative energy activity.
    The most important factor for an applicant to consider in deciding

[[Page 39393]]

whether to pursue a commercial lease or a limited lease is the right to 
commercial development of the leased site. Such right is included only 
in a commercial lease. Thus, if an alternative energy project applicant 
is interested in demonstrating a particular alternative energy 
technology but is unsure that it will ultimately lead to commercial 
production, we encourage that applicant to pursue a commercial lease 
because it reserves the right to commercially develop the OCS site. 
Pursuing a commercial lease would not obligate the lessee to remain on 
a lease for the full term of the lease. As provided in subpart D, if 
the lessee no longer intends to commercially develop the OCS a 
commercial lease may be relinquished by the lessee.
    Alternatively, if a company obtained a limited lease to initiate 
technology testing activities and subsequently determined that full-
scale commercial development of the OCS area is possible, that lessee 
of a limited lease would have no right to develop that site without 
applying for a commercial lease, which is subject to potential 
competition following public notice. For these reasons, we anticipate 
that most project applicants will pursue commercial leases to ensure 
that all necessary rights for future development are reserved should 
initial testing activities show that a commercial project could be 
viable.
    In developing the proposed rule, we incorporated requirements of 
the EPAct, considered public comment received in response to the ANPR 
(70 FR 77345) published in the Federal Register on December 30, 2005, 
and reviewed other existing models for the conveyance of rights for 
energy and mineral development in the United States and abroad. One 
model we considered is a two-stage lease that would authorize short-
term resource assessment and technology testing in the first phase and 
then be converted to authorize long-term commercial production 
activities in the second phase. We believe that such an approach would 
entail the same level of consultation and review that would be involved 
in the issuance of the single commercial lease we are proposing to 
authorize these activities. Also, a lessee may accomplish the same 
activities under a single commercial lease as under a two-stage lease. 
In either instance, the lessee would be able to do resource assessment 
and technology testing and then decide whether to continue the lease in 
effect for commercial production. Therefore, we do not see the benefit 
of offering two-stage leases in lieu of a single commercial lease as 
proposed.
    The types of leases proposed and the activities authorized are 
intended to provide both for long-term, large scale commercial 
production of alternative energy and for shorter-term, smaller scale 
activities in support of alternative energy production, such as site 
assessment and technology testing activities. We invite comments on the 
proposed types of leases described above and the specific requirements 
for leases described in the section-by-section analysis below.
    Issuing Leases. It is the goal of MMS to issue alternative energy 
leases through a simple and straightforward process and in a fair and 
equitable manner. The EPAct requirements mean that both a competitive 
and noncompetitive system will be employed.
    We anticipate that initial leasing of alternative energy sites on 
the OCS may be driven by unsolicited applications, rather than an MMS-
initiated request for interest in an area. A formal request for 
interest would be part of the process for confirming that there is no 
competitive interest in the area identified in the unsolicited 
application. The proposed process for noncompetitive issuance of OCS 
alternative energy leases is based on the requirements of EPAct and is 
patterned after the existing MMS process for issuing noncompetitive 
negotiated agreements for the conveyance of OCS sand and gravel. We 
invite comments on the proposed process, including the proposed 
acquisition fee and case-by-case procedures by which applicants would 
pay for associated NEPA analysis. We also seek comment on the process 
we would use to obtain public input on unsolicited applications and the 
considerations for determining whether competitive interest exists.
    Any leasing process for OCS alternative energy activity, whether 
competitive or noncompetitive, would include full analysis as required 
by NEPA and other applicable laws. Table 1, which is presented in the 
discussion titled ``Overview of the process'' under the Compliance 
discussion, describes the NEPA requirements for steps in the OCS 
alternative energy process, including the lease issuance step.
    The proposed competitive sale process for alternative energy leases 
is similar to long-standing Federal and State processes for conveying 
mineral rights. This process would have multiple steps, beginning with 
a Call for Information and Nominations (Call) that would solicit 
information from potential bidders as well as other interested and 
affected parties concerning areas to be considered for leasing. The 
Call serves several functions by informing the public of the proposed 
lease sale, inviting comments from all interested and affected 
parties--including Federal, State, and local government agencies and 
interest groups--to identify their issues and concerns about the sale, 
and requesting potential lessees to describe their bidding interest in 
certain areas. After considering input received in response to the 
Call, the next step would be Area Identification, in which MMS would 
identify the area to be considered for leasing and analyzed under NEPA. 
Following the NEPA analysis, MMS would issue a Proposed Sale Notice for 
public comment. Next, the MMS would publish a Final Sale Notice 
describing the lease sale, including the auction process we will use to 
award leases on a competitive basis. Participation in a competitive 
sale would not be limited to those entities that commented or expressed 
interest in the area unless the sale notice specifies otherwise. We 
invite comments on all aspects of the proposed sale process, including 
the proposed criteria for determining competition, proceeding with 
competitive auctions, and awarding leases.
    We want to encourage competition for OCS leases from entities that 
will diligently develop alternative energy resources and avoid 
situations where leases are acquired for strategic or purely 
speculative purposes. Diligence requirements under subparts E and F of 
this part would require lessees to make payments and meet lease 
development requirements that ensure efficient and expeditious 
activities on the lease. Also, subpart D of the proposed rule would 
allow leases to be sold and assigned to other companies under certain 
conditions.
    A competitive lease sale for alternative energy activities could be 
held for one type of activity (e.g., wind) or for various activities 
(e.g., wind, wave, current, etc). We would determine the scope of 
competing alternative energy activities based on responses to initial 
public notices (Request for Information, Call for Information and 
Nominations, or other Federal notices), issued during the leasing 
process and we would clearly state that scope (e.g. wind, wave, 
current, etc.) early in that process and the subsequent Proposed and 
Final Sale Notices. If we decided to limit competition to one type of 
activity (e.g., current), then we would not consider bids for any other 
type of activity and the lease that is issued would be limited to that 
activity. If we decided to open competition to more than one type of 
activity (e.g., wind, wave, current, etc.),

[[Page 39394]]

then we would consider all bids for one or more of those activities and 
the lease instrument may authorize one or more of those activities.
    We would like to know if the proposed leasing system and lease 
development requirements are appropriate to foster efficient 
development of OCS alternative energy resources, or whether there are 
other conditions or requirements that we should consider to prevent 
speculative bidding, holding and resale of the lease rights.
    Lease Terms. Provisions relating to the duration of leases are set 
forth in several sections of this subpart B as well as in subpart D. 
Sections 285.235 and 285.236 set finite terms for both commercial and 
limited leases while providing for automatic extensions only if 
necessary for MMS review and approval of necessary plans. Depending on 
the type of lease (commercial or limited) and the acquisition process 
(competitive or noncompetitive), a lease could have up to three 
distinct terms: A 6-month preliminary term, a 5-year site assessment 
term, and a 25-year operations term. Sections 285.415-421 discuss 
suspensions that extend the term of a lease, and Sec. Sec.  285.425 
through 427 address lease renewal.
    In establishing these lease terms and related provisions for OCS 
alternative energy leases we considered numerous suggestions. Two of 
the most prominent proposals were (1) provide for open-ended lease 
terms based on the oil and gas lease model (i.e., continuation of 
leases by drilling or producing) and (2) provide for automatic 
extensions and renewals of lease terms. We believe that both of these 
proposals could perpetuate inefficient or obsolete operations on a 
lease. We prefer to retain discretion relating to lease terms in order 
to promote diligent development and ensure use of the most effective 
and most efficient operating procedures and technologies. For 
commercial leases, the proposed 25-year operations term coincides with 
the anticipated term that a lessee and utility would establish in a 
power purchase agreement. It is possible that technology could improve 
substantially over such a 25-year term, and we want the ability to 
ensure that operations on leases keep in step with such technological 
improvements. The proposed lease term provisions are designed to be 
flexible enough to allow for operations over the entire design life of 
facility equipment but also allow for lease relinquishment, 
contraction, or termination if the seller is unable to market 
production.
    We believe that the proposed lease terms and related provisions 
would allow necessary flexibility while promoting diligence, thereby 
allowing OCS alternative energy activities to operate efficiently. We 
invite comments on whether the length and structure of these terms 
would inhibit legitimate efforts to develop alternative energy projects 
on the OCS and whether there would be better alternatives.

Section by Section Discussion for Subpart B

    The discussion in part A of this section of the preamble summarized 
principal concepts in the proposed procedures for conveying rights to 
develop alternative energy resources on the OCS. This section-by-
section analysis will describe and provide more details on each of the 
proposed provisions and discuss the rationale for proposing that 
provision.

General Lease Information

Section 285.200 What rights are granted with a lease issued under this 
part?

    We may issue OCS leases for any alternative energy source. 
Paragraph (a) of this section identifies the types of alternative 
energy leases that we propose to make available and describes rights 
that come with a lease issued under these regulations. In general, a 
lease issued under this part conveys the right to install and operate 
facilities on a designated portion of the OCS for the purpose of 
conducting commercial (production) activities or limited 
(noncommercial) activities supporting the production of energy from 
alternative energy sources. All rights are subject to compliance with 
requirements to secure approvals of, and then comply with, applicable 
plans, i.e., Site Assessment Plan (SAP), Construction and Operations 
Plan (COP), and General Activities Plan (GAP), that are set forth in 
proposed subpart F.
    Under paragraph (b) of this section, leases generally include the 
right to one or more project easements without further competition for 
the purpose of installing lines for gathering, transmission, and 
distribution of electricity; as well as pipelines for transporting 
other energy products (i.e. hydrogen); and appurtenances on the OCS as 
necessary to conduct operations. This could include the cables, 
pipelines and other structures necessary to transmit electricity or 
transport other energy product produced from the OCS to shore. The 
lessee would apply to MMS for the project easement as part of the COP 
or GAP. When we approve the proposed plan and project easement, an 
addendum covering the project easement will be incorporated in the 
lease. Ancillary activities that are not associated with an OCS 
alternative energy lease (e.g., a transmission line or support 
structure located in Federal waters to support a project in State 
waters or a commonly shared line supporting multiple leases) would be 
permitted and managed as a separate ROW grant or RUE grant under 
proposed subpart C.
    The proposed lease right to a project easement is necessitated by 
the nature of power generation activities as well as the competition 
requirement set forth in EPAct [subsection 8(p)(3) of the OCS Lands 
Act]. Each alternative energy project located offshore will need to 
transmit produced electricity or transport other energy product (i.e. 
hydrogen) to shore by cable or pipeline. If access to the corridor 
needed for transmission or transportation is not granted with the 
lease, the lessee would be required to compete for that right in 
accordance with subsection 8(p)(3). The uncertainty associated with 
acquiring a lease for a generation project in the absence of a 
guaranteed right to the path needed to transmit or transport the 
produced energy to market could be a significant disincentive to 
investment. Therefore, we propose to award the transmission or 
transportation right along with the lease. We invite comments on the 
proposed project easement provision.
    Paragraph (c) of this section provides for phased lease 
development. The proposed commercial lease framework would be capable 
of accommodating multi-phase project development as is commonly used 
for onshore utility-scale wind projects (see Sec. Sec.  285.200 and 
285.629). The lease applicant would need to inform us of its intent to 
develop a project in multiple phases and would need to lease from the 
outset all of the acreage necessary for the full build-out envisioned. 
If the applicant for a commercial lease phases in operations, the 
applicant must pay rentals on the portion of the lease that is not 
producing and operating fees on the portion of the lease that is 
producing or on which construction is underway. We may waive rental for 
the acreage on which activities are deferred, as provided by subpart E 
on a case-by-case basis for any lease issued under this part. As 
additional acreage is developed, operating fees would be charged in 
place of rentals, as appropriate. If the lessee decides not to develop 
the additional acreage, it would relinquish that acreage, or MMS could 
contract the lease, as provided in Sec. Sec.  285.435 and 285.436. 
Multi-phased project

[[Page 39395]]

development would have to comply with NEPA, CZMA, and other applicable 
laws.

Section 285.201 How will MMS issue leases?

    As required by subsection 8(p) of the OCS Lands Act, MMS must issue 
leases, easements, or ROWs for OCS alternative energy activities on a 
competitive basis unless we determine after public notice that there is 
no competitive interest. If we determine that there is competitive 
interest, we will conduct a fair and open competition process. When we 
receive an unsolicited request for a lease, we will make a 
determination if a competitive interest exists by first issuing a 
public notice of the request. After considering the comments received 
on the notice, as required by the OCS Lands Act, section 8(p), we will 
issue a determination that there is, or is not, competitive interest in 
the proposed leases. If two or more project proponents express interest 
in leasing the same area of the OCS (overlapping partially or 
completely), we would conclude that competitive interest exists and 
conduct a competitive lease sale. We may offer areas for leasing that 
do not conform exactly with the areas nominated for leasing, after 
analysis of requirements given in subsection 8(p)(4) of the OCS Lands 
Act. We invite comments on considerations other than interest by more 
than one party in leasing the same area of the OCS to determine whether 
or not there is a need to conduct a competitive lease sale in an area.
    We are aware that instances of partially overlapping interests may 
occur. Even if the overlap is a relatively small portion of the 
respective areas of interest, a process for deciding what to offer and 
how to choose the winning bid needs to be established. For example, if 
proposed Project A entails 10,000 acres for generation of 500 megawatts 
and Project B entails 2,000 acres for 100 MW, and there is an overlap 
of 1,000 acres, we would have to determine how to resolve the conflict. 
Six alternative approaches for addressing such a situation are 
discussed below. The actual set of approaches that we could consider 
for issuing leases is not necessarily limited to these options.
    (1) Offer both the Project A and Project B areas and award a lease 
for one or the other to the high bidder. If a cash bonus is a bid 
variable, it could be based on either the total or the amount per acre, 
and if an operating fee is a bid variable, it could be based on the 
total or the amount per MW of proposed capacity.
    (2) Offer and award a lease through competition for only the 
overlapping 1,000-acre area and then follow with a noncompetitive lease 
issuance for the remaining 9,000 acres under project A and 1,000 acres 
under project B.
    (3) Offer to lease individual tracts covering the area of interest, 
designated as legal subdivisions of a standard OCS lease block of 9 
square miles. Bidders that value specific tracts most highly could win 
leases through a simultaneous tract offering, and subsequently propose 
operations on multiple \1/4\\1/4\ legal subdivisions to obtain possible 
synergies.
    (4) Offer the combined A and B areas as one lease and award the 
lease to the high bidder (the winning lessee could then relinquish 
excess acreage).
    (5) Offer standard block sizes or legal subdivisions of those block 
sizes and allow bidders to ``package'' those blocks in a bidding unit. 
Identify the various features of the auction, e.g., bidder eligibility 
to compete and to remain active in various rounds, information to be 
released between rounds, rules for ending the auction, method for 
choosing the provisional high bidders, restrictions on bidding in 
subsequent rounds, etc.
    (6) Rely on coordination and consultation efforts with State and 
local governments to identify one preferable project area to be offered 
and awarded to the high bidder.
    We invite comments on any of these approaches. In particular, what 
do you think is the capability of package bidding to ensure a fair 
return and to induce an efficient allocation of leases?
    We also are aware that there will be other instances in which 
multiple projects could be proposed in the same general area with no 
actual geographic overlap, but the number of lease tracts may need to 
be limited based on regional or local needs and concerns. For example, 
a State or locality may identify a need for a certain amount of 
renewable energy generation from an OCS source. If the number of 
prospective leases proposed for an area greatly exceeded the projected 
demand, we may limit the number of tracts that could be offered. Such a 
case could be addressed by proceeding with an intertract competition in 
which multiple tracts could be offered for lease in the proposed 
auction formats described below (see Sec. Sec.  285.220 through 
285.223), but the number of approved bids would be limited. 
Accordingly, MMS proposes to use its discretion and, based on 
consultation--notably with the affected States and local communities, 
as well as the applicants--identify the appropriate tract or set of 
tracts to be offered for sale, thereby forgoing the need for intertract 
competition. We offer this approach in an effort to encourage a level 
of OCS alternative energy development commensurate with regional and 
local needs. We invite comments on our proposed approach, as well as 
other possible approaches such as intertract competitive auctions, to 
address this issue.
    Generally, we believe that priority should be given to leasing 
tracts for commercial operations so that in instances where there is 
competition between proponents of commercial leasing and limited 
leasing, commercial leasing would prevail (assuming that the proposed 
activities are not compatible). Thus, competitive leasing of areas for 
limited leases might be much less likely than for commercial leases, 
and limited leases might be confined to areas in which there is no 
interest in commercial leasing. Also, given such a priority, commercial 
leasing of an area would proceed noncompetitively even if interest in 
limited leasing in the same area is expressed. We invite comments on 
this proposed priority.
    Once we make the determination about competitive interest, we will 
proceed with issuing leases under the appropriate process as described 
in this subpart. The competitive process is set forth in Sec. Sec.  
285.210 through 285.225, and the noncompetitive process is set forth in 
Sec. Sec.  285.230 through 285.231. MMS will prepare an OCS alternative 
energy lease form and provide or reference such a lease form in a 
public notice. The approved lease form (or forms) for OCS alternative 
energy will be developed separately from the rulemaking and in 
consultation with interested and affected parties. This approach is 
designed to give us the flexibility to accommodate all possible 
alternative energy activities and adapt forms as necessary. We invite 
comments on this approach for developing appropriate lease documents.

Section 285.202 What types of leases will MMS issue?

    This section states that MMS may issue leases for one or more types 
of activity relating to assessment and production of alternative energy 
and may issue commercial or limited leases as discussed above in the 
overview of this subpart. A single purpose lease would authorize one 
type of activity (e.g., wind power generation), whereas a multi-purpose 
lease would authorize multiple types of activity (e.g., both wind and 
wave power generation). A lease issued for one type of alternative 
energy activity would not necessarily result in prohibition of other 
types of

[[Page 39396]]

activities in that same area, which could be authorized by separate 
leases issued subsequently. For example, we may conduct a lease sale 
for wind and then conduct a lease sale for wave activities in that same 
area. While the initial lessee in such a case would be restricted to 
wind development, we could authorize multiple types of OCS alternative 
energy activities in an OCS area to the extent that these activities 
are compatible and do not unreasonably impede the ability of the 
existing lessee to reasonably conduct its operations in the area. We 
will not issue access rights for oil, gas, or any other minerals under 
this part.

Section 285.203 With whom will MMS consult before issuance of a lease?

    As directed by subsections 8(p)(4) and (7) of the OCS Lands Act and 
by other relevant Federal statutory requirements (e.g. ESA and 
Magnuson-Stevens Fishery Conservation and Management Act (MSA)), MMS 
will coordinate and consult with relevant Federal agencies, with the 
Governor of any State, and the executive of any local government that 
may be affected by an alternative energy lease. As provided in Sec.  
285.102 of subpart A, we may invite any Governor of an affected State 
or government executive of an affected local government to participate 
in a joint task force or other joint planning or coordination agreement 
if we are considering offering or issuing leases (or grants). 
Participation in a task force would give the parties opportunities to 
contribute to the planning process and access to nonproprietary 
information.
    Further, we recommend that companies that plan to pursue 
alternative energy activities on the OCS conduct preliminary outreach 
early in the process by contacting interested and affected parties to 
provide information and receive feedback concerning their proposals. A 
provision in subpart A of the proposed regulations encourages this type 
of early contact and coordination (see Sec.  285.103(f)). This approach 
is consistent with the many suggestions we have received concerning 
timely and thorough coordination and consultation, notably a 
recommendation from the U.S. Coast Guard calling for early outreach 
from OCS alternative energy project applicants.
    We believe that it is particularly important for companies that 
plan to produce and deliver electricity to existing onshore 
distribution systems to consult with involved States and localities to 
establish power generation needs and to become aware of pertinent 
regulatory requirements before pursuing OCS commercial development and 
production rights. Early communication among potential developers and 
the States and localities that would be most affected by any 
development that ensues and that regulate associated onshore facilities 
helps assure that authorized OCS alternative energy activity will be 
compatible with and support any renewable portfolio standards, policies 
on the location of transmission and other support facilities, and any 
other relevant factors.
    We invite comments on issues relevant to coordination and 
consultation with Federal agencies and State and local governments.

Section 285.204 What areas are available for leasing consideration?

    We intend to consider offering for lease any area of the OCS that 
is appropriately platted, except areas prohibited from leasing by 
EPAct. Subsection 8(p)(10) of the OCS Lands Act prohibits alternative 
energy leasing in any area of the OCS within the exterior boundaries of 
any unit of the National Park System, National Wildlife Refuge System, 
National Marine Sanctuary System, or any National Monument. In 
administering this program, the Secretary will take into account other 
uses and may withdraw portions of the OCS from leasing under this part 
and restrict operations on leases for national defense purposes.
    The areas we actually make available for alternative energy leasing 
are likely to be determined through a process that assesses different 
types of alternative energy resources and potential environmental 
impacts and other relevant information on a national, regional, or more 
specific basis. The assessment process will include coordination and 
consultation with Federal, State, and local governments and other 
interested and affected parties and may entail the establishment of 
task forces as discussed above. Based on such assessments, we would 
have the discretion to offer or not offer to lease areas as 
appropriate. We intend to use our existing system of OCS regions, 
planning areas, official protraction diagrams, and lease blocks to 
designate, delineate, and describe areas of the OCS under the OCS 
alternative energy program.
    We invite comments on the proposed process for choosing areas to 
make available for leasing and the proposed means for mapping and 
describing those areas.

Section 285.205 How will leases be mapped?

    This section states that MMS will prepare and use necessary leasing 
maps and official protraction diagrams as it does for other energy and 
mineral leasing on OCS (e.g., 30 CFR 256.8)

Section 285.206 What is the lease size?

    We will determine the size for each lease on a case-by-case basis 
to ensure that it is an appropriate size to accommodate the anticipated 
activities. The processes leading to both competitive and 
noncompetitive issuance of leases will provide public notice of the 
lease size. Since there is no size limit in the EPAct amendment to the 
OCS Lands Act, and because it would not be prudent to prescribe such a 
limit for an unknown range of future activities with varying areal 
requirements, we favor the flexibility of this proposed approach.
    We plan to delineate leases by using mapped OCS blocks, portions of 
such blocks, or aggregations of such blocks. For example, a limited 
lease supporting a small data gathering or technology testing facility 
might require only a small part of a 3-mile by 3-mile OCS block. In 
such a case the lessee could acquire (or retain after originally 
acquiring a larger area) an aliquot part as small as a quarter-quarter 
(i.e., \1/16\) of a block. On the other hand, it is likely that a 
typical commercial-scale alternative energy project would result in the 
issuance of one lease encompassing several contiguous OCS blocks. We 
invite comments on the proposed provisions governing lease size.

Section 285.207 Through 285.209 [Reserved]

Competitive Lease Process

Section 285.210 How does MMS initiate the competitive leasing process?

    This section establishes a process for us to solicit proposals to 
develop the alternative energy potential on the OCS. We may use a 
general Request for Interest to gauge interest in alternative energy 
leasing anywhere on the OCS or a specific Request for Interest to 
assess interest in specific areas after receiving an unsolicited 
leasing proposal. Any Request for Interest will be published in the 
Federal Register.
    Depending on the level and extent of interest and review of 
comments, we may formulate a nationwide or regional program schedule of 
lease sales or we may initiate individual competitive lease sales on a 
case-by-case basis without an overarching program schedule. Once a 
determination is made

[[Page 39397]]

to offer an area(s) for competitive lease, we would initiate an 
alternative energy lease sale process.

Section 285.211 What is the process for competitive issuance of leases?

    This section lays out the discrete steps we propose to follow in 
preparing for and holding a lease auction and issuing leases 
competitively. These steps include a Call for Information and 
Nominations (Call), an Area Identification, a Proposed Sale Notice, and 
a Final Sale Notice.
    An Area Identification step would follow the Call. In it we would 
use responses to the Call and other information to delineate a 
geographical area or areas to be considered for leasing and analysis 
under NEPA and other applicable laws. This process includes identifying 
potential impacts on the environment, consulting with other agencies 
and State and local officials on mitigating stipulations and 
conditions, and perhaps public hearings. We would provide public notice 
of the area identified for leasing, which could encompass the OCS 
blocks, portions of blocks, or aggregations of blocks requested for 
leasing.
    The product of these evaluations and consultations would then be 
reflected in the Sale Notices that implement a competitive lease sale. 
We invite comments on the most useful way to describe areas we decide 
to make available for alternative energy leasing.

Section 285.212 What must I submit in response to a Request for 
Interest or a Call for Information and Nominations?

    This section describes the type of information we seek from 
potential lessees, in a response to a Request for Interest or a Call. 
We may issue a broad request for interest to be used as a basis for 
developing a national or regional schedule of alternative energy lease 
sales, or we may issue a tract specific request to be used to determine 
competitive interest in a particular area that has been proposed for 
leasing. We would issue a Call as the first step in a competitive lease 
sale process to elicit information from all interested and affected 
parties concerning proposed leasing activities and the existing 
conditions that may affect or be affected by those activities. In all 
cases--responding to a general or specific Request for Interest or a 
Call--we would require prospective lessees to submit the same types of 
information. That information would include: the area of interest for a 
possible lease; a general description of objectives and the facilities 
needed to achieve those objectives; a general schedule of proposed 
activities, including those leading to commercial production or other 
approved operations; available and pertinent data and information 
concerning alternative energy resources and environmental conditions in 
the area of interest, including energy and resource data and 
information used to evaluate the area of interest; certification that 
the proposed activity conforms with State and local energy planning 
requirements, initiatives or guidance, as appropriate; documentation 
showing that the applicant is qualified to hold a lease; and any other 
information specifically requested in the Federal Register notice.
    We believe that this information is necessary for MMS in developing 
leasing schedules, determining competitive interest for unsolicited 
proposals, and proceeding with alternative energy lease sales. We also 
believe that such information should be readily available from 
prospective lessees and that this requirement poses no undue burden. In 
cases where a prospective lessee has already submitted the required 
information, we would not require it to be submitted subsequently. For 
example, if a company responded to a broad or specific Request for 
Interest for an area that MMS subsequently decided to offer in a lease 
sale, that company would not have to resubmit information in response 
to the Call for that sale. Only companies that had not previously 
expressed interest and submitted information would be expected to 
provide the required information in response to the Call.
    In addition to the items listed, we believe that information 
relating to potential markets that could be served and processes that 
could be used to serve those markets is important. Also, information on 
similar projects elsewhere in the world and on issues associated with 
proceeding in your proposed area(s) may be necessary for our 
deliberations, especially those entailed in developing a broad leasing 
program or schedule. We invite comments on information that we should 
request to identify alternative energy interest in general or specific 
OCS areas.
    Subpart A discusses how we would handle such data and information, 
including procedures for withholding material from public disclosure to 
the extent allowed by law. We invite comments on the handling of data 
and information.

Section 285.213 What will MMS do with information from the Requests for 
Information or Calls for Information and Nominations?

    This section states that we will use the information we receive to 
identify lease areas, develop options for conducting environmental 
analysis and adopting lease provisions, and prepare documentation to 
satisfy relevant Federal requirements, such as NEPA, the Coastal Zone 
Management Act (CZMA), the Endangered Species Act (ESA), and the 
Magnuson-Stevens Fishery Conservation and Management Act (MSA).
    For purposes of Federal consistency, we will treat alternative 
energy competitive lease offerings as Federal agency activities and 
follow the requirements of subsection 307(c)(1) of the CZMA procedures. 
That means we must determine if the effects to any land or water use or 
natural resource of a State's coastal zone from the competitive lease 
offering are reasonably foreseeable and comply with the appropriate 
Federal consistency regulatory path found in 15 CFR part 930 subpart C. 
We invite comments on how this process could be expedited.

Section 285.214 What areas will MMS offer in a lease sale?

    This section states that the areas we will offer for lease will be 
identified as provided in Sec.  285.211(b). However, it should be noted 
that the leasing area could be reduced subsequently through the lease 
sale process. This section also states that no further nominations for 
a lease sale will be accepted following the completion of the Call for 
Information and Nominations step.

Section 285.215 What information will MMS publish in the Proposed Sale 
Notice and Final Sale Notice?

    We will publish Proposed Sale Notices and Final Sale Notices in the 
Federal Register for each lease sale. Proposed Sale Notices and Final 
Sale Notices will provide information pertaining to:
     The area offered for leasing;
     Proposed and final lease terms and conditions including 
lease size, lease term, payment and bond requirements, performance 
requirements, and site specific lease stipulations;
     Auction details including bidding procedures and systems, 
the bid variable and minimum bid, the bid deposit, the place and time 
for filing bids and the place, date and hour for opening bids;
     The official MMS lease form to be used or a reference to 
that form;

[[Page 39398]]

     Bid evaluation criteria we will use and how the criteria 
will be used in decision-making for awarding a lease;
     Award procedures including how and when we will award 
leases and how we will handle unsuccessful bids or applications;
     Procedures for appealing the lease issuance decision; and
     Execution of the lease instrument.
    The Proposed Sale Notice would invite comments from all interested 
and affected parties. We expect that the use of such a notice in the 
process of offering leases for development of OCS alternative energy 
sources would provide a valuable opportunity for us to consult on the 
selection of appropriate competitive leasing procedures and the 
formulation of the details of the lease instruments to be issued. After 
considering comments on the Proposed Sale Notice, we would revise and 
publish a Final Sale Notice that adjusts as appropriate and confirms 
the same information. The final steps in the leasing process would be 
conducting the actual auction and awarding the leases. Figure 2 shows 
the steps in the proposed competitive leasing process.
    We invite comments on whether this process provides sufficient 
information and notice to encourage competition for prospective 
alternative energy sites.

Section 285.216 through 285.219 [Reserved]

Competitive Lease Award Process

Section 285.220 What auction format may MMS use in a lease sale?

    This and the next two sections describe how we propose to structure 
a competitive process for granting alternative energy leases. We will 
hold auctions to award leases using either sealed bidding, ascending 
bidding, or two-stage bidding. The sealed bidding format is mandated 
for oil and gas lease sales by subsection 8(a) of the OCS Lands Act. In 
contrast, no particular auction format is specified for alternative 
energy lease sales conducted under subsection 8(p) of the OCS Lands Act 
and there may be advantages to using other approaches with emerging OCS 
industries.
    For each auction, we would establish a sale area or sale areas 
based on information received in response to Request for Interest and 
Call notices, and establish a bid variable, a minimum acceptable bid, 
and criteria for bid acceptance. We would include specific details of 
the selected auction format in appropriate Federal Register notices 
including the Proposed Sale Notice and the Final Sale Notice. The sale 
notices would include details on the bidding process, such as the 
auction format, bidder eligibility, bidder deposits, the bid variable, 
the object of the bidding, minimum bid amounts, bid increments, 
criteria for ending or continuing the auction, method for determining 
the provisional winning bidder(s), and bid adequacy considerations. A 
general description of the three auction formats from which we propose 
to choose follows.
    Sealed Bidding would consist of a single round and provide for each 
lease sale participant to submit a single bid by post or e-mail, after 
which we would publicly announce the high bidder. We will specify in 
the Call either a cash bonus or an operating fee rate for the bid 
variable. This traditional format works best in cases where there are 
limited areas of overlapping interest and one bidder is much better 
informed than others about the underlying technical and economic 
prospects of leasing the area for use in an alternative energy project.
    This auction format is administratively compatible with application 
of a ranking and filtering procedure which would identify the set of 
highest bids per tract before MMS decides which of those tracts to 
lease. This ranking of high bids can serve as a bid adequacy mechanism 
for determining which high bids to accept. It also has the advantage of 
creating competition for lease rights across tracts, when competition 
for individual leases is absent. This procedure is known as 
``intertract competition.''
    Ascending Bidding involves multiple rounds of bidding and provides 
for participants to submit increasing sequential bids over a predefined 
time period. Again, we will specify either a cash bonus or an operating 
fee rate for the bid variable. Bids may be submitted orally or 
electronically (e.g., Internet). If bidding activity continues right up 
to the deadline, the time period may be continuously extended as 
warranted by additional bidding activity. This type of auction format 
works best in the presence of common high interest and strong 
competition among bidders who are equally informed about the quality 
and value of the lease area.
    Two-stage Bidding would combine the two formats previously 
discussed, sealed and ascending bidding. Generally, we would require 
interested bidders to offer a minimum cash bonus to join the auction. 
Then, in the most likely process formulation, participants would submit 
ascending bids (e.g., operating fee rate, cash bonus, etc.) in the 
first stage until all but two bidders drop out or more than one bidder 
offers to pay the maximum bid amount specified by MMS. The auction 
would then move to the second stage, where the remaining participants 
typically would offer a sealed bid on a bidding variable not employed 
in stage one. However, we reserve the option to conduct the two-stage 
auction using sealed or ascending bidding in either or both stages, and 
to select the bid variables in each stage. This type of auction works 
well when competition for specific acreage is weak, or when potential 
lessees are better informed than the lessor.
    Subject to the bid adequacy requirements referenced in Sec.  
285.222, typically the qualified bidder offering the highest cash bonus 
or the highest fee rate, depending on which deciding bid variable is 
used, would win the lease. When there are multiple leases, intertract 
competition could be used to decide which of the high bids to accept 
under the rubric of bid adequacy.
    We invite comments on the relative merits of these alternative 
auction formats for leasing OCS acreage for alternative energy projects 
and on other alternatives. Also, we request comments on whether 
allowing bidders to define a set of tracts on which they wish to submit 
a package bid would increase interest in a sale, generate higher 
aggregate bonus bids, and help ensure that bidders acquire their 
primary tracts of interest.

Section 285.221 What bidding systems may MMS use for commercial leases 
and limited leases?

    A bidding system is composed of various elements, the most 
important of which are the bid variable(s) and the payment 
requirements. The bid variable is generally subject to a minimum bid 
level and potentially to a reservation price, both established by MMS. 
The minimum bid level represents the entry level of the bid, i.e., the 
smallest bid amount that MMS might consider acceptable. Usually the 
same minimum bid level would be set across certain classes of tracts. 
The reservation price is a tract-specific measure that represents an 
estimate of the underlying value of the tract when used for a specific 
purpose. In cases where sufficient competition is deemed to exist, a 
reservation price typically would not be needed to ensure that a fair 
return is obtained in the auction for the individual tract. For an 
alternative energy lease, we propose to choose from five different bid 
variables:
    (1) A cash bonus with a constant or sliding operating fee rate;
    (2) a constant operating fee rate with a fixed cash bonus;

[[Page 39399]]

    (3) an initial operating fee rate for use in a sliding operating 
fee calculation with a fixed cash bonus;
    (4) a constant operating fee rate followed by a cash bonus; or
    (5) the starting value for a fee rate to be used in calculating a 
sliding operating fee followed by a cash bonus.
    The fee rate in this context is analogous to a royalty rate used in 
oil and gas leasing. If a cash bonus is the bid variable, the operating 
fee each year would be based on the formula in subpart E. If the fee 
rate is the bid variable, the cash bonus would be fixed, and the 
operating fee would be calculated using the fee rate offered by the 
winning bidder as a part of the formula in subpart E of this 
regulation. The two-bid variable systems, cash bonus and operating fee 
rate, either constant or as a sliding scale, would be used only in a 
two-stage auction.
    The resulting annual operating fee in these two-stage bidding 
auctions would be derived from the formula established in subpart E of 
this part which is based in part on megawatts of installed capacity and 
the prevailing market rates for electricity sold in the consuming 
region targeted by the lease. Values for the formula components, 
excluding the fee rate when it is used as the bid variable, will be 
established in the Final Sale Notice or in the final public notice in 
the case of a non-competitive lease.
    For limited leases we propose the cash bonus as the only 
permissible bid variable. The MMS imposed no operating fee for limited 
leases because such leases are not authorized to engage in commercial 
operations. This also means we will not be using a two-stage auction 
format for issuing limited leases.
    The proposed bidding systems and parameters have been developed 
based on a consideration of the EPAct requirements, domestic and 
foreign alternative energy programs, and the long-standing OCS oil and 
gas leasing program, as well as comments received in response to the 
ANPR. The proposed alternatives for a competitive lease sale bidding 
system are used in other domestic mineral leasing programs such as 
offshore oil and gas. Also, the BLM, which manages ROWs for wind energy 
development on U.S. Federal onshore lands, has held one competitive 
auction to date. In that auction BLM used a cash bonus as the bid 
variable and established a minimum initial bid of $17.00 per acre.
    One alternative bidding system suggested by commenters that we 
considered but rejected is a multiple-factor system. Such a system 
would consist of many different bid variables as factors, both 
quantitative and qualitative, in determining the winning bid in a 
competitive process. This is the approach used in Denmark, which has 
the most developed offshore wind program in the world and issues 
licenses based on multiple factors (e.g., project design, operator 
experience, etc.). We concluded that our AEAU program requires a 
bidding system based on clear objective standards, simple to administer 
and transparent to the public.
    We invite comments on which of the proposed bidding systems is most 
appropriate for alternative energy leases and why.

Section 285.222 What does MMS do with my bid?

    We will open the sealed bids at the place, date, and hour specified 
in the Final Sale Notice for the sole purpose of publicly announcing 
and recording the bids. However, we will not accept or reject any bids 
at that time. We will determine whether to accept a high bid as a 
winning bid based on the following factors.
    With sealed bidding, bid acceptance criteria typically rely on (1) 
minimum bid levels we establish with bids above that level being 
acceptable if there is a sufficient level of competition or if the 
lease area is not considered prospective, or (2) assessments of the 
adequacy of the high bids for a specific lease area in comparison to 
calculated reservation prices for the property rights that are the 
object of the bidding. Whereas a minimum bid reflects a publicized 
level below which bids are not deemed satisfactory or competitive and 
thus will not be considered, the reservation price reflects an 
unpublished estimate of the value of the tract and thus generally the 
lowest bid level at which we would award the lease. In this context, 
the term reservation price could also refer to the lowest operating fee 
at which we would award the lease, if the operating fee is used as the 
deciding bid variable. The calculation of the reservation price 
compensates for insufficient market competition, so if enough 
competition for the tract materializes, there is less need to rely on a 
reservation price. However, when there is little competition for 
specific acreage, the reservation price becomes critical if the absence 
of competition is known to the interested party. An additional factor 
we may consider in calculating the reservation price is the value of 
other uses of the area that are incompatible with the alternative 
energy project and which are under consideration for leasing.
    Due to the competitive aspects of the ascending bidding procedure, 
bid acceptance ordinarily would be less dependent on application of a 
reservation price and instead could rely solely on the bidding results 
to ensure receipt of fair market value. The ascending bid framework has 
been used by the BLM for allocating the property ROWs for wind energy 
projects. If we conclude that ascending bidding is the preferred 
auction format for many alternative energy situations, then sale 
procedures for ascending auctions could differ substantially from the 
customary OCS sealed bid model.
    With a two-stage auction format, the bid acceptance considerations 
are the same as those discussed that apply to the format for the final 
stage that was used (i.e. sealed and/or ascending bidding).
    One way to reduce reliance on a calculated reservation price in 
sealed bidding or two-stage bidding could be to apply the auction 
format to multiple areas employing intertract competition. Intertract 
competition may be needed in areas with high industry interest in a 
number of OCS leases, but where expected demand per tract is limited or 
constrained. In addition to enhancing competition, the object of 
intertract competition would be to provide signals through the bids 
which serve to assist us in leasing only the most valuable sources of 
energy needed to meet the expected demand.
    Our goal is to accept or reject all sealed bids within 90-calendar 
days after the sale date, although we may extend that time if 
necessary. In the case of ascending bidding, we may be able to 
determine the winning bidder once we confirm that the high bidder is a 
qualified bidder. Nevertheless, we reserve the right to reject any and 
all bids, regardless of the amount offered or bidding system employed. 
We will send a written notice to each high bidder, accepting or 
rejecting the bid or informing the bidder of tied high bids.
    We invite comments on the appropriate bid acceptance considerations 
and the potential use of intertract competition.

Section 285.223 What does MMS do if there is a tie for the highest bid?

    This section does not apply to bids at the end of stage one of a 
two-stage bidding format. If the highest bids are tied, we will notify 
the tied bidders. Within 15-calendar days after notification, unless 
otherwise specified in the Final Sale Notice, we will determine the 
winning bidder from among the tied bidders by lot.

[[Page 39400]]

    The proposed provisions governing bidding procedures and results 
are largely patterned after the way other mineral leases are handled by 
the Federal Government. However, the procedures proposed to govern tied 
high bids are slightly different from other existing systems in that 
they are designed to always result in the award of a lease rather than 
returning it to the government inventory for future offering. We invite 
comments on the likelihood of receiving tied bids and on the proposed 
provisions for selecting a winner in that case. In particular, would 
holding an additional round of bidding be more appropriate than 
resolving a tie by lot or, perhaps, by offering a joint lease?

Section 285.224 What happens if MMS accepts my bid?

    This section explains the responsibilities of the successful 
bidder. Our acceptance notice will include three copies of the lease to 
be executed by the bidder. The first 6 months' rental, the balance of 
the winning or fixed bonus, and required financial assurance will be 
due within 10-business days. We may extend this deadline upon request 
if we find that the delay is due to events beyond the control of the 
successful bidder. After the three executed copies are returned to MMS, 
we will execute the lease on behalf of the United States and send one 
fully executed copy to the lessee. If the bidder fails to execute the 
lease or otherwise fulfill requirements, the bidder's deposit will be 
forfeited and no lease will be issued.
    If, before the lease or grant is executed on behalf of the United 
States, the OCS area which would be subject to the lease is withdrawn 
or restricted from leasing, we will not issue a lease and will refund 
the deposit. We reserve this right to rescind a lease offering in 
situations where new environmental or other concerns about the 
prospective area, operation, or need for the facility surface after the 
lease sale. If the awarded lease or grant is executed by an agent 
acting on behalf of the bidder, the bidder must submit with the 
executed lease evidence that the agent is authorized to act on behalf 
of the bidder. We invite comments on any difficulties these procedures 
for formally issuing of a lease might cause potential lessees.

Section 285.225 What happens if my bid is rejected and what are my 
appeal rights?

    This section explains what options a bidder has if we reject the 
apparent high bid. In that case, we will provide a written statement of 
reasons and refund any money deposited with the bid. The bidder may 
then petition the MMS Director for reconsideration in writing, within 
15-business days of bid rejection. The Director will send the bidder a 
written response either affirming or reversing the rejection. Denial of 
a bid reconsideration by the Director is a final agency action. It is 
not subject to review by the Interior Board of Land Appeals, but is 
judicially reviewable. We invite comments on the fairness of this bid 
appeal process.

Section 285.226 through 285.229 [Reserved]

Noncompetitive Lease Award Process

Section 285.230 May I request a lease if there is no call?

    Anyone qualified to hold an OCS lease under Sec.  285.106 may 
request an alternative energy lease from us at any time, except in 
areas otherwise proposed for competitive lease offerings or excluded by 
statute from leasing. Such an unsolicited request for a lease may be 
submitted to conduct either commercial or noncommercial activities 
authorized in this part. To be valid, the request must include the 
information equivalent to that required under Sec.  285.213 in response 
to a Call for Information and Nominations. Specifically, the 
unsolicited request must contain a depiction of the area requested for 
lease; a general description of the objectives of the project and the 
facilities that would be used; a general schedule of proposed 
activities including those leading to commercial production or other 
approved operations; available and pertinent data and information 
concerning alternative energy resources and environmental conditions in 
the area of interest; certification that the proposed activity conforms 
with State and local energy planning requirements, initiatives or 
guidance, if any; and documentation that you are qualified to be a 
lessee as specified in Sec.  285.107.
    In addition, your request must include an acquisition fee of $0.25 
per acre for the area requested as required by Sec.  285.502. This fee 
is proposed at a level intended to be high enough to discourage 
speculation but low enough not to inhibit interest, allowing lessees to 
establish a low ratio of lease acquisition costs to total project 
costs. We invite comments on whether and how any requested information 
may inhibit requests and on whether this fee will serve its intended 
purpose.

Section 285.231 How will MMS process my unsolicited request for a 
noncompetitive lease?

    Paragraphs (a), (b), and (c) of this section state that MMS will 
first determine competitive interest in processing an unsolicited 
request in order to decide whether to proceed with leasing under a 
competitive or noncompetitive process. If we find that there is 
competitive interest in the lease area, we will proceed with a 
competitive lease process. If we determine that there is no competitive 
interest, then we will issue a notice of such determination.
    If we determine that there is a competitive interest, we will 
proceed with a competitive process, we will apply your acquisition fee 
to any bid you submit. If you choose not to bid, we will not refund 
your acquisition fee. We believe retention of your fee in this case is 
appropriate, because your original request indicated that your interest 
was serious and that you intended to pursue development if we carried 
out the steps needed to issue you a lease. If you submit a qualified 
bid that does not win, we will refund your deposit, including the 
amount of the acquisition fee. We invite comment on whether our 
proposal not to return your acquisition fee if you choose not to bid is 
appropriate.
    Paragraph (d) describes how MMS will proceed if it determines there 
is no competitive interest. Within 60 days after we issue a finding 
that there is no competitive interest, the prospective lessee must 
submit either a SAP for a commercial lease or a GAP for a limited 
lease. We will review the plan and conduct NEPA and other required 
analyses before simultaneously issuing the noncompetitive lease or 
grant and approving the SAP or the GAP.
    Our process for conveying OCS sand and gravel by negotiated 
noncompetitive lease under Public Law 103-421 is a relevant model for 
the proposed process for issuing alternative energy leases on a 
noncompetitive basis. The sand and gravel process starts with a request 
to MMS for a noncompetitive lease. If we determine that the request has 
potential, we require a NEPA analysis (environmental impact statement 
or environmental assessment). We inform the requestor of the type of 
environmental analysis required and provide an estimated schedule for 
completing the analysis and making the decision whether or not to issue 
a lease. As part of the NEPA analysis, we undertake or participate in 
endangered species consultations with the National Oceanic and 
Atmospheric

[[Page 39401]]

Administration and the U.S. Fish and Wildlife Service. We may ask the 
requestor to fund the NEPA analysis. After the NEPA analysis is 
completed, we decide whether or not to issue a lease to convey OCS sand 
and gravel resources. If the decision is made to issue a lease, the 
specific terms and conditions (e.g., mitigating measures, size and 
length of lease) are discussed with the requestor and included in the 
noncompetitive agreement (lease instrument) that we offer. The 
requestor must sign that agreement to complete acquisition of the 
lease.
    We would treat alternative energy noncompetitive lease issuance and 
SAP or GAP approval as Federal licenses or permits (as defined by 15 
CFR 930.51), and follow the requirements of subsection 307(c)(3)(A) of 
the CZMA and 15 CFR Part 930, Subpart D, as shown in Table 1. Under the 
CZMA and its implementing regulations an OCS plan is any plan for the 
exploration or development of, or production from, any area leased 
under the OCS Lands Act that is submitted to the Department of the 
Interior which describes in detail Federal license or permit 
activities. Since, for leases issued noncompetitively, the lease and 
SAP or GAP will be processed simultaneously (before the area has been 
leased), the SAP or GAP cannot qualify as an ``OCS Plan'' under the 
CZMA implementing regulations. For leases issued competitively, the SAP 
or GAP will be submitted and processed after the lease has been issued, 
and in those instances, the SAP or GAP would be processed as an ``OCS 
Plan'' (as defined by 15 CFR 930.73), and follow the requirements of 
subsection 307(c)(3)(B) of the CZMA and 15 CFR part 930, subpart E.
    We invite comments on the proposed SAP or GAP deadlines and the 
proposed NEPA and CZMA compliance procedures.

Section 285.232 through 285.234 [Reserved]

Commercial and Limited Lease Terms

Section 285.235 If I have a commercial lease, how long will my lease 
remain in effect?

    This section describes the duration terms for a commercial lease. 
Commercial leases issued competitively would have three separate phases 
of lease activity: preliminary term, site assessment term, and 
operations term. For commercial leases issued competitively, the 
preliminary term would be the initial 6 months during which the lessee 
must submit a SAP in accordance with subpart F. If the commercial lease 
is issued noncompetitively, there is no preliminary term, because lease 
issuance and SAP approval occur simultaneously. The site assessment 
term for all commercial leases would begin on the date that we approve 
the lessee's SAP for a term of 5 years to allow conduct of the approved 
activities proposed in the SAP. A commercial lease would expire at the 
end of the site assessment term unless the lessee submits a COP, in 
form and content satisfactory to us, before the end of the 5-year term. 
The preliminary and site assessment terms are automatically extended as 
necessary to allow us to review and approve plans.
    The operations term would follow, beginning on the date that we 
approve the lessee's COP, and would last 25 years to allow development, 
construction, and ultimately commercial production activities. An 
operations term longer than 25 years could be established if applicable 
parties determine that such a term is warranted (e.g., the lessee and 
project proponent negotiate a power purchase agreement with a 30-year 
term before the lease is issued).

Section 285.236 If I have a limited lease, how long will my lease term 
remain in effect?

    Limited leases issued competitively would have two phases: 
preliminary term and operations term. For limited leases issued 
competitively the preliminary term would be the initial 6 months during 
which the lessee must submit a GAP in accordance with subpart F. If the 
commercial lease is issued noncompetitively, there is no preliminary 
term, because lease issuance and GAP approval occur simultaneously. The 
operations term for all limited leases would begin on the date that we 
approve the GAP and continue for a term of 5 years to allow the lessee 
to conduct the approved activities proposed in the GAP.

Section 285.237 What is the effective date of a lease?

    This section describes how we will determine the effective date of 
a lease. A lease issued under this part must be dated and become 
effective as of the first day of the month following the date a lease 
is signed on behalf of the lessor. However, if the lessee submits a 
written request and we approve, a lease may be dated and become 
effective as of the first day of the month within which it is signed on 
behalf of the lessor.

BILLING CODE 4310-MR-P

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[GRAPHIC] [TIFF OMITTED] TP09JY08.002

BILLING CODE 4310-MR-C

Section 285.238 How can I conduct alternative energy research 
activities on the OCS?

    This section describes how alternative energy research activities 
might be conducted on the OCS. We may set aside areas of the OCS for 
testing and research activities managed by the U.S. Department of 
Energy (DOE). This provision was developed following discussions with 
DOE officials who cited a need for an offshore research area or areas 
patterned after the European Marine Energy Center, an offshore wave and 
tidal energy technology testing site in the United Kingdom. The 
proposed rule would allow us to establish one or more such sites for 
testing all types of offshore alternative energy technology after 
giving public notice, coordinating and consulting with relevant Federal 
agencies and State and local governments, and determining that there is 
no competitive interest in the area, and comply with all relevant 
Federal statutes (e.g. ESA, NEPA, MSA).
    We believe that such research areas should not preempt potential 
commercial development and should be administered by DOE under some 
sort of lease-like agreement rather than directly by MMS. The purposes, 
issue process, and terms of this kind of lease will be established on a 
case-by-case basis in negotiations between MMS and DOE. This kind of 
lease would not be bound by the other provisions of this rule

[[Page 39403]]

pertaining to leases. These would not be conventional alternative 
energy leases, authorizing private developers to conduct commercial or 
non-commercial activities. These would be a negotiated agreement 
between DOI and DOE to convey to DOE the access right to conduct 
alternative energy-related research and development. The leasing 
arrangements made under this provision should not be confused with the 
limited lease issued directly through a competitive or noncompetitive 
process we conduct without DOE involvement. We invite comments on this 
concept for making areas of the OCS available for alternative energy 
research.

Subpart C--Rights-of-Way Grants and Rights-of-Use and Easement Grants 
for Alternative Energy Activities

Overview

    Applicability. This subpart addresses issuing ROW grants and RUE 
grants for OCS alternative energy activities that are not associated 
with an MMS-issued alternative energy lease. Alternative energy leases 
include the rights to project easements for cables, pipelines, and 
other facilities associated with projects on OCS leases as discussed in 
subparts B and F. It is important to distinguish the grant authority 
under this part with grant authorities of MMS under other regulations, 
such as those in 30 CFR part 250. The two examples below are helpful to 
illustrate the types of activities on the OCS that MMS would authorize 
with a ROW grant or RUE grant issued under this subpart C.
    Example 1: The MMS would issue a ROW grant under this part for 
activities involving the placement and maintenance of a transmission 
cable that crosses the OCS and transmits energy produced from 
alternative energy resources onshore or in state waters. The proposed 
Juan de Fuca Cable Project--which would install on the OCS a cable 
several hundred miles long to transport electricity from renewable 
energy sources in the northwest to the San Francisco area--is a good 
illustration of an activity requiring a ROW granted under this subpart.
    Example 2: The MMS would issue an RUE under this part for 
activities involving the placement and operation of a facility on the 
OCS that supports an alternative energy project located on state 
submerged lands.
    The proposed provisions include general requirements for ROW grant 
and RUE grant applicants, as well as application and issuance 
procedures. These provisions are similar to the provisions proposed for 
issuing OCS alternative energy leases.
    The MMS would not issue ROW grants and RUE grants for installing 
site assessment facilities (e.g., meteorological towers) on the OCS. If 
a company intends to install site assessment facilities, it must 
acquire a lease under this part.
    Competitive and Noncompetitive Processes. As required by subsection 
8(p) of the OCS Lands Act, MMS must issue ROW grants and RUE grants 
through a competitive process unless MMS determines after public notice 
that there is no competitive interest. This subpart provides for public 
notice of applications for ROW grants and RUE grants to allow potential 
competitors and other interested and affected parties to comment on 
proposals and possibly compete for the ROW grants and RUE grants. 
However, due to the nature of potential operations on ROW grants and 
RUE grants, as well as the areal requirements involved, it is unlikely 
that there will be much, if any, competition. It appears that in most 
cases even separate geographically overlapping proposals for ROWs and 
RUEs would not be mutually exclusive. It is therefore unlikely that MMS 
would conduct an auction of ROW grants or RUE grants. The 
noncompetitive process for granting ROWs and RUEs would be similar to 
the noncompetitive leasing process described in subpart B, except there 
is no acquisition fee and a GAP is required in lieu of a SAP.
    In the unlikely event that MMS did determine that there is 
competition for a ROW or RUE, we would follow the process outlined in 
subpart B for competitive issuance of leases, with the ultimate terms 
and conditions of the grant established in a Final Sale Notice. It is 
more likely that we would receive unsolicited proposals that would be 
processed after public notice and determination that no competitive 
interest exists.
    As explained above in the discussion of subpart B, because of the 
competition requirement set forth in subsection 8(p) of the OCS Lands 
Act, MMS decided to authorize transportation and other ancillary 
activities associated with an OCS alternative energy lease through the 
issuance of a project easement as part of the lease rather than 
providing for separate grants of ROWs and RUEs. We invite comments on 
the proposed provisions for ROWs and RUEs, as well as project 
easements.
    Plans. As with limited leases, before operations may commence on a 
ROW grant or RUE grant, the grant holder must submit a GAP to MMS in 
accordance with subpart F and receive necessary approvals.
    Data and Information. Subpart C requires the submission of data and 
information associated with ROW grant and RUE grant proposals. Subpart 
A discusses how MMS would handle such data and information, including 
procedures for withholding material from public disclosure to the 
extent allowed by law. We invite comments on the handling of data and 
information.
    Coordination and Consultation. The MMS must coordinate and consult 
with other Federal agencies and State and local governments as directed 
by subsections 8(p)(4) and (7) of the OCS Lands Act and by other 
relevant Federal statutory requirements (e.g. ESA and MSA). As in 
subpart B, subpart C provides for coordination and consultation with 
affected Federal agencies, the Governors of affected States, and the 
executives of affected localities, including possible participation of 
State and local governments in task forces or other joint planning 
agreements with MMS. We invite comments on these provisions.
    CZMA Compliance. For purposes of Federal consistency, MMS would 
treat ROW grant or RUE grants issued through a competitive process as 
direct Federal agency activities and follow the subsection 307(c)(1) 
procedures of the CZMA. The MMS would determine if the ROW grant or RUE 
grant is reasonably likely to affect any land or water use or natural 
resource of a State's coastal zone and comply with the appropriate 
Federal consistency regulatory path found in 15 CFR part 930 subpart C.
    The MMS would treat ROW grants and RUE grants issued 
noncompetitively as Federal licenses or permits, which would follow 
requirements of CZMA subsection 307(c)(3)(A) and 15 CFR part 930 
subpart D. For ROW grants and RUE grants issued noncompetitively, MMS 
requires that the applicant submit simultaneously its proposed GAP. The 
GAP is properly characterized as a Federal license or permit under 
current CZMA regulations since it will describe activities and 
operations proposed to be undertaken in areas of the OCS that are not 
under a lease, and therefore cannot qualify as an OCS Plan (as defined 
by 15 CFR 930.73).
    We invite comments on the proposed CZMA compliance procedures.
    Areas Available for ROW Grants and RUE Grants. As with OCS 
alternative energy leases, ROWs and RUEs may be granted on any 
appropriately platted area that is not located within the exterior 
boundaries of any unit of the National Park System, National Wildlife 
Refuge System, National Marine

[[Page 39404]]

Sanctuary System, or any National Monument. We invite comments on the 
areas available for ROW grants and RUE grants.
    ROW and RUE Size. The proposed size of a ROW would encompass 200 
feet (61 meters) in width, the full length of the cable, pipeline or 
other facilities, and adjacent areas reasonably necessary for accessory 
facilities such as power stations for electricity or pumping stations 
for other energy products (i.e., hydrogen). The size of a RUE would be 
determined by MMS on a case-by-case basis to include the site of 
proposed facilities, associated structures, and the areal extent of 
anchors, chains or other equipment. The proposed ROW and RUE size 
provisions are patterned after comparable provisions governing mineral 
activities. We invite comments on the proposed ROW and RUE size 
provisions.
    ROW and RUE Term. A ROW grant or RUE grant is proposed to be in 
effect for as long as it is properly maintained, continues to support 
the activities for which it was granted, and is used for the purpose 
for which it was granted, unless otherwise stated on a case-by-case 
basis. Since ROW grants and RUE grants are tied to specific activities 
and purposes, MMS believes that in most cases it will be appropriate to 
link their term to those activities and purposes rather than setting 
specific independent terms. However, the proposed provisions do 
preserve discretion for MMS to set specific terms when called for. We 
invite comments on the provisions for ROW and RUE terms.
    Other ROW and RUE Provisions. ROW grants and RUE grants will be 
issued on forms approved by MMS and will become effective on the date 
granted by MMS or as stated in the grant instrument. Financial 
assurance and rental requirements are provided in subpart E. Additional 
provisions relating to the administration of ROW grants and RUE grants 
are set forth in subpart D. We invite comments on these ROW and RUE 
provisions.

Section by Section Discussion for Subpart C

ROW Grants and RUE Grants

Section 285.300 What types of activities are authorized by ROW grants 
and RUE grants issued under this part?

    This section explains what ROW grants and RUE grants authorize, 
which includes activities relating to the production, transportation or 
transmission of electricity or energy from any alternative energy 
resource that is not produced or generated on an OCS alternative energy 
lease issued under this part. It further clarifies that you do not need 
an ROW grant or RUE grant for a project easement authorized under 
subpart B of this part.

Section 285.301 What do ROW grants and RUE grants include?

    This section provides a detailed description of ROW grants and RUE 
grants, including their dimensions, boundaries, and limitations based 
on factors such as locations of associated and accessory facilities, as 
well as taking into consideration environmental and safety concerns. 
This does not cover RUE grants issued for the alternate use of existing 
facilities; those are covered in subpart J of this part.

Section 285.302 What are the general requirements for ROW grant and RUE 
grant holders?

    This section cites the proposed regulation pertaining to lease and 
grant holder qualifications in subpart A. It then lists the express 
conditions you must meet to be granted a ROW or a RUE so as not to 
prevent or interfere in any way with the management, administration, or 
the granting of other rights by the United States. Further, these 
conditions allow for other users to use or occupy any part of the ROW 
grant or RUE grant not actually occupied or required for any necessary 
operations.

Section 285.303 How long will my ROW grant or RUE grant remain in 
effect?

    This section states in general terms the proposed duration of ROW 
grant and RUE grants.

Section 285.304 [Reserved]

Obtaining ROW Grant and RUE Grants

Section 285.305 How do I request a ROW grant or RUE grant?

    This section addresses how to apply for a new or modified ROW grant 
or RUE grant. A separate application is required for each ROW grant or 
RUE grant requested. It lists the information the application must 
contain, including the area requested, objectives, facilities projected 
to achieve those objectives, a general schedule of proposed activities, 
environmental conditions in the area of interest.

Section 285.306 What action will MMS take on my request?

    This section explains how MMS will process requests for ROW grant 
and RUE grants based on whether or not competitive interest is 
determined. It cites the competitive process outlined in Sec.  285.308 
and describes the noncompetitive process. The noncompetitive ROW grant 
and RUE grant process is similar to the noncompetitive lease issuance 
process, requiring a determination of no competitive interest, 
negotiation of terms and conditions between grantee and grantor, as 
well as submission and simultaneous approval of a GAP.

Section 285.307 How will MMS determine whether competitive interest 
exists for ROW grants and RUE grants?

    This section outlines how MMS will determine whether or not there 
is competitive interest by publishing a public notice (Request for 
Interest). The public notice would describe the parameters of a project 
and give potential competitors an opportunity to express their 
interest. The MMS will make a determination of competitive interest 
based on comments received in response to the notice. If competitive 
interest is determined, MMS will initiate the process outlined in Sec.  
285.308. If no competitive interest is determined, MMS will follow the 
process outlined in Sec.  285.306.

Section 285.308 How will MMS conduct an auction for ROW grants and RUE 
grants?

    This section describes how an auction will be held if MMS 
determines that there is competitive interest for ROW grants and RUE 
grants. The proposed grant auction process is similar to the auction 
process for leases.

Section 285.309 When will MMS issue a noncompetitive ROW grant or RUE 
grant?

    This section describes the circumstances under which MMS will issue 
a grant. The MMS will issue a grant if we approve your GAP and you 
accept all terms and conditions of the grant.

Section 285.310 What is the effective date of a ROW grant or RUE grant?

    The effective date of a ROW grant or RUE grant is established by 
MMS on the ROW grant or RUE grant instrument.

Section 285.311 Through 285.314 [Reserved]

Financial Requirements for ROW Grants and RUE Grants

Section 285.315 What deposits are required for a competitive ROW grant 
or RUE grant?

    This section cites the deposit requirements of Sec.  285.501 
pertaining to ROW grant and RUE grant auctions and provides for the 
return of a rejected high bid.

[[Page 39405]]

Section 285.316 What payments are required for ROW grants or RUE 
grants?

    This section lists the payments required in order for MMS to issue 
the ROW grant or RUE grant. It states that the balance on an accepted 
high bid and the first year annual rental as specified in Sec.  285.507 
(the greater $5.00 per acre per year or $450 per year) must be paid 
before MMS will issue the ROW or RUE.

Subpart D--Lease and Grant Administration

Overview

    This subpart addresses noncompliance with regulations pertaining to 
a lease or grant, assignment and designation of operator, and 
suspension, renewal, termination, relinquishment, and cancellation of 
leases and grants.
    Noncompliance. The requirements that the lessee or grantee must 
meet to maintain a lease or grant in effect would include plan and 
reporting requirements (subpart F), payment obligations (subpart E), 
and procedures for conducting, stopping, and resuming operations or 
receiving appropriate suspensions from MMS (subpart D). In an instance 
of noncompliance MMS may issue a notice of noncompliance specifically 
citing failure to comply and prescribing corrective action. In an 
instance of noncompliance that poses an imminent threat MMS may issue a 
cessation order directing the lessee or grantee to cease an activity or 
activities. Likewise, failure to take corrective action prescribed in a 
noncompliance order may lead to the issuance of a cessation order. A 
cessation order does not lengthen the term of the lease or grant or 
relieve any payment obligations. Also, noncompliance may lead to the 
assessment of civil or criminal penalties. The MMS believes the 
proposed noncompliance provisions, in conjunction with the proposed 
regulatory requirements, are essential to ensure prompt, efficient, and 
responsible alternative energy activities on a lease or grant. We 
invite comments on the proposed provisions.
    Designation of Operator. The provisions governing designation of an 
operator to perform activities on a lease or grant are patterned after 
the regulations at 30 CFR 250.143 through 146.
    Assignment. The provisions governing assignment of leases or grants 
would generally follow the regulations at 30 CFR 256.62, including 
assignor and assignee responsibilities, procedures for filing 
transfers, and the effects of an assignment on a particular lease or 
grant. The MMS believes such requirements are appropriate for all OCS 
alternative energy leases and grants. We invite comments on these 
provisions.
    Suspension. The proposed rule provides for lease or grant 
suspensions that would lengthen the duration of the lease or grant to 
allow completion of activities or continuation of operations. 
Extensions relating to MMS technical and environmental review of 
required plans would be automatic. The lessee or grant holder could 
request suspensions for other purposes and these would be subject to 
Director approval.
    Renewal. The proposed rule provides that a lessee or grantee may 
request a renewal to conduct substantially similar activities as were 
originally authorized, and MMS, at its sole discretion, may approve 
such requests. The renewal provisions also provide timeframes and 
information requirements associated with renewal requests, as well as 
guidance on making payments and suspending activities while a renewal 
request is pending. The length of a renewal will be set by MMS on a 
case-by-case basis. As explained above in the discussion of lease term 
provisions in Subpart B, MMS is purposely proposing to retain 
discretion relating to lease terms and renewals as a tool to promote 
diligence. We invite comments on the proposed provisions as well as 
alternatives such as:
    (1) Open-ended lease terms;
    (2) Shorter lease terms (i.e. 10 years); or
    (3) Automatic renewals.
    Termination, Relinquishment, and Cancellation. The MMS would be 
able to cancel leases or grants for failure to comply with the OCS 
Lands Act and other applicable laws, regulations, and lease 
requirements; for fraudulent acquisition; and for a continuing and 
undiminished threat to marine life, property, natural resources, 
national security or defense, or the marine, coastal, or human 
environment. Provisions governing terminations and relinquishments of a 
lease or parts of a lease are also proposed.

Section by Section Discussion for Subpart D

Noncompliance and Cessation Orders

Section 285.400 What happens if I fail to comply with this part?

    This section states that MMS can take appropriate corrective action 
if you fail to comply with applicable provisions of Federal law, the 
regulations in this part, other applicable regulations, or MMS orders. 
The MMS may issue to you a notice of noncompliance if it determines 
that there has been a violation. A notice of noncompliance will tell 
you how you failed to comply, and will specify what you must do to 
correct the noncompliance and when you must act. This section also 
states that if you do not follow a notice of noncompliance, or any 
other regulation of this part, MMS may issue a cessation order, cancel 
your lease or grant, assess civil penalties, and in addition you may be 
subject to criminal penalties.

Section 285.401 When may MMS issue a cessation order?

    This section specifies that a cessation order can be issued if you 
fail to comply with any law or regulation under this part. The 
cessation order will have a timeframe for you to correct the 
noncompliance and set forth what measures you are required to take in 
order to resume activities on your lease or grant.

Section 285.402 What is the effect of a cessation order?

    This section gives the details of what you must do when you receive 
a cessation order. You must cease all activities on your lease or grant 
for the specified period and you must continue to make all required 
payments while a cessation order is in effect. A cessation order does 
not extend the term of your lease or grant for the period you are 
prohibited from conducting activities. Once again, if MMS determines 
that the circumstances giving rise to the cessation order cannot be 
resolved within a reasonable time period, your lease or grant may be 
cancelled.

Section 285.403 [Reserved]

Section 285.404 [Reserved]

Designation of Operator

Section 285.405 How do I designate an operator?

    Under this section if you intend to designate an operator who is 
not the lessee or grant holder, you must identify the proposed operator 
in your specific plan (SAP, COP, or GAP). Once approved in your plan, 
the designated operator is authorized to act on your behalf and 
authorized to perform activities necessary to fulfill your obligations 
under laws and regulations in this part. This section requires you to 
keep MMS informed if there is any change of status with your designated 
operator. And if you are the designated operator you must comply with 
all regulations governing those activities and may be held liable or 
penalized for any noncompliance. Designation of an operator does not 
relieve the lessee or grant holder of its obligations.

[[Page 39406]]

Section 285.406 Who is responsible for fulfilling lease and grant 
obligations?

    When you are not the sole lessee or grantee, you and your co-
lessee(s) or co-grantee(s) are jointly and severally responsible for 
fulfilling your obligations under the lease or grant. If your 
designated operator fails to fulfill any obligations under this part, 
MMS may require you or any or all of your co-lessees or co-grantees to 
fulfill those obligations.

Section 285.407 [Reserved]

Lease or Grant Assignment

Section 285.408 May I assign my lease or grant interest?

    Under this section you can assign all or part of your lease or 
grant interest. To assign interest, an assignment application must be 
sent to MMS. The assignment application includes various detailed 
requirements outlined in this section (i.e. location identification, 
qualifications, contact information, etc.). The assignment takes effect 
on the date MMS approves your application.

Section 285.409 How do I request approval of a lease or grant 
assignment?

    This section contains additional details of the assignment 
requirements.

Section 285.410 How does an assignment affect the assignor's liability?

    You are liable for all obligations that accrued under your lease or 
grant before MMS approves your assignment. If your assignee fails to 
perform any obligation you may be responsible for corrective action.

Section 285.411 How does an assignment affect the assignee's liability?

    The assignee is liable for all obligations once MMS has approved 
the assignment. The assignee will be responsible to comply with all 
lease or grant terms and conditions as well as all applicable 
regulations.

Section 285.412 through 285.414 [Reserved]

Lease or Grant Suspension

Section 285.415 What is a lease or grant suspension?

    A suspension is an interruption of the term of your lease or grant. 
You can request or MMS can order a suspension. A suspension extends the 
term of your lease or grant for the length of time the suspension is in 
effect. Activities may not be conducted on your lease or grant during 
the period of a suspension unless otherwise directed by MMS.

Section 285.416 How do I request a lease or grant suspension?

    To request a suspension you must submit a request to MMS containing 
the details explained in this section.

Section 285.417 When may MMS order a suspension?

    Under this section MMS may order a suspension to comply with 
judicial decrees prohibiting some or all activities under your lease or 
when continued activities pose an imminent threat of serious or 
irreparable harm or damage to natural resources, life (including human 
and wildlife), property, etc. This section also states that if you have 
a suspension from an imminent threat you may be required to conduct a 
site-specific study to resume activities.

Section 285.418 How will MMS issue a suspension?

    MMS can issue a suspension order orally, but ultimately it will be 
written. The written explanation will describe the effect of the 
suspension order on your lease or grant and any associated activities. 
The order may also include authorization of certain activities during 
the period of the suspension.

Section 285.419 What are my immediate responsibilities if I receive a 
suspension order?

    You must take action to comply fully with the terms of a suspension 
order upon receipt.

Section 285.420 What effect does a suspension order have on my 
payments?

    You must make all payments on your original term obligations until 
MMS authorizes/orders the suspension. Once the suspension has been 
issued MMS may waive your payments during the suspension period.

Section 285.421 How long will a suspension be in effect?

    The time frame for a suspension will mostly be outlined by MMS. 
However, if you request a suspension, MMS will not approve a suspension 
request longer than 2 years.

Section 285.422 through 285.424 [Reserved]

Lease or Grant Renewal

Section 285.425 May I obtain a renewal of my lease or grant before it 
terminates?

    The MMS may approve a renewal request to conduct substantially 
similar activities that were authorized under the original lease or 
grant. The MMS will not approve a renewal request that involves 
development of alternative energy not originally authorized in the 
lease or grant. We invite comments on establishing standard criteria 
for consideration in lease renewal decisions. For example such criteria 
could include:
    (1) Design life of existing technology;
    (2) Availability and feasibility of new technology;
    (3) Environmental and safety record of the lessee;
    (4) Operational and financial compliance record of the lessee; and
    (5) Competitive interest and fair return considerations.

Section 285.426 When must I submit my request for renewal?

    This section provides a timeframe for when you must request a 
renewal. You must submit no later than 180 calendar days before the 
termination date of your limited lease or grant, and no later than 2 
years before the termination date of the operations term of your 
commercial lease.

Section 285.427 How long is a renewal?

    The MMS will set the term of a renewal on a case-by-case basis not 
to exceed the original term of the lease or grant.

Section 285.428 What effect does applying for a renewal have on my 
activities and payments?

    If you request a renewal you must continue all payments and may 
continue to conduct your approved activities until your lease expires 
or until we make a determination on your request.

Section 285.429 through 285.431 [Reserved]

Lease or Grant Termination

Section 285.432 When does my lease or grant terminate?

    Your lease or grant terminates upon the expiration of the 
applicable term, upon cancellation by the Secretary, or upon approval 
of your relinquishment.

Section 285.433 What must I do after my lease or grant terminates?

    After your lease or grant terminates, you must make all payments 
due and perform any other outstanding obligations under the lease or 
grant (including decommissioning).

[[Page 39407]]

Section 285.434 [Reserved]

Lease or Grant Relinquishment

Section 285.435 How can I relinquish a lease or a grant or parts of a 
lease or a grant?

    To surrender a lease or grant you must submit a relinquishment 
application to MMS. The application will include the information 
required in this section such as identifying information and contact 
information. You are responsible for all payment obligations until the 
relinquishment is in effect.

Lease or Grant Contraction

Section 285.436 Can MMS require lease or grant contraction?

    The MMS may review your lease or grant area, at intervals no more 
frequent than every 5 years, to determine whether the lease or grant 
area is larger than needed to develop the project and manage activities 
in a manner that is consistent with the provisions of this part. MMS 
will notify you of its proposal to contract the lease or grant area and 
give you the opportunity to present orally or in writing information 
demonstrating that you need the area in question to manage lease 
activities consistent with these regulations. Prior to taking action to 
contract the lease or grant area, MMS will issue a decision addressing 
your contentions that the area is needed.

Lease or Grant Cancellation

Section 285.437 When can my lease or grant be canceled?

    The Secretary may cancel your lease or grant if you obtained it 
fraudulently, failed to comply with laws and regulations, for national 
security, or if your activities cause serious harm or damage to natural 
resources, life, property, etc. In certain circumstances, the Federal 
government may provide compensation if your lease is cancelled.

Subpart E--Payments and Financial Assurance Requirements

Overview

    This subpart proposes a payment structure for alternative energy 
leases that complies with subsection 8(p)(2) of the OCS Lands Act. In 
part, that subsection added by the EPAct directs the Secretary to 
establish royalties, fees, rentals, bonuses, or other payments to 
ensure a fair return to the United States for any lease, easement, or 
ROW granted for alternative energy activity on the OCS. As with other 
OCS programs, we intend to collect this fair return through a 
combination of payments. In addition to up-front acquisition fees or 
bonus payments for alternative energy leases, we propose to charge 
acreage-based rentals for technology assessment activities on limited 
leases. On commercial leases we propose to charge acreage-based rentals 
for the pre-development phases of alternative energy production 
ventures and their ancillary facilities, and a share of revenues from 
the alternative energy production phase in the form of an operating 
fee. After reviewing guidance available from other alternative energy 
leasing systems, we summarize internal analysis that guided our initial 
proposed payment amounts. Then we describe how we chose to structure 
the components of those payments in the section-by-section discussion.
    Payments to other landowners. While developing the initial 
financial terms proposed in this rule, we examined comparable domestic 
and foreign alternative or renewable energy programs. For renewable 
energy projects like wind farms on private lands onshore, leasing the 
land or obtaining easements is a common arrangement. Payments on such 
leases are structured in numerous ways that can include a single up-
front payment, a fixed annual payment, a share of the revenues from the 
project, or a combination of such payments. In some cases, a minimum 
annual payment per acre or per turbine may be assessed, especially 
during periods prior to development or during non-activity. Often, 
lease terms will include a royalty payment or operating fee based on 
power generation or revenues.
    Our research indicates that for projects commissioned in the 1998-
2005 period, payments to landowners on privately leased lands for wind 
power generation tend to be fixed annual payments in the range of 
$1,500 to $6,000 per turbine, or minimum rents of $1,500 to $5,000 for 
each megawatt of nameplate capacity. This is equivalent to royalty 
payments on private leases generally ranging from 1 percent to 4 
percent or more of gross revenues on an annual basis, with lower rates 
seen in more remote areas and higher rates in areas nearer to markets 
or areas with other competing land uses. Sometimes the lease payments 
will be set lower in the initial years of operation, and escalate in 
later years after capital costs have been recovered. Onshore wind 
energy development projects may also be subject to annual property 
taxes assessed by local governments on the value of improvements made 
to the property. These rentals and fees compensate the landowner for 
the lessee's use of the land. Such factor payments are an essential 
element in achieving efficient allocation of the available factors of 
production for any good. They also confirm that alternative energy 
projects, notwithstanding their prospective social benefits, can be 
expected to support payments for use of public land.
    There is a limited amount of legislative history that would give 
insight on the type of alternative energy payment structure intended by 
the Congress. For this reason, we reviewed alternative energy 
regulatory regimes implemented by other governmental agencies in the 
United States and overseas.
    We found that the programs employed overseas, in countries with the 
most mature offshore wind industries, such as Denmark, Germany, and the 
United Kingdom, were fundamentally different from the program 
authorized by the EPAct. Hence, they generally do not offer the best 
comparisons for determining appropriate financial terms for our 
domestic offshore program. In Denmark, for example, which has the most 
extensive offshore wind program in the world, operators are not charged 
rentals or operating fees. On the other hand, annual rent provisions 
based on production are used by the United Kingdom and are part of the 
required lease terms for wind leases issued offshore Texas in state 
submerged lands. The United Kingdom requires an annual rent payment 
based on two percent of revenue. Between 2005 and 2007, the State of 
Texas issued the nation's first offshore wind energy leases on both a 
competitive and non-competitive basis that included annual fees per 
tract paid until production and then production royalty schedules that 
would increase payment rates from 3.5 percent to 6.5 percent of revenue 
over the productive life of the lease.
    For commercial onshore wind facilities sited on Federal lands 
managed by the Bureau of Land Management (BLM), the operator pays a 
fixed annual payment. That payment is derived from a formula that 
effectively captures a share of expected revenues based on capacity 
using fixed parameters; i.e., a 3 percent royalty, a capacity factor 
(30 percent), and an assumed average electricity price of $0.03 per 
kilowatt hour. This formula generates a fixed fee for all lessees of 
$2,365 per 1000 kilowatts (kW) (or 1 megawatt, MW) of anticipated 
installed capacity. The BLM minimum rent is phased in over the first 
three years at 25 percent for year 1, 50 percent for year 2, and 100 
percent for year 3 and thereafter. The full minimum rental fee is 
required after the start of commercial operations and is due annually 
in

[[Page 39408]]

advance on a calendar year basis. In summary, we found that most 
financial requirements for wind energy leases are designed with 
relatively modest lease terms, which provide a market-based and fair 
return to the owners of the leased lands, but which are not so high as 
to discourage development of alternative energy projects. The proposed 
rates in this rule are in line with financial terms used elsewhere and 
would constitute a small fraction of the expected offshore alternative 
energy project costs. We request your comments on whether or not 
information from other sources supports this conclusion. If not, please 
provide such alternative information.
    Potential OCS Feasibility. We supplemented this guidance with a 
detailed economic analysis of potential alternative energy projects on 
the OCS. See Final Summary Report, ``MMS Offshore Renewable Energy 
Program--Cost-Benefit Analysis to Support the Rulemaking Process for 30 
CFR 285,'' Industrial Economics, Incorporated, October 18, 2007. This 
report is available from MMS upon request. Part of the rationale for 
the payment levels proposed herein was drawn from the cost-benefit 
analysis carried out for this rule. This analysis considered an 
alternative energy development forecast of 73 wind, wave and subsurface 
water current projects that could enter the operations term within the 
20-year period, from 2007 through 2026, assuming that development would 
be economically viable.
    The economic analysis evaluated four different payment scenarios 
that utilize a range of rental and operating fee magnitudes and forms 
from which we are likely to choose. These scenarios consisted of a 
baseline payment scenario in which no payments would be required and 3 
additional scenarios reflecting progressively higher rental and royalty 
terms, some phased in over time. The high payment scenario incorporates 
a step scale for rental that may be useful if we found it necessary to 
encourage diligence during the site assessment phase or to help ensure 
a fair return. A step scale formulation for the operating fee also may 
be used for a different reason. During production, the step scale 
allows lessees to keep more of the revenues in early years to help 
recover project capital costs and for the repayment of debt, in 
comparison to a fixed operating fee set around the mid-point of the 
step scale levels. This step scale formulation tends to increase short-
term cash flow, thereby raising the project's rate of return and hence 
profitability.
    Results from the economic analysis show that the same number of 
projects (55) would be viable (i.e., we estimated a nominal internal 
rate of return of at least 11 percent) under the baseline (no 
payments), low and intermediate payment scenarios. Three of those 
projects (approximately five percent) became nonviable under the high 
payment scenario. Therefore, a lessee's decision to develop a wind, 
wave or subsurface water current project would only be slightly 
sensitive to our imposition of anticipated payments in the high payment 
scenario, and even then only in a small proportion of all cases. A 
detailed technical report documenting this forecast as well as the 
results of the cost-benefit analysis may be viewed at www.mms.gov.
    In addition to the economic analysis, we carried out an ancillary 
and more focused income analysis to estimate how the allocation of 
profits between lessee interests and the government would vary under 
the low, intermediate and high payment scenarios. We evaluated 3 
hypothetical wind energy projects; one with an installed capacity of 
150 MW assumed to start power generation in 2020 and two with an 
installed capacity of 500 MW, one assumed to start power generation in 
2010 and the other in 2020. Using cost estimates from trade periodicals 
and Internet sites and choosing revenue levels (from power sales, 
renewable energy credits, capacity payments, and credits for providing 
ancillary services) that yield minimally profitable project economics 
(internal rate of return of 10 percent), we compared project owner and 
government shares of net revenue. We found that the payments assumed in 
the intermediate payment scenario allocated approximately 40 percent of 
the net revenue to the government for the 2010 project. For the two 
2020 projects, the government share fell to about 15 percent (with 
internal rates of return above 12 percent) in the intermediate payment 
scenario and rose to 40 percent only in the high payment scenario. This 
exercise supports the view that the government receipts, with the 
payment schedules we considered, should not discourage truly feasible 
alternative energy projects. Further, while the initial offshore 
alternative energy developments could be comprised of a significant 
proportion of marginal projects, the long term profit outlook is 
brighter, because future lease owners will have the opportunity to 
install newer and more efficient equipment. We base this optimistic 
outlook on an expectation that most of these future leases should be 
able to utilize newer technology in shallow water locations near major 
metropolitan areas and sell power for generally higher electricity 
prices than will be the case for the initial alternative energy leases 
issued on the OCS.
    External Benefits. In choosing initial acquisition, rental, and 
operating fee amounts, we considered that the cost to society for 
generating electricity has two components, the internal cost to the 
generator and the external cost in terms of pollution. External costs 
attributed to environmental degradation are less for electricity 
generated with renewable energy resources than from conventional fuels.
    A report issued by the European Wind Energy Association in May 
2005, titled Support Schemes for Renewable Energy--A Comparative 
Analysis of Payment Mechanisms in the European Union, discusses the 
issue of external costs and presents findings applicable to this 
discussion. Page 11 of the report states that:

    The European Commission's ExternE project on external costs 
estimated that the cost of producing electricity from coal or oil in 
the European Union would double, and the cost of electricity 
production from gas would increase by 30 percent, if external costs, 
in the form of damage to the environment and health, were taken into 
account.

    In contrast, the external cost of generating electricity from 
renewable energy sources is much less significant, accruing from the 
emissions of vessels and equipment used during the construction, 
operation and decommissioning of the generation facilities. Clearly, 
external costs to society may be reduced by substituting renewable 
energy for fossil fuels.
    However, avoided damages are not easily assessed for individual 
projects, and the exact terms of a payment structure that would 
properly credit the benefits to renewable energy developers is not 
known. In the U.S. there are already important categorical incentives 
which would apply to all onshore and offshore wind energy production 
projects. According to Title 26--Internal Revenue Code, Subtitle A, 
Chapter 1, Subchapter A, Part IV, Subpart D, Sec. 45(a) and 45(d)(1), 
wind energy generators may claim a production tax credit (PTC) for a 
qualified facility during the 10-year period beginning on the date the 
facility was originally placed in service. The credit amount for 2007 
was $0.02 per kilowatt-hour, according to the Internal Revenue 
Service's Internal Revenue Bulletin 2007-21, Notice 2007-40, published 
on May 21, 2007. Wave and subsurface water current projects are not 
eligible to

[[Page 39409]]

claim the credit. Aside from the PTC, renewable portfolio standards 
established by many states encourage offshore alternative energy 
activities by requiring that part of the electricity sold by a retail 
electricity supplier be generated from renewable sources. This raises 
the demand for alternative energy and serves to make the related 
projects more profitable.
    We view the existence of such provisions as the principal 
compensation to project owners for the social benefits of their 
alternative energy projects, and want to ensure that our payment 
proposals do not seriously undermine the purpose of that compensation. 
To understand the financial implications of both our payment proposals 
and the PTC, we quantified the economic significance of both elements 
as part of the feasibility analysis mentioned above. Recall that we 
found that the forecasted number of profitable projects, 55 out of 
73,would be the same under both the baseline no payments case (i.e., 
rentals or operating fees) and the case where the rental and operating 
fee levels proposed here would apply to initial OCS alternative energy 
projects (for the high case payments scenario, 3 of the 55 projects 
became unprofitable). In contrast, we estimate that only 31 of those 73 
projects would be economically viable without the PTC. That is, 
introducing payments at the levels proposed in this rule has no 
apparent effect on economic viability over the range of project types 
and sizes considered in our analysis, while eliminating the PTC would 
convert 24 of these 55 otherwise profitable projects from economically 
viable to nonviable.
    These findings lead to the expectation that the size of the 
proposed fee payments would be a small portion of the value of the PTC. 
To confirm this expectation, we focused on a set of these projects 
already identified as being most sensitive to added costs: a 
representative sample of 12 of the 24 projects in our analysis that 
could be made unprofitable if the PTC were eliminated. For each 
project, we calculated both the current and discounted values of the 
fee payments and the PTC, for both the 10-year period that the PTC 
would be in effect as well as over the entire life of the project. For 
these four sets of cases, we found that the ratio of the value of the 
fee payments to that of the PTC varied across projects from a low of 
about 5 percent to a high of about 15 percent. So, our analysis of the 
data confirmed our expectation that the fee payments we propose would 
not be a significant portion of the value of the PTC, that is, it would 
not reduce the PTC by more than 15 percent in any case and, in most 
cases, a 5 to 10 percent reduction in the effective net value of the 
PTC could be expected. Thus, we conclude that the proposed size of our 
payments would not adversely affect the rate of offshore alternative 
energy development. We request comments on whether the results of this 
analysis accurately characterize the basic economics of anticipated OCS 
alternative energy projects.
    Another part of the rationale for the payment scheme we propose for 
alternative energy lessees relates to the societal benefits of these 
projects compared to traditional OCS oil and gas projects. By requiring 
lower payments for alternative energy leases, we help electricity 
generators reduce internal costs, thereby improving the economics of 
electricity generation from alternative energy sources. At the same 
time, based on the analysis discussed previously, we do not expect 
these payments to materially affect the economics of alternative energy 
projects. It should be a rare occurrence that the decision to develop 
an alternative energy project depends on the level of the modest rent 
and operating fees under consideration. Yet, these relatively lower 
payment terms should still ensure a fair return to the public, when 
benefits resulting from reduced external costs to society are taken 
into account. Additional discussion of the proposed payment terms and 
their effect on project economics continues under Sec.  285.505 of the 
preamble.
    An important goal of the first phase of our proposed alternative 
energy program is to provide financial terms that do not discourage the 
alternative energy industry from demonstrating the practicality of 
alternative energy production on the OCS. Thus, we propose to collect 
payments of relatively small size initially from a nascent OCS 
alternative energy industry. After successful demonstration of the 
commercial viability of that activity, we may decide to adjust 
financial terms. To provide for that adjustment, these proposed 
regulations would authorize us to consider revisions to financial terms 
for established projects based on their operating experience and for 
new projects based on prevailing and anticipated conditions in the 
energy market.
Financial Assurance Requirements
    This portion of the subpart is intended to minimize the risk of 
financial loss to the Federal Government if lessees, operators and 
grant holders default in fulfilling their obligations under this rule 
and other applicable laws or regulations. The proposed rule would 
fulfill that purpose in two ways: through the prequalification of 
lessees, operators, and grant holders, and providing sufficient 
financial collateral to assure lessee, operator, and grant holder 
obligations can be fulfilled by a third party in the event of default. 
The rule anticipates different requirements for ranges of activities 
for commercial production leases, limited leases, ROW grants, and RUE 
grants.
    The financial assurance portion of the proposed rule is divided 
into four general areas:
    (5) Basic financial assurance requirements for commercial leases;
    (6) Financial assurance for limited leases, ROW grants, and RUE 
grants;
    (7) Requirements for financial assurance instruments; and
    (8) Changes in financial assurance.
Basic Financial Assurance Requirements for Commercial Leases
    The financial assurance requirements for commercial leases are set 
forth first in the proposed rule. Generally, the financial assurance 
required by MMS will be used to ensure the performance of the following 
lease obligations:
    (a) The projected amount of rentals and other payments due the 
Government over the next 12 months;
    (b) Any past due rentals and/or other payments;
    (c) Other monetary obligations; and
    (d) The costs, as estimated by MMS, of lease abandonment and 
cleanup.
    Before MMS will issue a commercial lease, the prospective lessee 
must provide either a lease-specific $100,000 bond; alternative 
financial assurance that the Regional Director determines protects U.S. 
interests to the same extent as the bond; or evidence that your 
designated lease operator has provided commensurate financial 
assurance.
    Additional bonds/financial assurance are required before the MMS 
will approve a Site Assessment Plan (SAP) or a Construction and 
Operations Plan (COP). The amount of this additional bond/financial 
assurance will be determined by MMS and be based upon the type and 
number of facilities to be used in your planned activities.
Financial Assurance for Limited Leases, ROW Grants, and RUE Grants
    The proposed rule provides that when you obtain a limited lease, 
ROW grant or RUE grant, you must post a lease or grant-specific bond or 
other approved financial assurance in the amount of $300,000. Unlike 
commercial leases, further financial assurance is not automatically 
triggered by applications

[[Page 39410]]

for activity such as the Site Assessment Plan and the General 
Activities Plan. However, MMS may require you to increase your level of 
financial assurance as activities progress on your limited lease or 
grant.
Requirements for Financial Assurance Instruments
    This portion of the proposed rule lays out the provisions that must 
be included in any financial instrument you use for financial 
assurance. The financial instrument must be payable to MMS upon demand, 
on a form approved by MMS, and guarantee compliance with all terms and 
conditions of the lease or grant. Surety bonds must be issued by a 
surety listed in the current Department of the Treasury Circular 570.
    This portion of the proposed rule also provides guidance on the 
types of financial instruments that MMS will accept.
Changes in Financial Assurance
    This portion of the proposed rule discusses topics such as 
termination or reduction of financial assurance instruments and 
reduction of required bond amounts. Also covered are topics such as 
forfeiture of bonds and MMS requirements for supplemental bonds.
Revenue Sharing
    This proposed rulemaking also addresses the requirements related to 
the new subsection 8(p)(2)(B) of the OCS Lands Act (43 U.S.C. 
1337(p)(2)(B)), which describes how revenues received by the Federal 
Government as a result of payments from alternative energy projects or 
alternate uses of existing facilities would be shared, in some cases, 
with affected States. Proposed Sec. Sec.  285.540 through 285.541 set 
out a process for implementing revenue sharing from alternative energy 
projects. We invite your comments on the following issues associated 
with that implementation process.
    1. The law does not specifically address the eligibility of a State 
with submerged lands within 3 miles of the edge of a project but with a 
coastline more than 15 miles from the geographic center of that 
project.

    The Secretary shall provide for the payment of 27 percent of the 
revenues received by the Federal Government as a result of payments 
under this section from projects that are located wholly or 
partially within the area extending three nautical miles seaward of 
State submerged lands. Payments shall be made based on a formula 
established by the Secretary by rulemaking * * * that provides for 
equitable distribution, based on proximity to the project, among 
coastal states that have a coastline that is located within 15 miles 
of the geographic center of the project.

    Has MMS interpreted the pertinent language of EPAct in a manner 
that is reasonable and provides the most equitable share of revenue to 
adjoining states?
    2. Using the proposed methodology for determining project area and 
the geographic center of the project, the share of each eligible State 
would be independent of the location of any concentration of project 
activities. Should the formula for distributing revenues allow the 
flexibility to compensate for a situation in which a qualified project 
area lies off more than one State but in which the vast majority of 
facilities and activity are concentrated off a single State? For 
example, a project area might be 9 miles long and straddle the 
administrative boundary between two States, with the first phase of the 
project constructed at one end or, alternately, the completed project 
might leave perhaps 90 percent of the facilities at one end. The 
proposed methodology would assign the same State shares, regardless of 
where the project activities were concentrated. One way to compensate 
for this would be to identify one or more ``special project areas,'' 
which could include only the geographic focus of generation activities, 
would have their own geographic centers, and would be used only for 
determining shares of operating revenues. (Creation of such special 
project areas would not affect eligibility but would alter revenue 
shares.) Is this a reasonable approach for MMS to take? Is there 
another approach permitted by law that would achieve the same purpose?
    3. Should the rule restrict MMS's authority to redefine project 
areas with regard to time or other factors? For example, should such 
redefinitions be limited to a period at the end of each fiscal or 
calendar year? Or should the original project area remain fixed, 
irrespective of changes in the acreage used for project activities?
    4. Is the inverse distance formula proposed for this rule a 
reasonable method for achieving an equitable distribution of revenues? 
If not, are there alternative formulas that would be superior? If so, 
what makes them superior?
    5. What other issues should MMS consider in this rulemaking?

Section by Section Discussion for Subpart E

Payments

Section 285.500 How do I make payments under this part?

    This section explains how persons would submit application and 
filing fees, as well as payments due under the provisions of leases, 
easements and ROW grants. Some payments would be made electronically 
through the Pay.Gov Web site at: https://www.pay.gov/paygov/ other 
payments will be made directly to the Minerals Revenue Management 
office in Denver, Colorado. We plan to promulgate subsequent 
regulations to describe specific payment procedures for the alternative 
energy and alternate use program. Until that occurs, we propose that 
payment procedures for this program follow the model of the oil and gas 
program cited at 30 CFR 218.51.
    We request suggestions concerning how the payment procedures should 
be structured and what the content of alternative energy payment 
procedures should include.
    Depending on the method of award we select for issuing a lease or 
grant, persons that seek access to the OCS for alternative energy 
activities may be required to submit a bonus or other up-front cash 
payment for a lease or grant issued competitively or an acquisition fee 
for a lease or grant issued noncompetitively. We then propose that 
lessees pay rental during the preliminary and site assessment terms. 
During the operations term, commercial lease holders would be obligated 
to pay operating fees or a rental. We propose no operating payments for 
limited leases, easements and ROW grants because they do not produce. 
Only rental would be paid by limited lease holders for each year of a 
specified lease term, and be paid by grantees for as long as an 
easement or right-of-way is in effect.

Section 285.501 What deposits will MMS collect for a competitively 
issued lease, ROW grant, or RUE grant?

    This section provides the deposit requirements for persons 
submitting a bonus or other cash payments on a competitive lease, ROW 
grant, or RUE grant. Sealed bids would be offered with a deposit of 20 
percent of the bid amount, unless specified otherwise in the Final Sale 
Notice. Bidders participating in ascending auctions would deposit a 
cash payment as established in the Final Sale Notice. Procedures for 
submitting the balance owed on accepted high bids would also be 
established in the Final Sale Notice.

[[Page 39411]]

We traditionally require a 20 percent deposit on sealed bids submitted 
in oil and gas sales to assure bids are genuine, but will consider 
proposals for setting a different deposit requirement for alternative 
energy lease sales. Historically, a small number of bidders have failed 
to execute an oil and gas lease within the allotted time period. In 
those situations the bidders forfeit their deposits. MMS is considering 
implementation of a similar requirement for alternative energy 
competitive auctions.
    We request your comments on setting the deposit amount and deposit 
forfeiture requirements, including the extent to which these amounts 
and requirements should be related to the type of auction format 
employed.

Section 285.502 What initial payment will MMS require to obtain a 
noncompetitively issued lease, ROW grant, or RUE grant?

    Developers are allowed to submit unsolicited applications for 
alternative energy leases. We are required by law to give the public 
notice of such applications, and determine if other parties are 
interested in competing for the lease rights. In cases where there is 
no competitive interest, we may issue a lease to the applicant. We 
propose an acquisition fee of $0.25 per acre for noncompetitive leases. 
For example, an application to lease a single OCS block of 25 square 
miles in area, or 16,000 acres, would be submitted with an acquisition 
fee of $4,000. However, a fee that small will not necessary provide a 
fair return to the United States for use of the seabed. If we decide to 
issue a noncompetitive lease, we are considering whether to require an 
additional payment equal to the difference between the minimum bid we 
would have set for a competitive sale offering in the same area and the 
acquisition fee. In this way, the sum of the payments made to acquire 
the lease noncompetitively will provide a similar return to the 
government regardless of whether the lease is issued competitively or 
noncompetitively. We seek comments on the adoption of this alternative 
approach.
    Following our determination that there is competitive interest, a 
lease or grant sale would be held. If the applicant submits a qualified 
bid, the acquisition fee would be applied to the applicant's bid. 
Otherwise, we would not refund the acquisition fee.
    We are not proposing to require an acquisition fee payment when 
applying for a noncompetitive ROW grant or RUE grant. We invite 
comments on whether such a payment should be included in the final 
rule. We request comments concerning whether the size and treatment of 
acquisition fees proposed in this section is appropriate and whether or 
not it would discourage expression of any legitimate interest in a 
possible alternative energy lease.

Section 285.503 What rentals will MMS collect on a commercial lease?

    This section would provide a rental rate of $3 per acre per year 
for a commercial lease, unless we specify a different rate in the Final 
Sale Notice for leases issued on a competitive basis. When we issue a 
commercial lease noncompetitively, the elements of the rental and any 
adjustments to it would be given in the lease instrument. Rental for 
the first 6 months, or preliminary term, would be due when we issue the 
lease. Rental for the next 12 months and for each subsequent year 
during the site assessment term would be due at the beginning of the 
year for the entire lease area until approval of the COP, which begins 
the operations term and when the obligation to pay operating fees would 
begin. We propose to apply the same interest charge to late rentals 
from alternative energy leases as we do to late payments from oil and 
gas leases under 30 CFR 218.54.
    We may specify the payment of rental during part, or all, of the 
operations term instead of or in addition to operating fees, in the 
Final Sale Notice for leases issued on a competitive basis. We reserve 
this right partly to make any adjustments that may be needed in 
connection with the operating fee structure we propose in Sec.  
285.505.
    For example, a situation could arise where a lease is developed in 
phases, and both rental and operating fees could be due on different 
parts of the commercial lease during the same time period. In this 
case, rental would be paid on portions of the lease not authorized for 
commercial development, and operating fees could be required for the 
portion of the lease with commercial operations.
    A variety of considerations are behind our proposed baseline $3.00 
per acre rental value, subject to any change in the Final Sale Notice 
for competitively issued leases. In general, a rental payment serves 
several purposes. It compensates the Federal government for the 
opportunity cost of precluding other incompatible uses of the OCS area. 
Also, it serves as a holding cost that encourages the lessee to 
expedite activity on the area. Under some circumstances, we may 
determine that charging progressively higher rental rates over time 
would be desirable to obtain a fair return and perhaps be necessary to 
induce diligent operations. In those cases, we may adopt a rental rate 
schedule instead of a constant rental rate.
    The proposed baseline commercial alternative energy lease rental 
rate of $3 per acre would be less than one-half of the lowest oil and 
gas rental rate of $6.25 per acre for oil and gas leases in shallow 
waters of the Gulf of Mexico issued in 2007. Rentals, as well as 
operating fees, proposed in these regulations for commercial 
alternative energy leases would be lower than those for other uses of 
the OCS such as oil and gas development, in part to encourage industry 
to invest in offshore alternative energy technology. Another reason for 
setting lower payment rates for commercial alternative energy leases 
than for oil and gas leases is the lower environmental costs of 
generating electricity with renewable energy, rather than fossil fuels 
such as oil, gas and coal, as discussed in the Overview to this part. 
Since external costs of electricity generated from renewable energy are 
much lower than external costs of electricity generated from fossil 
fuels, we propose to provide for relatively lower payments by 
alternative energy developers to encourage investment.
    We request comments concerning whether the baseline rental fee 
proposed in this section would be appropriate for lessees and fair to 
the public.

Section 285.504 What rentals will MMS collect on a limited lease?

    This section would provide a $3 per acre per year rental rate for a 
limited lease, unless a different rate is specified in the Final Sale 
Notice for leases issued on a competitive basis. When we issue a 
limited lease noncompetitively, the rental and any adjustments to it 
would be established in the lease instrument. Rental for the first 6 
months would be due when MMS issues the lease. Rental for the next 12 
months and for each subsequent year would be due at the beginning of 
the year for the entire lease area through the end of the lease term. 
We propose to apply the same interest charge to late rentals from 
alternative energy leases as we do to late payments from oil and gas 
leases under 30 CFR 218.54. These rental requirements are equivalent to 
those on a commercial alternative energy lease during the preliminary 
and site assessment terms, before activity begins for constructing and 
producing energy.
    We request comment on whether there is any valid reason to charge a 
different rental for limited leases than for commercial leases.

[[Page 39412]]

Section 285.505 What operating fees will MMS collect from a commercial 
lease?

    This section provides that the annual operating fee payments for 
commercial alternative energy leases would be determined by a formula 
related to the anticipated, rather than actual, gross value of the 
electricity generated on the lease. Upon approval of a COP for a 
commercial lease and commencement of operations for commercial 
projects, rental payments typically would cease. We propose to then 
invoke the production charge in the form of a capacity-based operating 
fee payment. This operating fee would not apply to limited leases as 
those leases do not allow commercial production of energy. These 
payments would be due on a schedule established in the Final Sale 
Notice and lease instrument. We also propose to apply the same interest 
charge to late operating fees from alternative energy leases as we do 
to late payments from oil and gas leases under 30 CFR 218.54. We 
propose the following formula for determining the annual operating fee:


         F                          M                          H                          c                          P                         r

(annual operating     =          (installed      *    (hours per year)      *    (capacity factor)     *    (power price per      *      (operating fee
             fee)          capacity in units                                                                         unit of                      rate)
                             of production)                                                                      production)


    The operating fee rate r, like a royalty rate, is one element in 
the formula. The other elements serve as reasonable and easily 
observable proxy measures of the output and price related to a specific 
operation. We propose that the fee rate be set equal to 1 percent 
during the first two years of the operations term, and would be set 
equal to 2 percent for the third and remaining years of the operations 
term, unless we specify otherwise in the Final Sale Notice for 
competitively issued leases. We would establish initial values for 
other elements in the formula, such as the power price and capacity 
factor, and provide for periodically revising the initially selected 
values based on new information. When we issue a commercial lease 
noncompetitively, the elements of the operating fee and any adjustments 
to it would be given in the lease instrument.
    Using the proposed payment terms, government lease revenues for a 
commercial lease in any given year would depend on the phase of the 
project and the relevant prices as designated by MMS for electricity in 
the Region. The proposed lease rental and operating fee payments can be 
illustrated with an example for wind energy. An offshore wind lease, 
issued non-competitively, on 12,000 acres of the OCS would be required 
to pay $36,000 to the Government annually based on a charge of $3.00 
per acre in rent during the site assessment term under Sec.  285.503. 
Once we approve the COP, the operations term begins, and operating fees 
typically are payable. For a lease with an installed capacity of 200 
megawatts and an operating capacity factor of 0.38, i.e., 38 percent, 
the operating fee payable to the Government would be about $333,000 
during the first two years of the operations term and about $666,000 
annually thereafter if the applicable electricity price was $50 per 
megawatt hour. Additionally, if the approved project plan has easements 
covering 2,000 acres, an additional $10,000 in rentals ($5.00 per acre) 
would be collected per year under Sec.  285.506.
    During the production phase of a project, a capacity-based 
operating fee, rather than a production amount or value based fee, has 
several advantages. The capacity based fee avoids detailed audits of 
production sales accounts, and mitigates subsequent disagreements and 
possible legal actions which entail a significant expense to both 
lessees and the government. However, applying it as well during the 
pre-production construction phase that begins with approval of the COP 
appears both inappropriate and unnecessary, since imposition of a 
simple rental fee can better serve the objective in that period of 
encouraging diligent efforts to begin production.
    In either the pre-production construction or production phase, at 
least two reasons can be cited for employing a rental rate or operating 
fee higher than the rental rate charged during the preliminary and site 
assessment period rental rate. First, we would only approve a COP for a 
project that has the potential for commercial operations. Hence, a 
lease with proven resource potential is likely more valuable, and 
should command a higher payment. Second, you will be using more 
intensively the leased area when the project moves from the site 
assessment phase to construction work phase. Hence, while you are not 
depleting a public asset such as oil or gas, you are causing increased 
disturbances on public property which makes a higher payment 
appropriate. The operating fee rate in the first 2 years of the 
operating term, even at the reduced level proposed, serves as that 
increased payment while avoiding confusion with the rental applied 
before the COP. Also, phasing in the operating fee is similar to the 
BLM fee for onshore wind ROWs for projects, with the minor difference 
being that a BLM grantee is charged 25 percent of the full operating 
fee in the first year and 50 percent in the second after approval of a 
project, instead of 50 percent in both years as we propose.
    Prior to holding a lease sale, a high level of uncertainty exists 
in the estimation of the amount of energy a given facility could 
generate and in the evaluation of the economic viability of a project 
planned for an area to be leased. Although we have included a baseline 
2 percent fee rate in the proposed regulation, subject to revisions in 
the Final Sale Notice, this rate is not necessarily the appropriate fee 
rate for every wind, wave, subsurface water current or other renewable 
energy project that might be developed on the OCS. However, in the 
interests of reducing uncertainty, where possible, for pioneering OCS 
alternative energy projects and stimulating investment in such 
projects, we intend to use a 2 percent fee rate for the first 
commercial alternative energy leases issued on the OCS after the first 
2 years of the operations term.
    For leases issued competitively, we propose that an alternative 
energy lease on the OCS may be issued, depending of the bidding system, 
with constant or sliding operating fee rates. With a sliding fee rate, 
the operating fees could automatically change over the life of a lease 
according to a sliding scale schedule specified in the Final Sale 
Notice and/or lease instrument. The term sliding in this context 
applies generally to any change in the operating fee rate over time or 
other increment. A sliding fee rate could provide for future 
adjustments based on the analysis of either market data or actual 
project data. Another example would be a case where the fee rate used 
to calculate the operating fee changes in a specific manner at 
predetermined time intervals. If a sliding operating fee rate is used 
as a bid variable in an auction, MMS

[[Page 39413]]

would specify a mathematical function to determine changes to the value 
of the operating fee over time and the function variable which would be 
bid. The sliding operating fee in any year would be the amount derived 
from this function in conjunction with the operating fee formula.
    If the operating fee rate is constant, it could only vary from one 
period to the next following approval of a request for reduction or 
waiver. In addition to a predetermined sliding fee process, we reserve 
the right to review relevant electricity price information and capacity 
factor information as they relate to the formula, established in 
subpart E, and adjust the values used in the operating fee formula 
accordingly. Upon the completion of the first year of commercial 
operations on the lease, MMS may adjust the capacity factor as 
necessary (to accurately represent a comparison of actual production 
over a given period of time with the amount of power a facility would 
have produced if it had run at full capacity). Thereafter, MMS may 
adjust the capacity factor (to accurately represent a comparison of 
actual production over a given period of time with the amount of power 
a facility would have produced if it had run at full capacity) no 
earlier than the completion of the sixth year of operation, or any five 
year period thereafter. We request comments on the frequency of the 
review and adjustment of the capacity factor.
    In either the case of a competitively or noncompetitively issued 
lease, we may reduce or waive fee rates under the process given in 30 
CFR 285.509. We would establish operating fees for activities not 
related to the generation of electricity, such as the generation of 
hydrogen, on a case by case basis through the lease sale process. 
Operating fees and other payment requirements for activities conducted 
as an alternate use of an OCS facility, such as an oil and gas 
platform, previously authorized under the OCS Lands Act, are explained 
in Subpart J of these proposed regulations.
    In addition to the capacity-based fee approach being proposed, MMS 
also considered other methods for computing the operating fee. They 
included fees based on the actual amount or value of production either 
in the current year or in prior years, fees that varied depending on 
the characteristics of the project (e.g., water depth, distance from 
shore, output efficiency, etc.), fees that involved a combination of 
rentals and output-based charges, or some combination of these options. 
We are requesting comments on whether the proposed capacity-based 
operating fees are always in the best interests of the alternative 
energy program from the perspective of both lessees and the Government, 
or whether there are circumstances where a different type of fee would 
be more appropriate. In the latter case, we would like you to identify 
what those cases are, and how lessees or the Government would benefit 
from an operating fee based on other than anticipated capacity 
utilization as a proxy measure for production quantity. To the extent 
practical, please include detailed examples and explanations for any 
alternatives suggested.

Section 285.506 What rental payments will MMS collect on a project 
easement?

    This section would provide an annual rental rate of $5 per acre for 
project easements, or a minimum of $450 per year, which would be due 
initially upon approval of the COP or GAP. Subsequent payments would be 
made on an annual basis, probably in conjunction with payments due 
under Sec.  285.505, unless we specify otherwise in the lease for the 
associated commercial project. The width of the area covered by a 
project easement for a cable or pipeline would be 200 feet. The area 
covered by an installation, outside of the cable or pipeline corridor, 
would be limited to the areal extent of anchor chains, other devices, 
or facilities associated with the installation.
    We grant ROW easements for electrical cables and pipelines under 
the existing oil and gas program, similar to project easements under 
the proposed alternative energy program. Rental rates for grants issued 
through the oil and gas program are specified by regulation and provide 
a precedent. The level of compensation due to the government for grants 
issued under the oil and gas program is an appropriate analog for uses 
under the proposed program. Accordingly, we propose to charge project 
easement holders a constant rental rate equal to $5 per acre, 
commencing with our approval of your COP or GAP and continuing until 
lease termination.
    We request comment on whether this is the most appropriate way to 
set rentals for easements and whether the size of the rental is 
appropriate.

Section 285.507 What rental payments will MMS collect on ROW grants or 
RUE grants associated with alternative energy projects?

    This section would provide the rental rates for ROW grant and RUE 
grants. Proposed rental rates for alternative energy ROWs parallel 
rentals considered fair and reasonable for oil and gas ROWs, and would 
be due in the amount of $70 per statute mile that a ROW crosses. For 
sites outside the main corridor, an additional rental of $5 per acre, 
or a minimum of $450 per year, would be charged. Likewise, proposed 
rental rates for an alternative energy RUE would parallel those for oil 
and gas RUEs and be charged at an annual rental rate of $5 per acre, or 
a minimum of $450 per year. The first rental payment would be due when 
the ROW or RUE request is filed. Subsequent payments could be made on 
an annual basis, for a 5 year period or for multiples of 5 years. We 
propose to apply the same interest charge to late rentals due on ROW 
grants or RUE grants for alternative energy projects as we do to late 
payments from oil and gas ROWs and RUEs under 30 CFR 218.54.
    ROW authorizations approved under the oil and gas program are 
granted for electrical cables and pipelines, and similar requests would 
also be approved under the proposed alternative energy program. The 
value of compensation due to the government for ROW grants issued under 
the oil and gas program forms a useful precedent, which also appears to 
be an appropriate analog for alternative energy activities. As 
discussed in the last paragraph of the preceding section on project 
easements, the rental requirements for an alternative energy RUE are 
related to the payment requirements for oil and gas RUEs.
    Proposed rental rates for oil and gas pipeline ROW grants were 
published on October 3, 2007, in the Federal Register, Vol. 72, No. 
191, in 30 CFR 250.1130 of the rulemaking for 30 CFR parts 250, 253, 
254, 256, RIN 1010-AD11, titled Oil and Gas and Sulfur Operations in 
the Outer Continental Shelf--Pipelines and Pipeline Rights-of-Way. If 
we determine that the proposed oil and gas ROW rental payment 
regulations should be revised as a result of new information received 
through comments, we would also consider this information as it might 
apply to alternative energy ROW rental rates.
    We request comment on whether this is the most appropriate way to 
set rentals for easements, and whether the size of the rental is 
appropriate.

Section 285.508 Who is responsible for submitting lease or grant 
payments to MMS?

    For each lease, easement, ROW or RUE, one person, designated as 
payor, would be responsible for making all payments. All payors and the 
lessee shall maintain auditable records in accordance with regulations 
in Subpart

[[Page 39414]]

A. We may also issue guidance related to recordkeeping.

Section 285.509 May MMS reduce or waive lease or grant payments?

    This section provides that the MMS Director has the authority to 
reduce or waive a rental or operating fee, including components of the 
operating fee such as the fee rate or capacity factor, when necessary 
to encourage continued or additional activities. Applications to modify 
lease payment terms must include information that demonstrates that 
continued or additional activity would not be economic without the 
reductions or waiver requested. No more than six years of your 
operations term will be subject to a full waiver of the operating fee.
    It is our intent to use relevant electricity market and operating 
information to set the initial values for the power price and capacity 
factor of the operating fee formula, and to revise the same parameters 
after a lease is issued, in Sec. Sec.  285.505(c)(2) and (3). Beyond 
that mechanism for revising payment requirements, the Director may 
consider a reduction or waiver of payments. In practice, we anticipate 
that most requests for reduced payments would involve a reduction in 
the fee rate of the operating fee formula. The Director may authorize 
such reductions if an applicant can show that market or operating 
conditions have changed significantly in a way that reduces project 
cash flows to uneconomic levels.

Section 285.510 Through 285.514 [Reserved]

Basic Financial Assurance Requirements for Commercial Leases

Section 285.515 What financial assurance must I provide when I obtain 
my commercial lease?

    Before MMS will issue a commercial lease, the applicant must 
provide either a $100,000 basic lease-specific bond or another MMS 
approved financial assurance. You may also satisfy this requirement by 
providing proof that your designated lease operator provided the bond 
or approved financial assurance.

Section 285.516 What are the financial assurance requirements for each 
stage of my commercial lease?

    Minimum financial assurance requirements for each stage of lease 
development are presented in this section. A $100,000 basic bond or 
other financial assurance is required at lease issuance. A second bond 
or financial instrument, in an amount determined by MMS, is due before 
the MMS will approve your Site Assessment Plan (SAP). And a third bond 
or financial instrument, in an amount determined by MMS, is due before 
the MMS will approve your Construction and Operations Plan (COP).

Section 285.517 How will MMS determine the amounts of the SAP and COP 
financial assurance requirements associated with commercial leases?

    The MMS will determine the amount required by considering projected 
amounts of rentals and other payments due the government over the next 
12 months; any past due rentals or other payments; and the costs of 
lease abandonment and cleanup. You may increase an existing bond or use 
a combination of existing bonds and other approved financial assurances 
to satisfy your requirements.

Section 285.518 [Reserved]

Section 285.519 [Reserved]

Financial Assurance for Limited Leases, ROW Grants, and RUE Grants

Section 285.520 What financial assurance amount must I provide when I 
obtain my limited lease, ROW grant or RUE grant?

    Before MMS will issue a limited lease, ROW grant, or RUE grant, the 
applicant must provide either a $300,000 basic limited lease or grant-
specific bond or another MMS approved financial assurance. The basic 
bond for a limited lease or grant is higher than the basic bond on a 
commercial lease because we anticipate that obligations on a limited 
lease or grant will begin to accrue sooner, but will not be as 
extensive as the obligations on a commercial lease. With the commercial 
lease, we have established periods to reassess the bond amount (i.e., 
before approving the SAP or the COP). We do not have these automatic 
reassessments under a limited lease or grant. Also, a limited lease has 
a short term, only 5 years and we do not anticipate reassessing the 
bond amount, unless the applicant proposes significant or complex 
facilities. You may also satisfy this requirement by providing proof 
that your designated limited lease or grant operator provided the bond 
or approved financial assurance.

Section 285.521 Do my financial assurance requirements change as 
activities progress on my limited lease or grant?

    The MMS may require you to provide additional financial assurance 
as activities on your lease progress and projected liabilities of 
rentals and other payments due the government over the next 12 months; 
any past due rentals or other payments; and the costs of lease 
abandonment and cleanup increase.

Section 285.522 through 285.524 [Reserved]

Requirements for Financial Assurance Instruments

Section 285.525 What general requirements must a financial assurance 
instrument meet?

    All bonds and other forms of financial assurance must be payable to 
MMS upon demand and be in a form approved by MMS. Your surety bonds 
must be issued by a certified surety listed in the current Treasury 
Circular 570. This section also provides guidance on executing your 
bond and when your surety must notify you and the MMS due to changes in 
its Treasury certification status, insolvency, or bankruptcy.

Section 285.526 What instruments other than a surety bond may I use to 
meet the financial assurance requirement?

    You may utilize alternative financial assurance instruments when 
MMS determines that they protect the interests of the U.S. Government 
to the same extent as a bond. If using an alternative financial 
instrument, you must monitor its value and must provide the authority 
for MMS to sell it and use the proceeds if the MMS determines that you 
have failed to satisfy any lease obligation.

Section 285.527 Can I use a lease or grant-specific decommissioning 
account to meet the financial assurance requirements?

    MMS may authorize you to establish a decommissioning account in a 
federally insured institution with certain limitations. Funds may not 
be withdrawn without prior MMS approval, and must be pledged to meet 
your decommissioning and site clearance obligations. This section also 
discusses how interest paid on the account must be treated and when we 
may allow the use of Treasury Securities to satisfy the obligation to 
make payments into the account.

Section 285.528 [Reserved]

Section 285.529 [Reserved]

Changes in Financial Assurance

Section 285.530 What must I do if my financial assurance lapses?

    This section discusses the steps you must take if your surety loses 
Treasury certification, becomes insolvent, has its

[[Page 39415]]

charter suspended, or if your approved security expires. You must 
promptly notify MMS and provide new financial assurance.

Section 285.531 What happens if the value of my financial assurance is 
reduced?

    This section requires that additional financial assurance be 
provided whenever the value of the current assurance falls below the 
required amount.

Section 285.532 What happens if my surety wants to terminate the period 
of liability of my bond?

    This section describes the liabilities that accrue during a period 
of liability and provides requirements that a surety must follow when 
requesting to terminate the period of liability under its bond.

Section 285.533 How does my surety obtain cancellation of my bond?

    The MMS will release a bond or allow a surety to cancel a bond only 
when all obligations covered by the bond have been completed 
satisfactorily or MMS accepts a replacement bond or alternative form of 
financial assurance. This section describes when your period of 
liability ends, when your financial assurance will be released by MMS, 
and how the MMS may approve a reduction in the amount of your approved 
financial assurance if portions of your lease obligations have been 
satisfactorily completed.

Section 285.534 When may MMS cancel my bond?

    This section presents a comprehensive table which displays the 
different types of bonds required in this subpart, and when the period 
of liability ends. The table further displays when the bond will be 
released under a variety of circumstances.

Section 285.535 Why might MMS call for forfeiture of my bond?

    The MMS may call for forfeiture of your bond if you default on any 
of the conditions under which you accepted your bond or refuse or fail 
to comply with any term or condition of your lease or grant.

Section 285.536 How will I be notified of a call for forfeiture?

    This section specifies that you and your surety will be notified in 
writing of the call for forfeiture and provided the reasons for the MMS 
action. The MMS will also advise you and your surety in writing of the 
actions you must take within ten days to avoid forfeiture.

Section 285.537 How will MMS proceed once my bond or other security is 
forfeited?

    This section explains that you and any co-lessee or co-grant 
holders are jointly and severally liable for the full cost of 
corrective actions on your lease or grant, regardless of the amount 
collected under your bond. MMS may take or direct action to recover all 
costs in excess of the forfeited bonds.

Section 285.538 [Reserved]

Section 285.539 [Reserved]

Revenue Sharing With States

Section 285.540 How will MMS equitably distribute revenues to States?

    Proposed Sec.  285.540 of this rule describes the factors MMS would 
consider in determining how to equitably distribute revenues among 
eligible States. This section also provides the procedure for 
calculating the State revenue shares.
    The location of a State's submerged lands relative to the nearest 
part of a qualified project area (i.e., whether all or part of the 
project area falls within the State's 8(g) zone) or the proximity of 
the State's coastline to the geographic center of the qualified project 
would determine State eligibility, such that a State becomes eligible 
by meeting either criterion. However, only proximity of a State's 
coastline's to the geographic center of the qualified project would be 
a factor in allocating revenues among eligible States, should more than 
one State be eligible. If a qualified project changes significantly in 
size, scope, or some other way that may affect the equitable 
distribution of revenues, MMS may re-evaluate the project area to 
ensure that an equitable distribution of revenues is maintained when 
any such change becomes apparent.
    To determine each eligible State's share of the 27 percent of the 
revenues received by the Federal Government for a qualified project, 
MMS is proposing to use the inverse distance formula, based on the 
proximity of the States' coastline to the geographic center of the 
qualified project. This is the formula used for the same purpose under 
the Coastal Impact Assistance Program administered by MMS. Under this 
methodology, eligible States with coastlines that are closer to a 
qualified project's center would receive proportionally more revenues 
than eligible States with coastlines that are farther away. In 
particular, if eligible State A is twice as far as eligible State B 
from the qualified project's center, then State A would receive half as 
much of the revenues as would State B. If Si is equal to the nearest 
distance from the geographic center of the qualified project to the i = 
1, 2, * * * nth eligible State's coastline, then State i would be 
entitled to the fraction Fi of the 27-percent aggregate 
revenue share due all the States according to this formula:

Fi = [(1/Si) / ([Sigma] i=1...n (1/
Si))].

    For example, if the nearest point of the coastline of State A is 21 
miles from the qualified project's center, and the nearest point of the 
coastline of State B is 7 miles away (and there are no other eligible 
States), the ratio of A's distance to B's distance is 21:7, or 3:1. 
(Put another way, there are 28 total miles of distance from the nearest 
coastline points of eligible States to the qualified project's center; 
21 of the 28 miles represent the distance from State A, and the 
remaining 7 miles represent the distance from State B.) In the 
calculations, this gets inverted (giving the formula its name) such 
that the ratio of A's share to B's share becomes 1:3 This results in 
the 27 percent being divided such that A gets one-fourth and B gets 
three-fourths of the 27-percent revenue share provided to the eligible 
States. These proportionate shares reflect the relative distances from 
the center of the qualified project to the nearest points of their 
coastlines in an inverse manner.

Section 285.541 How will a qualified project's location affect an 
eligible State's share of revenues?

    Proposed Sec.  285.541 includes a table that describes how a 
State's eligibility for revenue sharing would be determined, using 3 
different situations. The examples are intended to provide 
interpretations of the rule for both typical cases and unusual 
situations. As such, the table provides 3 program principles from which 
proper application of the proposed rule can be inferred for other 
cases. These are those program principles:
     There must be at least one eligible State for every 
qualified project.
     A State becomes eligible for revenue sharing from a 
qualified project if either or both of two distance criteria are 
satisfied, i.e., at least a part of the project lies within the State's 
8(g) zone or the geographic center of the project is within 15 miles of 
the nearest point of the State's coastline.
     The proportion of revenues to be shared by an eligible 
State depends only on the distance from the geographical center of the 
qualified project to the nearest point of the State's coastline.
    To illustrate this further, here are expanded versions and 
discussions of the cases in the section and table.
    Example (a). A qualified project area is located partially within 
the zone

[[Page 39416]]

extending 3 miles seaward of State A's submerged lands. The qualified 
project area does not extend into any other State's 8(g) zone, and the 
geographic center of the qualified project is more than 15 miles from 
the coastline of any other State. In this scenario, State A would 
receive the entire 27 percent share of the Federal revenues from the 
qualified project, regardless of the distance from the center of the 
qualified project to the nearest point on State A's coastline. This is 
the case because of the program principle that there must be at least 
one eligible State for every qualified project.
    Example (b). A qualified project area is located partially within 
the zone extending 3 miles seaward of State A's submerged lands. The 
project area does not extend into any other State's 8(g) zone. The 
geographic center of the project is within 15 miles of State B's 
coastline, but is farther than 15 miles from State A's coastline. In 
this scenario, State A and State B would each receive a portion of the 
27 percent of revenues to be shared from the project. This is the case 
because of the program principle that a State becomes eligible for 
sharing in the revenues from a qualified project by meeting either one 
of the two distance criteria, regardless how or when another State 
might become eligible. The sharing between the two States would be in 
accordance with their proximity to the geographic center of the 
qualified project. To elaborate, assume that the geographic center of 
the qualified project lies 20 miles from the closest point to State A's 
coastline and 10 miles from the closest point to State B's coastline. 
Pursuant to the inverse distance formula, States with coastlines that 
are farther from the geographic center of a project would get 
proportionally lower revenue shares from the project.

State A's proportion = [(1/20) / (1/20 + 1/10)] = 1/3.
State B's proportion = [(1/10) / (1/20 + 1/10)] = 2/3.
Therefore, State B, being twice as close as State A to the qualified 
project's center, would receive a share that is twice as large as State 
A's share.
    The sharing rate of the total revenues is mandated to be 27 percent 
under the EPAct. Hence, if the qualified project generates $1,000,000 
of revenues in a given year, the Federal Government would distribute 
the States' 27 percent share as follows, rounded to the nearest whole 
dollar:

State A's share = $270,000 x 1/3 = $90,000.
State B's share = $270,000 x 2/3 = $180,000.
    Example (c). A qualified project area is located partially within 
the zone extending 3 miles seaward of State A's and State B's submerged 
lands. The project area does not extend into any other State's 8(g) 
zone. The geographic center of the qualified project is within 15 miles 
only of State B's and State C's coastlines. In this example, all 3 
States would receive portions of the 27 percent of revenues to be 
shared from the qualified project based on the inverse distance 
formula. This is the case because of the program principle that the 
proportion to be shared by an eligible State depends only on the 
shortest distance from its coastline to the geographical center of the 
project, not the number or type of criteria that were the basis for its 
eligibility.
    To illustrate how the inverse distance formula would be applied in 
the case of 3 eligible States, assume that the qualified project center 
lies 20 miles from the closest coastline point in State A, 10 miles 
from the closest coastline point in State B, and 14 miles from the 
closest coastline point in State C. The proportion of the 27 percent 
revenue share due each State would be calculated as follows:

State A's proportion = [(1/20) / (1/20 + 1/10 + 1/14)] = 7/31.
State B's proportion = [(1/10) / (1/20 + 1/10 + 1/14)] = 14/31.
State C's proportion = [(1/14) / (1/20 + 1/10 + 1/14)] = 10/31.
    If the qualified project generates $1,000,000 of revenues in a 
given year, the Federal Government would distribute the States' 27 
percent share as follows:

State A's share = $270,000 x 7/31 = $60,968.
State B's share = $270,000 x 14/31 = $121,935.
State C's share = $270,000 x 10/31 = $87,097.

Subpart F--Plans and Information Requirements

Overview

    Subpart F describes the types of plans and information requirements 
for commercial leases, limited leases, ROW grants, and RUE grants for 
alternative energy activities. The subpart outlines the timing of 
submission, content requirements, and necessary MMS approvals for each 
of the plans. The MMS will not allow a lease or grant holder to conduct 
any activities on the OCS without proper plan submittal and MMS 
approval. The types of required plans are described below. The lessee, 
grant holder, or operator must submit the appropriate plan to MMS for 
review and approval, before beginning any activities covered by that 
plan.
    Types of Plans. The MMS is proposing three types of plans that 
would be required, depending on the type of instrument held and the 
activity to be conducted:
    (1) Site Assessment Plan (SAP),
    (2) Construction and Operations Plan (COP), and
    (3) General Activities Plan (GAP).
    The SAP and the COP would be used for commercial leases, while the 
GAP would be used for limited leases and grants.
    Prior to conducting site assessment activities on a commercial 
lease, a lessee would be required to submit a SAP. The SAP describes 
the surveys that a lessee plans to conduct to characterize a commercial 
lease, including a project easement. These surveys would include: (1) 
Physical characterization surveys (e.g., geological and geophysical 
surveys or hazards surveys), (2) resources assessment surveys (e.g., 
meteorological and oceanographic data collection), and (3) baseline 
environmental surveys (e.g., biological, archaeological, or 
socioeconomic surveys).
    A COP would be required before a lessee could begin construction 
and/or operations on a commercial lease, including a project easement. 
The COP describes the construction, operations, and conceptual 
decommissioning activities the lessee plans to undertake.
    A GAP would be required before a lessee or grantee could begin 
activities on a limited lease (including a project easement, as 
applicable) or ROW grant or RUE grant. The GAP describes the site 
assessment and/or development activities. These activities include: (1) 
Physical characterization surveys (e.g., geological and geophysical 
surveys or hazards surveys, (2) resources assessment surveys (e.g., 
meteorological and oceanographic data collection), (3) baseline 
environmental surveys (e.g., biological, archaeological, or 
socioeconomic surveys), and (4) construction activities, operations, 
and conceptual decommissioning plans for all planned facilities.

Considered Approaches

    In developing an approach for the types of plans to require for 
alternative energy projects, MMS considered a number of options. One 
option we considered was a single comprehensive project plan. This plan 
would cover the entire project, including site assessment, 
construction, operations, production, and decommissioning. However, we 
were concerned that the one plan approach would make compliance with 
NEPA, CZMA, and other Federal laws

[[Page 39417]]

more difficult, since the single plan would need to be modified at each 
stage of the project and would possibly require additional compliance 
reviews. Another option was multiple plans, with a different plan for 
each stage in the project. For example, the applicant would submit one 
plan for site assessment, one for construction, another for production, 
and a final plan for decommissioning. This option was not selected 
because it was considered overly burdensome and would require the 
preparation of multiple NEPA documents, reviews and other compliance 
documents.
    The selected approach would require two plans for a commercial 
lease (SAP and COP) and one plan (GAP) for limited leases and ROW grant 
or RUE grants. We chose this approach for commercial lease because 
there are two distinct phases for commercial development for 
alternative energy projects: A site assessment phase, where a lessee 
may install a meteorological or marine data collection facility to 
assess alternative energy resources, and a generation of power phase, 
which includes construction, operations, and decommissioning. Limited 
leases are limited to resource measurements or technology testing and 
are not for the commercial generation of power. Therefore, only one 
phase exists, and only one plan, a GAP, is required for this phase. 
Having only one plan for one phase allows for a simple process to 
conduct resource evaluation or technology testing. The same reasoning 
was used for ROW grant and RUE grants--these instruments do not involve 
commercial power generation activities on the OCS. We wanted to 
distinguish between generating and non-generating types of projects.

Overview of Required Plans

    The two plans for commercial development are a site assessment plan 
(SAP) and a construction and operations plan (COP). These plans should 
clearly describe the general approach to the project and include 
detailed technical and environmental information. The two plan approach 
for commercial activities sets two defined times for conducting NEPA 
analysis and CZMA determinations. These plans must include all the 
information needed to conduct appropriate NEPA analysis and for 
compliance with other relevant laws. In addition, the applicant must 
submit one copy of their CZMA consistency certification with each plan. 
This approach includes a predictable schedule for development and 
milestones for plan submittals.
    The SAP covers site assessment and other data gathering activities 
that would be conducted to gather information needed to develop the 
project. The data gathered under the SAP would be used to develop the 
COP for the project. The site assessment activities may include 
physical characterization surveys (e.g., geological and geophysical 
surveys or hazards surveys), resources assessment surveys (e.g., 
meteorological and oceanographic data collection), and baseline 
environmental surveys (e.g., biological, archaeological, or 
socioeconomic surveys). Additionally, a SAP may include the 
construction of simple facilities for data collection, such as 
meteorological towers. If MMS approves the SAP, the operator may begin 
conducting any approved activities except those that involve the 
construction of facilities proposed in the SAP. The operator would 
gather the data needed to confirm the location of any facilities 
proposed in the SAP or for the COP. The operator would submit the 
findings and data to MMS before constructing any facilities. Most of 
the data and findings of SAP activities would be submitted as part of 
the COP. The SAP expires when MMS approves the COP. To conduct site 
assessment type activities after a COP is approved, the applicant would 
need to include those activities in the COP.
    To facilitate development of a commercial lease, an applicant may 
choose to submit to MMS a COP with the SAP. In this case the NEPA, 
CZMA, and compliance with other relevant laws would be done at one 
time. If the applicant decides to submit the COP and SAP 
simultaneously, then sufficient data and information must be submitted 
with the COP for MMS to conduct needed technical, NEPA, and other 
required reviews. If new information becomes available after the 
applicant completes the site assessment activities, then the COP will 
require revision. Furthermore, MMS may need to conduct additional 
reviews, including NEPA, on any new information.
    The COP would describe the construction and operations for the 
project itself, covering all planned facilities, including onshore and 
support facilities, and all anticipated project easements needed for 
the project. It would also describe the actual activities related to 
the project including construction, commercial operations, maintenance, 
and decommissioning. The COP would include the results of the survey 
activities conducted under the SAP. The COP must demonstrate to MMS 
that the operator has planned and is prepared to conduct the proposed 
activities in a manner that conforms to their responsibilities under 
these regulations. It also must demonstrate that the project:
     Will conform to all applicable laws, implementing 
regulations, lease provisions and stipulations or conditions of the 
commercial lease;
     Is safe;
     Does not unreasonably interfere with other uses of the 
OCS, including those involved with national security or defense;
     Does not cause undue harm or damage to natural resources, 
life (including human and wildlife), property, or the marine, coastal, 
or human environment;
     Does not cause undue harm or damage to sites, structures, 
or objects of historical or archaeological significance;
     Will use best available and safest technology; will use 
best management practices; and will employ properly trained personnel.
    Limited leases, ROW grants, and RUE grants would require approval 
of a general activities plan (GAP). The GAP includes components of both 
the SAP and the COP. However, we expect that limited leases, ROWs, and 
RUEs would involve less extensive activities than those planned for a 
commercial lease. The applicant could include multiple scenarios in the 
GAP to address the potential outcome of the site assessment activities, 
so that multiple locations would be evaluated as part of the NEPA 
analysis. If, after evaluating the site, the initially planned location 
of a facility needs to be relocated, additional NEPA would not be 
required, since alternative locations were evaluated in the NEPA for 
the GAP.
    Site Assessment Plan (SAP): The SAP describes the operator's 
initial assessment and survey activities needed to characterize the 
alternative energy project site for a commercial lease, including a 
project easement. These activities would take place during the site 
assessment term of a commercial lease. The data obtained during site 
assessment is used to develop a COP and is included in the COP. The 
activities proposed in a SAP may include vessel-based surveys and the 
installation of facilities (including vessels) attached to the sea 
floor, such as meteorological towers to measure winds, radars to assess 
avian resources, or marine data collection facilities to measure waves 
or currents. The MMS expects that the applicant would conduct physical 
characterization surveys, resource assessment surveys, and baseline 
environmental surveys under the SAP. Information contained in the SAP 
must provide sufficient

[[Page 39418]]

detail for MMS to adequately assess the proposed activities and ensure 
compliance with NEPA and other relevant Federal laws.
    The MMS must approve the SAP before the operator can begin 
conducting any proposed activities. If MMS approves the SAP, the 
operator may begin conducting activities that do not involve the 
installation of facilities. The operator would gather data to confirm 
the placement of the facilities. Before constructing any facilities, 
the operator would submit to MMS the findings of the data gathering and 
appropriate data, along with additional information on the facilities. 
After MMS receives the additional data and information and after we 
notify you that we have no objections, the applicant may begin 
construction activities proposed in the SAP. If MMS has objections, the 
applicant may not begin construction until all MMS objections are 
resolved to MMS's satisfaction.
    When MMS receives the applicant's COP for technical and 
environmental review, MMS may extend the lease term during the review 
period, if necessary. The SAP expires when MMS approves the COP. 
Therefore, if an applicant anticipates conducting site assessment 
activities anytime during the COP period, those activities must be 
described in the COP and receive MMS approval of the COP before 
conducting the activities.
    Subpart F outlines what the applicant must demonstrate in the SAP 
such as legal requirements, safety, other uses of the OCS, 
environmental protection, technology, best management practices, and 
the use of properly trained personnel. The provisions also outline the 
information that the applicant must submit with the SAP as well as 
additional information that must be submitted if the SAP includes 
activities that require the installation of bottom-founded facilities. 
The MMS envisions that most of the facilities would be relatively 
simple and temporary. If an operator proposes to install a facility 
that the MMS determines is significant, or complex, additional 
information would be required. If MMS makes this determination, you 
would be required to complete the survey activities in the SAP and 
submit an initial survey report of the results of those activities to 
the MMS. You must also submit a Facility Design Report and a Facility 
Fabrication and Installation Report, as described in subpart G, and a 
Safety Management System, as described in subpart H, before any 
construction could begin. The Facility Design Report provides MMS with 
a detailed description of the proposed facility or facilities and 
locations on the OCS. The Fabrication and Installation Report describes 
the lessee/operator's or grant holder's plans for both the facility's 
fabrication and installation process. MMS will review these reports 
prior to each stage of these operations.
    For commercial leases acquired noncompetitively, you must submit 
the SAP within 60 calendar days after the MMS determination of no 
competitive interest. The MMS will not issue the lease until the SAP is 
approved. If you acquired a commercial lease competitively, you must 
submit the SAP within 6 months of the date of lease issuance. We will 
conduct technical and environmental reviews, including NEPA analysis, 
and forward the plan and required information to affected States for 
CZMA review. After the reviews are complete, MMS would approve, 
disapprove, or approve with modifications the SAP. MMS will specify the 
terms and conditions of the approval and you must incorporate these 
into your SAP. If the SAP is approved or approved with modifications, 
the applicant must conduct all site assessment activities in accordance 
with the provisions of the approved plan and MMS would require the 
applicant to certify compliance with certain of the terms and 
conditions as identified by the MMS. If MMS does not approve the SAP, 
we will provide an explanation of our disapproval, and the applicant 
may modify and resubmit the revised SAP.
    If you want to conduct activities not directly addressed in the 
approved SAP, you would need to provide MMS with a written description 
of the proposed activities and receive approval from MMS before 
conducting the activities. We will determine whether the activities are 
within the scope of the approved SAP or if the SAP needs to be revised. 
If MMS determines that you must revise the SAP, then MMS must approve 
the revised SAP before you can conduct the activities.
    Construction and Operations Plan (COP): The COP describes the 
construction, operations, and conceptual decommissioning plans for the 
operations term of any project under a commercial lease, including your 
project easement. Your plan would describe all operations and 
facilities (onshore and offshore) that would be installed and used to 
test, gather, transport, transmit, or generate and distribute energy 
from the lease. The COP would include:
     Nominations of certified verification agents (CVA) for MMS 
approval;
     Preliminary plans for project design, facility fabrication 
and installation, and production transportation and transmission;
     Plans for safety management, inspection, maintenance, and 
monitoring systems; and
     The decommissioning concept.
    The proposed rule outlines the process for preparing, submitting, 
processing, and implementing a COP. The COP should include any 
anticipated site assessment activities that may be conducted during the 
life of your plan. The MMS must approve the COP before you can 
construct any facilities for commercial operation.
    As with the SAP, the proposed provisions outline what a COP must 
contain and demonstrate, as well as how the COP is submitted, 
processed, and authorized. The MMS may require additional specific 
information for submittal with the COP, to aid in the appropriate 
reviews of the project by external agencies and to assist in compliance 
with all relevant Federal laws and regulations (e.g., NEPA, CZMA, ESA, 
and MMPA). We may request additional information if the information 
provided is insufficient.
    For commercial leases acquired noncompetitively and competitively, 
you must submit a COP within 5 years after MMS approves your SAP. MMS 
will extend the term of the SAP, if necessary, while conducting the 
technical and environmental reviews of your COP. We will conduct these 
technical and environmental reviews of your COP, including NEPA 
analysis, and forward the plan and required information to affected 
States for CZMA review. After the reviews are complete, MMS would 
approve, disapprove, or approve with modifications the COP. MMS will 
specify the terms and conditions of the approval and these terms and 
conditions would be incorporated into your COP. If MMS approves the COP 
or approves the COP with modifications, the applicant must conduct all 
of the proposed activities in accordance with the provisions of the 
approved plan and MMS would require the applicant to certify compliance 
with certain of the terms and conditions as identified by the MMS. If 
MMS does not approve the COP, we will provide an explanation of our 
disapproval, and the applicant may modify and resubmit the revised COP.
    If MMS approves your project easement, we will issue an addendum to 
your lease specifying the terms of the easement. The project easement 
may include off-lease areas that contain areas for cable, pipeline or 
associated facilities. These areas cannot exceed 200

[[Page 39419]]

feet (61 meters) in width, unless safety and environmental factors 
during construction and maintenance of the associated cables or 
pipelines require a greater width. For associated facilities, the area 
is limited to the area reasonably necessary for power stations for 
electricity or pumping stations for other energy products such as 
hydrogen.
    You may propose in your COP to develop your lease in phases. You 
must clearly provide details as to the portions of the lease that will 
be initially developed for commercial operations, and what portions of 
the lease will be reserved for subsequent phased development.
    If MMS approves your COP, you must commence construction by the 
date given in your construction schedule, as stated in the approved 
COP. MMS may approve a deviation from this schedule. However, before 
you may construct and install facilities under the approved COP, you 
must submit to MMS a Facility Design Report and a Fabrication and 
Installation Report. You may commence commercial operations 30 calendar 
days after the CVA has submitted the final fabrication and installation 
report to MMS. The activities described in these 2 reports must fall 
within the scope of the approved COP, or you will be required to submit 
a revision to the COP for approval before commencing the activity.
    A COP may require future revisions and potentially require 
additional or new environmental and regulatory reviews. You must notify 
MMS in writing before you conduct any activities not described in your 
approved COP, describing in detail the activities you propose to 
conduct. MMS will determine whether the proposed activities may be 
conducted under your existing COP or require a revision to the COP. We 
may request that you provide additional information for us to make this 
determination. The MMS will periodically review an approved COP and may 
determine, based on the significance of any changes in information and 
environmental conditions affecting activities, that revisions are 
necessary. The revisions may require new environmental and technical 
reviews.
    Any time you cease commercial operations, without an MMS approved 
suspension, you must notify MMS. MMS may cancel your lease and you must 
start the decommissioning process if you cease commercial operations 
for an indefinite period which extends longer than 6 months.
    When you complete the commercial operations under your approved 
COP, you must start the decommissioning process described in subpart I 
of this part.
    General Activities Plan (GAP): The GAP describes the operator's 
planned activities for a limited lease, ROW grant, or RUE grant. It 
would include information similar to what is required in a SAP, as well 
as additional information concerning planned activities throughout the 
term of the lease or grant. As with the SAP, the GAP must be submitted 
within 6 months of competitive issuance of a lease or grant or within 
60 calendar days after the determination of no competitive interest for 
a lease or grant being pursued noncompetitively. In some cases, a GAP 
would describe activities that are analogous to those covered in a COP 
for a commercial lease, i.e. if you are proposing a facility or 
multiple facilities. Review, approval, and revision of a GAP will be 
subject to requirements and procedures similar to those applied to SAPs 
and COPs.
    NEPA Compliance for Plans: MMS action on the SAP, COP, and GAP 
would require the preparation of appropriate NEPA documentation. We 
anticipate that initially, all commercial development projects will 
require an EIS for each phase of the project (i.e. one EIS for the SAP 
and one EIS for the COP). Also, we anticipate that limited leases and 
RUE and ROW grants will require an EIS. After the impacts and related 
mitigation of alternative energy activities on the OCS are better 
understood, it is possible that projects may require an environmental 
assessment. The applicant must provide MMS with the data necessary to 
complete the required NEPA documentation. This would include a 
description of those resources, conditions, and activities that could 
be affected by your proposed site assessment activities, including 
associated construction and decommissioning activities. This would 
include, but is not limited to information on the following:
     Hazard information including meteorology, oceanography, or 
manmade hazards.
     Water quality including turbidity and total suspended 
solids from construction.
     Biological resources including benthic communities, marine 
mammals, sea turtles, coastal and marine birds, fish and shellfish, 
plankton, barrier islands, beaches, dunes, wetlands, seagrasses and 
plant life.
     Threatened or endangered species including critical 
habitats, as defined by the Endangered Species Act of 1973.
     Sensitive biological resources or habitats including 
essential fish habitat, refuges, preserves, special management areas 
identified in coastal management programs, sanctuaries, rookeries, hard 
bottom habitats, chemosynthetic communities, and calving grounds.
     Archaeological resources including historic and 
prehistoric archaeological resources to meet the requirements of the 
National Historic Preservation Act of 1966, as amended, and associated 
regulations.
     Social and economic including employment, existing 
offshore and coastal infrastructure (including major sources of 
supplies, services, energy, and water), land use, subsistence resources 
and harvest practices, recreation, recreational and commercial fishing 
(including typical fishing seasons, location, and type), minority and 
lower income groups, coastal zone management programs, and viewshed.
     Coastal and marine uses including military activities, 
vessel traffic, and mineral exploration or development.
     Other resources, conditions, and activities as identified 
by the Director.

    The MMS may decide to use a third party to prepare the NEPA 
document.
    CZMA Compliance for Plans: For purposes of Federal consistency, MMS 
will treat SAPs, COPs, and GAPs as OCS plans which must comply with 
requirements of CZMA subsection 307(c)(3)(B) and 15 CFR part 930, 
subpart E. The plans must describe all federally licensed or permitted 
activities and operations proposed on the MMS-issued lease, ROW grant, 
or RUE grant. The lease or grant holder will be required to prepare a 
consistency certification to submit to MMS with the proposed plan. The 
MMS will send one copy of the plan, supporting information, and 
consistency certification to the affected State CZMA agency. The State 
agency will then determine whether the supplied information is adequate 
for its review. When the State agency has adequate information it will 
begin its consistency review and either concur with or object to the 
consistency certification.
    Subsequent consistency reviews for revisions to the plan are not 
required unless MMS determines that the revisions: (1) Result in a 
significant change in the impacts previously identified and evaluated; 
(2) require any additional Federal authorizations; or (3) involve 
activities not previously identified and evaluated. For CZMA compliance 
purposes, when a State objects to the consistency certification, MMS 
will not approve the plan if: (1) Consistency has not been conclusively

[[Page 39420]]

presumed; or (2) the State objects to the applicant's consistency 
certification and the Secretary of Commerce has not found that the 
permitted activities are consistent with the objectives of the CZMA or 
are otherwise necessary in the interest of national security.
    NEPA and CZMA Compliance for Additional Reports and Approvals: The 
NEPA and CZMA compliance for a project will be addressed in the MMS 
decision process for the SAP, COP, or GAP. The reports and applications 
that are required relating to facility design, fabrication, 
installation, and decommissioning are intended to provide MMS with 
specific technical details on the project as approved in the SAP, COP, 
or GAP. If these documents present activities that fall outside the 
scope of your approved SAP, COP, or GAP, then you will be required to 
submit a revision to your SAP, COP, or GAP.

Additional NEPA or CZMA review may be required if the revisions for 
facility design, fabrication, installations, or decommissioning:
    (1) Result in a significant change in the impacts previously 
identified and evaluated;
    (2) Require any additional authorizations; or
    (3) Propose activities not previously identified and evaluated.
    Frequency of NEPA/CZMA Reviews Based on Instrument Held: The number 
of NEPA and CZMA reviews that would be conducted on your lease or grant 
is determined by the type of instrument that you hold (Table 2). For a 
competitive, commercial lease there would be three NEPA and three CZMA 
reviews--one each for the Lease Sale action, the SAP, and the COP. For 
a non-competitive commercial lease, two NEPA and two CZMA reviews would 
be required--one for the lease with the SAP and one for the COP. Since 
MMS requires the applicant to submit a SAP or a GAP within 60 calendar 
days after the Director issues a determination that there was no 
competitive interest for your lease or grant, the SAP would be reviewed 
under the same review as the lease issuance action. An efficiency is 
gained in this example because MMS can conduct reviews on the SAP and 
lease issuance at the same time. It would be unreasonable to require 
this for competitive commercial leases since MMS would have to request 
all bidders to submit a SAP before they actually knew whether they 
would be awarded a lease.
    For limited leases, two NEPA and two CZMA reviews would be required 
for a competitive limited lease and one review for a non-competitive 
lease. The reviews for the competitive limited lease would be conducted 
on the lease sale action and the GAP, while the non-competitive limited 
lease would have a simultaneous review of the lease issuance action and 
the GAP.
    We envision that all ROW grants and RUE grants would likely be non-
competitive. The ROW/RUE issuance action and the GAP would be reviewed 
under NEPA and CZMA simultaneously. In the unlikely case of a 
competitive ROW/RUE grant, a separate NEPA and CZMA review would be 
conducted on the ROW/RUE sale and the GAP.

    Table 2.--Frequency of NEPA/CZMA Reviews Based on Instrument Held
------------------------------------------------------------------------
                                                      NEPA documentation
         Instrument held              MMS process       and CZMA review
------------------------------------------------------------------------
Competitive Commercial Lease....  Conduct lease sale  1. Lease Sale EIS.
                                   and issue          2. SAP.
                                   decision on plans. 3. COP.
Non-Competitive Commercial Lease  Negotiate and       1. Lease Issuance
                                   issue lease.        and SAP.
                                                      2. COP.
Competitive Limited Lease.......  Conduct lease sale  1. Lease Sale.
                                   and issue          2. GAP.
                                   decision on plan.
Non-competitive Limited Lease...  Negotiate and       1. Lease Issuance
                                   issue lease.        and GAP.
Competitive ROW, RUE Grant......  Conduct ROW, RUE    1. ROW, RUE Sale.
                                   sale and issue     2. GAP.
                                   decision on plan.
Non-competitive ROW, RUE Grant..  Negotiate and       1. ROW, RUE
                                   issue ROW, RUE      issuance and GAP.
                                   grant.
------------------------------------------------------------------------

Section by Section Discussion for Subpart F

Section 285.600 What plans and information must I submit to MMS before 
I conduct activities on my lease or grant?

    This section describes the three different types of plans that are 
required to be submitted to MMS for approval. The type of plan that you 
would submit depends on the type of instrument held and the type of 
activity to be conducted: (1) Site Assessment Plan (SAP), (2) 
Construction and Operations Plan (COP), and (3) General Activities Plan 
(GAP). The SAP and the COP would be used for commercial leases, while 
the GAP would be used for limited leases and grants. Prior to 
conducting site assessment activities on a commercial lease, a lessee 
would be required to submit a SAP to MMS for review and approval. A COP 
is required to be submitted to MMS for review and approval before a 
lessee could begin construction and/or operations on a commercial 
lease, including a project easement. A GAP is required to be submitted 
to MMS for review and approval before a lessee could begin activities 
on a limited lease or ROW grant or RUE grant including, if applicable, 
a project easement.

Section 285.601 When am I required to submit my plans to MMS?

    The timing for the submission of your plans depends on whether your 
lease or grant was issued on a competitive or noncompetitive basis 
(refer to subpart B for leases or subpart C for grants for further 
discussion of these types of conveyance). The timing is as follows:
     Competitively issued lease or grant: You must submit your 
SAP or GAP within 6 months of issuance.
     Non-competitive lease or grant: You must submit your SAP 
or your GAP within 60 calendar days after the Director issues a 
determination that there was no competitive interest for your lease or 
grant.
     Operations for commercial lease: You must submit a COP at 
least 6 months before the end of your site assessment term if you plan 
to request an operations term for your commercial lease.
    MMS will allow you to submit your COP with your SAP. However, you 
must submit the necessary data and information with your COP to allow 
MMS to complete its technical and environmental reviews. Furthermore, 
you may need to make revisions to your

[[Page 39421]]

COP, followed by additional MMS reviews, including those required under 
NEPA, if new information becomes available after you complete your site 
assessment activities. For example, following a geophysical survey, you 
may determine the presence of hard bottom habitat that was previously 
not identified. Based on this information, MMS may require you to 
conduct a biological survey to describe the communities present in that 
habitat. The results from those surveys may require you to revise your 
COP in order to propose the relocation of some of part or all of your 
proposed facilities to another part of your lease.

Section 285.602 What records must I maintain?

    You must maintain and provide to MMS upon request all data and 
information related to compliance with required terms and conditions of 
your SAP, COP, or GAP. You must meet this requirement until MMS 
releases your financial assurance.

Section 285.603 [Reserved]

Section 285.604 [Reserved]

Site Assessment Plan and Information Requirements for Commercial Leases

Section 285.605 What is a Site Assessment Plan (SAP)?

    This section generally describes a SAP. A SAP contains the plans 
for conducting surveys, data gathering, and operations to characterize 
a commercial lease, including the project easement. A SAP must include 
a description of how surveys such as physical characterization surveys, 
resource assessment surveys, and baseline surveys would be conducted. 
It includes additional requirements for both simple and complex 
facilities.

Section 285.606 What must I demonstrate in my SAP?

    This section provides details on the requirements for a SAP. The 
SAP must demonstrate how a lessee would conform to all applicable laws, 
implementing regulations, lease provisions and stipulations. The 
activities conducted under a SAP must:
     Conform to all applicable laws, implementing regulations, 
lease provisions and stipulations;
     Be safe;
     Not unreasonably interfere with other uses of the OCS, 
including those involved with national security or defense
     Not cause undue harm or damage to natural resources, life 
(including human and wildlife), property, or the marine, coastal, or 
human environment; or to sites, structures, or objects of historical or 
archaeological significance;
     Use best available and safest technology;
     Use best management practices; and
     Use properly trained personnel.
    The SAP must demonstrate that the planned site assessment 
activities include all surveys and other activities to gather 
information and data required for the COP.

Section 285.607 How do I submit my SAP?

    This section requires you to submit a hard copy and an electronic 
version of the SAP to MMS at the address in Sec.  285.110.

Section 285.608 [Reserved]

Section 285.609 [Reserved]

Contents of the Site Assessment Plan

Section 285.610 What must I include in my SAP?

    This section contains further detailed requirements on what must be 
submitted for SAP applications. This includes: identifying information, 
a discussion of the objectives, air emissions, lease stipulations, a 
listing of all Federal, State, and local authorizations or approvals 
for projected site assessment activities, a list of entities that you 
have consulted with regarding the potential impacts of your project, 
financial assurance information, and additional information as 
requested by MMS. For site assessment activities that include the 
installation of any facilities (e.g., a single monopole meteorological 
tower), additional requirements are listed. They include:
     A location plat,
     Geotechnical survey,
     General structural and project installation information,
     A description of the deployment activities,
     Construction schedule,
     A list of solid and liquid wastes generated,
     Shallow hazards,
     Archaeological resource surveys,
     Relevant geological surveys,
     Biological surveys,
     Socio-economic surveys,
     A description of any vessels and aircraft,
     Proposed measures for avoiding, minimizing, reducing, 
eliminating, and monitoring environmental impacts,
     CVA nominations (if required),
     Decommissioning and site clearance procedures,
     References, and
     Additional information as requested by MMS.

Section 285.611 What information and certifications must I submit with 
my SAP to assist MMS in complying with NEPA and other relevant laws?

    This section requires the applicant to submit information needed to 
assist MMS in preparing compliance documents related to NEPA 
(Environmental Impact Statement or Environmental Assessment) and other 
relevant laws, including MSA, ESA, and CZMA, that are required for SAP 
approval. This includes information on resources, conditions, and 
activities listed in this section that could be affected by or could 
affect activities proposed and approved in your SAP.
    This section also requires the applicant to submit a consistency 
certification for CZMA. The consistency certification must state that 
the proposed activities covered in the SAP comply with the State(s) 
approved coastal management program and that the applicant will conduct 
these activities in a manner consistent with such a program. The 
consistency certification must also include ``information'' as required 
by 15 CFR 930.76(a) and 15 CFR 930.58(a)(2) and ``analysis'' as 
required by 15 CFR 930.58(a)(3).

Section 285.612 How will MMS process my SAP?

    This section describes the MMS review process for a SAP. The MMS 
will review the SAP and determine if it contains all of the required 
information needed to complete the technical and environmental reviews. 
After MMS has all of the information needed for its reviews, we will 
prepare appropriate NEPA documentation.
    The MMS will forward a copy of your SAP and consistency 
certification to the State's CZM Agency after all information 
requirements for the SAP are met. We will consult with relevant 
Federal, State, and local agencies and provide to other Federal, State, 
and local agencies relevant non-proprietary data and information 
pertaining to the proposed site assessment activities as directed by 
subsections 8(p)(4) and (7) of the OCS Lands Act and by other relevant 
Federal statutory requirements (e.g. ESA and MSA). We may request 
additional information during the review and approval process; if you 
do not provide this information MMS may disapprove your application.
    After MMS completes the technical and environmental reviews, we may 
approve, disapprove, or approve with modifications your SAP. If we 
disapprove your SAP, we will provide the reasons for the disapproval 
and you

[[Page 39422]]

will have an opportunity to revise and resubmit your SAP. If we approve 
your SAP, it will be subject to terms and conditions set by MMS. We 
will specify these terms and conditions and they will be incorporated 
into your SAP. Examples of the types of terms and conditions we may 
require include, but are not limited to terms and conditions from and 
ESA incidental take statement, conservation recommendations resulting 
from EFH consultations, and other safety, operational, or environmental 
protection measures. Also you must certify compliance with certain of 
these terms and conditions as identified by MMS. The certification 
would include summary reports, a description of mitigation measures and 
monitoring, the effectiveness of the mitigation measures, and new 
proposed mitigation measures.
Activities Under an Approved SAP

Section 285.613 When may I begin conducting activities under my 
approved SAP?

    After MMS approves the SAP, the applicant may begin to conduct any 
approved activities that do not involve the construction of facilities 
or any other seabed disturbing activities on the OCS.

Section 285.614 When may I construct OCS facilities proposed under my 
SAP?

    This section discusses the timing of constructing simple and 
complex facilities and various reports that must be submitted at each 
stage for MMS approval before proceeding to the next step. Also 
required are CVA nominations for plans and the Safety Management 
System.
    Before you begin construction of any OCS facility described in the 
SAP, you must complete the initial survey activities that relate to the 
construction and installation of the facility or facilities, and a 
report of the findings of those activities must be submitted to MMS. 
This report must also identify the specific location on the lease area 
where facilities will be installed. If MMS determines that the 
facilities are complex or significant, additional information, 
described in the last paragraph of this section, is required. The 
applicant may begin to construct and install a facility or facilities 
after MMS receives the initial survey report and has no objections. If 
MMS does not respond to the applicant with objections within 60 
calendar days after receiving the report, MMS is deemed not to have 
objections to the report.
    However, if MMS has objections to the initial survey report, we 
will notify the applicant in writing within 60 calendar days of 
receipt. The MMS may follow-up with written correspondence outlining 
its specific objections to the initial survey report and request that 
certain actions be performed to resolve the agency's objections. The 
applicant cannot begin construction until the objections are resolved.
    If you are constructing multiple facilities or a complex or 
significant facility you must complete the required survey activities, 
and submit an initial survey report of the findings of those activities 
to MMS. The applicant must also submit a Facility Design Report; a 
Facility Fabrication and Installation Report; CVA nomination; and a 
Safety Management System.

Section 285.615 What other reports or notices must I submit to MMS 
under my approved SAP?

    This section identifies the various reports and notifications that 
must be submitted to MMS and their timing. This includes the initial 
survey report, an annual summary of findings from site assessment 
activities, notification of completion of construction and installation 
activities, and annual compliance certification. The compliance 
certification includes a listing and description of any mitigation 
measures and monitoring and their effectiveness. The MMS will protect 
the annual summary information from public disclosure as provided in 
Sec.  285.113.

Section 285.616 [Reserved]

Section 285.617 What activities require a revision to my SAP and when 
will MMS approve the revision?

    The lessee or operator must notify MMS in writing, including a 
detailed description, prior to conducting any activities not described 
in the SAP, and we will determine if those activities require a 
revision to the approved SAP. We will also conduct periodic reviews of 
the activities being conducted under an approved SAP, to ensure that 
they fall within the scope of the SAP. The SAP will likely be required 
to be revised if the applicant plans to:
     Conduct activities not described in the approved SAP,
     Change the size or type of facility or equipment used,
     Change the surface location of a facility or structure,
     Add another facility or structure not contemplated in the 
approved SAP,
     Change the location of the onshore support base from one 
State to another or to a new base requiring expansion, or
     Change the location of bottom disturbances by 500 feet 
(152 meters), or changes to any other activity specified by MMS.
    A revision to the SAP may require NEPA, CZMA, and other required 
compliance if MMS determines that the proposed revision could result in 
a significant change in impacts previously identified and evaluated; 
require any additional Federal authorizations; or involve activities 
not previously identified and evaluated.
    The MMS may approve the revision to the SAP if the revision is 
designed to prevent or minimize adverse effects to the coastal and 
marine environments, including their physical, atmospheric, and 
biological components to the extent practicable; and the revision is 
otherwise consistent with the provisions of subsection 8(p) of the OCS 
Lands Act.

Section 285.618 What must I do upon completion of approved site 
assessment activities?

    After completing activities under the approved SAP, the applicant 
must initiate the decommissioning process for any facilities built for 
conducting SAP activities. However, if you submit a COP to MMS, the 
applicant may leave the facilities in place while MMS reviews the COP. 
You are not required to start decommissioning if the facilities are 
authorized to remain in place under your approved COP. However, if MMS 
determines that the facilities built for conducting SAP activities may 
not remain in place, then the decommissioning process described in 
subpart I of this part must be initiated. Upon the termination of your 
lease, you must initiate this same decommissioning process for all 
facilities authorized by your approved COP.

Section 285.619 [Reserved]

Construction and Operations Plan for Commercial Leases

Section 285.620 What is a Construction and Operations Plan (COP)?

    This section provides the basic requirements for the COP. The COP 
describes your construction, operations, and conceptual decommissioning 
plans under your commercial lease, including your project easement. The 
COP must include the location of the operations and facilities, the 
land, labor, material, and energy requirements associated with such 
operations and facilities, and environmental and safety safeguards. The 
COP must cover all proposed activities and operations, including 
activities associated with constructing and maintaining project 
easements. The

[[Page 39423]]

MMS must approve the COP before any construction and operation can 
begin.

Section 285.621 What must I demonstrate in my COP?

    This section describes what the applicant must demonstrate in the 
COP. The COP must demonstrate how proposed activities conform with all 
applicable laws, implementing regulations, lease provisions and 
stipulations or conditions of the commercial lease. In addition, the 
COP must demonstrate that the proposed activity is:
     Safe;
     Does not unreasonably interfere with other uses of the 
OCS;
     Does not cause undue harm or damage;
     Uses best available and safest technology;
     Uses best management practices; and
     Uses properly trained personnel.

Section 285.622 How do I submit my COP?

    This section provides the requirements for submitting the COP and 
future revisions, the applicant must submit one hard copy and one 
electronic version of the COP to MMS. The applicant may submit 
information to cover the project easement with the original submission 
of the COP or at a later time, as a revision to the COP.

Section 285.623 [Reserved]

Section 285.624 [Reserved]

Contents of the Construction and Operations Plan

Section 285.625 What survey activities must I conduct to obtain 
approval for the proposed site of facilities?

    Before MMS will approve the site of the commercial facilities 
proposed for the project, you must conduct the listed surveys and 
activities under the SAP and submit the results to MMS in your COP. The 
required surveys and activities include:
     Shallow hazard surveys;
     Geological surveys;
     Geotechnical surveys;
     Archaeological resource surveys;
     Biological surveys;
     Socio-economic surveys; and
     An overall site investigation.
    You would conduct these surveys and activities under the SAP. You 
must describe in your COP any other surveys that you may need to 
conduct during your COP phase.

Section 285.626 What must I include in my COP?

    This section lists the project-specific information that must be 
included in the COP. The required information includes:
     Identifying information;
     The construction and operation concept;
     Designation of an operator;
     Lease stipulation and compliance information;
     A location plat;
     General structural and project design, fabrication, and 
installation information; including how you will use a CVA to review 
and verify each stage of the project
     All cables and pipelines, including lines on project 
easements;
     A description of the deployment activities;
     A list of solid and liquid wastes generated;
     A listing of chemical products used;
     A description of any vessels, vehicles, and aircraft that 
will be use to support the activities;
     A general description of the operating procedures and 
systems;
     Decommissioning and site clearance procedures;
     A listing of all Federal, State, and local authorizations, 
approvals or permits that are required;
     Proposed measures for avoiding, minimizing, reducing, 
eliminating, and monitoring environmental impacts;
     A summary of information incorporated by reference;
     A list of entities with whom you consulted, or will be 
consulting, regarding potential impacts associated with the proposed 
activities;
     Reference information;
     Financial assurance statements;
     CVA nominations;
     Construction schedule; and
     Any other information required by MMS.

Section 285.627 What information and certifications must I submit with 
my COP to assist the MMS in complying with NEPA and other relevant 
laws?

    This section discusses additional submittal requirements to assist 
MMS in complying with NEPA and other relevant laws, including MSA, ESA, 
and CZMA. The information must include the resources, conditions, and 
activities listed in this subpart, that could be affected by proposed 
activities, or that could affect proposed construction, operation, and 
decommissioning activities. The applicant must include one copy of the 
consistency certification for the project to verify compliance with 
each State's approved coastal management program, including required 
``information'' and ``analysis'' per Sec.  285.611. Also, the applicant 
must submit an oil spill response plan and the Safety Management System 
for the project.

Section 285.628 How will MMS process my COP?

    This section discusses how MMS will review the submitted COP and 
determine if it contains the information necessary to conduct the 
technical and environmental reviews. The MMS will notify the applicant 
if the COP lacks any information needed for the reviews. We will 
prepare appropriate NEPA documentation and forward one copy of the COP, 
consistency certification, and associated data and information under 
the CZMA to the State's CZM Agency. When appropriate, we will 
coordinate and consult with, and provide relevant, non-proprietary data 
and information to, relevant State, Federal and local agencies as 
directed by subsections 8(p)(4) and (7) of the OCS Lands Act and by 
other relevant Federal statutory requirements (e.g. ESA and MSA). We 
may request additional information during the review and approval 
process; if you do not provide this information MMS may disapprove your 
application.
    After MMS completes the technical and environmental reviews, we may 
approve, disapprove, or approve with modifications your COP. If we 
disapprove your COP, we will provide the reasons for the disapproval 
and you will have an opportunity to revise and resubmit your COP. If we 
approve your COP, it will be subject to terms and conditions set forth 
by MMS. The applicant must certify compliance with certain of those 
terms and conditions as required under Sec.  285.615(c). If MMS 
disapproves your COP, we will inform you of the reasons and you will 
have an opportunity to resubmit a revised plan addressing the concerns 
identified. The MMS may suspend the term of your lease, as appropriate, 
to allow this to occur. If the project easement is approved, MMS will 
issue an addendum to the lease specifying the terms of the project 
easement.

Section 285.629 May I develop my lease in phases?

    In the COP, the applicant may request to develop the commercial 
lease in phases. To support this request, the applicant must provide 
details as to what portions of the lease will be initially developed 
for commercial operations, and what portions of the lease will be 
reserved for subsequent phased development.

[[Page 39424]]

Section 285.630 [Reserved]

Activities Under an Approved COP

Section 285.631 When must I initiate activities under an approved COP?

    After MMS approves the COP the applicant must commence construction 
by the date given in the construction schedule, and included as a part 
of your approved COP, unless MMS approves a deviation from the 
schedule.

Section 285.632 What documents must I submit before I may construct and 
install facilities under my approved COP?

    This section describes documents that must be submitted to MMS for 
review, before construction and installation of facilities under an 
approved COP. This includes a Facility Design Report and a Fabrication 
and Installation Report for facilities proposed for commercial 
operations. The requirements for these reports are found in Sec.  
285.701 and 702. The activities described in these reports must fall 
within the scope of the approved COP. If they are not within the scope 
of the approved COP, the applicant will be required to submit a 
revision to the COP for MMS approval, before commencing the activity.

Section 285.633 How do I comply with my COP?

    After completing the environmental and technical reviews of the 
COP, if MMS approves your COP, we will specify terms and conditions to 
be incorporated into your COP. These terms and conditions will be 
considered as part of the COP and you must comply with them. We will 
specify these terms and conditions and they will be incorporated into 
your COP. Examples of the types of terms and conditions we may require 
include, but are not limited to terms and conditions from and ESA 
incidental take statement, conservation recommendations resulting from 
EFH consultations, and other safety, operational, or environmental 
protection measures. Also you must certify compliance with certain of 
these terms and conditions as identified by MMS. The certification 
would include summary reports, a description of mitigation measures and 
monitoring, the effectiveness of the mitigation measures, and new 
proposed mitigation measures.

Section 285.634 What activities require a revision to my COP and when 
will MMS approve the revision?

    The lessee or operator must notify MMS in writing, including a 
detailed description, prior to conducting any activities not described 
in the COP, and we will determine if those activities require a 
revision to the approved COP. We will also conduct periodic reviews of 
the activities being conducted under an approved COP, to ensure that 
they fall within the scope of the COP. The COP will likely be required 
to be revised if the applicant plans to:
     Conduct activities not described in the approved COP;
     Change the size or type of facility or equipment used;
     Change the surface location of a facility or structure;
     Add another facility or structure not contemplated in the 
approved COP;
     Change the location of the onshore support base from one 
State to another or to a new base requiring expansion;
     Change the location of bottom disturbances by 500 feet 
(152 meters); or
     Make changes to any other activity specified by MMS.
    A revision to the COP may require NEPA, CZMA, and other required 
compliance if MMS determines that the proposed revision could result in 
a significant change in impacts previously identified and evaluated; 
require any additional Federal authorizations; or involve activities 
not previously identified and evaluated.
    The MMS may approve the revision to the COP if the revision is 
designed to prevent or minimize adverse effects to the coastal and 
marine environments, including their physical, atmospheric, and 
biological components to the extent practicable; and the revision is 
otherwise consistent with the provisions of subsection 8(p) of the OCS 
Lands Act.

Section 285.635 What must I do if I cease activities approved in my COP 
before the end of my commercial lease?

    The applicant must notify MMS any time commercial operations are 
ceased, without an MMS approved suspension. We may cancel the lease if 
activities are ceased for an indefinite period that is longer than 6 
months, and you must initiate the decommissioning process described in 
subpart I of this part.

Section 285.636 What notices must I provide MMS following approval of 
my COP? The applicant must notify MMS in writing of the following 
events, within the time periods provided:

     No later than 30 calendar days after commencing activities 
associated with the placement of facilities on the lease area under a 
Fabrication and Installation Report;
     No later than 30 calendar days after completion of 
construction and installation activities under a Fabrication and 
Installation Report; and
     At least 7 business days before commencing commercial 
operations.

Section 285.637 When may I commence commercial operations on my 
commercial lease?

    The applicant may commence commercial operations 30 calendar days 
after the CVA has submitted to MMS the final report for the fabrication 
and installation review.

Section 285.638 What must I do upon completion of my commercial 
operations as approved in my COP?

    After completing operations on your lease, you must initiate the 
decommissioning process as set forth in subpart I of this part.

Section 285.639 [Reserved]

General Activities Plan Requirements for Limited Leases, ROW Grants, 
and RUE Grants

Section 285.640 What is a General Activities Plan (GAP)?

    The GAP describes proposed activities and operations for the 
assessment and development of the limited lease or grant including, if 
applicable, a project easement. A GAP contains the plans for conducting 
surveys, data gathering, and operations to characterize a limited lease 
or grant. A GAP must include a description of how surveys such as 
physical characterization surveys, resource assessment surveys, and 
baseline surveys would be conducted. It includes requirements for 
construction, activities, and decommissioning plans for all planned 
facilities, including onshore and support facilities, that you will 
construct and use for your project including project easements. It 
includes additional requirements for both simple and complex 
facilities, or if you intend to apply for a project easement. You must 
receive MMS approval of your GAP before you can begin activities on 
your lease or grant. For a ROW grant or RUE grant that is issued 
competitively, you must submit your GAP within 6 months of issuance. 
For a ROW grant or RUE grant issued noncompetitively, you must submit 
your GAP within 60 calendar days of the determination of no competitive 
interest. The MMS will evaluate your request for a noncompetitive grant 
and GAP simultaneously.

Section 285.641 What must I demonstrate in my GAP?

    The GAP must demonstrate that the applicant plans and is prepared 
to conduct the proposed activities in a manner that:
     Conforms to all applicable laws (NEPA, MSA, ESA, and 
CZMA),


[[Continued on page 39425]]


From the Federal Register Online via GPO Access [wais.access.gpo.gov]
]                         
 
[[pp. 39425-39474]] Alternative Energy and Alternate Uses of Existing Facilities on 
the Outer Continental Shelf

[[Continued from page 39424]]

[[Page 39425]]

implementing regulations, lease provisions, and stipulations;
     Is safe;
     Does not unreasonably interfere with other uses of the 
OCS, including those involved with national security or defense;
     Does not cause undue harm or damage to natural resources, 
life (including human and wildlife), property, or the marine, coastal, 
or human environment; or to sites, structures, or objects of historical 
or archaeological significance;
     Uses best available and safest technology;
     Uses best management practices; and
     Uses properly trained personnel.

Section 285.642 How do I submit my GAP?

    This section provides the requirements for submitting the GAP. The 
applicant must submit one hard copy and one electronic version of the 
GAP to MMS. The applicant may submit information to cover the project 
easement with the original submission of the GAP or at a later time, as 
a revision to the GAP.

Section 285.643 [Reserved]

Section 285.644 [Reserved]

Contents of the General Activities Plan

Section 285.645 What must I include in my GAP?

    This section lists the project-specific information that must be 
included in the GAP. The required information includes:
     Identifying information;
     The site assessment concept;
     Designation of operator;
     ROW, RUE or limited lease stipulation;
     A listing of all Federal, State, and local authorizations, 
approvals, or permits required;
     Financial assurance information; and
     Other information requested by MMS.
    If activities include the installation of any facilities (e.g., 
single monopile meteorological tower, anchored vessels, transmission 
substations) the applicant must also submit the following information 
or a description of how this information will be acquired:
     A location plat;
     Geotechnical survey;
     General structural and project design, fabrication, and 
installation information;
     A description of deployment activities;
     A list of solid and liquid wastes generated;
     A listing of chemical products used;
     Shallow hazards;
     Socio-economic surveys;
     Archaeological resources;
     Geological survey relevant to the design and siting of the 
facility
     Biological survey;
     Proposed measures for avoiding, minimizing, reducing, 
eliminating, and monitoring environmental impacts;
     Description of any vessels, offshore vehicles, and 
aircraft used to support activities;
     Decommissioning and site clearance procedures;
     References cited in the plan; and
     Any additional information required by MMS.
    The applicant may reference information and data discussed in other 
plans or documents previously submitted or that are otherwise readily 
available to MMS. If the project will require a project easement, 
multiple facilities, of the facility is complex or significant, the 
following additional information must be included in the GAP:
     The construction and operation concept;
     All cables and pipelines, including cables on project 
easements;
     A description of the deployment activities;
     A general description of the operating procedures and 
systems;
     A list of agencies and persons with whom you consulted, or 
with whom you will be consulting, regarding potential impacts 
associated with your proposed activities;
     CVA nominations for reports required in subpart G of this 
part;
     Construction schedule;
     Other information.

Section 285.646 What information and certifications must I submit with 
my GAP to assist MMS in complying with NEPA and other relevant laws?

    This section discusses the detailed information that must be 
submitted with the GAP to assist MMS in complying with NEPA and other 
relevant laws. For NEPA compliance the lessee or grantee must provide 
information on resources, conditions, and activities listed in this 
section, that could be affected by or could affect your proposed 
activities. In addition, the lessee or grantee must submit information 
for CZMA compliance including one copy of the consistency certification 
required by CZMA and required ``information'' and ``analysis'' as 
required in Sec.  285.611.

Section 285.647 How will MMS process my GAP?

    This section discusses how MMS will review the submitted GAP and 
determine if it contains the information necessary to conduct our 
technical and environmental reviews. The MMS will review the submitted 
GAP and determine if it contains all the required information necessary 
to conduct our technical and environmental reviews. If the GAP lacks 
information needed for the reviews, we will notify the applicant and 
request the necessary information. We will prepare appropriate NEPA 
documentation and forward one copy of the GAP and supporting documents 
to the State(s) CZM Agency. When appropriate, we will coordinate and 
consult with relevant State and Federal agencies as directed by 
subsections 8(p)(4) and (7) of the OCS Lands Act and by other relevant 
Federal statutory requirements (e.g. ESA and MSA) and provide to other 
State and Federal agencies relevant data and information pertaining to 
the proposed site assessment activities. We may request additional 
information during the review and approval process; if you do not 
provide this information MMS may disapprove your application.
    After MMS completes the technical and environmental reviews, MMS 
may approve, disapprove, or approve with modifications your GAP. If we 
disapprove your GAP, we will provide the reasons for the disapproval 
and you will have an opportunity to revise and resubmit your GAP. If we 
approve your GAP, it will be subject to terms and conditions set forth 
by MMS. We will specify these terms and conditions and they will be 
incorporated into your GAP. Examples of the types of terms and 
conditions we may require include, but are not limited to terms and 
conditions from an ESA incidental take statement, conservation 
recommendations resulting from EFH consultations, and other safety, 
operational, or environmental protection measures. Also you must 
certify compliance with certain of these terms and conditions as 
identified by MMS. The certification would include summary reports, a 
description of mitigation measures and monitoring, the effectiveness of 
the mitigation measures, and new proposed mitigation measures. If the 
project easement is approved, MMS will issue an addendum to the lease 
specifying the terms of the project easement.

[[Page 39426]]

Section 285.648 [Reserved]

Section 285.649 [Reserved]

Activities Under an Approved GAP

Section 285.650 When may I begin conducting activities under my GAP?

    After MMS approves the GAP the applicant may begin conducting 
activities that do not involve the construction of facilities on the 
OCS.

Section 285.651 When may I construct OCS facilities proposed under my 
GAP?

    Before beginning construction of any OCS facility or any related 
seabed disturbing activities proposed in the approved GAP, the lessee 
or grantee must complete the initial survey activities described in the 
approved GAP that relate to any of these activities and submit a report 
of the findings of those activities to MMS. The initial survey report 
must also identify the specific location on the limited lease or grant 
area that you intend to install the facility. If MMS determines that 
the proposed facilities are complex or significant, the lessee or 
grantee must submit the additional information required in this 
section.
    The lessee or grantee may begin to construct and install the 
facility or facilities after MMS notifies the lessee or grantee that it 
has received the initial survey report and MMS has no objections. If 
MMS receives the initial survey report, but does not respond with 
objections within 60 calendar days of receipt, MMS is deemed not to 
have objections to the report and the lessee or grantee may commence 
construction and installation of the facility or facilities.
    If MMS has any objections to your initial survey report, we will 
notify the lessee or grantee within 60 calendar days of receipt. We may 
follow-up with written correspondence outlining specific objections to 
the initial survey report and request certain actions be taken to 
resolve MMS's objections. You may not begin construction until all 
objections have been resolved to MMS's satisfaction.
    For a project easement, multiple facilities, or a facility deemed 
by MMS to be complex or significant, the applicant must submit a 
Facility Design Report; a Facility Fabrication and Installation Report; 
and a Safety Management System.

Section 285.652 How long do I have to conduct activities under an 
approved GAP?

    For a limited lease, after MMS approves the GAP, then you must 
conduct the approved activities within 5 years, unless MMS renews the 
term. For an ROW grant or RUE grant, the time for conducting approved 
activities is provided in the terms of the grant.

Section 285.653 What other reports or notices must I submit to MMS, 
under my approved GAP?

    This section lists the various reports and notifications that must 
be submitted to MMS. These include the initial survey report, notice of 
completion of construction and installation activities, annual 
compliance certification, an annual report of findings that result from 
conducting the activities approved under the GAP, and an annual 
compliance certification of certain terms and conditions of your GAP 
that MMS identifies. The compliance certification includes a listing 
and description of any mitigation measures and monitoring and their 
effectiveness. If you determine that any of the measures or monitoring 
were not effective, then you must include recommendations for new 
measures or monitoring methods. You must also submit an annual summary 
report of the findings from any activities that you conduct under your 
approved GAP and the results of those activities. The information from 
this report will be protected as provided in Sec.  285.113.

Section 285.654 [Reserved]

Section 285.655 What activities require a revision to my GAP and when 
will MMS approve the revision?

    The lessee or grantee must notify MMS in writing prior to 
conducting any activities not documented in the GAP. The MMS will 
determine if those activities require a revision to the approved GAP. 
We will also conduct periodic reviews of the activities being conducted 
under an approved GAP to ensure that they fall within the scope of the 
GAP. The GAP will likely be required to be revised if you plan to:
     Conduct activities not described in the approved GAP;
     Change the size or type of facility or equipment used;
     Change the surface location of a facility or structure;
     Add another facility or structure not contemplated in the 
approved GAP;
     Change the location of the onshore support base from one 
State to another or to a new base requiring expansion; or
     Change the location of bottom disturbances by 500 feet 
(152 meters).
    The GAP requires revision if MMS specifies any changes to any other 
activity.
    Revisions to the GAP will require NEPA and other required 
compliance if MMS determines that the proposed revision could result in 
a significant change in impacts previously identified and evaluated; 
require any additional Federal authorizations; or involve activities 
not previously identified and evaluated.
    The MMS may approve the revision to the GAP if the revision is 
designed not to cause undue harm or damage to natural resources; or to 
sites, structures, or objects of historical or archaeological 
significance; and the revision is otherwise consistent with the 
provisions of subsection 8(p) of the OCS Lands Act.

Section 285.656 What must I do if I cease activities approved in my GAP 
before the end of my term?

    The lessee or grantee applicant must notify the MMS upon ceasing 
activities under an approved GAP without an approved suspension. If 
activities are ceased for an indefinite period that exceeds 6 months, 
MMS may cancel the lease or grant under Sec.  285.437 and the applicant 
must initiate the decommissioning process, as set forth in subpart I of 
this part.

Section 285.657 What must I do upon completion of approved activities 
under my GAP?

    After completing the activities approved under the GAP, the 
applicant must initiate the decommissioning process, as required in 
subpart I of this part.
Cable and Pipeline Deviations

Section 285.658 Can my cable or pipeline construction deviate from my 
approved COP or GAP?

    This section discusses the requirements related to the construction 
of cables, pipelines, and facilities so as to minimize deviations from 
the approved plan under the limited lease or grant.
    If MMS determines that a deviation occurred, you would be required 
to notify affected lessees or ROW/RUE grant holders and you would be 
required to relinquish the unused portion of the lease or grant. 
Substantial deviations could result in the cancellation of the lease or 
grant. MMS may delay the start of construction until MMS modifies the 
lease or grant.

Subpart G--Facility Design, Fabrication, and Installation

Overview

    As indicated in the discussion of subpart F, your plan would 
include general descriptions for project design and facility 
fabrication and installation. Subpart G describes the various detailed 
technical reports that the MMS would

[[Page 39427]]

require lessees, operators, and grant holders to submit that address 
the final design, fabrication, and installation of facilities on a 
lease or grant. These reports would be submitted after MMS approves the 
SAP, COP, or GAP, as applicable.
    Subpart G also describes a third party verification process that 
would require lessees, operators, and grant holders to use a certified 
verification agent (CVA), to verify and certify that projects are 
designed, fabricated, and installed in conformance with accepted 
engineering practices and with the submitted reports.
    Certified Verification Agents: The CVA is responsible for 
conducting an independent assessment of the facility design and the 
fabrication and installation processes to ensure that facilities are 
designed, fabricated, and installed in conformance with accepted 
engineering practices and the approved plans and applications.
    The CVA will also ensure that repairs and major modifications are 
completed in conformance with accepted engineering practices. The CVA 
will certify and report to the lessee, operator, or grant holder; and 
MMS on the status of each phase included in the Facility Design Report 
and the Fabrication and Installation Report. The CVA must submit 
interim reports, as required by the Director, and a final report 
covering the adequacy of each phase.
    The MMS is aware of companies overseas that are capable of acting 
as certification bodies; we do not know the extent of the capabilities 
of domestic firms to provide CVA services. All of the major 
verification organizations (ABS, Lloyds, GL, DNV, etc.) operate 
worldwide. Their U.S. offices have access to expertise from around the 
world, so they could draw from their European affiliates as necessary. 
Also, the main areas of concern will involve structural issues related 
to project facilities. Current U.S. verifiers have years of offshore 
experience and could address structural issues for these facilities. 
They could hire outside or contract expertise as necessary to address 
turbine design and other aspects of the proposal. However, we request 
comments regarding both the domestic and international availability of 
CVAs that will be necessary to implement the OCS alternative energy 
program as described in the proposed rule.
    Facility Design Report: This report provides MMS with a detailed 
description of the proposed facility or facilities and locations on the 
OCS. The lessee, operator, or grant holder is required to provide to 
MMS a complete set of structural drawings, structural loading 
information, detailed design criteria, and foundation information 
including mooring or tethering systems in the case of a floating 
facility. The CVA, nominated in your plan, will conduct an independent 
assessment of the design of the facility and ensure that it is designed 
to withstand the environmental and functional loads conditions 
appropriate for the intended service life at the proposed location. The 
CVA must submit interim reports, as required by the Director, and a 
final report covering the adequacy of the design phase.
    Fabrication and Installation Report: Under the proposed rule, 
fabrication and installation reports would be combined. The Fabrication 
and Installation Report describes the lessee/operator's or grant 
holder's plans for both the facility's fabrication (including the 
manufacture, assembly, and construction) and installation process. The 
report would include a schedule for fabrication and installation as 
well as detailed engineering and environmental information. The CVA, 
nominated in the SAP, COP or GAP, will conduct an independent 
assessment of the fabrication and installation phases. The CVA must use 
good engineering judgment and practices in conducting an independent 
assessment of fabrication and installation activities and ensure that 
these activities are conducted according to the approved applications. 
The CVA must submit interim reports, as required by the Director, and a 
final report covering the adequacy of the fabrication and installation 
phase.
    After fabrication and installation activities are completed, a 
company representative must submit a certification statement certifying 
that the fabrication and installation were conducted in accordance with 
accepted engineering practices and certified by an MMS approved CVA.
    Other Options and Approaches: MMS considered incorporating design 
standards in these regulations. We are in the process of reviewing 
international standards and guidance documents for Alternative Energy 
systems including those developed by the British Wind Energy 
Association, Det Norske Veritas, Germanischer Lloyds, IEC, and 
Energistyrelsen (Denmark). We are also assessing the applicability of 
certain American Petroleum Institute (API) and International Standards 
Organization (ISO) standards for offshore alternative energy 
structures, operating systems, and management practices. As part of 
this assessment, we are participating in a project that compares the 
performance of Atlantic wind structures under IEC and API standards. 
This project is scheduled for completion in July 2008. The application 
of domestic and international standards will depend on the type of 
project, and regional and site-specific environmental conditions. The 
MMS may elect to incorporate into the regulations those standards that 
are expected to have widespread applicability to Alternative Energy 
projects. Other standards may be proposed by operators (or determined 
to be necessary by MMS) on a case-by-case basis.

Section by Section Discussion for Subpart G

Reports

Section 285.700 What reports must I submit to MMS before installing 
facilities described in my approved SAP, COP, or GAP?

    This section lists the two reports required prior to installing 
facilities: (1) Facility Design Report; and (2) Fabrication and 
Installation Report. The MMS has 60 calendar days to review these 
reports and notify the applicant of any objections. If MMS does not 
have any objections, the applicant may begin to construct and install 
the facilities at the end of the 60 period.
    If there are any objections, MMS will notify you either verbally or 
in writing within 60 calendar days of receipt. After notification of 
objections, MMS may follow-up with written correspondence outlining its 
specific objections to the report and requesting certain actions 
necessary to resolve the agency's objections. You cannot commence 
activities addressed in such report until any objections are resolved 
to MMS's satisfaction.

Section 285.701 What must I include in my Facility Design Report?

    The Facility Design Report provides specific details of the design 
of any facilities, including cables and pipelines, that are outlined in 
your approved SAP, COP, or GAP. This report must demonstrate that the 
design conforms to the responsibilities of a lessee contained in these 
regulations. This section includes a list of required contents for the 
report and details the required contents of each element of the report. 
The report must include:
     A cover letter;
     A location plat;
     Front, side, and plan view drawings;
     A complete set of structural drawings;
     A summary of environmental data used for design;

[[Page 39428]]

     A summary of the engineering design data;
     A complete set of design calculations;
     Project-specific studies used in the facility design or 
installation;
     Description of the loads imposed on the facility;
     A geotechnical report; and
     A certification statement and location of records.

Section 285.702 What must I include in my Fabrication and Installation 
Report?

    The Fabrication and Installation Report describes how facilities 
will be fabricated and installed in accordance with the design criteria 
identified in the Facility Design Report, the approved SAP, COP, or 
GAP; and generally accepted industry standards and practices. The 
Fabrication and Installation Report must demonstrate how your 
facilities will be fabricated and installed in a manner that conforms 
to your responsibilities of a lessee contained in these regulations. 
This section includes a list of required contents for the report and 
details the required contents of each element of the report. The report 
must include:
     A cover letter;
     A schedule for fabrication and installation;
     Fabrication information;
     Installation process information;
     Federal, State, and Local Permits (e.g. EPA, USACE);
     Environmental information; and
     Project easement design.

Section 285.703 [Reserved]

Section 285.704 [Reserved]

Certified Verification Agent

Section 285.705 What is the function of a Certified Verification Agent 
(CVA)?

    This section details the responsibilities of the CVA. The CVA must 
ensure that facilities are designed, fabricated, and installed in 
conformance with accepted engineering practices and the Facility Design 
Report and Fabrication and Installation Report, and ensure that repairs 
and major modifications are completed in conformance with accepted 
engineering practices. The CVA must provide reports of all incidents 
that affect the design, fabrication, and installation of the project 
and its components.

Section 285.706 How do I nominate a CVA for MMS approval?

    A CVA must be nominated in the SAP, COP or GAP, as applicable. This 
section describes the process for nominating the CVA and the 
information that must be included in the qualifications statement. The 
section also requires that the verification be conducted by or under 
the direct supervision of registered professional engineers and 
prohibits conflict of interest by CVAs.

Section 285.707 What are the CVA's primary duties for facility design 
review?

    The CVA must certify to MMS that the facility is designed to 
withstand the environmental and functional load conditions for the 
intended life at the proposed location. This section lists those 
elements of the design phase that the CVA must independently assess. 
These elements include:
     Planning criteria;
     Operational requirements;
     Environmental loading data;
     Load determinations;
     Stress analyses;
     Material designations;
     Soil and foundation conditions;
     Safety factors; and
     Other pertinent parameters of the proposed design.
    For floating facilities, the CVA must ensure that the requirements 
of the U.S. Coast Guard for structural integrity and stability, e.g., 
verification of center of gravity, etc., are met.

Section 285.708 What are the CVA's primary duties for fabrication and 
installation review?

    The CVA must certify to the MMS that the facilities are fabricated 
and installed as proposed in the approved Facility Design Report and 
the Fabrication and Installation Report. This section details the 
monitoring and inspection functions of the CVA during this phase of the 
project. It also requires the CVA to inform the lessee when procedures 
or design specifications are changed.
    For the fabrication and installation review, the CVA must:
     Use good engineering judgment and practice in conducting 
an independent assessment of the fabrication and installation 
activities;
     Monitor the fabrication and installation of the facility;
     Make periodic onsite inspections while fabrication is in 
progress;
     Make periodic onsite inspections while installation is in 
progress; and
     Certify in a report that project components are fabricated 
and installed in accordance with accepted engineering practices, the 
approved COP, SAP, or GAP, and the Fabrication and Installation Report.
    The report must identify the location of all records pertaining to 
fabrication and installation. The lessee or grantee may commence 
commercial operations or other approved activities 30 calendar days 
after MMS receives the certification report, unless MMS notifies the 
applicant within that time period of objections to the certification 
report.
    The CVA must monitor the fabrication and installation of the 
facility to ensure that it is built and installed according to the 
Facility Design Report and Fabrication and Installation Report. If the 
CVA finds that fabrication and installation procedures are changed or 
design specifications are modified, the CVA must inform the applicant.

Section 285.709 When conducting on-site fabrication inspections, what 
must the CVA verify?

    The CVA must make periodic on-site inspections while fabrication of 
the facility is in progress. The CVA must verify the following items 
during these inspections:
     Quality control by lessee (or grant holder) and builder;
     Fabrication site facilities;
     Material quality and identification methods;
     Fabrication procedures specified in the Fabrication and 
Installation Report, and adherence to such procedures;
     Welder and welding procedure qualification and 
identification;
     Structural tolerances specified and adherence to those 
tolerances;
     The nondestructive examination requirements, and 
evaluation results of the specified examinations;
     Destructive testing requirements and results;
     Repair procedures;
     Installation of corrosion-protection systems and splash-
zone protection;
     Erection procedures to ensure that overstressing of 
structural members does not occur;
     Alignment procedures;
     Dimensional check of the overall structure, including any 
turrets, turret-and-hull interfaces, any mooring line and chain and 
riser tensioning line segments; and
     Status of quality-control records at various stages of 
fabrication.
    For any floating facilities, the CVA must ensure that the 
requirements of the U.S. Coast Guard for structural integrity and 
stability, e.g., verification of center of gravity, etc., have been 
met. The CVA must also consider foundations, foundation pilings and 
templates, and anchoring systems and mooring or tethering systems.

[[Page 39429]]

Section 285.710 When conducting on-site installation inspections, what 
must the CVA do?

    The CVA must make periodic on-site inspections while installation 
is in progress. The CVA must verify, survey, witness, survey or check 
the following items during facility installation:
     Loadout and initial flotation activities;
     Towing operations to the specified location, and review 
the towing records;
     Launching and uprighting activities;
     Submergence activities;
     Pile or anchor installations;
     Installation of mooring and tethering systems;
     Final deck and component installations; and
     Installation at the approved location according to the 
Facility Design Report and the Fabrication and Installation Report.
    For a fixed or floating facility, the CVA must witness the loadout 
of the jacket, decks, piles, or structures from each fabrication site 
and the actual installation of the facility or major modification and 
the related installation activities.
    For a floating facility, the CVA must witness the loadout of the 
facility; the installation of foundation pilings and templates, and 
anchoring systems; and the installation of the mooring and tethering 
systems.
    The CVA must conduct an onsite survey of the facility after 
transportation to the approved location. The CVA must spot-check the 
equipment, procedures, and recordkeeping as necessary to determine 
compliance with the applicable documents incorporated by reference and 
the regulations under this part.

Section 285.711 What reports must the CVA submit for project 
modifications and repairs?

    This section requires a report from a CVA on major repairs and 
modifications to certify that the repairs and modifications to the 
project conform with accepted engineering practices. The report must 
also identify the location of all records pertaining to the major 
repairs or major modifications.
    A major repair is a corrective action involving structural members 
affecting the structural integrity of a portion of or all the facility. 
A major modification is an alteration involving structural members 
affecting the structural integrity of a portion of or all the facility.

Section 285.712 What are the CVA's reporting requirements?

    This section details when the CVA must submit reports to MMS and 
the lessee or grantee. This includes interim reports, as requested by 
the MMS. For each report the CVA must submit one electronic copy and 
one hard copy to MMS. In each report, the CVA must:
     Give details of how, by whom, and when the CVA activities 
were conducted;
     Describe the CVA's activities during the verification 
process;
     Summarize the CVA's findings; and
     Provide any additional comments that the CVA deems 
necessary.

Section 285.713 What must I do after the CVA confirms compliance with 
the Fabrication and Installation Report on my commercial lease?

    After receiving confirmation of compliance with the Fabrication and 
Installation Report from the CVA, the lessee or grantee must notify MMS 
within 10 business days after commencing commercial operations.

Section 285.714 What records must I keep?

    This section provides requirements for records that the lessee must 
maintain for the duration of the project, until MMS releases the 
required financial assurance. The lessee or grantee must compile, 
retain, and make these records available to MMS representatives. These 
records include:
     The as-built drawings;
     The design assumptions and analyses;
     A summary of the fabrication and installation examination 
records;
     The inspection results; and
     Records of repairs not covered in the inspection report.
     The lessee or grantee must record and retain the original 
material test results of all primary structural materials during all 
stages of construction. The lessee or grantee must provide MMS with the 
location of these records in the certification statement.

Subpart H--Environmental and Safety Management, Inspections, and 
Facility Assessments

Overview

    This subpart describes requirements to prevent or minimize the 
likelihood of harm or damage to the marine and coastal environments and 
to promote safe operations, including their physical, atmospheric, and 
biological components. The MMS intends to use adaptive management 
practices to regulate alternative energy activities using a system 
whereby the operating industries would demonstrate and validate their 
performance. The MMS then will require adjustments to mitigation and 
monitoring activities on a case-by-case basis based on operating 
experiences. MMS will specify terms and conditions to be incorporated 
into the SAP, COP, or GAP. You must certify compliance with certain of 
those terms and conditions.
    Environmental Management: While the proposed subpart H would not 
require use of an Environmental Management System (EMS), the MMS 
generally endorses the EMS concept and the general concepts of the 
International Organization for Standards standard 14001 (ISO 14001). We 
encourage companies operating under this Part to develop and implement 
EMS systems under ISO 14001 or other accepted industry standards. We 
believe that lessee and grantee development and implementation of an 
EMS would facilitate compliance with the certification requirements 
proposed by the MMS. However, an EMS would not be a substitute for and 
would not excuse the operator from complying with any requirements in 
this subpart. The environmental management provisions include specific 
requirements relating to threatened, endangered, and protected species, 
air quality, and archaeological and cultural resources.
    Air Quality: Those equipment, facilities, and activities associated 
with alternative energy leases and grants (e.g., survey, construction, 
and maintenance activities) that emit air pollutants will be treated as 
``OCS sources'' under section 328 of the Clean Air Act. When those OCS 
sources are located within the Gulf of Mexico West of 87.5[deg]W 
longitude, the applicant would be required to comply with air quality 
provisions of this regulation. Any OCS sources located outside of that 
area will be regulated under the U.S. Environmental Protection Agency's 
air quality regulations at 40 CFR 55.
    Section 328 of the Clean Air Act divided the control over air 
pollution from OCS sources between the Environmental Protection Agency 
(EPA) and the MMS. The MMS regulates air pollution from OCS sources 
located within the Gulf of Mexico west of 87.5[deg] west longitude, 
this includes areas offshore of Texas, Louisiana, Mississippi and 
Alabama. Air pollution from OCS sources anywhere else (Pacific, Artic, 
and Atlantic coasts and the Gulf of Mexico east of 87.5[deg] west 
longitude, offshore Florida) on the OCS is regulated by the EPA. The 
EPA may delegate this authority, refer to 40 CFR 55. Under the proposed 
regulations

[[Page 39430]]

MMS may request data and information regarding:
     Emission triggers and controls;
     Screening formulas and thresholds;
     Pollutant significance levels;
     Controls for emissions that exceed significance levels;
     Emission offsets;
     Prevention of Significant Deterioration areas;
     Modeling;
     Monitoring; and
     Meteorological data.
    The applicant would be required to submit emissions information 
that is adequate for MMS to determine which air quality requirements 
apply to the project, if any. This information would be summarized in 
the NEPA document prepared for the proposed project.
    Safety Management System: As proposed in this subpart, the safety 
management system would include, as applicable:
     Remote monitoring, control, and shut down capabilities;
     Emergency response procedures;
     Fire suppression equipment;
     Testing procedures; and
     Training.
    These safety management provisions also cover maintenance and 
equipment shutdowns, including reporting and notification requirements, 
as well as requirements relating to both MMS and operator self 
inspections. The safety management system would be required to be 
submitted as part of the COP.
    Maintenance and shutdowns: This section describes when operators 
would be required to notify MMS of shutdowns. Notification would be 
required when safety equipment is taken out of service for more than 12 
hours. If safety equipment is removed from service for more than 60 
calendar days, the operator must submit a written confirmation to MMS. 
The operator must also notify MMS when the equipment is returned to 
service.
    Equipment Failure and Adverse Environmental Affects: These 
provisions address equipment failure and affects of environmental or 
other conditions. Operators would be required to notify MMS and repair 
any equipment failure, including pipelines and cables, as soon as 
practicable. The MMS may require an analysis to determine the cause of 
the failure. If environmental or other conditions adversely affect a 
cable, pipeline or facility, the operator must submit a corrective 
action plan to MMS; take the actions described in the plan; and submit 
a report to MMS of the action taken.
    Inspections: Under the proposed rule, the MMS would conduct 
periodic scheduled and unscheduled inspections of OCS alternative 
energy facilities. The purpose of an MMS inspection is to ensure that 
an operator is conducting operations in accordance with all laws, 
regulations, and MMS-approved plans and to verify that proper safety 
equipment is correctly installed and working properly.
    Operators would be required to develop a self-inspection program 
for all facilities that covers all structures above and below the 
waterline. Each operator must inspect for corrosion and other factors 
affecting the structural integrity of the facility. Operators also must 
submit annually a summary of inspections, including how they conducted 
the inspections; what equipment was used; what repairs were made, if 
any; and the structural condition.
    Facility Assessments: This subpart also contains the requirements 
for facility assessments, incorporating sections 17.2.1 through 17.2.5 
of the American Petroleum Institute Recommended Practice 2A-WSD (API RP 
2A-WSD), as they relate to initiating facility assessments. This 
proposed provision would also require mitigation if a facility did not 
pass the assessment process described in API RP 2A-WSD. We selected the 
API RP 2A-WSD because there is a lack of standards for offshore 
alternative energy facilities and this standard has proven to be an 
effective assessment tool for other OCS structures in U.S. waters. The 
MMS would like comments on the use of this document for assessments and 
suggestions for other standards MMS should consider. This relates to 
the structure only and does not include production or transmission 
equipment.
    Incident reporting: This proposed rule would require that operators 
report certain significant incidents associated with activities 
regulated under this part immediately to the Director. The initial 
report would be followed by a written report, within 15 calendar days. 
Significant incidents that require immediate notification are 
identified, and include any incidents resulting in fire, explosions or 
that involve a fatality. In addition, MMS requires submission of a 
written incident report within 15 calendar days following certain types 
of incidents, including those involving injuries that resulted in days 
absent from work, restricted work, or job transfer.

Other Options and Approaches

    The MMS considered several approaches to the requirements in this 
subpart. With respect to safety management, we considered including 
detailed requirements. However, this would require separate 
requirements for each type of project. Given that offshore alternative 
energy is a new and developing industry, we determined that the best 
course is to address safety on a project-by-project basis. This 
approach requires operators to address certain safety issues in their 
plans.
    For inspections and assessments we considered an approach that 
would require operators to conduct their own inspections, to hire 3rd 
party contractors, or to permit only MMS to conduct inspections. This 
joint approach puts the burden on both the operator and MMS to conduct 
inspections.
    Facility assessment and incident reporting requirements mirror 
those that work for OCS oil and gas operations.

Section by Section Discussion for Subpart H

Section 285.800 How must I conduct my activities to comply with 
environmental requirements?

    This section states the performance requirements for using trained 
personnel and technologies, precautions, and techniques to prevent or 
minimize the likelihood of harm or damage to human life and the 
environment. In addition you must certify compliance with those terms 
and conditions identified in your approved SAP, COP, or GAP.

Section 285.801 How must I protect threatened, endangered, and 
protected species?

    Threatened and endangered and protected species are protected under 
the ESA as amended. This section describes the actions you must take if 
there is reason to believe that protected species may be affected by 
your operations. These actions include submitting mitigating measures 
designed to avoid or minimize adverse effects and incidental take of 
the species and habitat; and monitoring for the incidental take of the 
species and habitat. Protected species is defined in this section as, 
threatened and endangered species listed and designated critical 
habitat under the Endangered Species Act (16 U.S.C. 1531 et seq.); and 
all marine mammals, if the applicant has not already received 
authorization for incidental take of marine mammals as may be necessary 
under the Marine Mammal Protection Act (16 U.S.C. 1361 et seq.).

Section 285.802 How must I protect archaeological resources?

    This section describes the process for determining if 
archaeological resources

[[Page 39431]]

are present, and the measures you must take to avoid disturbing those 
resources. As part of preparing the SAP, COP, GAP, or decommissioning 
application, the applicant, lessee, or grantee would be required to 
consult with MMS about archaeological resources. The applicant, lessee, 
or grantee would be required to include an archaeological report with 
the SAP, COP, GAP, or decommissioning application, if an archaeological 
resource is known to exist or if MMS has reason to believe that an 
archaeological resource may exist in the area of a proposed lease or 
grant. The MMS will specify the survey methods and instrumentation for 
conducting the archaeological survey and specify the contents of the 
archaeological report.
    If an archaeological resource may be present, MMS will specify a 
minimum distance which the applicant, lessee, or grantee must maintain 
to avoid the potential resource, and where the applicant must locate 
the site of all proposed seafloor-disturbing activities to avoid the 
potential archaeological resource or establish that an archaeological 
resource either does not exist or will not be adversely affected by the 
proposed seafloor-disturbing activities.
    The MMS may require the applicant, lessee, or grantee to conduct 
further archaeological investigations, using appropriate personnel, 
equipment, and techniques and submit the investigation report for 
review. We will notify the applicant, lessee, or grantee after 
determining that an archaeological resource exists and may be adversely 
affected by the proposed seafloor-disturbing activities. The applicant, 
lessee, or grantee (and all subcontractors or agents acting on behalf 
of the applicant, lessee, or grantee) would be required to keep the 
location of the discovery confidential and not take any action that may 
adversely affect the archaeological resource until MMS makes an 
evaluation and tells the applicant, lessee, or grantee how to proceed.

Section 285.803 What must I do if I discover a potential archaeological 
resource?

    This section describes the procedures if a potential archaeological 
resource is discovered while conducting any activity related to a 
project. It also includes additional requirements MMS may impose after 
such a discovery, such as conducting additional archaeological 
investigations. If a potential archaeological resource is discovered, 
you must immediately halt all seafloor-disturbing activities within the 
area of the discovery; notify the Director of the discovery within 72 
hours; and keep the location of the discovery confidential and not take 
any action that may adversely affect the archaeological resource until 
MMS has made an evaluation and tells you how to proceed.
    The MMS may require additional investigations to determine if the 
resource is eligible for listing on the National Register of Historic 
Places under 36 CFR 60.4. This will be required if either the site has 
been impacted by your project activities or impacts to the site or to 
the area of potential effect cannot be avoided. If these investigations 
indicate that the resource is potentially eligible for the National 
Register of Historic Places, MMS will tell you how to protect the 
resource, or how to mitigate adverse effects to the site. Under section 
110(g) of the National Historic Preservation Act, MMS may charge 
reasonable costs for carrying out preservation responsibilities under 
the OCS Lands Act.

Section 285.804 How must I protect essential fish habitats identified 
and described under MSA?

    This section describes what you must do if there may be a sensitive 
benthic habitat (e.g., essential fish habitat, topographic features) 
that may be adversely affected by the approved activities. You would be 
required to submit mitigation measures designed to avoid or minimize 
the adverse effects. MMS may require additional surveys to define 
boundaries and avoidance distances. If MMS required additional surveys, 
we will specify the requirements, at that time.

Section 285.805 [Reserved]

Section 285.806 [Reserved]

Air Quality

Section 285.807 What requirements must I meet regarding air quality?

    This section identifies the regulatory requirements for the 
different areas of the OCS. It also provides basic information on air 
quality modeling requirements. Projects authorized under this part must 
comply with the Clean Air Act and its implementing regulations. For a 
project located within the Gulf of Mexico west of 87.5[deg] west 
longitude (western Gulf of Mexico), the applicant must follow MMS 
implementing regulations under this part. For a project that is located 
anywhere else on the OCS, you must follow the appropriate implementing 
regulations promulgated by the U.S. Environmental Protection Agency 
under 40 CFR 55 and, appropriate sections under this part.
    For air quality modeling performed in support of the activities 
proposed in plans under this part, you should contact the 
jurisdictional agency to establish a modeling protocol to ensure the 
agency's requirements are met and that the meteorological files used 
are acceptable before initiating the modeling work. You must submit 
three copies of the modeling report and three sets of digital files as 
supporting information to MMS.

Section 285.808 [Reserved]

Section 285.809 [Reserved]

Safety Management Systems

Section 285.810 What must I include in my Safety Management System?

    You must submit a Safety Management System with the SAP, COP, or 
GAP. The Safety Management System must describe the following for all 
aspects of the project:
     How you will ensure the safety of personnel;
     Remote monitoring, control, and shutdown capabilities;
     Emergency response procedures;
     Fire suppression equipment, if needed;
     How and when you will test your Safety Management System; 
and
     How you will demonstrate that personnel are properly 
trained.
    This section also requires that you demonstrate compliance, 
identify any impacts and any mitigation measures that are not 
effective, and make recommendations for new mitigation measures.

Section 285.811 [Reserved]

Section 285.812 [Reserved]

Maintenance and Shutdowns

Section 285.813 When do I have to report removing equipment from 
service?

    This section requires you to notify MMS when safety equipment is 
taken out of service for more than 12 hours and to submit written 
confirmation of any equipment that is removed from service for greater 
than 60 calendar days. It also requires that MMS be notified after the 
repairs are complete, including the nature of the repairs and the date 
returned to service.

[[Page 39432]]

Section 285.814 [Reserved]

Equipment Failure and Adverse Environmental Effects

Section 285.815 What must I do if I have facility damage or an 
equipment failure?

    This section requires that all facility damage or equipment 
failures be repaired as soon as possible, and that MMS be notified of 
the repairs as soon as practicable. It also requires that you submit a 
report describing the repairs to MMS, and that MMS may require an 
analysis of the failure.

Section 285.816 What must I do if environmental or other conditions 
adversely affect a cable, pipeline, or facility?

    If environmental or other conditions adversely affect a cable, 
pipeline, or facility, these regulations require you to submit a plan 
of corrective action to MMS. In addition, the applicant must take the 
remedial action described in the plan, and submit a report of the 
remedial action taken.

Section 285.817 Through 285.819 [Reserved]

Inspections and Assessments

Section 285.820 Will MMS conduct inspections?

    The MMS conducts inspections of OCS facilities and any vessels 
engaged in activities authorized under this part to verify that the 
applicant is operating in accordance with the OCS Lands Act, the 
regulations, lease stipulations, conditions of the grant, approved 
plans, and other applicable laws and regulations, and to determine 
whether the proper safety equipment is installed and operating 
properly.

Section 285.821 Will MMS conduct scheduled and unscheduled inspections?

    The MMS will conduct both scheduled and unscheduled inspections of 
your facilities.

Section 285.822 What must I do when MMS conducts an inspection?

    These regulations require you to make the area of the lease or 
grant, all facilities on the lease or grant, and records of design, 
construction, operation, maintenance, repairs, or investigations 
available to MMS for inspection. You must retain all records as 
required, and certain records must be retained until MMS releases your 
financial assurance.

Section 285.823 Will MMS reimburse me for my expenses related to 
inspections?

    Upon request, MMS will reimburse you reasonable expenses for the 
expenses related to food, quarters, and transportation provided for MMS 
representatives while they inspect the project facilities.

Section 285.824 How must I conduct self inspections?

    This section requires the applicant to develop an annual self 
inspection plan describing both above-water and below-water structural 
inspections and describing how corrosion protection will be monitored. 
It also requires that you submit an annual report that summarizes the 
results of the inspections.

Section 285.825 When must I assess my facilities?

    This section requires the applicant to use the assessment 
requirements of American Petroleum Institute Recommended Practice for 
Planning, Designing, and Constructing Fixed Offshore Platforms--Working 
Stress Design (API RP 2A-WSD) to conduct assessments of structures, 
when needed, based on the platform assessment initiators in API RP 2A-
WSD. The applicant must initiate mitigation actions for structures that 
do not pass the assessment process of API RP 2A-WSD and perform other 
assessments as required by MMS.

Section 285.826 Through 285.829 [Reserved]

Incident Reporting and Investigation

Section 285.830 What are my incident reporting requirements?

    This section requires that all incidents that occur on the area 
covered by a lease or grant and that are related to operations 
conducted under your lease or grant be reported to MMS.

Section 285.831 What incidents must I report and when must I report 
them?

    This section requires that all fatalities, incidents requiring 
evacuation of a person(s) from a facility, fires, explosions, incidents 
and collisions resulting in property damage greater than $25,000, 
incidents resulting in structural damage, crane incidents, and 
incidents that damage or disable safety systems be reported to MMS 
immediately with written follow-up within 15 calendar days. It also 
requires that any injuries that result in one or more days away from 
work and incidents that require personnel to muster for evacuation be 
reported in writing within 15 calendar days.

Section 285.832 How do I report incidents requiring immediate 
notification?

    This section requires for incidents that require immediate 
notification, you notify the Director orally immediately after aiding 
the injured and stabilizing the situation. This section also describes 
the information required in the notification.

Section 285.833 What are the reporting requirements for incidents 
requiring written notification?

    This section describes the specific information that must be 
reported in writing to the MMS. It allows you to submit a form prepared 
for another agency to fulfill the requirement as long as it contains 
all the information required by MMS. The MMS may subsequently require 
additional information about an incident on a case-by-case basis.

Subpart I--Decommissioning

Overview

    This subpart describes requirements for decommissioning OCS 
alternative energy facilities and associated structures including the 
submission of advance plans, applications, and notices to the MMS. Co-
lessees and co-grant holders are all jointly and severally responsible 
for meeting decommissioning obligations on their respective leases or 
grants. All facilities, including pipelines, cables, and other 
structures and obstructions, must be removed when they are no longer 
used for operations but no later than one year after the termination of 
the lease, ROW grant, or RUE grant.

Other Options and Approaches

    The MMS considered delaying regulations on decommissioning, because 
there are no structures in place, and large scale commercial projects 
will not be developed for several years. It may be 20-25 years before a 
large scale commercial project would be decommissioned. We know that 
small scale projects for technology testing and site assessment and ROW 
grants and RUE grants would involve structures that may be 
decommissioned after a short time (2-5 years). Also, MMS believes it is 
important to provide all of the project requirements at this time, so 
that lessees and grantees will know what would be expected at the end 
of the project's life. Decommissioning information is required for any 
plans that involved a structure (SAP, COP, or GAP), in order to meet 
NEPA

[[Page 39433]]

requirements. MMS also needs information on decommissioning to assess 
financial assurance amounts.

Section by Section Discussion for Subpart I

Decommissioning Obligations and Requirements

Section 285.900 Who must meet the decommissioning obligations in this 
subpart?

    Co-lessees and co-grant holders are jointly and severally 
responsible for the decommissioning responsibilities for facilities on 
a lease or grant, including all obstructions.

Section 285.901 When do I accrue decommissioning obligations?

    Decommissioning obligations accrue when the lessee or grant holder 
installs, constructs, or acquires a facility, cable, or pipeline; or 
creates an obstruction.

Section 285.902 What are the general requirements for decommissioning?

    This section is a general overview of the decommissioning process:
     After your lease terminates, the lessee or grant holder 
has 1 year to decommission and clear the seafloor of all obstructions 
created by activities on the lease or grant.
     To begin decommissioning, the lessee or grant holder must 
submit a decommissioning application. This can be submitted at any 
time, but no later than 2 years before any intended decommissioning 
operation.
     Once MMS approves the decommissioning application, a 
decommissioning notice is required before beginning any decommissioning 
activity. The decommissioning notice is required to keep MMS informed 
of decommissioning activities.
     If an archaeological resource is discovered while 
decommissioning, activities around the resource must stop and the 
lessee or grant holder must inform MMS.
     Biologically sensitive features and items of 
archaeological interest must be avoided and protected during 
decommissioning and site clearance activities.
     MMS will direct the lessee or grant holder on what action 
to take.

Section 285.903 [Reserved]

Section 285.904 [Reserved]

Decommissioning Applications

Section 285.905 When must I submit my decommissioning application?

    While the conceptual decommissioning plans would be included in the 
SAP, COP or GAP, in many cases the project will not be decommissioned 
until many years after approval of the plan, therefore a 
decommissioning application is required. A decommissioning application 
may be submitted at any time, but no later than 2 years before any 
intended decommissioning operation. However if a lease or grant is 
cancelled, relinquished, or otherwise terminated, the application must 
be submitted within 90 calendar days.

Section 285.906 What must my decommissioning application include?

    The application would include such items as: an identification and 
description of the facilities to be removed; a proposed decommissioning 
schedule; a description of the removal methods; description of site 
clearance activities; plans for transporting and disposing of the 
removed facilities; a description of those resources, conditions, and 
activities that could be affected by or could affect the proposed 
decommissioning activities; results of any recent biological surveys 
conducted in the vicinity of the structure and recent observations of 
turtles or marine mammals at the structure site; mitigation measures to 
protect archaeological and sensitive biological features during removal 
activities; and a statement whether or not divers will be used to 
survey the area after removal to determine any effects on marine life.

Section 285.907 How will MMS process my decommissioning application?

    The MMS will review the proposed decommissioning and site clearance 
activities to ensure compliance with all applicable laws, regulations, 
and other requirements. The MMS will compare the decommissioning 
application with the decommissioning general concept in the approved 
SAP, COP or GAP to determine what technical and environmental reviews 
are needed. The operator may be required to revise the approved SAP, 
COP, or GAP, if MMS determines the proposed decommissioning activities 
would result in a significant change in the SAP, COP, or GAP; or 
requires any additional permits; or proposes activities not previously 
identified and evaluated in the SAP, COP, or GAP. MMS may begin the 
appropriate NEPA and other regulatory reviews as required.
    After completing the technical and environmental reviews MMS may 
approve, approve with conditions, or disapprove the decommissioning 
application. If MMS disapproves decommissioning application, the 
operator must resubmit the application to address the concerns 
identified by MMS.

Section 285.908 What must I include in my decommissioning notice?

    This section describes what needs to be included in the 
decommissioning notice. A decommissioning notice is separate from the 
decommissioning application and can only be submitted after MMS 
approves the decommissioning application. The decommissioning notice is 
submitted at least 60 days before you plan to begin decommissioning 
activities. The decommissioning notice includes any changes from your 
decommissioning application, and your decommissioning schedule. MMS 
will evaluate your decommissioning notice and may require additional 
changes to your decommissioning application before you can begin 
decommissioning activities.

Facility Removal

Section 285.909 When may MMS authorize facilities to remain in place 
following termination of a lease or grant?

    In the decommissioning application, the operator may request that 
certain facilities authorized in the lease or grant remain in place for 
other activities authorized in this part, elsewhere in this subchapter, 
or by other applicable Federal laws. The MMS will approve such requests 
on a case-by-case basis considering potential impacts to the marine 
environment; competing uses of the OCS; impacts on marine safety and 
national defense; maintenance of adequate financial assurance; and 
other factors determined by the Director.
    If MMS authorizes facilities to remain in place, the former lessee 
or grantee under this part remains jointly and severally liable for 
decommissioning the facility unless satisfactory evidence is provided 
to MMS showing that another party has assumed that responsibility and 
has secured adequate financial assurances. In the decommissioning 
application, the operator may request that certain facilities 
authorized in the lease or grant be converted to an artificial reef or 
otherwise toppled in place.

Section 285.910 What must I do when I remove my facility?

    All facilities must be removed to a depth of 15 feet below the 
mudline and you must verify to MMS that you have cleared the site, 
within 60 days after you remove a facility.

[[Page 39434]]

Section 285.911 [Reserved]

Decommissioning Report

Section 285.912 After I remove a facility, cable, or pipeline, what 
information must I submit?

    Within 30 calendar days after removing a facility, the operator 
must submit a written report to MMS summarizing removal operations. The 
report must include a summary of the removal activities including the 
date it was completed; a description of any mitigation measures you 
took; and if explosives were used, a statement signed by an authorized 
representative that certifies that the types and amount of explosives 
used in removing the facility were consistent with those in the 
approved decommissioning application.

Compliance With an Approved Decommission Application

Section 285.913 What happens if I fail to comply with my approved 
decommissioning application?

    If the lessee, grant holder, or operator fails to comply with the 
approved decommissioning plan or application MMS may call for the 
forfeiture of your bond or other financial guarantee and the lessees or 
grant holders remain liable for removal or disposal costs and 
responsible for accidents or damages that might result from such 
failure.

Subpart J--Rights-of-Use and Easement for Energy and Marine-Related 
Activities That Use Existing Facilities on the OCS

Overview

    This subpart establishes general requirements for how MMS will 
consider proposals for activities that involve the alternate use of 
existing OCS facilities. This subpart also includes general provisions 
that explain how MMS will approve and regulate such alternate use 
activities on the OCS. We propose to authorize such activities through 
the issuance of an Alternate Use Right-of-Use and Easement (Alternate 
Use RUE).
    This subpart explains how applicants request an Alternate Use RUE, 
how MMS will decide whether to issue Alternate Use RUEs, and how 
Alternate Use RUEs will be competitively issued (if MMS determines that 
competitive interest exists). Once an Alternate Use RUE is issued by 
MMS, this subpart provides details on the term of such authorizations, 
required payments to MMS, necessary financial assurance, as well as 
other administrative issues such as assignment, suspension, and 
termination of Alternate Use RUEs.
    This subpart also includes provisions regarding decommissioning of 
approved alternate use facilities. In addition to the proposed 
provisions in this subpart J, MMS has proposed associated revisions to 
MMS's existing oil and gas decommissioning regulations found in 30 CFR. 
part 250, subpart Q, that clarify and expand on an oil and gas platform 
owner's obligations for decommissioning, and when such decommissioning 
obligations may be suspended for approved alternate uses.
    The statutory authority for this subpart is paragraph 8(p)(1)(D) of 
the OCS Lands Act (43 U.S.C. 1337(p)(1)(D)). Under this authority, as 
delegated by the Secretary, the MMS may approve activities that use, 
for energy or other marine-related purposes, facilities that are 
currently or were previously used for other activities authorized under 
the OCS Lands Act.

Regulatory Options Considered and Selected for Proposal

    A threshold issue that MMS considered when framing its proposal for 
regulating alternate use activities authorized under subsection 8(p) of 
the OCS Lands Act was the appropriate level of specificity for the 
proposed rule with respect to setting payments, required financial 
assurances and the term for which an Alternate Use RUE would remain in 
effect. MMS considered setting specific values for each of these 
issues. Ultimately, however, MMS elected not to set such values in 
these proposed regulations because there are a wide variety of 
acceptable alternate uses of existing OCS facilities, and MMS has not 
yet evaluated any specific proposals for alternate use projects. MMS 
believes it is premature to establish specific payment, financial 
assurance and other terms. MMS believes that it is important to retain 
flexibility when considering new alternate use proposals for existing 
OCS facilities. MMS intends, on a case-by-case basis, to establish 
payment, financial assurance and term provisions for an individual 
Alternate Use RUE taking into account the unique aspects of each 
individual proposal, including the specific types of activities 
proposed and their associated effects on the OCS and marine 
environment.
    As MMS gains experience considering alternate use proposals and 
overseeing alternate use activities, we may revise these regulations 
accordingly. Similarly, if MMS receives a significant number of similar 
alternate use proposals, it may consider issuing regulations or other 
guidance that set specific criteria for all alternate use activities of 
a particular type.
    Subsection 8(p) of the OCS Lands Act requires MMS to make a 
determination of competitive interest for any alternate use proposal. 
MMS may only proceed in its evaluation of an alternate use proposal 
noncompetitively after MMS determines, following public notice of a 
proposed alternate use activity, that there is no competitive interest.
    Alternate use of existing OCS facilities requires the allocation of 
responsibilities between the existing lessee and facility owner (e.g., 
the oil and gas lessee and/or operator) and the holder of the Alternate 
Use RUE. This is particularly true with respect to decommissioning 
responsibilities and required financial assurance. On this issue, three 
potential options were considered by MMS:
    (1) A regulatory framework whereby the existing lessee or operator 
would assume either primary or joint responsibility for the 
decommissioning obligations associated with approved alternate use 
activities, and would increase its required financial assurance as 
necessary to cover all additional obligations associated with approved 
alternate use activities.
    (2) A regulatory framework whereby the holder of the Alternate Use 
RUE would assume either primary or joint responsibility for the 
decommissioning obligations associated with the existing facility 
(e.g., the oil and gas platform), and would provide financial assurance 
in an amount sufficient to cover both the proposed alternate use 
activities as well as obligations associated with the eventual removal 
or other decommissioning of the existing facility.
    (3) A regulatory option that divided equitably the responsibilities 
for decommissioning and necessary financial assurance between the 
existing lessee and/or operator and the holder of the Alternate Use 
RUE.
    MMS believes that Option (1) above would place an unfair financial 
burden on the existing lessee and facility owner. Similarly, MMS did 
not select the regulatory approach under Option (2) because we believe 
it would place an unfair financial burden on the alternate use 
applicant and would likely deter potentially advantageous alternate 
uses of existing platforms because of the significant financial 
responsibilities associated with platform removal. MMS selected Option 
(3) as an appropriate and equitable balance of responsibilities among 
the relevant parties.
    MMS acknowledges that the parties may negotiate among themselves 
who will be ultimately financially responsible for decommissioning 
responsibilities associated with an existing platform, and MMS 
encourages

[[Page 39435]]

such negotiations and those that encourage responsible alternate uses 
of existing platforms. However, MMS will not look to the terms of any 
private contract when identifying parties responsible for fulfilling 
decommissioning requirements under these proposed regulations.

Section by Section Discussion for Subpart J

Regulated Activities

Section 285.1000 What activities does this subpart regulate?

    This provision describes the scope of activities regulated by this 
subpart. The authority for Alternate Use Rights-of-Use and Easements 
(Alternate Use RUEs) was established in paragraph 8(p)(1)(D) of the OCS 
Lands Act (43 U.S.C. 1337(p)(1)(D)). Under this authority, as delegated 
by the Secretary, the MMS may approve activities that use, for energy 
or other marine-related purposes, facilities that are currently or were 
previously used for other activities authorized under the OCS Lands 
Act. However, the MMS may not approve alternate use activities under 
subsection 8(p)(1)(D) of the OCS Lands Act if those activities are 
authorized by another statutory authority, including: the OCS Lands 
Act, the Deepwater Port Act of 1974 (33 U.S.C. 1501 et seq.), the Ocean 
Thermal Energy Conversion Act of 1980 (42 U.S.C. 9101 et seq.), or 
other applicable law.
    A couple of examples are helpful to illustrate the types of 
activities that would be subject to this subpart. In the first example, 
an individual seeks to use an existing oil and gas platform in the Gulf 
of Mexico to conduct certain offshore aquaculture activities. Offshore 
aquaculture activities on the OCS are not currently authorized by any 
other statutory authority. Therefore, MMS may authorize the use of an 
existing facility for offshore aquaculture activities using an 
Alternate Use RUE. In the second example, an individual seeks to 
convert an existing oil and gas platform in the Gulf of Mexico to a 
deepwater port. Activities associated with the construction and 
operation of a deepwater port on the OCS are authorized under the 
Deepwater Port Act of 1974, as amended, and regulated jointly by the 
U.S. Coast Guard and U.S. Maritime Administration. Since such deepwater 
port activities are authorized by the Deepwater Port Act, the 
activities do not require an Alternate Use RUE under this subpart. 
While the MMS may not issue an Alternate Use RUE for deepwater port 
activities (or other activities that are authorized by other Federal 
law) that would use an existing OCS structure, MMS approvals may be 
required under either part 250 or part 282 of this subchapter for 
activities that could impact existing MMS-approved operations on an 
existing facility, as well as for deferring decommissioning 
requirements upon the termination of an OCS lease.
    Use of the term ``existing facility'' or ``existing platform'' in 
this subpart is not intended to limit such facilities to those that are 
currently in place as of the time of publication of this proposed rule. 
Any facility that, at the time of an alternate use proposal, is 
situated on the OCS and has been authorized by MMS under the OCS Lands 
Act is potentially eligible for consideration under this subpart. 
Therefore, such ``existing facilities'' could include oil and gas 
facilities, facilities constructed in association with sand, gravel, 
sulfur or any other mineral resource development approved under the OCS 
Lands Act, as well as alternative energy facilities authorized though 
this part.
    As stated in paragraph (c) of this provision, MMS has the 
discretion to authorize alternate use activities on existing OCS 
structures that are currently in active operation, or limit alternate 
use activities to existing OCS structures that are no longer in 
operation and would otherwise be subject to removal. MMS will consider 
these issues on a case-by-case basis taking into account the unique 
operating considerations for each proposed alternate use activity as 
well as the associated operations on the existing OCS platform.

Section 285.1001 Through 285.1003 [Reserved]

Requesting an Alternate Use RUE

Section 285.1004 What must I do before I request an Alternate Use RUE?

    Before submitting a request to the MMS for issuance of an Alternate 
Use RUE, the applicant must contact the owner of the existing OCS 
facility as well as the current lessee of the area in which the 
facility is located and reach preliminary agreement regarding the 
alternate use of the structure. Since the platform or other facility is 
the private property of the owner, MMS could not issue an Alternate Use 
RUE unless the alternate use was tentatively agreed to by the owner of 
the facility. If the alternate use applicant is also the lessee and 
owner of the existing OCS facility, a preliminary agreement regarding 
alternate use is not needed.
    This provision does not require the owner of the facility and 
lessee of the area in which the facility is located to give a final, 
unconditional approval for the proposed alternate use. This initial 
agreement among the parties need only state that the owner and lessee 
are aware of the proposed alternate use activity, and have no immediate 
objections to such activities. This preliminary agreement does not need 
to be in any specific prescribed form.

Section 285.1005 How do I request an Alternate Use RUE?

    The MMS will consider requests for an Alternate Use RUE on a case-
by-case basis provided such requests comply with the requirements of 
this provision. An applicant's request for an Alternate Use RUE must 
include a summary of the proposed activities that would involve use of 
the existing OCS facility, a statement affirming that the proposed 
activities are not otherwise authorized by other MMS regulations or any 
other Federal law, and satisfactory evidence that the applicant 
qualifies to hold a lease, ROW, or RUE on the OCS. When summarizing the 
proposed activities under an Alternate Use RUE, the applicant must 
include all of the information identified in Sec.  285.1005(a). Any 
request to MMS for an Alternate Use RUE must also include the 
signatures of the alternate use applicant, the owner of the existing 
OCS facility, and the lessee of the area in which the existing facility 
is located.
    If an existing OCS facility proposed for an Alternate Use RUE is in 
operation on an active OCS lease, the alternate use applicant as well 
as the lessee or owner of the structure must consider what approvals 
and plan modifications may be required under part 250 or part 282 of 
this subchapter with respect to impacts on operations regulated by 
those parts.

Section 285.1006 How will MMS decide whether to issue an Alternate Use 
RUE?

    The MMS will consider requests for an Alternate Use RUE on a case-
by-case basis. The MMS will evaluate all proposals to ensure that the 
proposed activities that would involve the use of existing OCS 
facilities can be conducted in a manner that is safe and protects the 
marine, coastal and human environment; does not inhibit or otherwise 
restrain orderly development of OCS mineral and energy resources; and 
avoids serious harm or damage to, or waste of, any natural resources or 
property. Regardless of whether the existing OCS facility is currently 
in use or no longer in use and subject to removal, the MMS has the 
discretion whether or not to approve and issue an Alternate Use RUE. 
Since Alternate Use RUEs would require the MMS to

[[Page 39436]]

regulate the development, operation, and eventual decommissioning of 
such alternate use projects, the MMS may determine that it has 
insufficient resources or subject matter expertise to properly regulate 
such projects. However, the MMS may partner with other Federal agencies 
with relevant expertise to ensure proper regulation of certain types of 
alternate use activities.

Section 285.1007 What process will MMS use for competitively offering 
an Alternate Use RUE?

    Paragraph 8(p)(3) of the OCS Lands Act requires that Alternate Use 
RUEs be issued on a competitive basis unless the Secretary determines 
after public notice of the proposed Alternate Use RUE that there is no 
competitive interest.
    Before initiating the competitive process, the MMS will first 
determine whether an applicant's proposal contains the information 
necessary to be deemed acceptable as set forth in Sec.  285.1005. The 
MMS will then determine whether the proposed activity that would 
involve the use of an existing OCS facility is one that is (1) subject 
to MMS authority under paragraph 8(p)(1)(D) of the OCS Lands Act, and 
(2) the type of activity that the MMS has the necessary expertise and 
resources to regulate effectively. If the answer is yes to both (1) and 
(2), the MMS will issue a public notice in the Federal Register to 
determine if there is competitive interest in using the facility for 
other alternate use activities. The MMS will specify a time period 
(e.g., 30 days) from the date of issuance of the public notice for 
those who are interested in the use of that facility to respond to MMS, 
indicating that interest. Indications of competitive interest are not 
required to provide all the information required in Sec.  285.1005. If 
there is no expression of competitive interest within the timeframe 
expressed in the public notice, the MMS will presume that there is no 
competitive interest and will commence review of the applicant's 
proposal for an Alternate Use RUE.
    If there are indications of competitive interest received by the 
MMS within the timeframe in the public notice, the MMS will proceed 
with a competitive offering. The MMS will request that each competing 
applicant submit a description of the types of activities proposed for 
the existing facility, as well as satisfactory evidence that the 
competing applicant qualifies to hold a lease, ROW, or RUE on the OCS. 
The MMS may impose a time period to submit the requested information, 
but one that would allow sufficient time for competing applicants to 
prepare the necessary information requested. The MMS may subsequently 
request additional information to adequately evaluate competing 
proposals. At this stage, competing applicants are not required to seek 
or obtain the consent of the lessee or owner of the existing OCS 
facility.
    The MMS will evaluate the competing proposals to determine whether 
the proposed activities appear to be compatible with existing 
operations at the facility and are activities that it has the expertise 
and resources available to regulate effectively. If more than one 
proposal initially appears feasible, the MMS may commence an 
environmental review under NEPA, where each of the proposals is 
analyzed. Based on its NEPA analysis, the MMS may select one or more of 
the alternative proposals as potentially acceptable.
    Once the MMS has chosen one or more acceptable proposals for 
activities involving the alternate use of an existing OCS facility, it 
will notify the competing applicants and submit each acceptable 
proposal to the lessee and owner of the existing OCS facility. The 
lessee and owner of the existing OCS facility may accept any one of the 
proposals deemed acceptable by the MMS. If the lessee and owner of the 
facility agree to accept one of the proposals, through a written 
acknowledgement submitted to MMS, the MMS will complete efforts to 
issue an Alternate Use RUE. If the lessee and owner of the facility are 
unwilling to accept any of the proposals deemed acceptable by the MMS, 
the MMS will not issue an Alternate Use RUE.
    Activities under subpart J will include full analysis as required 
by NEPA and other applicable laws. Compliance with the CZMA will follow 
15 CFR 930, subpart C, for competitive RUE offerings and 15 CFR 930, 
subpart D, for noncompetitive RUE offerings.
    Figure 5 shows the process envisioned for granting access to 
existing OCS facilities for alternate use activities.
BILLING CODE 4310-MR-P

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[GRAPHIC] [TIFF OMITTED] TP09JY08.003


[[Page 39438]]



Section 285.1008 [Reserved]

Section 285.1009 [Reserved]

Alternate Use RUE Administration

Section 285.1010 How long may I conduct activities under an Alternate 
Use RUE?

    This provision explains that MMS will determine the duration of 
Alternate Use RUEs on a case-by-case basis considering pertinent 
factors including the size, scale and type of the proposed alternate 
use activities. Considering the scope of potential alternate use 
activities that could reasonably occur on the OCS, MMS does not believe 
that it is appropriate to set a specific term in the regulations for 
Alternate Use RUEs.
    This provision also provides that MMS will consider requests for 
renewal of an Alternate Use RUE on a case-by-case basis, at MMS's 
discretion.

Section 285.1011 What payments are required for an Alternate Use RUE?

    This provision provides that MMS will determine rentals or other 
charges on a case-by-case basis and such rentals or other charges will 
be set forth in the Alternate Use RUE. The MMS will charge rentals or 
other charges for Alternate Use RUEs to ensure a fair return to the 
United States, as required by paragraph 8(p)(2) of the OCS Lands Act 
(43 U.S.C. 1337(p)(2)). There are many different potential alternate 
uses of the OCS that could be authorized (e.g., offshore aquaculture, 
research, education, and recreation) and each of these potential uses 
could have different effects in terms of the exclusion of other 
valuable uses of the OCS area. Certain alternate use activities could 
require that a significant portion of an OCS area be excluded from 
other potentially valuable uses (i.e. a large offshore aquaculture 
project). MMS would consider such exclusivity requirements for a 
potential alternate use activity in determining a fair return to the 
United States. The MMS would calculate the rentals or other charges for 
Alternate Use RUEs taking into account the areal extent of the 
alternate use activity, MMS resources needed for regulating such 
activities, and the exclusion in that area of competing uses.

Section 285.1012 What financial assurance is required for an Alternate 
Use RUE?

    This provision makes clear that MMS will require that holders of 
Alternate Use RUEs provide financial assurance in an amount sufficient 
to cover all obligations under the Alternate Use RUE, including 
decommissioning obligations. Holders of Alternate Use RUEs will be 
required to retain such financial assurance until MMS determines that 
all obligations have been fulfilled to MMS satisfaction. The provision 
also provides that MMS may increase or decrease required financial 
assurance amounts as appropriate provided that financial assurance will 
always be required in an amount necessary to satisfy all obligations 
under the authorizing instrument.
    MMS has determined not to define in the regulations what specific 
forms of financial assurance will be deemed acceptable. MMS will 
consider all forms of financial assurance that are deemed acceptable by 
MMS under its other regulatory programs, and will consider other 
proposals for financial assurance on a case-by-case basis.
    Unlike what is proposed for alternative energy under this part and 
what is established for oil and gas leasing under Part 256, MMS has 
determined that the regulations for alternate use activities should not 
set specific minimum levels for financial assurance. Considering the 
range of potential activities that could be approved for an Alternate 
Use RUE, MMS has determined that it would be more appropriate to set 
required financial assurance levels on a case-by-case basis.

Section 285.1013 Is an Alternate Use RUE assignable?

    This provision provides that Alternate Use RUEs may be assigned to 
eligible assignees. This provision sets forth the requirements that 
must be satisfied for MMS to approve an assignment request. At this 
time, it is not clear to what extent Alternate Use RUEs will be 
requested and approved by MMS. Therefore, we are not creating a 
standard MMS form for assignments at this time.
    Paragraphs (d) and (e) of this provision describe to what extent 
assignors and assignees are responsible for obligations associated with 
an Alternate Use RUEs arising both before and after MMS approval of an 
assignment.

Section 285.1014 When will MMS suspend an Alternate Use RUE?

    This provision explains that MMS may suspend activities authorized 
under an Alternate Use RUE as provided in this section. It is important 
to note that MMS may suspend activities authorized under an Alternate 
Use RUE even if there has been no finding of fault by the grant holder. 
The holder of an Alternate Use RUE may be in full compliance with the 
terms and conditions of its authorizing instrument, but other 
circumstances outside the control of the grant holder may require MMS 
to suspend activities in order to comply with judicial decrees, for 
reasons of national security or defense, to avoid unsafe activities or 
interference with lessee's operation and to protect against potential 
environmental damage. For this reason, any such suspension will extend 
the term of the Alternate Use RUE for the period of the suspension.

Section 285.1015 How do I relinquish an Alternate Use RUE?

    This provision explains that the holder of an Alternate Use RUE may 
relinquish the authorization at any time provided it complies with the 
requirements of this section. MMS would officially approve any 
relinquishment after it has determined that the requestor has complied 
with all necessary requirements, including the payment of any 
outstanding rentals (or other payments) and fines. The relinquishment 
would take effect on the date that MMS officially approves the request.

Section 285.1016 When will an Alternate Use RUE be cancelled?

    This provision explains under what circumstances MMS may initiate 
cancellation of an Alternate Use RUE. The provisions of this section 
are similar to the cancellation provisions under subpart D of this 
part, but includes an additional provision for cancellation when 
continued activity under an Alternate Use RUE is determined to be 
adversely impacting ongoing lease activities on the existing OCS 
facility (e.g., an associated oil and gas production platform on which 
alternate use activities have been authorized).

Section 285.1017 [Reserved]

Decommissioning an Alternate Use RUE

Section 285.1018 Who is responsible for decommissioning an OCS facility 
subject to an Alternate Use RUE?

    This provision explains that the holder of an Alternate Use RUE 
will be responsible for removing all structures and completing all 
other decommissioning activities associated with an approved alternate 
use activity. The Alternate Use RUE would set forth specific 
requirements for decommissioning, as determined by the MMS based on the 
approved alternate use activity.
    As set forth in the proposed conforming amendments to Part 250, 
subpart Q, included in this Notice of Proposed Rulemaking, approval of 
an

[[Page 39439]]

Alternate Use RUE will not relieve the original lessee (e.g., the 
original oil and gas lessee) from its accrued decommissioning 
obligations. If the MMS approves an Alternate Use RUE with respect to 
an existing facility located on a lease that has terminated, or a lease 
subsequently terminates following approval of an Alternate Use RUE, the 
MMS will defer the commencement of decommissioning activities related 
to that facility for the duration of the Alternate Use RUE. Such 
deferral would be limited, however, to the facility that is associated 
with the alternate use activities, and the lessee would be required to 
complete all other decommissioning activities associated with the 
lease. Unless the lessee and owner of the existing facility are also 
the holder of the Alternate Use RUE, the lessee and owner of the 
existing facility are not responsible for decommissioning associated 
with an Alternate Use RUE. Similarly, the holder of an Alternate Use 
RUE is not responsible for decommissioning with respect to the existing 
facility. To avoid confusion or potential subsequent dispute between 
the parties, MMS anticipates setting forth in the Alternate Use RUE 
instrument the specific decommissioning obligations pertaining to the 
alternate use activities.

Section 285.1019 What are the decommissioning requirements for an 
Alternate Use RUE?

    This provision explains that decommissioning requirements for 
Alternate Use RUEs will be established on a case-by-case basis after 
considering the specific alternate use proposal. These specific 
decommissioning requirements will be set forth in detail in the 
authorizing instrument. This provision also explains that all 
decommissioning activities would be required to be completed within one 
year of termination of the Alternate Use RUE.

Accompanying Part 250 and Part 290 Amendments Relating to Part 285 
Proposed Rule

    To ensure that the regulations proposed under 30 CFR part 285 do 
not conflict with existing MMS regulations under 30 CFR part 250 or 30 
CFR part 290, we are proposing conforming changes to those regulations, 
as appropriate. Most of these proposed changes are to the regulations 
at 30 CFR part 250, subpart Q, Decommissioning. These regulations are 
being revised to address the alternate use of existing facilities on 
the OCS. We are also proposing a revision to 30 CFR part 290, to 
clarify that requests for reconsideration of an MMS decision concerning 
a lease bid authorized pursuant to Part 285 do not follow the 
procedures outlined in Part 290.

Part 250 Amendments Accompanying Part 285 Proposed Rule

Section 250.1703 What are the general requirements for decommissioning?

    The proposed amendment to this provision clarifies that MMS may 
authorize temporary exceptions to the general requirement to remove all 
platforms and other facilities, as provided in Sec. Sec.  250.1725(a) 
and 250.1730.

Section 250.1725 When do I have to remove platforms and other 
facilities?

    The proposed amendment to this paragraph (a) is intended to 
elaborate on the types of activities that may be authorized by MMS on 
an existing platform or other facility that would, in effect, defer or 
suspend the removal obligation that would otherwise be triggered under 
Sec.  250.1725. The amended language identifies activities on an 
existing oil and gas platform or other facility that would support OCS 
oil and gas production and transportation, or would otherwise support a 
valuable energy-related or marine-related purpose.
    The proposed amendments to this provision are not intended to 
provide an exhaustive list of all potential alternate use activities 
that may be deemed acceptable by MMS. MMS will consider all potential 
alternate use proposals of existing platforms or other facilities on 
the OCS and determine whether they provide for a valuable use of our 
Nation's OCS and could be conducted in a fashion that is safe, 
protective of the environment and otherwise in accordance with MMS's 
role as steward of the OCS.
    The proposed amendments to this provision are not intended to 
indicate that MMS would approve all such alternate use activities. MMS 
has discretion to approve or disapprove of any alternate use proposal 
under the OCS Lands Act and its role as steward of the OCS. In 
considering whether to approve or disapprove a proposed alternate use 
activity, MMS would require that the applicant post adequate financial 
assurances to MMS or another Federal agency that ensure the platform or 
other existing facility will be properly decommissioned upon completion 
of the approved alternate use activity.
    The proposed amendments to this provision are also intended to 
clarify that MMS may consider proposals for liquefied natural gas (LNG) 
facilities (regasification terminals or, potentially, liquefaction 
facilities) that would make use of existing OCS platforms or other 
facilities. MMS may not approve the construction or operation of an LNG 
facility--as responsibility for approval of construction and operation 
of marine LNG facilities rests with the U.S. Coast Guard and U.S. 
Maritime Administration--but may authorize the alternate use of an 
existing OCS facility that was originally approved under the OCS Lands 
Act. An MMS approval for alternate use or reuse of an existing facility 
would be required from MMS before making use of such a facility for LNG 
activities. Approval for an alternate use proposal involving an 
existing LNG facility is not subject to the proposed provisions in Part 
285, subpart J, because subsection 8(p) of the OCS Lands Act does not 
apply to activities previously authorized under the Deepwater Port Act 
of 1974 (33 U.S.C. 1501 et seq.).

Section 250.1730 When might MMS approve partial structure removal or 
toppling in place?

    The proposed amendment to this provision is intended to clarify 
that the scope of Sec.  250.1730 is limited to proposals under the 
Artificial Reef Program administered by the U.S. Army Corps of 
Engineers.

Section 250.1731 Who is responsible for decommissioning an OCS facility 
subject to an Alternate Use RUE?

    This proposed provision is intended to define each party's 
decommissioning responsibilities once MMS has approved an Alternate Use 
RUE pursuant to the provisions proposed in Part 285, subpart J. MMS has 
determined that the most equitable approach to allocating 
decommissioning responsibilities among the platform owner and lessee 
and the holder of the Alternate Use RUE is to leave each party 
responsible for the decommissioning activities associated with the 
structures approved pursuant to each party's authorizing instrument. 
Therefore, the existing platform owner retains its ultimate 
responsibility to decommission the platform, but this obligation may be 
deferred until completion of the activities approved under the 
Alternate Use RUE. Similarly, the holder of the Alternate Use RUE is 
responsible to complete all decommissioning obligations associated with 
the approved alternate use activity once those alternate use activities 
are completed according to the terms of the Alternate Use RUE.

[[Page 39440]]

Part 290 Amendment Accompanying Part 285 Proposed Rule

Section 290.2 Who may appeal?

    The proposed amendment to this provision is intended to clarify 
that requests for reconsideration of an MMS competitive award of a 
lease, RUE or ROW to a bidder pursuant to Part 285 do not follow the 
procedures outlined in Part 290.

Commenting Procedures

    MMS is seeking comments on all aspects of this proposed rulemaking. 
However, we have identified areas that are of particular interest to us 
and we believe of interest to the regulated community and other 
interested parties. Comments on these items are requested throughout 
the rulemaking and are summarized here for your convenience in 
submitting comments. When you submit comments please identify the 
subpart and section number you are commenting on.

Subpart A--General Provisions

    MMS seeks comment on all items in subpart A, specifically we are 
seeking comments on:
    1. Is this subpart informative?
    2. Is it easy to locate needed information?
    3. Is it easy to read and follow?
    4. Does it include the appropriate topics?

Subpart B--Issuance of OCS Alternative Energy Leases

    We invite comments on the following items:
    1. Proposed types of leases. Do these lease types (commercial, 
limited) adequately address the possible uses allowed under these 
regulations?
    2. Proposed leasing process, including the proposed acquisition fee 
and procedures for paying for associated NEPA analysis.
    3. Proposed process for obtaining public input on unsolicited 
applications and the considerations for determining whether competitive 
interest exists.
    4. All aspects of the proposed sale process, including the proposed 
criteria for determining competition, proceeding with competitive 
auctions, and awarding leases.
    5. Whether the length and structure of the proposed terms would 
inhibit legitimate efforts to develop alternative energy projects on 
the OCS and on alternatives that might be better.
    Section 285.200 Proposed project easement provision.
    Section 285.201 Considerations other than geographic overlap of 
multiple proposals to determine whether or not there is a need to 
conduct a competitive lease sale in an area. We invite comments on any 
of the proposed approaches. In particular, what do you think is the 
capability of package bidding to ensure a fair return and to induce an 
efficient allocation of leases?
    The proposed approach, as well other possible approaches such as 
intertract competitive auctions, to address this issue.
    We invite comments on the proposed priority of commercial leases 
over limited leases.
    The proposed approach for developing appropriate lease documents.
    Section 285.203 Issues relevant to coordination and consultation 
with Federal agencies and State and local governments.
    Section 285.204 The proposed process for choosing areas to make 
available for leasing and the proposed means for mapping and describing 
those areas.
    Section 285.206 The proposed provisions governing lease size.
    Section 285.211 The most useful way to describe areas we decide to 
make available for alternative energy leasing.
    Section 285.212 Information that we should request to identify 
alternative energy interest in general or specific OCS areas.
    The handling of data and information.
    Section 285.213 How the CZMA process for competitive leasing could 
be expedited.
    Section 285.215 Whether this process provides sufficient 
information and notice to encourage competition for prospective 
alternative energy sites.
    Section 285.220 The relative merits of proposed alternative auction 
formats for leasing OCS acreage for alternative energy projects and on 
alternatives that might be more effective. Whether allowing bidders to 
define a set of tracts on which they wish to submit a package bid would 
increase interest in a sale, generate higher aggregate bonus bids, and 
help ensure that bidders acquire their primary tracts of interest.
    Section 285.221 Which of the proposed bidding systems is most 
appropriate for alternative energy leases and why.
    Section 285.222 The appropriate bid acceptance considerations and 
the potential use of intertract competition.
    Section 285.223 The likelihood of receiving tied bids and on the 
proposed provisions for selecting a winner in that case.
    Section 285.224 Any difficulties the procedures for formally 
issuing a lease might cause potential lessees. Would holding an 
additional round of bidding be more appropriate than resolving a tie by 
lot or, perhaps, by offering a joint lease?
    Section 285.225 The fairness of the proposed bid appeal process.
    Section 285.230 Whether and how any requested information may 
inhibit requests and on whether this fee will serve its intended 
purpose.
    Section 285.231 Whether our proposal not to return your acquisition 
fee if you choose not to bid is appropriate.
    The proposed SAP or GAP deadlines and the proposed NEPA and CZMA 
compliance procedures.
    Section 285.238 This concept for making areas of the OCS available 
for alternative energy research.

Subpart C--Rights-of-Way Grants and Rights-of-Use and Easement Grants 
for Alternative Energy Activities

    We invite comments on the following items:
    1. The proposed provisions for ROWs and RUEs, as well as project 
easements.
    2. The handling of data and information.
    3. The provisions on coordination and consultation.
    4. The proposed CZMA compliance procedures.
    5. The areas available for ROW grants and RUE grants.
    6. The proposed ROW and RUE size provisions.
    7. The provisions for ROW and RUE terms.
    8. The ROW and RUE provisions, forms, financial assurance, and 
administration.

Subpart D--Lease Administration

    We invite comments on all of the proposed provisions. We invite 
comments on the following items:
    1. Noncompliance.
    2. Assignments.
    3. Alternatives such as open-ended lease terms and automatic 
renewals.
    4. Criteria for consideration in lease renew decisions.

Subpart E--Payments and Financial Assurance Requirements

    We invite comments on the following items:
    1. Whether or not information from other sources supports the 
conclusion that proposed rates in this rule are in line with fixed 
terms used elsewhere and would constitute a small fraction of expected 
offshore alternative energy project costs. If not, please provide such 
alternative information.
    2. Payments to the landowners.
    3. We conclude that the proposed size of our payments would not 
adversely

[[Page 39441]]

affect the rate of offshore alternative energy development. We request 
comments on whether the results of this analysis accurately 
characterize the basic economics of anticipated OCS alternative energy 
projects.
    4. Issues related to implementation of revenue sharing.
    Section 285.500 Suggestions concerning how the payment procedures 
should be structured and what the content of alternative energy payment 
procedures should include.
    Section 285.501 Setting the deposit amount and deposit forfeiture 
requirements, including the extent to which these amounts and 
requirements should be related to the type of auction format employed.
    Section 285.502 For a noncompetitive lease, whether to require an 
additional payment equal to the difference between the minimum bid we 
would have set for a competitive sale offering in the same area and the 
acquisition fee, as an alternative approach.
    Whether the size and treatment of acquisition fees proposed in this 
section is appropriate and whether or not it would discourage 
expression of any legitimate interest in a possible alternative energy 
lease.
    Section 285.503 Whether the baseline rental fee proposed in this 
section would be appropriate for lessees and fair to the public.
    Section 285.504 Whether there is any valid reason to charge a 
different rental for limited leases than for commercial leases.
    Section 285.505 1. Whether there are operating fee procedures that 
are as efficient and fair as the one specified here for alternative 
energy activities. Please include detailed examples and explanations 
for any alternatives suggested.
    2. The frequency of the review and adjustment of the capacity 
factor.
    Section 285.506 Whether this is the most appropriate way to set 
rentals for easements and whether the size of the rental is 
appropriate.
    Section 285.507 Whether this is the most appropriate way to set 
rentals for easements, and whether the size of the rental is 
appropriate.

Subpart G--Facility Design, Fabrication, and Installation

     We request comments regarding both the domestic and international 
availability of CVA's that will be necessary to implement the OCS 
alternative energy program as described in the proposed rule.

Subpart H--Environmental and Safety Management, Inspections, and 
Facility Assessments

    The MMS would like comments on the use of API RP 2A-WSD for 
assessments and suggestions for other standards MMS should consider. 
This relates to the structure only and does not include production or 
transmission equipment.

Procedural Matters

Public Availability of Comments

    Before including your address, phone number, e-mail address, or 
other personal identifying information in your comment, on this rule or 
the Draft EA, you should be aware that your entire comment--including 
your personal identifying information--may be made publicly available 
at any time. While you can ask us in your comment to withhold your 
personal identifying information from public review, we cannot 
guarantee that we will be able to do so.

Regulatory Planning and Review (Executive Order (E.O.) 12866)

    This proposed rule is a significant rule as determined by the 
Office of Management and Budget (OMB) and is subject to review under 
E.O. 12866. We have made the assessments required by E.O. 12866 and the 
results are:
    (1) The proposed rule would not have an annual effect on the 
economy of $100 million or more or adversely affect in a material way 
the economy, a sector of the economy, productivity, competition, jobs, 
the environment, public health or safety, or State, local, or tribal 
governments or communities. The regulations would govern an industry 
that is at an early stage of development but which could have developed 
even without the subject regulations.
    The proposed rule would do two things: (1) It would set forth clear 
regulatory requirements, and (2) it would institute payments to the 
Government as a fair return for use of public lands. While the proposed 
program would generate new receipts for the U.S. Government primarily 
in the form of cash bonuses, acquisition fees, rentals, and operating 
fees, the aggregate annual amounts of these payments, as estimated in 
the fiscal cost-benefit study supporting this rulemaking, were found to 
be below $100 million for at least the next 15 years, and then slightly 
above that level in only in intermediate and high case scenarios. (See 
``Fiscal Cost-Benefit Analysis to Support the Rulemaking Process for 30 
CFR 285 Governing Alternative Energy production and Alternative Uses of 
Existing Facilities on the Outer Continental Shelf,'' Final Technical 
report prepared for MMS by Industrial Economics, Incorporated, MMS 
2007-050, February, 2008.)
    Any projections beyond that time horizon should be considered 
highly speculative given the early stage of development in this 
industry on the OCS. The payments to Federal agencies represent a 
transfer of money from one set of entities to another, not the 
anticipated effect of the regulations on real resources in the economy. 
The magnitudes of the required fees and payments, either set in this 
rule or at time of sale of the leases, are intended primarily to assure 
receipt of fair value for the lease rights and subsequent activities, 
not to influence post-lease decisions about the allocation of 
alternative energy resources. Thus, while the new rule would provide 
for an increase in the flow of payments from industry to the Federal 
government and, in some cases, to coastal States, these payments are 
not intended, nor do we expect them, to create or prevent industry 
activities that generate alternative energy products. In fact, a key 
purpose of this rule is to foster an important new industry by reducing 
regulatory uncertainty.
    For the purposes of the fiscal cost-benefit study, the baseline 
condition is a continuation of the regulatory regime that existed prior 
to passage of the EPAct, under which other Federal agencies, such as 
the Army Corps of Engineers (in the case of wind energy) and the 
Federal Energy Regulatory Commission (FERC, in the case of wave and 
ocean current energy), assumed primary responsibility for reviewing and 
permitting alternative energy projects on the OCS. The regulatory 
alternative to the baseline, as described in this rulemaking, is the 
MMS program authorized by Section 388 of the EPAct, comprising the 
granting of property rights, collection of payments for alternative 
energy and other uses of the OCS (primarily in the form of lease 
bonuses, rentals and operating fees), and establishment of a 
comprehensive ``cradle-to-grave'' regulatory program for authorizing 
alternative energy activity on the OCS. The analysis further considers 
three different sets of fiscal terms (identified as the ``Low,'' 
``Intermediate,'' and ``High'' payment cases), which vary in the way 
fees and rental payments are calculated. Rental would be paid in each 
of the payment cases before the construction and operation of a 
generation facility. During construction and operations, an annual 
operating fee would be charged in the Intermediate and High cases, 
while

[[Page 39442]]

MMS specified that a rental payment be substituted for an operating fee 
in the Low case. These payment cases are explained in Section 4 of the 
report MMS 2007-050. The analysis considers projects that are 
constructed and that begin operations (i.e., begin to generate 
electricity for sale) or that are in development during the 20-year 
period from 2008-2027. While these projects would have revenue and cost 
impacts that extend beyond this period (based on 20 years of 
electricity generation over an assumed 25-year operational term), the 
only fiscal impacts reported are those that occur during the period 
2008-2027. The cost side of the analysis comprises the Federal 
government's costs to implement the program that will administer the 
proposed regulation.
    In accordance with OMB guidance, we estimated the present value of 
cumulative net revenues in constant dollars for the Baseline, Low, 
Intermediate, and High payment cases assuming real discount rates of 
three and seven percent. These results were computed from project level 
nominal revenues which were aggregated annually for years from 2008 
through 2027, then deflated and discounted as end-of-year cash flows 
back to 2008. Section 8(p)(2)(B) of OCS Lands Act requires the 
distribution of 27 percent of fiscal revenues to the appropriate 
coastal states, when a project is located partially or wholly in the 
area extending 3 nautical miles seaward of state submerged lands. The 
revenue estimates reported for this analysis were adjusted assuming 
that 40 percent of the projects included in the development forecast 
would be subject to the revenue sharing provision.
    As of January 1, 2008, at a three percent discount rate, the 
present value of cumulative net Federal revenues over the 20-year 
period of the analysis ranges from approximately -9.3 million and -
$57.3 million in the Baseline and Low cases, respectively, to 
approximately $357 million and $538 million in the Intermediate and 
High payment cases, respectively. When a 7 percent discount rate is 
applied, the present value of cumulative net Federal revenues over the 
period of the analysis ranges from approximately -$7.8 million and -
$46.5 million in the Baseline and Low cases, respectively, to 
approximately $190 million and $291 million in the Intermediate and 
High payment cases, respectively. The significant difference in net 
revenues is attributable to the inclusion of operating fee payments to 
MMS in the latter two cases. The preliminary development forecast was 
comprised of 76 projects that would proceed through the pre-development 
period of their respective lease terms, and could at least begin 
construction before 2027, the last year of the period of analysis. We 
evaluated the economics of each project and found that 58 might be 
considered viable by virtue of having a calculated internal rate of 
return (IRR) greater than or equal to 11 percent, under the payment 
requirements of the Baseline (no payments), Low and Intermediate cases. 
In fact, the categorization of wind energy projects by IRR does not 
vary between payment cases, with the exception of three 500 MW wind 
projects that drop below an 11 percent IRR in the High case. This 
analysis shows that the magnitude of MMS payments under the assumed 
cases should not have a significant influence on decisions to invest in 
lease development on the OCS.
    Categorization of the results by technology and region highlights 
the impact of wind energy projects and the Atlantic region, which, 
respectively, account for over 99 percent and approximately 79 percent 
of the present value cumulative net revenues in the Intermediate 
payment case. None of the nine wave energy projects included in our 
preliminary development forecast cleared the IRR of 11 percent due to 
their location exclusively in the Pacific region, particularly the 
Pacific Northwest. Low electricity prices in this market are influenced 
by the presence of large, lower cost onshore hydroelectric resources. 
Wave energy projects developed over the next 20 years might be more 
economically viable in nearer-shore environments that are subject to 
State rather than MMS jurisdiction. In contrast, all 15 of the ocean 
current projects included in the preliminary development forecast have 
IRRs greater than or equal to 11 percent, primarily because of their 
relatively high capacity factors (80 percent compared to 38 percent for 
wind and 35 percent for wave).
    We then analyzed the impact of renewable portfolio standard 
financial incentives on project viability. Total viable projects might 
be reduced by 25 percent without revenue from renewable energy 
certificate (REC) sales. For the Intermediate case, we found that the 
number of viable projects modeled in the development forecast would 
drop from 58 to 43 without revenue from the sale of RECs. Therefore, 
renewable portfolio standards implemented by coastal states could be 
essential to the economic success of many OCS projects.
    We also analyzed the effect that elimination of the present Federal 
PTC could have on the viability of the wind, wave and current projects 
in the preliminary development forecast. This more focused analysis was 
made by assuming the PTC would not be extended beyond an expiration 
date of December 31, 2008. In that event, we determined that only 33 of 
the 76 projects might have IRRs of greater than or equal to 11 percent, 
regardless of the payment case analyzed. The difference in the number 
of projects constructed, 25 fewer than the 58 viable for the Baseline, 
Low and Intermediate cases, may be less if a change to economic 
conditions creates a benefit approximately equivalent to the PTC. 
Absent such a change, a reduction in total viable projects of more than 
40 percent could occur if the PTC is not available, making this 
incentive the most significant for investors. Thus, we concluded that 
project viability is more sensitive to the availability of the PTC 
benefit than REC benefits, or any of the fiscal requirements assumed in 
the payment cases.
    We further reviewed 12 of the 25 projects that might not be 
constructed without the PTC, to discern how much the MMS payments could 
detract from the value of the PTC. Specifically, the ratio of MMS 
payments over PTC value was calculated: (1) For the 10 years that the 
PTC would be in effect for each project, and (2) over the life of each 
project. Lease interests would discount the values at private rates and 
the government would discount with social rates. To simplify comparison 
of the results, ratios were calculated with undiscounted nominal dollar 
values. Ratios for the 10 years that the PTC would be in effect for 
each project fell within a range of 4.5 to 6.5 percent. Ratios 
calculated using the total of all payments made to MMS over the life of 
the project, divided by the total value of the PTCs over the 10 years 
following the date that a project is placed in service, ranged from 
about 11.0 percent to 14.5 percent. The second set of ratios are higher 
than the first set, because payments made before and after the 10 year 
PTC period are considered. The MMS recognizes that the alternative 
energy program payment requirements would effectively lower the value 
of the PTC. However, the payment cases analyzed would not reduce the 
value of the PTC by a significant amount. Of greater importance, this 
analysis seems to imply that the elimination of the requirement to make 
payments to MMS will not increase the rate of alternative energy 
development on the OCS.
    In developing the fiscal cost-benefit analysis and specifically 
regarding the financial cash flow model, a number of generalized 
assumptions were made, due in large part to the absence of reliable 
data for offshore alternative

[[Page 39443]]

energy technologies. The following are some issues that may warrant 
additional examination.
    The IEc study relied upon a literature review to develop the 
necessary assumptions used in the financial cash flow model. A major 
component driving the economics of an offshore alternative energy 
project is the capital cost assumption, specifically the rate at which 
the capital cost is forecasted to decline. This capital cost reduction 
results from a combination of ``learning'' and economies of scale. 
Learning based capital cost reductions for the offshore alternative 
energy technologies are based on publicly available studies and are 
summarized in table 2-3 for offshore wind and table 2-4 for wave and 
ocean current. Economies of scale, as observed through the capital cost 
reduction of projects as a function of increasing capacity (MW) is 
assumed only for U.S. offshore wind energy projects. Table 2-3 on page 
14 in the IEc study gives the assumed capital costs (2007$/kW) of U.S. 
offshore wind energy for representative sizes of 150 MW, 500 MW, and 
1,000 MW. Given the immaturity and lack of commercial development of 
wave and ocean current energy technologies, no economies of scale 
assumptions were made for these technologies.
    As the preliminary forecast projected by the IEc study are not 
project specific, default capacity factors for each of the three 
offshore alternative energy projects considered in the IEc study were 
used and are provided in Table 4-6, which lists each of the key inputs 
of the cash flow model and a description of the corresponding 
assumptions. The default capacity factors of 38 percent, 35 percent, 
and 80 percent for wind, wave, and ocean current projects, 
respectively, were used.
    The preliminary forecast of project development on the OCS is an 
indication of the projected growth rate of the industry, both on the 
individual technology level and aggregately as the offshore alternative 
energy industry. However, as an industry that is in its infancy, it is 
difficult to predict the path of this industry's development with any 
degree of certainty. To that extent, the IEc study bases the 
preliminary forecast on non-economic considerations as a starting 
point, such as likely regions where development will occur, and 
provides refinements using the cash flow model to determine the 
economic viability of each individual project.
    Additionally, the offshore alternative energy technologies 
considered in the IEc study are limited to offshore wind, wave, and 
ocean current as these represent the technologies that have a 
reasonable probability of becoming commercially viable in the 20-year 
period that defines the scope of the IEc study. In this vein, hydrogen 
production on the OCS may be realized in the future and thus be 
governed by this proposed rule.
    Due to the uncertainty regarding the nature and scope of interest 
in alternative uses of existing OCS facilities, a qualitative analysis 
of the potential impacts of a number of these activities was conducted 
in the IEc study in chapter 8. In terms of the net fiscal impact that 
these alternative activities entail, the magnitude of such impacts are 
likely to be insignificant.
    MMS solicits comments regarding the assumptions made in the fiscal 
cost-benefit analysis. In particular, the agency solicits comments on 
the reasonableness of assumptions on: (1) Economies of scale; (2) 
learning and cost reduction; (3) capacity factors; (4) projected growth 
rate of the industry; (5) hydrogen production; (6) technology 
characterization; (7) alternative uses of existing facilities; (8) 
regulatory and legislative climate assumed in the analysis.
    (2) The proposed rule would not create a serious inconsistency with 
or otherwise interfere with the actions taken or planned by any other 
agency except for the Federal Energy Regulatory Commission. By its 
terms, section 388 of the EPAct avoids this problem by granting to the 
Secretary of the Interior authority to authorize and regulate 
alternative energy activities on the OCS only to the extent such 
activities were not previously authorized by other laws, such as the 
Deepwater Port Act or the Ocean Thermal Energy Conversion Act. 
Therefore this rule does not address activities such as LNG storage or 
ocean thermal energy conversion.
    The Federal Energy Regulatory Commission has entertained 
applications for licenses for wave and current energy projects under 
the authority of the Federal Power Act. In comments on the ANPR for 
this rulemaking, FERC asserted that its jurisdiction to license such 
projects extends ``at least 12 nautical miles offshore.'' Under the 
Federal Power Act, the seaward limit of the authority is the 
territorial sea, and was understood to be a belt extending three miles 
from the coastal baseline at the time that FERC's statutory authority 
was established. When President Reagan issued his proclamation on 
December 27, 1988, extending the territorial sea to 12 miles, he 
expressly stated ``nothing in this Proclamation * * * extends or 
otherwise alters existing Federal or State law or any jurisdiction, 
rights, legal interests or obligations derived therefrom.'' 
Presidential Proclamation 5928, 54 FR 777. Nothing in the Federal Power 
Act or its legislative history expressed an intent to allow changes in 
the definition of territorial sea for international law purposes to 
change the extent of the jurisdiction conferred therein.
    There is no inconsistency or conflict between the Interior program 
for the outer continental shelf, which commences three miles from the 
coastline (or three leagues in the case of Texas and the Florida Gulf 
Coast), and FERC licensing of projects within the historic territorial 
sea. MMS has conferred with FERC staff in an effort to reduce 
unnecessary inconsistencies between the regulatory requirements 
applicable to FERC licensed projects within the territorial sea and 
those that would operate under these proposed MMS rules. Such 
coordination is essential because it is foreseeable that some projects 
may straddle the boundary between the territorial sea and the OCS. 
However, the agencies have not been able to resolve their conflicting 
views as to whether the Federal Power Act grants FERC jurisdiction ``to 
at least 12 nautical miles,'' which would constitute ``other applicable 
law'' under section 8(p), that would limit Interior authority to 
oversee wave or current projects.
    (3) This proposed rule would not alter the budgetary effects of 
entitlements, grants, user fees or loan programs, or the rights or 
obligations of their recipients. The proposed rule does not contain any 
requirements or regulations that would alter the budgetary effects of 
entitlements, grants, user fees or loan programs, or the rights or 
obligations of their recipients.
    (4) This proposed rule would raise novel legal or policy issues 
because the rulemaking would establish a new regulatory program for the 
development of alternative energy on the OCS and to allow for alternate 
uses of existing OCS facilities. For these reasons OMB determined that 
this is a significant rule.
    Primarily for the reason that the proposed rule would raise novel 
legal or policy issues, MMS was required to conduct an economic 
analysis of this rule. Prior to the passage of the EPAct, the Federal 
Government lacked the authority to oversee all aspects of alternative 
energy project development on the OCS, including siting, construction, 
operation, and decommissioning. Additionally, prior to the passage of 
the EPAct, the Federal Government lacked the authority to seek payments 
from private interests for use of our Nation's OCS. These regulations

[[Page 39444]]

will provide the framework for MMS's management of an Alternative 
Energy-Alternate Use Program. This program will create a system that 
provides a degree of regulatory certainty to those proposing, planning, 
or potentially financing an offshore alternative energy project on the 
OCS, as it will address lease and grant issuance, activity 
authorization, payment collection, financial assurance, and project 
decommissioning.
    As described above, MMS is required to conduct an economic 
(``benefit-cost'') analysis of this rulemaking because it has been 
determined to be a significant regulatory action, as defined in 
Executive Order 12866. Discussions between MMS and OMB resulted in a 
determination that the appropriate analysis of the proposed rulemaking 
is one that focuses on the financial impacts of the rule over a 20-year 
period (2008-2027). While financial revenues (i.e., the revenues the 
Federal Government will receive due to economic activity that occurs 
under this rule) are traditionally considered a transfer payment, in 
this analysis they are treated as a ``benefit.'' The cost side of the 
analysis comprises the Federal Government's costs to implement the 
program that will administer the proposed rules. In addition, as 
required by the Regulatory Flexibility Act (RFA) of 1980 (as amended by 
the Small Business Regulatory Enforcement Fairness Act of 1996 (SBRFA) 
and Executive Order 13272 (``Proper Consideration of Small Entities in 
Agency Rulemaking'')), this analysis considers whether the financial 
payments made by the developers of regulated projects to MMS will 
significantly affect a substantial number of small entities.
    The baseline condition, against which the impact of the proposed 
rule is to be compared, is a continuation of the regulatory regime that 
existed prior to the EPAct, under which the Army Corps of Engineers 
(Corps) assumed principal responsibility for reviewing and permitting 
wind energy projects and the Federal Energy Regulatory Commission 
(FERC) asserted authority for wave and ocean current projects on the 
OCS. For the purposes of this analysis, we assume that the project 
development forecast is independent of the regulatory regime; the 
locations, types, and timing of development would be the same with or 
without the MMS program contemplated by the EPAct. MMS is considering 
only one alternative to the baseline--a regulatory program under which 
MMS grants property rights, collects payments for activities conducted 
on the OCS, and establishes a comprehensive ``cradle-to-grave'' 
regulatory program for authorizing alternative energy activity. Within 
this alternative, MMS considered three payment cases: a ``Low'' payment 
case requiring only rental payments for the use of Federal lands, an 
``Intermediate'' payment case that also included a fixed generation 
capacity fee, and a ``High'' payment case that included a graduated 
generation fee.
    Given the considerable uncertainty in forecasting activity levels 
for a nascent industry, MMS used expressed interest by potential 
developers, estimates of wind resources, regional electricity prices, 
and other information to create a development scenario that included 
103 (predominantly wind energy) projects that at least reached the 
application stage during the 2008-2027 period of analysis. Based on the 
financial viability results of cash flow model--given size, capacity 
factor, capital costs, operations and maintenance cost, regional 
electricity prices, availability of financing, financial incentives 
(e.g., the Production Tax Credit), and other factors--63 of these 
projects were assumed to begin operations during the 20-year period of 
analysis and an additional 13 were assumed to drop out of the process 
prior to beginning operations, primarily for financial reasons. MMS 
estimated the personnel and other costs of reviewing all 103 
applications and the additional costs of processing applications that 
made it to the approval stage, as well as any other regulatory 
compliance costs through 2027 for those projects that went into 
operation. On the ``benefits'' side, MMS also estimated the revenues to 
be received from developers under each payment case through 2027. 
(Payments to the Government beyond 2027 were considered only to assess 
project viability and the potential effects of this action on small 
entities.)
    Under the Intermediate and High payment cases, respectively, MMS 
estimated that net revenues (to the Federal Government) would turn 
positive about 2015 and about 2014, increasing to over $100 million by 
2025 and by 2022. Net revenues would be negative throughout the period 
of analysis under the Low payment case. However, as noted above, these 
revenue numbers indicate the effect on the Federal Treasury, not on the 
economy. Given the assumptions agreed upon with OMB, the industry would 
have developed with or without the new rule and, therefore, this rule 
would not determine the amount of money to be generated and spent but 
rather who would spend it.

Regulatory Flexibility Act (RFA)

    Under the requirements of the RFA (5 U.S.C. 601 et seq.), as 
amended by SBREFA and Executive Order 13272, Federal agencies must 
consider the potential distributional impact of new rules on small 
businesses, small governmental jurisdictions, and small organizations. 
MMS prepared an initial regulatory flexibility analysis to determine 
the impacts of this proposed regulation on small entities. Based on 
this analysis, we concluded that these regulations will impact a 
substantial number of small entities, however the regulations would not 
have a significant economic impact on these small entities when 
compared to the economic impact the regulations will have on large 
entities. Please see the following discussion for the basis of our 
conclusion.

Discussion of the Regulatory Flexibility Act Analysis

Number of Small Entities To Which the Rule Will Apply

    The North American Industry Classification System (NAICS) code for 
the industry affected by the proposed rule is 221119 (Other Electric 
Power Generation). The definition for this code is:

    This U.S. industry comprises establishments primarily engaged in 
operating electric power generation facilities (except 
hydroelectric, fossil fuel, nuclear). These facilities convert other 
forms of energy, such as solar, wind, or tidal power, into 
electrical energy. The electric energy produced in these 
establishments is provided to electric power transmission systems or 
to electric power distribution systems.

    An entity within this classification is ``small'' if it is 
``primarily engaged in the generation, transmission, and/or 
distribution of electric energy for sale and its total electric output 
for the preceding fiscal year did not exceed four million megawatt 
hours'' (MWh). Some new companies may be created, solely to develop one 
or more offshore alternative energy projects that combined will not 
have a total electric output greater than 4 million MWh. Some 
companies, either through a combination of projects or through the 
incorporation of offshore alternative energy projects into a larger 
portfolio of electricity generating stations, will exceed the 4 million 
MWh threshold.
    Given the newness of the offshore alternative energy industry, it 
is difficult to develop an accurate count of the number of entities 
that will or may be subject to this rule in order to determine whether 
the rule will affect a ``substantial'' number of small entities.

[[Page 39445]]

Several companies have formally or informally expressed interest in 
being granted access to the OCS for electricity generation purposes. At 
least 40 to 50 entities are identifiable as potential project or 
technology developers with a focus on utilizing offshore wind, wave, or 
ocean current resources. The U.S. Census Bureau's 2002 Economic Census 
reported 411 entities within NAICS code 221119. However, for the 
purposes of this analysis MMS assumes that most of the relevant 
entities will be considered ``small,'' and therefore can conclude that 
a substantial number of small entities will be affected.
    It is possible that the proposed rule may eventually govern 
hydrogen production, affecting entities that fall under NAICS Code 
325120, Industrial Gas Manufacturing. The definition for this code is:

    This industry comprises establishments primarily engaged in 
manufacturing industrial organic and inorganic gases in compressed, 
liquid, and solid forms.

    However, it is unlikely that hydrogen will be produced on the OCS 
in significant amounts during the next 20-years, and MMS has no means 
to predict what kinds of entities would likely be involved in OCS 
hydrogen production, given the lack of proposals for projects that 
would produce hydrogen.

Impacts of This Rule on Small Businesses

    We believe that most affected companies will be small businesses 
according to the size standard. While large power/energy companies may 
engage in offshore alternative energy, we do not see that company size 
plays a factor in the economic impact of our rulemaking.
    Both large and small business will be subject to the same 
regulations because we do not believed it is necessary, at this time to 
have different sets of regulations for large and small companies.
    For example, the payments for a commercial lease are rentals and 
operating fees. Rentals (during the preliminary and site assessment 
terms) are based on the size of the leased area. The operating fee is 
based on the potential generation capacity of a commercial project. The 
lease area needed will be determined by the size of the project and the 
operating fee is determined by capacity of the actual installed 
project. The project size is determined by the applicant and the rental 
and operating fee will not burden small business more than large 
because the project size determines the fee. Moreover, the greater the 
project's ability to produce, the greater the fee, but also the greater 
the potential income from the project to the developer.
    One factor that could influence a company's ability to deal with 
these new regulations will be its experience and knowledge in working 
in the offshore environment. This knowledge is not size dependent as 
evidenced by the size of the companies that own leases and operate oil 
and gas facilities on the OCS. The vast majority of companies that 
operate oil and gas facilities on the OCS (70%) are considered to be 
small companies according to the size standards.
    Due to the significant costs involved to develop, construct, and 
produce energy in the offshore environment, a project would need to 
generate a significant amount of electricity or energy to be 
economical. There are provisions in the rule for short-term leases that 
would allow a company to do preliminary site work and research without 
the same level of commitment as a commercial production lease. This is 
one way a small company could approach offshore development, without 
committing extensive resources to a project.
    In addition the costs of operating in an offshore environment, are 
significantly higher than the costs of complying with this regulation. 
For example, this proposed rule would require the use of Certified 
Verification Agents (CVA). Although this is an additional cost to 
project developers, the cost of the CVA is small in comparison to the 
cost of designing and engineering the projects. Much of the data 
required for this proposed rule would need to be gathered by the 
project developers anyway (i.e. site surveys). The rule requires the 
data be provided to MMS to ensure protection of environment and 
endangered species.
    MMS also has provisions that allow for departures from the 
requirements in this proposed rule. MMS can evaluate, on a case-by-case 
basis, if any part of this proposed regulation places an undue burden 
on a small business and make adjustments to the requirements, as 
appropriate. However, MMS cannot waive requirements to comply with 
other Federal laws, such as NEPA and CZMA.
    Your comments are important. The Small Business and Agriculture 
Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards were 
established to receive comments from small businesses about Federal 
agency enforcement actions. The Ombudsman will annually evaluate the 
enforcement activities and rate each agency's responsiveness to small 
business. If you wish to comment on the actions of MMS, call: 1-888-
734-3247. You may comment to the Small Business Administration without 
fear of retaliation. Disciplinary action for retaliation by an MMS 
employee may include suspension or termination from employment with the 
DOI.

Small Business Regulatory Enforcement Fairness Act (SBREFA)

    The proposed rule is not a major rule under the SBREFA (5 U.S.C. 
804(2)). This proposed rule:
    a. Would not have an annual effect on the economy of $100 million 
or more, as discussed previously under the Regulatory Planning and 
Review section.
    b. Would not cause a major increase in costs or prices for 
consumers, individual industries, Federal, State, or local government 
agencies, or geographic regions. This rule would allow greater 
production of energy from the OCS and would make more energy available 
in the US.
    c. Would not have significant adverse effects on competition, 
employment, investment, productivity, innovation, or the ability of 
U.S.-based enterprises to compete with foreign-based enterprises. 
Leasing on the U.S. OCS is limited to residents of the U.S. or 
companies incorporated in the U.S. under this proposed rule. This rule 
would encourage competition, employment, investment, productivity, 
innovation, and would not have an adverse impact on the ability of 
U.S.-based companies to compete with foreign-based enterprises. This 
rule would allow production of energy (e.g., electricity) in areas 
where there is no production at this time. It would encourage companies 
to explore new avenues for generating electricity and other energy from 
sources other than oil and gas. The proposed rule includes a 
competitive process for leasing. New developments and projects would 
create new jobs and investment. Since this is a nascent industry in the 
U.S., it would also encourage the development of new technology.

Unfunded Mandates Reform Act

    This rule does not impose an unfunded mandate on State, local, or 
tribal governments or the private sector of more than $100 million per 
year. The rule does not have a significant or unique effect on State 
local or tribal governments or the private sector. This proposed rule 
does not impose any (zero) Federal mandates on State, local, or tribal 
governments or any mandate on any part of the private sector that would 
involve more than $100 million a year

[[Page 39446]]

to operate on the OCS; therefore, a statement containing the 
information required by the Unfunded Mandates Reform Act (2 U.S.C. 1531 
et seq.) is not required.

Takings Implication Assessment (E.O. 12630)

    Under the criteria in E.O. 12630, this proposed rule does not have 
significant takings implications. The proposed rule is not a 
governmental action capable of interference with constitutionally 
protected property rights. There are not, at present, any property 
rights in alternative energy facilities. Further, the rule on alternate 
use of existing facilities would require consent of the owner of the 
existing facility to any RUE MMS might issue. A Takings Implication 
Assessment is not required.

Federalism (E.O. 13132)

    Under the criteria in E.O. 13132, this proposed rule does not have 
sufficient federalism implications to warrant the preparation of a 
Federalism Assessment. This proposed rule would not substantially and 
directly affect the relationship between the Federal and State 
governments. To the extent that State and local governments have a role 
in OCS activities, there is nothing in this proposed rule that would 
affect that role. A Federalism Assessment is not required.

Civil Justice Reform (E.O. 12988)

    This rule complies with the requirements of E.O. 12988. 
Specifically, this rule:
    (a) Meets the criteria of section 3(a) requiring that all 
regulations be reviewed to eliminate errors and ambiguity and be 
written to minimize litigation; and
    (b) Meets the criteria of section 3(b)(2) requiring that all 
regulations be written in clear language and contain clear legal 
standards.

Consultation With Indian Tribes (E.O. 13175)

    Under the criteria in E.O. 13175, we have evaluated this proposed 
rule and determined that it has no potential effects on federally 
recognized Indian tribes. There are no Indian or tribal lands in the 
OCS.

Data Quality Act

    In developing this rule we did not conduct or use a study, 
experiment, or survey requiring peer review under the Data Quality Act 
(Pub. L. 106-554, app. C Sec.  515, 114 Stat. 2763, 2763A-153-154).

Paperwork Reduction Act (PRA)

    This proposed rule contains a collection of information being 
submitted to the Office of Management and Budget (OMB) for review and 
approval under Sec.  3507(d) of the PRA. The title of the collection of 
information for this rule is ``30 CFR 285--Alternative Energy and 
Alternate Uses of Existing Facilities on the Outer Continental Shelf'' 
(OMB Control Number 1010-NEW). Respondents primarily will be an 
estimated 15-25 Federal OCS companies that submit unsolicited 
proposals, lessees and designated operators, and ROW or RUE grant 
holders. Other potential respondents are companies or States and local 
governments that submit information or comments relative to alternative 
energy-related uses of the OCS; certified verification agents (CVAs); 
and surety or third-party guarantors. The frequency of response varies 
depending upon the requirement. Responses to this collection of 
information are mandatory or are required to obtain or retain a 
benefit. The MMS will protect proprietary information according to the 
Freedom of Information Act, its implementing regulations, and 30 CFR 
285.112 through 285.114.
    As discussed earlier in the preamble, the rule establishes 
regulations to implement a new program to allow access for operations 
of alternative energy projects and alternate uses of existing 
facilities on the OCS. The information collection requirements are all 
new paperwork burdens. We estimate 31,251 total annual burden hours. 
Based on a cost factor of $85 per hour, we estimate the total annual 
hour burden cost to industry at $2,656,335 ($85 x 31,251 hours = 
$2,656,335).
    In addition, there are three non-hour cost burdens associated with 
this rulemaking.
     The first concerns Sec.  285.111 requiring respondents to 
pay a processing fee for MMS document or study preparation to process 
applications and requests. The processing fee is $4,000 and we 
anticipate approximately four payments.
     The second non-hour cost burden concerns Sec.  
285.111(b)(3) requiring respondents to pay for the cost of independent 
third-party contractors selected by MMS for all or part of any 
document, study, or other activity (including NEPA) and providing the 
results to MMS. We estimate the non-hour cost burden of this study 
could range from $100,000 to $2,000,000, depending on the nature of the 
study. For estimating purposes, we have averaged the cost range at 
$950,000 per submittal. We expect three submissions to be done by a 
contractor.
     And the last concerns Sec.  285.417(b) requiring 
respondents to pay for a site-specific study to evaluate the cause of 
harm or damage to natural resources, and submit a report to MMS. We 
estimate the non-hour cost burden of this study could range from 
$100,000 to $2,000,000, depending on the nature of the study. For 
estimating purposes, we have averaged the cost range at $950,000 per 
submittal. We expect one submittal.
    We estimate the total annual non-hour cost burden for these 
requirements at $3,816,000.
    The following table provides a breakdown of the paperwork burden 
estimates for this proposed rulemaking.

----------------------------------------------------------------------------------------------------------------
                                         Reporting and
     Section(s) in 30 CFR 285            recordkeeping         Hour burden    Average number of    Annual burden
                                          requirement                          annual responses        hours
----------------------------------------------------------------------------------------------------------------
                                                Non-hour costs
----------------------------------------------------------------------------------------------------------------
                                          Subpart A--General Provisions
----------------------------------------------------------------------------------------------------------------
102; 105; 110....................     These sections contain general references to submitting                  0
                                     requests, applications, plans, notices, and/or supplemental
                                    information for MMS approval--burdens covered under specific
                                                            requirements.
----------------------------------------------------------------------------------------------------------------
102(e)...........................  State and local                        1  6 agreements.......               6
                                    governments enter into
                                    task force or joint
                                    planning or
                                    coordination agreement
                                    with MMS.
----------------------------------------------------------------------------------------------------------------

[[Page 39447]]


103..............................  Request general                        2  6 requests.........              12
                                    departures not
                                    specifically covered
                                    elsewhere in part 285.
----------------------------------------------------------------------------------------------------------------
105(c)...........................  Make oral requests and                 1  8 requests.........               8
                                    submit written follow
                                    up within 10 business
                                    days not specifically
                                    covered elsewhere in
                                    part 285.
----------------------------------------------------------------------------------------------------------------
106(b)(1)........................  Request exception from                 1  1 exception........               1
                                    exclusion or
                                    disqualification from
                                    participating in
                                    transactions covered by
                                    Federal non-procurement
                                    debarment and
                                    suspension system.
----------------------------------------------------------------------------------------------------------------
107; 212(f); 230(f); 302(a);       Submit evidence of                     2  20 evidence                      40
 408(b)(6); 409(c); 1005(c);        qualifications to hold                    submissions.
 1007(c); 1013(b)(7).               a lease or grant.
----------------------------------------------------------------------------------------------------------------
108; 530(b)......................  Notify MMS within 3                    1  1 notice...........               1
                                    business days after
                                    learning of any action
                                    filed alleging
                                    respondent is insolvent
                                    or bankrupt.
----------------------------------------------------------------------------------------------------------------
109..............................  Notify MMS in writing of    Exempt under 5 CFR 1320.3(h)(1).                0
                                    merger, name change, or
                                    change of business form
                                    no later than 120
                                    calendar days after
                                    earliest of either the
                                    effective date or
                                    filing date.
----------------------------------------------------------------------------------------------------------------
111..............................  Within 30 calendar days               .5  4 processing fee                  2
                                    of receiving bill,                        payment
                                    submit processing fee                     submissions.
                                    payments for MMS
                                    document or study
                                    preparation to process
                                    applications and
                                    requests.
                                                            ----------------------------------------------------
                                                                      4 MMS payments x $4,000 = $16,000
----------------------------------------------------------------------------------------------------------------
111(b)(2), (3)...................  Submit comments on                     2  4 processing fee                  8
                                    proposed processing fee                   comments or
                                    or request approval to                    reduction requests.
                                    perform or directly pay
                                    contractor for all or
                                    part of any document,
                                    study, or other
                                    activity, to reduce MMS
                                    processing costs.
----------------------------------------------------------------------------------------------------------------
111(b)(3)........................  Perform, conduct,                 19,000  1 submission.......          19,000
                                    develop, etc., all or
                                    part of any document,
                                    study, or other
                                    activity; and provide
                                    results to MMS to
                                    reduce MMS processing
                                    fee.
----------------------------------------------------------------------------------------------------------------
111(b)(3)........................  Pay contractor for all       3 contractor payments x $950,000 = $2,850,000
                                    or part of any
                                    document, study, or
                                    other activity, and
                                    provide results to MMS
                                    to reduce MMS
                                    processing costs.
----------------------------------------------------------------------------------------------------------------
111(b)(7); 118(a); 290.2; 436(c).  Appeal MMS estimated        Exempt under 5 CFR 1320.4(a)(2),                0
                                    processing costs,                        (c).
                                    decisions, or orders
                                    pursuant to 30 CFR 290.
----------------------------------------------------------------------------------------------------------------
113(b)...........................  Respondents submit                     4  1 agreement........               4
                                    agreement to allow MMS
                                    to disclose the data
                                    and information exempt
                                    from disclosure under
                                    the Freedom of
                                    Information Act.
----------------------------------------------------------------------------------------------------------------
115(c)...........................  Request approval to use                1  1 request..........               1
                                    later edition of a
                                    document incorporated
                                    by reference or
                                    alternative compliance.
----------------------------------------------------------------------------------------------------------------
116..............................  The Director may                       4  25.................             100
                                    occasionally request
                                    information to
                                    administer and carry
                                    out the offshore
                                    alternative energy
                                    program via Federal
                                    Register Notices.
----------------------------------------------------------------------------------------------------------------
118(c); 225(b)...................  Within 15 calendar days     Exempt under 5 CFR 1320.3(h)(9).                0
                                    of bid rejection,
                                    request reconsideration
                                    of bid decision or
                                    rejection.
----------------------------------------------------------------------------------------------------------------
    Subtotal...............................................................  78 responses.......          19,183
                                  ------------------------------------------------------------------------------
                                           $2,866,000 non-hour costs
----------------------------------------------------------------------------------------------------------------

[[Page 39448]]


                              Subpart B--Issuance of OCS Alternative Energy Leases
----------------------------------------------------------------------------------------------------------------
200; 224; 231; 235; 236..........  These sections contain references to information submissions,               0
                                      approvals, requests, applications, plans, payments, etc.,
                                       the burdens for which are covered elsewhere in part 285
----------------------------------------------------------------------------------------------------------------
210; 211(a), (b), (c); 212 thru    Submit comments in                     4  16 comments........              64
 215.                               response to Federal
                                    Register notices on
                                    Request for Interest in
                                    OCS Leasing, Call for
                                    Information and
                                    Nominations (Call),
                                    Area Identification,
                                    and the Proposed Sale
                                    Notice.
----------------------------------------------------------------------------------------------------------------
211(d); 215; 220 thru 222;         Submit bid, payments,                  5  12 bids............              60
 231(c)(2).                         and required
                                    information in response
                                    to Federal Register
                                    Final Sale Notice.
----------------------------------------------------------------------------------------------------------------
223..............................  Within 15 calendar days                4  1 agreement or                    4
                                    of MMS notification of                    notice.
                                    tied bids, tied bidders
                                    file agreement to
                                    accept joint lease or
                                    notify MMS which bidder
                                    will become lessee.
----------------------------------------------------------------------------------------------------------------
224..............................  Within 10 business days,               1  5 lease executions.               5
                                    execute 3 copies of
                                    lease form and return
                                    to MMS with required
                                    payments, including
                                    evidence that agent is
                                    authorized to act for
                                    bidder; if applicable,
                                    submit information to
                                    support delay in
                                    execution.
----------------------------------------------------------------------------------------------------------------
230; 231(a)......................  Submit unsolicited                     5  5 unsolicited                    25
                                    request and acquisition                   requests.
                                    fee for a commercial or
                                    limited lease.
----------------------------------------------------------------------------------------------------------------
231(b)...........................  Submit comments in                     4  4 unsolicited                    16
                                    response to Federal                       requests.
                                    Register notice re
                                    interest of unsolicited
                                    request for a lease.
----------------------------------------------------------------------------------------------------------------
231(e), (f)......................  Submit decision to                     2  4 lease decisions..               8
                                    accept or reject terms
                                    and conditions of
                                    noncompetitive lease.
----------------------------------------------------------------------------------------------------------------
235(b); 236(b)...................  Request additional time                1  2 requests.........               2
                                    to extend preliminary
                                    or site assessment term
                                    of commercial or
                                    limited lease,
                                    including revised
                                    schedule for SAP, COP,
                                    or GAP submission.
----------------------------------------------------------------------------------------------------------------
237(b)...........................  Request lease be dated                 1  1 request..........               1
                                    and effective 1st day
                                    of month in which
                                    signed.
----------------------------------------------------------------------------------------------------------------
    Subtotal...............................................................  50 responses.......             185
----------------------------------------------------------------------------------------------------------------
                     Subpart C--ROW Grants and RUE Grants for Alternative Energy Activities
----------------------------------------------------------------------------------------------------------------
306; 309; 315; 316...............  These sections contain references to information submissions,               0
                                      approvals, requests, applications, plans, payments, etc.,
                                       the burdens for which are covered elsewhere in part 285
----------------------------------------------------------------------------------------------------------------
302(a); 305; 306.................  Submit 1 paper copy and                5  1 ROW/RUE request..               5
                                    1 electronic version of
                                    a request for a new or
                                    modified ROW or RUE and
                                    required information,
                                    including
                                    qualifications to hold
                                    a grant.
----------------------------------------------------------------------------------------------------------------
307; 308(a)(1)...................  Submit comments on                     4  2 comments.........               8
                                    competitive interest in
                                    response to Federal
                                    Register notice of
                                    proposed ROW or RUE
                                    grant area or comments
                                    on notice of grant
                                    auction.
----------------------------------------------------------------------------------------------------------------
308(a)(2), (b); 315; 316.........  Submit bid and payments                5  1 bid..............               5
                                    in response to Federal
                                    Register notice of
                                    auction for a ROW or
                                    RUE grant.
----------------------------------------------------------------------------------------------------------------
309..............................  Submit decision to                     2  1 grant decision...               2
                                    accept or reject terms
                                    and conditions of
                                    noncompetitive ROW or
                                    RUE grant.
----------------------------------------------------------------------------------------------------------------
    Subtotal...............................................................  5 responses........              20
----------------------------------------------------------------------------------------------------------------

[[Page 39449]]


                                    Subpart D--Lease and Grant Administration
----------------------------------------------------------------------------------------------------------------
400; 401; 402; 405; 409; 416, 433  These sections contain references to information submissions,               0
                                      approvals, requests, applications, plans, payments, etc.,
                                       the burdens for which are covered elsewhere in part 285
----------------------------------------------------------------------------------------------------------------
401(b)...........................  Take measures directed               100  1 cessation                     100
                                    by MMS in cessation                       measures report.
                                    order and submit
                                    reports in order to
                                    resume activities.
----------------------------------------------------------------------------------------------------------------
405(d)...........................  Submit written notice of    Exempt under 5 CFR 1320.3(h)(1)                 0
                                    change of address.
----------------------------------------------------------------------------------------------------------------
405(e)...........................  If designated operator                 1  1 new DO notice....               1
                                    (DO) changes, notify
                                    MMS and identify new DO
                                    for MMS approval.
----------------------------------------------------------------------------------------------------------------
408 thru 411.....................  Within 90 calendar days                1  2 assignment                      2
                                    after last party                          requests/
                                    executes a transfer                       instruments
                                    agreement, submit 1                       submissions.
                                    paper copy and 1
                                    electronic version of a
                                    lease or grant
                                    assignment application,
                                    including originals of
                                    each instrument
                                    creating or
                                    transferring ownership
                                    of record title,
                                    eligibility and other
                                    qualifications; and
                                    evidence that agent is
                                    authorized to execute
                                    assignment.
----------------------------------------------------------------------------------------------------------------
415(a)(1); 416; 420(a), (b);       Submit request for                    10  2 suspension                     20
 421(b); 428(b).                    suspension and required                   requests.
                                    information no later
                                    than 90 calendar days
                                    prior to lease or grant
                                    expiration.
----------------------------------------------------------------------------------------------------------------
417(b)...........................  Conduct, and if required             100  1 study/submission.             100
                                    pay for, site-specific
                                    study to evaluate cause
                                    of harm or damage; and
                                    submit 1 paper copy and
                                    1 electronic version of
                                    study and results.
                                                            ----------------------------------------------------
                                                                        1 study x $950,000 = $950,000
----------------------------------------------------------------------------------------------------------------
425 thru 428; 652(a).............  Request lease or grant                 6  2 renewal requests.              12
                                    renewal no later than
                                    180 calendar days
                                    before termination date
                                    of your limited lease
                                    or grant, or no later
                                    than 2 years before
                                    termination date of
                                    operations term of
                                    commercial lease.
----------------------------------------------------------------------------------------------------------------
435; 658(c)(2)...................  Submit 1 paper copy and                1  2 relinquish                      2
                                    1 electronic version of                   applications.
                                    application to
                                    relinquish lease or
                                    grant.
----------------------------------------------------------------------------------------------------------------
436; 437.........................  Provide information for     Exempt under 5 CFR 1320.3(h)(9).                0
                                    reconsideration of MMS
                                    decision to contract or
                                    cancel lease or grant
                                    area.
----------------------------------------------------------------------------------------------------------------
    Subtotal...............................................................  11 responses.......             237
                                  ------------------------------------------------------------------------------
                                                   $950,000
----------------------------------------------------------------------------------------------------------------
                            Subpart E--Payments and Financial Assurance Requirements
----------------------------------------------------------------------------------------------------------------
An * indicates the primary cites for providing bonds or other financial assurance, and the                     0
 burdens include any previous or subsequent references throughout part 285 to furnish, replace,
 or provide additional bonds, securities, or financial assurance. This subpart contains
 references to other information submissions, approvals, requests, applications, plans, etc.,
 the burdens for which are covered elsewhere in part 285.
----------------------------------------------------------------------------------------------------------------
500 thru 508; 1011...............  Submit payor                 Burdens covered by information                 0
                                    information, payments      collections approved for 30 CFR
                                    and payment                         Subchapter A.
                                    information, and
                                    maintain auditable
                                    records according to
                                    subchapter A
                                    regulations or guidance.
----------------------------------------------------------------------------------------------------------------
509..............................  Submit application and                 1  1 waiver or rental                1
                                    required information                      reduction.
                                    for waiver or reduction
                                    of rental or other
                                    payment.
----------------------------------------------------------------------------------------------------------------
* 515; 516(a)(1), (b); 525(a)      Execute and provide                    1  6 base-level lease                6
 thru (f).                          $100,000 minimum lease-                   bonds or other
                                    specific bond or other                    security.
                                    approved security; or
                                    increase bond level if
                                    required.
----------------------------------------------------------------------------------------------------------------
* 516(a)(2), (3), (b); 517;        Execute and provide SAP                1  5 SAP and COP bonds               5
 525(a) thru (f).                   and COP commercial
                                    lease bonds in amounts
                                    determined by MMS.
----------------------------------------------------------------------------------------------------------------

[[Page 39450]]


517(d)(1)........................  Submit comments on                     1  3 adjustment                      3
                                    proposed adjustment to                    comments.
                                    bond amounts.
----------------------------------------------------------------------------------------------------------------
517(d)(2)........................  Request bond reduction                 5  2 reduction                      10
                                    and submit evidence to                    requests.
                                    justify.
----------------------------------------------------------------------------------------------------------------
* 520; 521; 525(a) thru (f)......  Execute and provide                    1  1 base-level ROW/                 1
                                    $300,000 minimum                          RUE bond.
                                    limited lease or grant-
                                    specific bond or
                                    increase financial
                                    assurance if required.
----------------------------------------------------------------------------------------------------------------
525(g)...........................  Surety notice to lessee                1  1 surety notice....               1
                                    or ROW/RUE grant holder
                                    and MMS within 5
                                    business days after
                                    initiating insolvency
                                    or bankruptcy
                                    proceeding, or Treasury
                                    decertifies surety.
----------------------------------------------------------------------------------------------------------------
* 526............................  In lieu of surety bond,                2  1 other security                  2
                                    pledge other types of                     pledge.
                                    securities, including
                                    authority for MMS to
                                    sell and use proceeds.
----------------------------------------------------------------------------------------------------------------
* 527............................  In lieu of surety bond,                2  1 decommissioning                 2
                                    request authorization                     account.
                                    to establish
                                    decommissioning
                                    account, including
                                    written authorizations
                                    and approvals
                                    associated with account.
----------------------------------------------------------------------------------------------------------------
530(a)...........................  Notify MMS promptly of                 1  1 notice...........               1
                                    lapse in bond or other
                                    security.
----------------------------------------------------------------------------------------------------------------
532(b)...........................  Surety requests MMS                    1  1 request..........               1
                                    terminate period of
                                    liability and notifies
                                    lessee or ROW/RUE grant
                                    holder.
----------------------------------------------------------------------------------------------------------------
533(a)(2)(ii), (iii).............  Provide agreement from                 3  1 surety agreement.               3
                                    surety issuing new bond
                                    to assume all or
                                    portion of outstanding
                                    liabilities.
----------------------------------------------------------------------------------------------------------------
536(b)...........................  Within 10 business days               16  1 agreement                      16
                                    following MMS notice,                     demonstration.
                                    lessee, grant holder,
                                    or surety agree to and
                                    demonstrate to MMS that
                                    lease will be brought
                                    into compliance.
----------------------------------------------------------------------------------------------------------------
    Subtotal...............................................................  25 responses.......              52
----------------------------------------------------------------------------------------------------------------
                                  Subpart F--Plans and Information Requirements
----------------------------------------------------------------------------------------------------------------
Two ** indicate the primary cites for Site Assessment Plans (SAPs), Construction and Operations                0
 Plans (COPs), and General Activities Plans (GAPs); and the burdens include any previous or
 subsequent references throughout part 285 to submission and approval. This subpart contains
 references to other information submissions, approvals, requests, applications, plans, etc.,
 the burdens for which are covered elsewhere in part 285.
----------------------------------------------------------------------------------------------------------------
** 600(a); 601(a), (b), (c); 605   Within 6 months after                240  6 SAPs.............           1,440
 thru 613.                          issuance of a
                                    competitive lease or
                                    grant, or within 60
                                    calendar days after
                                    determination of no
                                    competitive interest,
                                    submit 1 paper copy and
                                    1 electronic version of
                                    a SAP, including air
                                    quality and all
                                    required information,
                                    certifications, etc.
----------------------------------------------------------------------------------------------------------------
** 600(b); 601(c), (d)(1); 618;    If requesting an                   1,000  3 COPs.............           3,000
 620 thru 629; 633.                 operations term for
                                    commercial lease, at
                                    least 6 months before
                                    the end of site
                                    assessment term, submit
                                    1 paper copy and 1
                                    electronic version of a
                                    COP, including air
                                    quality and all
                                    required information,
                                    surveys and reports,
                                    certifications, project
                                    easements, etc.
----------------------------------------------------------------------------------------------------------------
** 600(c); 601(a), (b); 640 thru   Within 6 months after                240  1 GAP..............             240
 647.                               issuance of a
                                    competitive lease or
                                    grant, or within 60
                                    calendar days after
                                    determination of no
                                    competitive interest,
                                    submit 1 paper copy and
                                    1 electronic version of
                                    a GAP, including air
                                    quality and all
                                    required information,
                                    surveys and reports,
                                    certifications, project
                                    easements, etc.
----------------------------------------------------------------------------------------------------------------

[[Page 39451]]


602 \1\..........................  Until MMS releases                     2  9 records                        18
                                    financial assurance,                      maintenance/
                                    respondents must                          submissions.
                                    maintain, and provide
                                    to MMS if requested,
                                    all data and
                                    information related to
                                    compliance with
                                    required terms and
                                    conditions of SAP, COP,
                                    or GAP.
----------------------------------------------------------------------------------------------------------------
** 612(e), (f); 617..............  Submit revised or                     50  1 revised or                     50
                                    modified SAPs and                         modified SAP.
                                    required additional
                                    information.
----------------------------------------------------------------------------------------------------------------
614..............................  Before beginning                      30  6 surveys/reports..             180
                                    construction of OCS
                                    facility described in
                                    SAP, complete survey
                                    activities identified
                                    in SAP and submit
                                    initial findings. This
                                    only includes the time
                                    involved in submitting
                                    the findings, it does
                                    not include the survey
                                    time as these surveys
                                    would be conducted as
                                    good business practice.
----------------------------------------------------------------------------------------------------------------
615(a)...........................  Notify MMS in writing                  1  5 completion                      5
                                    within 30 calendar days                   construction
                                    of completion of                          notices.
                                    construction and
                                    installation activities
                                    under SAP.
----------------------------------------------------------------------------------------------------------------
615(b)...........................  Submit annual report                  30  8 annual reports...             240
                                    summarizing findings
                                    from site assessment
                                    activities.
----------------------------------------------------------------------------------------------------------------
615(c)...........................  Submit annual, or at                  40  8 compliance                    320
                                    other time periods as                     certifications.
                                    MMS determines, SAP
                                    compliance
                                    certification and
                                    reports.
----------------------------------------------------------------------------------------------------------------
617(a)...........................  Notify MMS in writing                 10  1 notice before                  10
                                    before conducting any                     activity.
                                    activities not
                                    approved, or provided
                                    for, in SAP; provide
                                    additional information
                                    if requested.
----------------------------------------------------------------------------------------------------------------
** 601(d)(2), 628(f); 632(b); 634  Submit revised or                     50  1 revised or                     50
                                    modified COPs,                            modified COP.
                                    including project
                                    easements, and all
                                    required additional
                                    information.
----------------------------------------------------------------------------------------------------------------
627(c)...........................  Include oil spill          Burden covered under 1010-0091, 30               0
                                    response plan as                       CFR 254.
                                    required by part 254.
----------------------------------------------------------------------------------------------------------------
631..............................  Request deviation from                 2  1 deviation request               2
                                    approved COP schedule.
----------------------------------------------------------------------------------------------------------------
633(b)...........................  Submit annual, or at                  80  9 compliance                    720
                                    other time periods as                     certifications.
                                    MMS determines, COP
                                    compliance
                                    certification and
                                    reports.
----------------------------------------------------------------------------------------------------------------
634(a)...........................  Notify MMS in writing                 10  1 notice before                  10
                                    before conducting any                     activity.
                                    activities not approved
                                    or provided for in COP,
                                    and provide additional
                                    information if
                                    requested.
----------------------------------------------------------------------------------------------------------------
635..............................  Notify MMS any time                    1  1 termination                     1
                                    commercial operations                     notice.
                                    cease without an
                                    approved suspension.
----------------------------------------------------------------------------------------------------------------
636(a)...........................  Notify MMS in writing no               1  3 commence notices.               3
                                    later than 30 calendar
                                    days after commencing
                                    activities associated
                                    with placement of
                                    facilities on lease
                                    area.
----------------------------------------------------------------------------------------------------------------
636(b)...........................  Notify MMS in writing no               1  3 completion                      3
                                    later than 30 calendar                    notices.
                                    days after completion
                                    of construction and
                                    installation activities.
----------------------------------------------------------------------------------------------------------------
636(c)...........................  Notify MMS in writing at               1  3 initial ops                     3
                                    least 7 calendar days                     notices.
                                    before commencing
                                    commercial operations.
----------------------------------------------------------------------------------------------------------------
** 647(f); 655; 658(c)(3)........  Submit revised or                     50  1 revised or                     50
                                    modified GAPs and                         modified GAP.
                                    required additional
                                    information.
----------------------------------------------------------------------------------------------------------------

[[Page 39452]]


651..............................  Before beginning                      30  5 surveys/reports..             150
                                    construction of OCS
                                    facility described in
                                    GAP, complete survey
                                    activities identified
                                    in GAP and submit
                                    initial findings. This
                                    only includes the time
                                    involved in submitting
                                    the findings; it does
                                    not include the survey
                                    time as these surveys
                                    would be conducted as
                                    good business practice.
----------------------------------------------------------------------------------------------------------------
653(a)...........................  Notify MMS in writing                  1  5 construction                    5
                                    within 30 calendar days                   completion notices.
                                    of completion of
                                    construction and
                                    installation activities
                                    under the GAP.
----------------------------------------------------------------------------------------------------------------
653(b)...........................  Submit annual report                  30  8 annual reports...             240
                                    summarizing findings
                                    from activities
                                    conducted under
                                    approved GAP.
----------------------------------------------------------------------------------------------------------------
653(c)...........................  Submit annual, or at                  40  8 compliance                    320
                                    other time periods as                     certifications.
                                    MMS determines, GAP
                                    compliance
                                    certification and
                                    reports.
----------------------------------------------------------------------------------------------------------------
655(a)...........................  Notify MMS in writing                 10  1 notice before                  10
                                    before conducting any                     activity.
                                    activities not approved
                                    or provided for in GAP,
                                    and provide additional
                                    information if
                                    requested.
----------------------------------------------------------------------------------------------------------------
656..............................  Notify MMS if at any                   1  1 termination                     1
                                    time approved GAP                         notice.
                                    activities cease
                                    without an approved
                                    suspension.
----------------------------------------------------------------------------------------------------------------
658(c)(1)........................  If after construction,                 3  1 deviation notice/               3
                                    cable or pipeline                         MMS evidence.
                                    deviate from approved
                                    COP or GAP, notify
                                    affected lease
                                    operators and ROW/RUE
                                    grant holders of
                                    deviation and provide
                                    MMS evidence of such
                                    notices.
----------------------------------------------------------------------------------------------------------------
    Subtotal...............................................................  100 responses......           7,074
----------------------------------------------------------------------------------------------------------------
                            Subpart G--Facility Design, Fabrication, and Installation
----------------------------------------------------------------------------------------------------------------
Three *** indicate the primary cites for the reports discussed in this subpart, and the burdens                0
 include any previous or subsequent references throughout part 285 to submitting and obtaining
 approval. This subpart contains references to other information submissions, approvals,
 requests, applications, plans, etc., the burdens for which are covered elsewhere in part 285.
----------------------------------------------------------------------------------------------------------------
*** 700(a)(1), (b), (c); 701.....  Submit Facility Design               200  3 Facility Design               600
                                    Report, including 1                       Reports.
                                    paper copy and 1
                                    electronic copy of the
                                    cover letter, and all
                                    required information (1-
                                    3 paper or electronic
                                    copies as specified).
----------------------------------------------------------------------------------------------------------------
*** 700(a)(2); (b), (c); 702.....  Submit 1 paper copy and              160  3 Fabrication &                 480
                                    1 electronic copy of a                    Installation
                                    Fabrication and                           Reports.
                                    Installation Report and
                                    all required
                                    information.
----------------------------------------------------------------------------------------------------------------
705(b); 707; 712.................  Certified Verification               100  3 CVA design                    300
                                    Agent (CVA) conducts                      interim reports.
                                    independent assessment
                                    of the facility design
                                    and submits reports to
                                    lessee or grant holder
                                    and MMS--interim
                                    reports if required,
                                    and 1 electronic copy
                                    and 1 paper copy of the
                                    final report.
                                                            ----------------------------------------------------
                                                                        100  3 CVA final reports             300
----------------------------------------------------------------------------------------------------------------
705(b); 708; 709; 710; 712.......  CVA conducts independent             100  3 CVA interim                   300
                                    assessments on the                        reports.
                                    fabrication and
                                    installation
                                    activities, informs
                                    lessee or grant holder
                                    if procedures are
                                    changed or design
                                    specifications are
                                    modified; and submits
                                    reports to lessee or
                                    grant holder and MMS--
                                    interim reports if
                                    required, and 1
                                    electronic copy and 1
                                    paper copy of the final
                                    report.
                                                            ----------------------------------------------------
                                                                        100  3 CVA final reports             300
----------------------------------------------------------------------------------------------------------------

[[Page 39453]]


705(b); 711; 712.................  CVA monitors major                    20  1 CVA interim                    20
                                    project modifications                     report.
                                    and repairs and submits
                                    reports to lessee or
                                    grant holder and MMS--
                                    interim reports if
                                    required, and 1
                                    electronic copy and 1
                                    paper copy of the final
                                    report.
                                                            ----------------------------------------------------
                                                                         15  1 CVA final report.              15
----------------------------------------------------------------------------------------------------------------
706..............................  Submit for approval with              16  13 new CVA                      208
                                    SAP, COP, or GAP,                         nominations.
                                    initial nominations for
                                    a CVA or new
                                    replacement CVA
                                    nomination, and
                                    required information.
----------------------------------------------------------------------------------------------------------------
708(b)(2)........................  Lessee or grant holder                 1  1 notice...........               1
                                    notify MMS if
                                    modifications
                                    identified by CVA are
                                    accepted.
----------------------------------------------------------------------------------------------------------------
709(a)(14); 710(a)(2), (e) \1\...  Make fabrication quality               1  3 records retention               3
                                    control, installation
                                    towing, and other
                                    records available to
                                    CVA for review
                                    (retention required by
                                    Sec.   285.714).
----------------------------------------------------------------------------------------------------------------
713(a)...........................  Notify MMS within 10                   1  2 commence notices.               2
                                    business days after
                                    commencing commercial
                                    operations.
----------------------------------------------------------------------------------------------------------------
714 \1\..........................  Until MMS releases                   100  3 lessees..........             300
                                    financial assurance,
                                    compile, retain, and
                                    make available to MMS
                                    and/or CVA the as-built
                                    drawings, design
                                    assumptions/analyses,
                                    summary of fabrication
                                    and installation
                                    examination records,
                                    inspection results, and
                                    records of repairs not
                                    covered in inspection
                                    report. Record original
                                    and relevant material
                                    test results of all
                                    primary structural
                                    materials; retain
                                    records during all
                                    stages of construction.
----------------------------------------------------------------------------------------------------------------
    Subtotal...............................................................  42 responses.......           2,829
----------------------------------------------------------------------------------------------------------------
              Subpart H--Environmental and Safety Management, Inspections, and Facility Assessments
----------------------------------------------------------------------------------------------------------------
801..............................  Submit information with                6  2 ESA/MMPA                       12
                                    plans to ensure                           submissions.
                                    proposed activities
                                    will be conducted in
                                    compliance with the
                                    Endangered Species Act
                                    (ESA) and Marine Mammal
                                    Protection Act (MMPA);
                                    including, agreements
                                    and mitigating measures
                                    designed to avoid or
                                    minimize adverse
                                    effects and incidental
                                    take of species or
                                    habitat.
----------------------------------------------------------------------------------------------------------------
801(d), (e)......................  Notify MMS if endangered               1  2 notices..........               2
                                    or threatened species,
                                    or their designated
                                    critical habitat, may
                                    be in the vicinity of
                                    the lease or grant or
                                    may be affected by
                                    lease or grant
                                    activities.
----------------------------------------------------------------------------------------------------------------
802(a), (b)......................  If applicable, consult                10  1 archaeological                 10
                                    with MMS and conduct                      report.
                                    survey and submit an
                                    archaeological report
                                    with applications or
                                    plans.
----------------------------------------------------------------------------------------------------------------
802(c); 803(b)...................  If requested, conduct                 10  1 archaeological                 10
                                    further archaeological                    report.
                                    investigations and
                                    submit report.
----------------------------------------------------------------------------------------------------------------
803(a)(2); 902(e)................  Notify MMS of                          3  1 archaeological                  3
                                    archaeological resource                   notice.
                                    within 72 hours of
                                    discovery.
----------------------------------------------------------------------------------------------------------------
803(d)...........................  If applicable, submit                 .5  1 payment..........              .5
                                    payment for MMS costs
                                    in carrying out
                                    National Historic
                                    Preservation Act
                                    responsibilities.
----------------------------------------------------------------------------------------------------------------
804(b), (c)......................  If required, conduct                  15  2 survey/report....              30
                                    additional surveys to
                                    define boundaries and
                                    avoidance distances and
                                    submit report.
----------------------------------------------------------------------------------------------------------------

[[Page 39454]]


807..............................  Determine appropriate                 70  10 air quality                  700
                                    air quality modeling                      modeling reports/
                                    protocol, conduct air                     info.
                                    quality modeling, and
                                    submit 3 copies of air
                                    quality modeling report
                                    and 3 sets of digital
                                    files as supporting
                                    information to plans.
----------------------------------------------------------------------------------------------------------------
810..............................  Submit safety management              35  10 safety                       350
                                    system description with                   management systems.
                                    the SAP, COP, or GAP.
----------------------------------------------------------------------------------------------------------------
813(b)(1)........................  Report within 24 hours                .5  3 safety equipment              1.5
                                    when any required                         reports.
                                    safety equipment taken
                                    out of service for more
                                    than 12 hours; provide
                                    written confirmation if
                                    oral report.
----------------------------------------------------------------------------------------------------------------
813(b)(2)........................  Submit written                         1  1 written                         1
                                    confirmation when                         confirmation.
                                    equipment removed from
                                    service for greater
                                    than 60 calendar days.
----------------------------------------------------------------------------------------------------------------
813(b)(3)........................  Notify MMS when                       .5  3 return to service             1.5
                                    equipment returned to                     notices.
                                    service; provide
                                    written confirmation if
                                    oral notice.
----------------------------------------------------------------------------------------------------------------
815(b)...........................  Notify MMS (oral or                   .5  3 repair notices...             1.5
                                    written) as soon as
                                    practicable of the
                                    repair of any P/L,
                                    cable, equipment, or
                                    facility associated
                                    with lease or grant.
----------------------------------------------------------------------------------------------------------------
815(c)...........................  When required, analyze               1.5  1 failure analysis              1.5
                                    cable, P/L, or facility                   report.
                                    failures to determine
                                    cause and as soon as
                                    available submit
                                    comprehensive written
                                    report.
----------------------------------------------------------------------------------------------------------------
816..............................  Submit plan of                         2  1 corrective action               2
                                    corrective action                         plan and report.
                                    report on observed
                                    detrimental affects on
                                    cable, P/L, or facility
                                    within 30 calendar days
                                    of discovery; take
                                    remedial action and
                                    submit report of
                                    remedial action within
                                    30 calendar days after
                                    completion.
----------------------------------------------------------------------------------------------------------------
822(a)(2)(iii), (b); 824(a) \1\..  Until MMS releases                     1  4 records retention               4
                                    financial assurance,
                                    maintain records of
                                    design, construction,
                                    operation, maintenance,
                                    repairs, investigation
                                    on or related to lease
                                    or ROW/RUE area, and
                                    make available to MMS
                                    for inspection.
----------------------------------------------------------------------------------------------------------------
823..............................  Request reimbursement                  2  1 reimbursement                   2
                                    within 90 calendar days                   request.
                                    for food, quarters, and
                                    transportation provided
                                    to MMS reps during
                                    inspection.
----------------------------------------------------------------------------------------------------------------
824(a)...........................  Develop annual self                   24  4 self assessment                96
                                    inspection plan                           plans.
                                    covering all
                                    facilities; retain with
                                    records, and make
                                    available to MMS upon
                                    request.
----------------------------------------------------------------------------------------------------------------
824(b)...........................  Conduct annual self                   36  4 annual reports...             144
                                    inspection and submit
                                    report by November 1.
----------------------------------------------------------------------------------------------------------------
825..............................  Based on API RP 2A-WSD,               60  4 assessments and               240
                                    perform assessment of                     mitigation actions.
                                    structures, initiate
                                    mitigation actions for
                                    structures that do not
                                    pass assessment
                                    process, retain
                                    information, and make
                                    available to MMS upon
                                    request.
----------------------------------------------------------------------------------------------------------------
830(a), (b), (c); 831 thru 833...  Immediately report               Oral .5  6 incidents........               3
                                    incidents to MMS via
                                    oral communications,
                                    submit written follow-
                                    up report within 15
                                    business days after the
                                    incident, and submit
                                    any required additional
                                    information.
                                                            ----------------------------------------------------
                                                                  Written 4  1 incident.........               4
----------------------------------------------------------------------------------------------------------------
830(d)...........................  Report oil spills as      Burden covered by 1010-0091, 30 CFR               0
                                    required by part 254.                    254.
----------------------------------------------------------------------------------------------------------------
    Subtotal...............................................................  66 responses.......       \2\ 1,620
----------------------------------------------------------------------------------------------------------------

[[Page 39455]]


                                           Subpart I--Decommissioning
----------------------------------------------------------------------------------------------------------------
902(b), (c), (d); 905, 906; 907;   Submit for approval 1                 20  1 decommissioning                20
 908(c); 909.                       paper copy and 1                          application.
                                    electronic copy of the
                                    decommissioning
                                    application and site
                                    clearance plan at least
                                    2 years before
                                    decommissioning
                                    activities begin, 90
                                    calendar days after
                                    completion of
                                    activities, or 90
                                    calendar days after
                                    cancellation,
                                    relinquishment, or
                                    other termination of
                                    lease or grant. Include
                                    requests that certain
                                    facilities remain in
                                    place for other
                                    activities, be
                                    converted to an
                                    artificial reef, or be
                                    toppled in place.
                                    Submit additional
                                    information requested
                                    or modify and resubmit
                                    application.
----------------------------------------------------------------------------------------------------------------
902(d); 908......................  Notify MMS at least 60                 1  1 decommissioning                 1
                                    calendar days before                      notice.
                                    commencing
                                    decommissioning
                                    activities.
----------------------------------------------------------------------------------------------------------------
910..............................  Within 60 calendar days                1  1 removal                         1
                                    after removing a                          verification.
                                    facility, verify to MMS
                                    that site is cleared.
----------------------------------------------------------------------------------------------------------------
912..............................  Within 60 calendar days                8  1 removal report...               8
                                    after removing a
                                    facility, cable, or
                                    pipeline, submit a
                                    written report.
----------------------------------------------------------------------------------------------------------------
We don't anticipate decommissioning activities for at least 5 years so the requirements have been given a
 minimal burden..
----------------------------------------------------------------------------------------------------------------
    Subtotal...............................................................  4 responses........              30
----------------------------------------------------------------------------------------------------------------
             Subpart J--RUEs for Energy and Marine-Related Activities Using Existing OCS Facilities
----------------------------------------------------------------------------------------------------------------
1004, 1005, 1006.................  Contact owner of                       1  1 request for RUE                 1
                                    existing facility and/                    to use existing
                                    or lessee of the area                     facility.
                                    to reach preliminary
                                    agreement to use
                                    facility and obtain
                                    concurring signatures;
                                    submit request to MMS
                                    for an alternative use
                                    RUE, including all
                                    required information/
                                    modifications.
----------------------------------------------------------------------------------------------------------------
1007(a), (b), (c)................  Submit indication of                   4  1 response.........               4
                                    competitive interest in
                                    response to Federal
                                    Register notice.
----------------------------------------------------------------------------------------------------------------
1007(c), (d), (e)................  Submit description of                  5  1 submission.......               5
                                    proposed activities and
                                    required information in
                                    response to Federal
                                    Register notice of
                                    competitive offering.
----------------------------------------------------------------------------------------------------------------
1007(f)..........................  Lessee or owner of                     1  1 decision.........               1
                                    facility submits
                                    decision to accept or
                                    reject proposals deemed
                                    acceptable by MMS.
----------------------------------------------------------------------------------------------------------------
1010(c)..........................  Request renewal of                     6  1 renewal request..               6
                                    Alternate Use RUE.
----------------------------------------------------------------------------------------------------------------
1012; 1016(b)....................  Provide financial                      1  1 bond or other                   1
                                    assurance as MMS                          security.
                                    determines in approving
                                    RUE for an existing
                                    facility, including
                                    additional security if
                                    required.
----------------------------------------------------------------------------------------------------------------
1013.............................  Submit request for                     1  1 RUE assignment                  1
                                    assignment of an                          request.
                                    alternative use RUE for
                                    an existing facility,
                                    including all required
                                    information.
----------------------------------------------------------------------------------------------------------------
1015.............................  Request relinquishment                 1  1 RUE relinquish...               1
                                    of RUE for an existing
                                    facility.
----------------------------------------------------------------------------------------------------------------
    Subtotal...............................................................  8 responses........              20
----------------------------------------------------------------------------------------------------------------
                                    30 CFR Parts 250 & 290 Proposed Revisions
----------------------------------------------------------------------------------------------------------------
250.1730(c)......................  Request departure from    No change to burden covered by 1010-              0
                                    requirement to remove a      0142, 30 CFR 250, subpart Q.
                                    platform or other
                                    facility.
----------------------------------------------------------------------------------------------------------------
250.1731(c)......................  Request deferral of                    1  1 deferral request.               1
                                    facility removal
                                    subject to RUE issued
                                    under this subpart.
----------------------------------------------------------------------------------------------------------------
250.290.2........................  Request reconsideration     Exempt under 5 CFR 1320.3(h)(9).                0
                                    of an MMS decision
                                    concerning a lease bid.
----------------------------------------------------------------------------------------------------------------

[[Page 39456]]


    Subtotal...............................................................  1 response.........               1
----------------------------------------------------------------------------------------------------------------
        Total Hour Burden..................................................  390 Responses......          31,251
----------------------------------------------------------------------------------------------------------------
            Total Non-Hour Burden Costs....$3,816,000 Non-Hour Costs.......
----------------------------------------------------------------------------------------------------------------
\1\ Retention of these records is usual and customary business practice; the burden is primarily to make them
  available to MMS and CVAs.

    As part of our continuing effort to reduce paperwork and respondent 
burdens, MMS invites the public and other Federal agencies to comment 
on any aspect of the reporting and recordkeeping burden. You may submit 
your comments directly to the Office of Information and Regulatory 
Affairs, OMB. You should provide MMS with a copy of your comments so 
that we can summarize all written comments and address them in the 
final rule preamble. Refer to the ADDRESSEES section for instructions 
on submitting comments. You may obtain a copy of the supporting 
statement for this new collection of information by contacting the 
Bureau's Information Collection Clearance Officer at (202) 208-7744.
    The PRA provides that an agency may not conduct or sponsor a 
collection of information unless it displays a currently valid OMB 
control number. Until OMB approves this collection of information and 
assigns an OMB control number and the regulations become effective, you 
are not required to respond. The OMB is required to make a decision 
concerning the collection of information of this proposed regulation 
between 30 to 60 days after publication of this document in the Federal 
Register. Therefore, a comment to OMB is best assured of having its 
full effect if OMB receives it by August 8, 2008. This does not affect 
the deadline for the public to comment to MMS on the proposed 
regulations.
    a. The MMS specifically solicits comments on the following 
questions:
    (1) Is the proposed collection of information necessary for MMS to 
properly perform its functions, and will it be useful?
    (2) Are the estimates of the burden hours of the proposed 
collection reasonable?
    (3) Do you have any suggestions that would enhance the quality, 
clarity, or usefulness of the information to be collected?
    (4) Is there a way to minimize the information collection burden on 
those who are to respond, including the use of appropriate automated 
electronic, mechanical, or other forms of information technology?
    b. In addition, the PRA requires agencies to estimate the total 
annual reporting and recordkeeping ``non-hour cost'' burden resulting 
from the collection of information. Other than the non-hour cost 
burdens previously identified and discussed, we have not identified any 
other non-hour burden costs, and we solicit your comments on this item. 
For reporting and recordkeeping only, your response should split the 
cost estimate into two components: (1) Total capital and start-up cost 
component, and (2) annual operation, maintenance, and purchase of 
services component. Your estimates should consider the costs to 
generate, maintain, and disclose or provide the information. You should 
describe the methods you use to estimate major cost factors, including 
system and technology acquisition, expected useful life of capital 
equipment, discount rate(s), and the period over which you incur costs. 
Generally, your estimates should not include equipment or services 
purchased: (i) Before October 1, 1995; (ii) to comply with requirements 
not associated with the information collection; (iii) for reasons other 
than to provide information or keep records for the Government; or (iv) 
as part of customary and usual business or private practices.

National Environmental Policy Act (NEPA) of 1969

    The Minerals Management Service (MMS) has prepared a Draft EA 
analyzing the proposed regulations for the MMS Alternative Energy and 
Alternate Use program. The Draft EA incorporates by reference the 
Programmatic Environmental Impact Statement (EIS) Programmatic 
Environmental Impact Statement for Alternative Energy Development and 
Production and Alternate Use of Facilities on the Outer Continental 
Shelf, Final Environmental Impact Statement, October 2007. This Draft 
EA was prepared to assess any impacts as a result of this rule. The 
Draft EA is available on the MMS Web site at: http://www.mms.gov/
offshore/AlternativeEnergy/RegulatoryInformation.htm.
    To obtain single copies of the Programmatic EIS published on 
November 7, 2007, you may contact Mr. James F. Bennett, Minerals 
Management Service, MS 4042, 381 Elden Street, Herndon, VA 20170. You 
may also view the Programmatic EIS on the MMS Web site at: 
ocsenergy.anl.gov.

Effects on the Energy Supply (E.O. 13211)

    While this proposed rule is a significant regulatory action under 
Executive Order 12866, the proposed rule would not have a significant 
adverse effect on the supply, distribution, or use of energy. In fact, 
this proposed rule is expected to have a positive effect on the 
production, supply, and distribution of energy because the proposed 
rule would establish a framework for allowing the development and 
production of new energy sources on the OCS. Furthermore, the 
Administrator of the Office of Information and Regulatory Affairs, OMB, 
has not designated this proposed rule a significant energy action. 
Therefore, this proposed rule is not a significant energy action and 
does not require a Statement of Energy Effects. E.O. 13211 requires the 
agency to prepare a Statement of Energy Effects when it takes a 
regulatory action that is identified as a significant energy action. 
According to E.O. 13211, a significant energy action means any action 
by an agency that promulgates or is expected to lead to promulgation of 
a final rule or regulations that is a significant regulatory action 
under E.O. 12866 and is likely to have a significant adverse effect on 
the supply, distribution, or use of energy.

Clarity of This Regulation

    We are required by E.O. 12866, E.O. 12988, and by the Presidential 
Memorandum of June 1, 1998, to write all rules in plain language. This 
means that each rule we publish must:
    (a) Be logically organized,

[[Page 39457]]

    (b) Use the active voice to address readers directly;
    (c) Use clear language rather than jargon;
    (d) Be divided into short sections and sentences; and
    (e) Use lists and tables wherever possible.
    If you feel that we have not met these requirements, send us 
comments by one of the methods listed in the ADDRESSES section. To 
better help us revise the rule, your comments should be as specific as 
possible. For example, you should tell us the numbers of the sections 
or paragraphs that you find unclear, which sections or sentences are 
too long, the sections where you feel lists or tables would be useful, 
etc.

List of Subjects

30 CFR Part 250

    Administrative practice and procedure, Continental shelf, 
Environmental impact statements, Environmental protection, Government 
contracts, Investigations, Oil and gas exploration, Penalties, 
Pipelines, Public lands--mineral resources, Public lands--rights-of-
way, Reporting and recordkeeping requirements.

30 CFR Part 285

    Bonding, Coastal zone, Continental shelf, Electric power, Energy, 
Environmental impact statements, Environmental protection, 
Incorporation by Reference, Marine resources, Natural resources, 
Payments, Public lands, Public lands--rights-of-way, Reporting and 
recordkeeping requirements, Revenue sharing, Solar energy.

30 CFR Part 290

    Administrative practice and procedure.

    Dated: March 19, 2008.
C. Stephen Allred,
Assistant Secretary--Land and Minerals Management.

    Editorial Note: This document was received at the Office of the 
Federal Register on June 24, 2008.

    For the reasons stated in the preamble, the Minerals Management 
Service (MMS) proposes to amend 30 CFR chapter II as follows:

PART 250--OIL AND GAS AND SULPHUR OPERATIONS IN THE OUTER 
CONTINENTAL SHELF

    1. The authority citation for part 250 continues to read as 
follows:

    Authority: 31 U.S.C. 9701, 43 U.S.C. 1334.

    2. Amend 250.1703 by revising paragraph (c) to read as follows:


Sec.  250.1703  What are the general requirements for decommissioning?

* * * * *
    (c) Remove all platforms and other facilities, except as provided 
in sections 1725(a) and 1730.
* * * * *
    3. Amend 250.1725(a) by adding a third and fourth sentence and new 
paragraphs (a)(1) and (2) to read as follows:


Sec.  250.1725  When do I have to remove platforms and other 
facilities?

    (a) * * * Other activities include those supporting OCS oil and gas 
production and transportation, as well as other energy-related or 
marine-related uses (including LNG) for which adequate financial 
assurance for decommissioning has been provided to a Federal agency 
which has given MMS a commitment that it has and will exercise 
authority to compel the performance of decommissioning within a time 
following cessation of the new use acceptable to MMS. The approval will 
specify:
    (1) Whether you must continue to maintain any financial assurance 
for decommissioning; and
    (2) Whether, and under what circumstances, you must perform any 
decommissioning not performed by the new facility owner/user.
* * * * *


Sec.  250.1730  [Amended]

    4. In Sec.  250.1730, amend the introductory text by removing ``or 
other use''.
    5. Add Sec.  250.1731, to read as follows:


Sec.  250.1731  Who is responsible for decommissioning an OCS facility 
subject to an Alternate Use RUE?

    (a) The holder of an Alternate Use RUE issued under part 285 of 
this subchapter is responsible for all decommissioning obligations that 
accrue following the issuance of the Alternate Use RUE and which 
pertain to the Alternate Use RUE. See part 285, subpart I of this 
subchapter for additional information concerning the decommissioning 
responsibilities of an Alternate Use RUE grant holder.
    (b) The lessee under the lease originally issued under 30 CFR part 
256 will remain responsible for decommissioning obligations that 
accrued before issuance of the Alternate Use RUE, as well as for 
decommissioning obligations that accrue following issuance of the 
Alternate Use RUE to the extent associated with continued activities 
authorized under this part.
    (c) If a lease issued under 30 CFR part 256 is cancelled or 
otherwise terminated under any provision of this subchapter, the 
lessee, upon our approval, may defer removal of any OCS facility within 
the lease area that is subject to an Alternate Use RUE. If we elect to 
grant such a deferral, the lessee remains responsible for removing the 
facility upon termination of the Alternate Use RUE and will be required 
to retain sufficient bonding or other financial assurances to ensure 
that the structure is removed or otherwise decommissioned in accordance 
with the provisions of this subpart.
    6. Add 30 CFR part 285 to read as follows:

PART 285--ALTERNATIVE ENERGY AND ALTERNATE USES OF EXISTING 
FACILITIES ON THE OUTER CONTINENTAL SHELF

Subpart A--General Provisions
Sec.
285.100 Authority.
285.101 What is the purpose of this part?
285.102 What are MMS's responsibilities under this part?
285.103 When may MMS prescribe or approve departures from the 
regulations governing operations?
285.104 Do I need an MMS lease or other authorization to produce or 
support the production of electricity or other energy product from 
an alternative energy resource on the OCS?
285.105 What are my responsibilities under this part?
285.106 Who can hold a lease or grant under this part?
285.107 How do I show that I am qualified to be a lessee or grant 
holder?
285.108 When must I notify MMS if an action has been filed alleging 
that I am insolvent or bankrupt?
285.109 When must I notify MMS of mergers, name changes, or changes 
of business form?
285.110 Where do I submit plans, applications, reports or notices 
required by this part?
285.111 When and how does MMS charge me processing fees on a case-
by-case basis?
285.112 Definitions.
285.113 How will data and information obtained by MMS under this 
part be disclosed to the public?
285.114 Paperwork Reduction Act statements--information collection.
285.115 Documents incorporated by reference.
285.116 Requests for information on the state of the offshore 
alternative energy industry.
285.117 [Reserved]
285.118 What are my appeal rights?
Subpart B--Issuance of OCS Alternative Energy Leases

General Lease Information

285.200 What rights are granted with a lease issued under this part?
285.201 How will MMS issue leases?

[[Page 39458]]

285.202 What types of leases will MMS issue?
285.203 With whom will MMS consult before issuance of a lease?
285.204 What areas are available for leasing consideration?
285.205 How will leases be mapped?
285.206 What is the lease size?
285.207 through 285.209 [Reserved]

Competitive Lease Process

285.210 How does MMS initiate the competitive leasing process?
285.211 What is the process for competitive issuance of leases?
285.212 What must I submit in response to a Request for Interest or 
a Call for Information and Nominations?
285.213 What will MMS do with information from the Requests for 
Information or Calls for Information and Nominations?
285.214 What areas will MMS offer in a lease sale?
285.215 What information will MMS publish in the Proposed Sale 
Notice and Final Sale Notice?
285.216 through 285.219 [Reserved]

Competitive Lease Award Process

285.220 What auction format may MMS use in a lease sale?
285.221 What bidding systems may MMS use for commercial leases and 
limited leases?
285.222 What does MMS do with my bid?
285.223 What does MMS do if there is a tie for the highest bid?
285.224 What happens if MMS accepts my bid?
285.225 What happens if my bid is rejected and what are my appeal 
rights?
285.226 through 285.229 [Reserved]

Noncompetitive Lease Award Process

285.230 May I request a lease if there is no call?
285.231 How will MMS process my unsolicited request for a 
noncompetitive lease?
285.232 through 285.234 [Reserved]

Commercial and Limited Lease Terms

285.235 If I have a commercial lease, how long will my lease remain 
in effect?
285.236 If I have a limited lease, how long will my lease remain in 
effect?
285.237 What is the effective date of a lease?
285.238 How can I conduct alternative energy research activities on 
the OCS?
Subpart C--Rights-of-Way Grants and Rights-of-Use and Easement Grants 
for Alternative Energy Activities

ROW Grants and RUE Grants

285.300 What types of activities are authorized by ROW grants and 
RUE grants issued under this part?
285.301 What do ROW grants and RUE grants include?
285.302 What are the general requirements for ROW grant and RUE 
grant holders?
285.303 How long will my ROW grant or RUE grant remain in effect?
285.304 [Reserved]

Obtaining ROW Grants and RUE Grants

285.305 How do I request a ROW grant or RUE grant?
285.306 What action will MMS take on my request?
285.307 How will MMS determine whether competitive interest exists 
for ROW grants and RUE grants?
285.308 How will MMS conduct an auction for ROW grants and RUE 
grants?
285.309 When will MMS issue a noncompetitive ROW grant or RUE grant?
285.310 What is the effective date of a ROW grant or RUE grant?
285.311 through 285.314 [Reserved]

Financial Requirements for ROW Grants and RUE Grants

285.315 What deposits are required for a competitive ROW grant or 
RUE grant?
285.316 What payments are required for ROW grants or RUE grants?
Subpart D--Lease and Grant Administration

Noncompliance and Cessation Orders

285.400 What happens if I fail to comply with this part?
285.401 When may MMS issue a cessation order?
285.402 What is the effect of a cessation order?
285.403 [Reserved]
285.404 [Reserved]

Designation of Operator

285.405 How do I designate an operator?
285.406 Who is responsible for fulfilling lease and grant 
obligations?
285.407 [Reserved]

Lease or Grant Assignment

285.408 May I assign my lease or grant interest?
285.409 How do I request approval of a lease or grant assignment?
285.410 How does an assignment affect the assignor's liability?
285.411 How does an assignment affect the assignee's liability?
285.412 through 285.414 [Reserved]

Lease or Grant Suspension

285.415 What is a lease or grant suspension?
285.416 How do I request a lease or grant suspension?
285.417 When may MMS order a suspension?
285.418 How will MMS issue a suspension?
285.419 What are my immediate responsibilities if I receive a 
suspension order?
285.420 What effect does a suspension order have on my payments?
285.421 How long will a suspension be in effect?
285.422 through 285.424 [Reserved]

Lease or Grant Renewal

285.425 May I obtain a renewal of my lease or grant before it 
terminates?
285.426 When must I submit my request for renewal?
285.427 How long is a renewal?
285.428 What effect does applying for a renewal have on my 
activities and payments?
285.429 through 285.431 [Reserved]

Lease or Grant Termination

285.432 When does my lease or grant terminate?
285.433 What must I do after my lease or grant terminates?
285.434 [Reserved]

Lease or Grant Relinquishment

285.435 How can I relinquish a lease or a grant or parts of a lease 
or grant?

Lease or Grant Contraction

285.436 Can MMS require lease or grant contraction?

Lease or Grant Cancellation

285.437 When can my lease or grant be canceled?
Subpart E--Payments and Financial Assurance Requirements

Payments

285.500 How do I make payments under this part?
285.501 What deposits will MMS collect for a competitively issued 
lease, ROW grant, or RUE grant?
285.502 What initial payments will MMS require to obtain a 
noncompetitive lease, ROW grant, or RUE grant?
285.503 What rentals will MMS collect on a commercial lease?
285.504 What rentals will MMS collect on a limited lease?
285.505 What operating fees will MMS collect from a commercial 
lease?
285.506 What rental payments will MMS collect on a project easement?
285.507 What rental payments will MMS collect on ROW grants or RUE 
grants associated with alternative energy projects?
285.508 Who is responsible for submitting lease or grant payments to 
MMS?
285.509 May MMS reduce or waive lease or grant payments?
285.510 through 285.514 [Reserved]

Basic Financial Assurance Requirements for Commercial Leases

285.515 What financial assurance must I provide when I obtain my 
commercial lease?
285.516 What are the financial assurance requirements for each stage 
of my commercial lease?
285.517 How will MMS determine the amounts of the SAP and COP 
financial assurance requirements associated with commercial leases?
285.518 [Reserved]
285.519 [Reserved]

Financial Assurance for Limited Leases, ROW Grants, and RUE Grants

285.520 What financial assurance amount must I provide when I obtain 
my limited lease, ROW grant or RUE grant?
285.521 Do my financial assurance requirements change as activities 
progress on my limited lease or grant?

[[Page 39459]]

285.522 through 285.524 [Reserved]

Requirements for Financial Assurance Instruments

285.525 What general requirements must a financial assurance 
instrument meet?
285.526 What instruments other than a surety bond may I use to meet 
the financial assurance requirement?
285.527 Can I use a lease or grant-specific decommissioning account 
to meet the financial assurance requirements?
285.528 [Reserved]
285.529 [Reserved]

Changes in Financial Assurance

285.530 What must I do if my financial assurance lapses?
285.531 What happens if the value of my financial assurance is 
reduced?
285.532 What happens if my surety wants to terminate the period of 
liability of my bond?
285.533 How does my surety obtain cancellation of my bond?
285.534 When may MMS cancel my bond?
285.535 Why might MMS call for forfeiture of my bond?
285.536 How will I be notified of a call for forfeiture?
285.537 How will MMS proceed once my bond or other security is 
forfeited?
285.538 [Reserved]
285.539 [Reserved]

Revenue Sharing with States

285.540 How will MMS equitably distribute revenues to States?
285.541 How will a qualified project's location affect an eligible 
State's share of revenues?
Subpart F--Plans and Information Requirements
285.600 What plans and information must I submit to MMS before I 
conduct activities on my lease or grant?
285.601 When am I required to submit my plans to MMS?
285.602 What records must I maintain?
285.603 [Reserved]
285.604 [Reserved]

Site Assessment Plan and Information Requirements for Commercial Leases

285.605 What is a Site Assessment Plan (SAP)?
285.606 What must I demonstrate in my SAP?
285.607 How do I submit my SAP?
285.608 [Reserved]
285.609 [Reserved]

Contents of the Site Assessment Plan

285.610 What must I include in my SAP?
285.611 What information and certifications must I submit with my 
SAP to assist MMS in complying with NEPA and other relevant laws?
285.612 How will MMS process my SAP?

Activities Under an Approved SAP

285.613 When may I begin conducting activities under my approved 
SAP?
285.614 When may I construct OCS facilities proposed under my SAP?
285.615 What other reports or notices must I submit to MMS under my 
approved SAP?
285.616 [Reserved]
285.617 What activities require a revision to my SAP and when will 
MMS approve the revision?
285.618 What must I do upon completion of approved site assessment 
activities?
285.619 [Reserved]

Construction and Operations Plan for Commercial Leases

285.620 What is a Construction and Operations Plan (COP)?
285.621 What must I demonstrate in my COP?
285.622 How do I submit my COP?
285.623 [Reserved]
285.624 [Reserved]

Contents of the Construction and Operations Plan

285.625 What survey activities must I conduct to obtain approval for 
the proposed site of facilities?
285.626 What must I include in my COP?
285.627 What information and certifications must I submit with my 
COP to assist the MMS in complying with NEPA and other relevant 
laws?
285.628 How will MMS process my COP?
285.629 May I develop my lease in phases?
285.630 [Reserved]

Activities Under an Approved COP

285.631 When must I initiate activities under an approved COP?
285.632 What documents must I submit before I may construct and 
install facilities under my approved COP?
285.633 How do I comply with my COP?
285.634 What activities require a revision to my COP and when will 
MMS approve the revision?
285.635 What must I do if I cease activities approved in my COP 
before the end of my commercial lease?
285.636 What notices must I provide MMS following approval of my 
COP?
285.637 When may I commence commercial operations on my commercial 
lease?
285.638 What must I do upon completion of my commercial operations 
as approved in my COP?
285.639 [Reserved]

General Activities Plan Requirements for Limited Leases, ROW Grants, 
and RUE Grants

285.640 What is a General Activities Plan (GAP)?
285.641 What must I demonstrate in my GAP?
285.642 How do I submit my GAP?
285.643 [Reserved]
285.644 [Reserved]

Contents of the General Activities Plan

285.645 What must I include in my GAP?
285.646 What information and certifications must I submit with my 
GAP to assist MMS in complying with NEPA and other relevant laws?
285.647 How will MMS process my GAP?
285.648 [Reserved]
285.649 [Reserved]

Activities Under an Approved GAP

285.650 When may I begin conducting activities under my GAP?
285.651 When may I construct OCS facilities proposed under my GAP?
285.652 How long do I have to conduct activities under an approved 
GAP?
285.653 What other reports or notices must I submit to MMS, under my 
approved GAP?
285.654 [Reserved]
285.655 What activities require a revision to my GAP and when will 
MMS approve the revision?
285.656 What must I do if I cease activities approved in my GAP 
before the end of my term?
285.657 What must I do upon completion of approved activities under 
my GAP?

Cable and Pipeline Deviations

285.658 Can my cable or pipeline construction deviate from my 
approved COP or GAP?
Subpart G--Facility Design, Fabrication, and Installation

Reports

285.700 What reports must I submit to MMS before installing 
facilities described in my approved SAP, COP, or GAP?
285.701 What must I include in my Facility Design Report?
285.702 What must I include in my Fabrication and Installation 
Report?
285.703 [Reserved]
285.704 [Reserved]

Certified Verification Agent

285.705 What is the function of a Certified Verification Agent 
(CVA)?
285.706 How do I nominate a CVA for MMS approval?
285.707 What are the CVA's primary duties for facility design 
review?
285.708 What are the CVA's primary duties for fabrication and 
installation review?
285.709 When conducting on-site fabrication inspections, what must 
the CVA verify?
285.710 When conducting on-site installation inspections, what must 
the CVA do?
285.711 What reports must the CVA submit for project modifications 
and repairs?
285.712 What are the CVA's reporting requirements?
285.713 What must I do after the CVA confirms compliance with the 
Fabrication and Installation Report on my commercial lease?
285.714 What records must I keep?
Subpart H--Environmental and Safety Management, Inspections, and 
Facility Assessments
285.800 How must I conduct my activities to comply with 
environmental requirements?
285.801 How must I protect threatened, endangered, and protected 
species?
285.802 How must I protect archaeological resources?

[[Page 39460]]

285.803 What must I do if I discover a potential archaeological 
resource?
285.804 How must I protect essential fish habitats identified and 
described under MSA?
285.805 [Reserved]
285.806 [Reserved]

Air Quality

285.807 What requirements must I meet regarding air quality?
285.808 [Reserved]
285.809 [Reserved]

Safety Management Systems

285.810 What must I include in my Safety Management System?
285.811 [Reserved]
285.812 [Reserved]

Maintenance and Shutdowns

285.813 When do I have to report removing equipment from service?
285.814 [Reserved]

Equipment Failure and Adverse Environmental Effects

285.815 What must I do if I have facility damage or an equipment 
failure?
285.816 What must I do if environmental or other conditions 
adversely affect a cable, pipeline, or facility?
285.817 through 285.819 [Reserved]

Inspections and Assessments

285.820 Will MMS conduct inspections?
285.821 Will MMS conduct scheduled and unscheduled inspections?
285.822 What must I do when MMS conducts an inspection?
285.823 Will MMS reimburse me for my expenses related to 
inspections?
285.824 How must I conduct self-inspections?
285.825 When must I assess my facilities?
285.826 through 285.829 [Reserved]

Incident Reporting and Investigation

285.830 What are my incident reporting requirements?
285.831 What incidents must I report and when must I report them?
285.832 How do I report incidents requiring immediate notification?
285.833 What are the reporting requirements for incidents requiring 
written notification?
Subpart I--Decommissioning

Decommissioning Obligations and Requirements

285.900 Who must meet the decommissioning obligations in this 
subpart?
285.901 When do I accrue decommissioning obligations?
285.902 What are the general requirements for decommissioning?
285.903 [Reserved]
285.904 [Reserved]

Decommissioning Applications

285.905 When must I submit my decommissioning application?
285.906 What must my decommissioning application include?
285.907 How will MMS process my decommissioning application?
285.908 What must I include in my decommissioning notice?

Facility Removal

285.909 When may MMS authorize facilities to remain in place 
following termination of a lease or grant?
285.910 What must I do when I remove my facility?
285.911 [Reserved]

Decommissioning Report

285.912 After I remove a facility, cable, or pipeline what 
information must I submit?

Compliance With an Approved Decommissioning Application

285.913 What happens if I fail to comply with my approved 
decommissioning application?
Subpart J--Rights of Use and Easement for Energy and Marine-Related 
Activities Using Existing OCS Facilities

Regulated Activities

285.1000 What activities does this subpart regulate?
285.1001 through 285.1003 [Reserved]

Requesting an Alternate Use RUE

285.1004 What must I do before I request an Alternate Use RUE?
285.1005 How do I request an Alternate Use RUE?
285.1006 How will MMS decide whether to issue an Alternate Use RUE?
285.1007 What process will MMS use for competitively offering an 
Alternate Use RUE?
285.1008 [Reserved]
285.1009 [Reserved]

Alternate Use RUE Administration

285.1010 How long may I conduct activities under an Alternate Use 
RUE?
285.1011 What payments are required for an Alternate Use RUE?
285.1012 What financial assurance is required for Alternate Use RUE?
285.1013 Is an Alternate Use RUE assignable?
285.1014 When will MMS suspend an Alternate Use RUE?
285.1015 How do I relinquish an Alternate Use RUE?
285.1016 When will an Alternate Use RUE be cancelled?
285.1017 [Reserved]

Decommissioning an Alternate Use RUE

285.1018 Who is responsible for decommissioning an OCS facility 
subject to an Alternate Use RUE?
285.1019 What are the decommissioning requirements for an Alternate 
Use RUE?

    Authority: 43 U.S.C. 1331 et seq., 43 U.S.C. 1337.

Subpart A--General Provisions


Sec.  285.100  Authority.

    The authority for this part derives from amendments to Section 8 of 
the Outer Continental Shelf Lands Act (OCS Lands Act) (43 U.S.C. 1337), 
as set forth in Subsection 388(a) of the Energy Policy Act of 2005 
(Pub. L. 109-58).


Sec.  285.101  What is the purpose of this part?

    The purpose of this part is to:
    (a) Establish procedures for issuance and administration of leases, 
right-of-way (ROW) grants, and right-of-use and easement (RUE) grants 
for alternative energy production on the Outer Continental Shelf (OCS) 
and RUEs for the alternate use of OCS facilities for energy or marine-
related purposes;
    (b) Inform you and third parties of your obligations when you 
undertake activities authorized in this part; and
    (c) Ensure that alternative energy activities on the OCS and 
activities involving the alternate use of OCS facilities for energy or 
marine-related purposes are conducted in a safe and environmentally 
sound manner, in conformance with the requirements of subsection 8(p) 
of the OCS Lands Act, other applicable laws and regulations, and the 
terms of your lease, ROW grant, RUE grant, or Alternate Use RUE grant.
    (d) This part is not intended to convey access rights for oil, gas, 
or other minerals.


Sec.  285.102  What are MMS's responsibilities under this part?

    (a) The MMS will ensure that any activities authorized in this part 
are carried out in a manner that provides for:
    (1) Safety;
    (2) Protection of the environment;
    (3) Prevention of waste;
    (4) Conservation of the natural resources of the OCS;
    (5) Coordination with relevant Federal agencies;
    (6) Protection of national security interests of the United States;
    (7) Protection of the rights of other authorized users of the OCS;
    (8) A fair return to the United States;
    (9) Prevention of interference with reasonable uses (as determined 
by the Secretary or Director) of the exclusive economic zone, the high 
seas, and the territorial seas;
    (10) Consideration of the location of and any schedule relating to 
a lease or grant under this part for an area of the OCS, and any other 
use of the sea or seabed;
    (11) Public notice and comment on any proposal submitted for a 
lease or grant under this part; and
    (12) Oversight, inspection, research, monitoring, and enforcement 
of activities authorized by a lease or grant under this part.
    (b) The MMS will require compliance with all applicable laws, 
regulations,

[[Page 39461]]

other requirements, the terms of your lease or grant under this part 
and approved plans. The MMS will approve, disapprove, or approve with 
conditions any plans, applications, or other documents submitted to MMS 
for approval under the provisions of this part.
    (c) Unless otherwise provided in this part, MMS may give oral 
directives or decisions whenever prior MMS approval is required under 
this part. The MMS will document in writing any such oral directives 
within 10 business days.
    (d) The MMS will establish practices and procedures to govern the 
collection of all payments due to the Federal Government, including any 
cost recovery fees, rentals, operating fees, and other fees or 
payments. The MMS will do this in accordance with the terms of this 
part, the leasing notice, the lease or grant under this part and 
applicable Minerals Revenue Management regulations or guidance.
    (e) The MMS will provide for coordination and consultation with the 
Governor of any State or the executive of any local government that may 
be affected by a lease, easement, or right-of-way under this 
subsection. The MMS may invite any affected State Governor and affected 
local government executive to join in establishing a task force or 
other joint planning or coordination agreement in carrying out our 
responsibilities under this part.


Sec.  285.103  When may MMS prescribe or approve departures from the 
regulations governing operations?

    (a) The MMS may prescribe or approve departures from the operating 
requirements of this part when departures are necessary to:
    (1) Facilitate the appropriate activities on a lease or grant under 
this part;
    (2) Conserve natural resources;
    (3) Protect life (including human and wildlife), property, or the 
marine, coastal, or human environment; or
    (4) Protect sites, structures, or objects of historical or 
archaeological significance.
    (b) Any departure approved under this section and its rationale 
must:
    (1) Be consistent with subsection 8(p) of the OCS Lands Act;
    (2) Protect the environment and the public health and safety to the 
same degree as if there was no approved departure from the regulations;
    (3) Not impair the rights of third parties; and
    (4) Be documented in writing.


Sec.  285.104  Do I need an MMS lease or other authorization to produce 
or support the production of electricity or other energy product from 
an alternative energy resource on the OCS?

    Except as otherwise authorized by law, it shall be unlawful for any 
person to construct, operate, or maintain any facility to produce, 
transport or support generation of electricity or other energy product 
derived from alternative energy resource on any part of the Outer 
Continental Shelf except under and in accordance with the terms of a 
lease, easement or right-of-way issued pursuant to the OCS Lands Act.


Sec.  285.105  What are my responsibilities under this part?

    As a lessee, applicant, operator, or holder of a ROW grant, RUE 
grant, or Alternate Use RUE grant, you must:
    (a) Design your projects and conduct all activities in a manner 
that ensures safety and minimizes adverse effects to the coastal and 
marine environments, including their physical, atmospheric, and 
biological components to the extent practicable;
    (b) Submit requests, applications, plans, notices, modifications, 
and supplemental information to MMS, as required by this part;
    (c) Follow up, in writing, any oral request or notification you 
made, within 3 business days;
    (d) Comply with the terms, conditions, and provisions of all 
reports and notices submitted to MMS and all plans, revisions, and 
other MMS approvals, as provided in this part;
    (e) Make all applicable payments on time;
    (f) Comply with the Department of the Interior's non-procurement 
debarment regulations at 2 CFR part 1400;
    (g) Include the requirement to comply with 2 CFR part 1400 in all 
contracts and transactions related to a lease or grant under this part;
    (h) Conduct all activities authorized by the lease or grant in a 
manner consistent with the provisions of subsection 8(p) of the OCS 
Lands Act;
    (i) Compile, retain, and make available to MMS representatives, 
within the time specified by MMS, any data and information related to 
the site assessment, design, and operations of your project; and
    (j) Respond to requests from the Director in a timely manner.


Sec.  285.106  Who can hold a lease or grant under this part?

    (a) A lease or grant issued under this part may be held only by:
    (1) Citizens and nationals of the United States;
    (2) Aliens lawfully admitted for permanent residence in the United 
States as defined in 8 U.S.C. 1101(a)(20);
    (3) Private, public, or municipal corporations organized under the 
laws of any State of the U.S., the District of Columbia, or any 
territory or insular possession subject to U.S. jurisdiction; or
    (4) Associations of such citizens, nationals, resident aliens, or 
corporations;
    (5) States of the U.S.; or
    (6) Political subdivisions of States of the U.S.
    (b) You may not become a lessee, ROW grant holder, RUE grant 
holder, Alternate Use RUE grant holder or acquire an interest in a 
lease or grant under this part if:
    (1) You or your principals are excluded or disqualified from 
participating in transactions covered by the Federal non-procurement 
debarment and suspension system (2 CFR part 1400), unless MMS 
explicitly has approved an exception for this transaction;
    (2) The MMS determines or has previously determined after notice 
and opportunity for a hearing that you or your principals have failed 
to meet or exercise due diligence under any OCS lease or grant;
    (3) The MMS determines or has previously determined after notice 
and opportunity for a hearing that you:
    (i) Remained in violation of the terms and conditions of any lease 
or grant issued under the OCS Lands Act for a period extending longer 
than 30 calendar days (or such other period MMS allowed for compliance) 
after MMS directed you to comply; and
    (ii) You took no action to correct the noncompliance within that 
time period; or
    (4) After notice and hearing, MMS finds that you are not meeting 
the diligence requirements on any other OCS lease issued under this 
subchapter.


Sec.  285.107  How do I show that I am qualified to be a lessee or 
grant holder?

    (a) An individual must submit a written statement of citizenship 
status attesting to U.S. citizenship. It need not be notarized nor give 
the age of individual. A resident alien may submit a photocopy of the 
Immigration and Naturalization Service form evidencing legal status of 
the resident alien.
    (b) A corporation or association must submit evidence, as specified 
in the table in paragraph (c) of this section, acceptable to MMS that:
    (1) It is qualified to hold leases or grants under this part,
    (2) It is authorized to conduct business under the laws of its 
State;

[[Page 39462]]

    (3) It is authorized to hold leases or grants on the OCS under the 
operating rules of its business; and
    (4) The persons holding the titles listed are authorized to bind 
the corporation or association when conducting business with us.
    (c) Acceptable evidence under paragraph (b) of this section 
includes, but is not limited to:

----------------------------------------------------------------------------------------------------------------
 Requirements to qualify to hold leases or grants on                 Ltd.        Gen.
                      the OCS:                           Corp.      Prtnsp.     Prtnsp.       LLC        Trust
----------------------------------------------------------------------------------------------------------------
(1) Original certificate or certified copy from the          XX
 State of incorporation stating the name of the
 corporation exactly as it must appear on all legal
 documents..........................................
(2) Certified statement by Secretary/ Assistant              XX
 Secretary, over corporate seal, certifying that the
 corporation is authorized to hold OCS leases.......
(3) Evidence of authority of titled positions to             XX
 bind corporation, certified by Secretary/Assistant
 Secretary, over corporate seal, including the
 following:
    (i) Certified copy of resolution of the board of
     directors with titles of officers authorized to
     bind corporation.
    (ii) Certified copy of resolutions granting
     corporate officer authority to issue a power of
     attorney.
    (iii) Certified copy of power of attorney or
     certified copy of resolution granting power of
     attorney.
(4) Original certificate or certified copy of         ..........         XX          XX          XX
 partnership or organization paperwork registering
 with the appropriate State official................
(5) Copy of articles of partnership or organization   ..........         XX          XX          XX
 evidencing filing with appropriate Secretary of
 State, certified by Secretary/Assistant Secretary
 of partnership or member or manager of LLC.........
(6) Original certificate or certified copy            ..........         XX          XX          XX
 evidencing State where partnership or LLC is
 registered. Statement of authority to hold OCS
 leases, certified by Secretary/Assistant Secretary
 OR original paperwork registering with the
 appropriate State official.........................
(7) Statements from each partner or LLC member        ..........         XX          XX          XX
 indicating the following:
    (i) If a corporation or partnership, statement
     of State of organization and authorization to
     hold OCS leases, certified by Secretary/
     Assistant Secretary over corporate seal, if a
     corporation.
    (ii) If an individual, a statement of
     citizenship.
(8) Statement from general partner, certified by      ..........         XX
 Secretary/Assistant Secretary that:
    (i) Each individual limited partner is a U.S.
     citizen and;
    (ii) Each corporate limited partner or other
     entity is incorporated or formed and organized
     under the laws of a U.S. State or territory.
(9) Evidence of authority to bind partnership or      ..........         XX          XX          XX
 LLC, if not specified in partnership agreement,
 articles of organization, or LLC regulations, i.e.,
 certificates of authority from Secretary/Assistant
 Secretary reflecting authority of officers.........
(10) Listing of members of LLC certified by           ..........  ..........  ..........         XX
 Secretary/Assistant Secretary or any member or
 manager of LLC.....................................
(11) Copy of trust agreement or document              ..........  ..........  ..........  ..........         XX
 establishing the trust and all amendments, properly
 certified by the trustee with reference to where
 the original documents are filed...................
(12) Statement indicating the law under which the     ..........  ..........  ..........  ..........         XX
 trust is established and that the trust is
 authorized to hold OCS leases or grants............
----------------------------------------------------------------------------------------------------------------

Sec.  285.108  When must I notify MMS if an action has been filed 
alleging that I am insolvent or bankrupt?

    You must notify MMS within 3 business days after you learn of any 
action filed alleging that you are insolvent or bankrupt.


Sec.  285.109  When must I notify MMS of mergers, name changes, or 
changes of business form?

    You must notify MMS in writing of any merger, name change, or 
change of business form. You must notify MMS as soon as practicable 
following the merger, name change or change in business form, but no 
later than 120 calendar days after the earliest of either the effective 
date, or the date of filing the change or action with the Secretary of 
the State or other authorized official in the State of original 
registry.


Sec.  285.110  Where do I submit plans, applications, reports or 
notices required by this part?

    You must submit all plans, applications, reports or notices 
required by this part to MMS at the following address: Associate 
Director OMM, Minerals Management Service, MS 4000, 381 Elden Street, 
Herndon, VA 20170.


Sec.  285.111  When and how does MMS charge me processing fees on a 
case-by-case basis?

    (a) MMS will charge a processing fee on a case-by-case basis under 
the procedures in this section with regard to any application or 
request under this part if we decide at any time that the preparation 
of a particular document or study is necessary for the application or 
request and it will have a unique processing cost, such as the 
preparation of an Environmental Impact Statement.
    (b) We will measure the ongoing processing cost for each individual 
application or request according to the following procedures:
    (1) Before we process your application or request, we will give you 
a written estimate of the proposed fee for reasonable processing costs.
    (2) You may comment on the proposed fee.
    (3) You may ask for our approval to perform, or to directly pay a 
contractor for, all or part of any document, study or other activity 
according to standards we specify, thereby reducing our costs for 
processing your application or request.
    (4) We will then give you the final estimate of the processing fee 
amount

[[Page 39463]]

after considering your comments and any MMS-approved work you will do.
    (i) If we encounter higher or lower processing costs than 
anticipated, we will re-estimate our reasonable processing costs 
following the procedure in paragraphs (b)(1), (b)(2), (b)(3), and 
(b)(4) of this section, but we will not stop ongoing processing unless 
you do not pay in accordance with paragraph (b)(5) of this section.
    (ii) Once processing is complete, we will refund to you the amount 
of money that we did not spend on processing costs.
    (5)(i) We will periodically estimate what our reasonable processing 
costs will be for a specific period and will bill you for that period. 
Payment is due to us 30 calendar days after you receive your bill. We 
will stop processing your document if you do not pay the bill by the 
date payment is due.
    (ii) If a periodic payment turns out to be more or less than our 
reasonable processing costs for the period, we will adjust the next 
billing accordingly or make a refund. Do not deduct any amount from a 
payment without our prior written approval.
    (6) You must pay the entire fee before we will issue the final 
document or take final action on your application or request.
    (7) You may appeal our estimated processing costs in accordance 
with the regulations in 43 CFR part 4, subpart J. We will not process 
the document further until the appeal is resolved, unless you pay the 
fee under protest while the appeal is pending.
    If the appeal results in a decision changing the proposed fee, we 
will adjust the fee in accordance with paragraph (b)(5)(ii) of this 
section. If we adjust the fee downward, we will not pay interest.


Sec.  285.112  Definitions.

    Terms used in this part have the meanings as defined in this 
section: Affected local government means with respect to any activities 
proposed, conducted, or approved under this part, any locality--
    (1) That is, or is proposed to be the site of, gathering, 
transmitting, or distributing electricity or other energy product or is 
otherwise receiving, processing, refining, or transshipping product, or 
services derived from activities approved under this part; or
    (2) That is used, or is proposed to be used, as a support base for 
activities approved under this part; or
    (3) In which there is a reasonable probability of significant 
effect on land or water uses from activities approved under this part.
    Affected State means with respect to any activities proposed, 
conducted, or approved under this part, any coastal State--
    (1) That is, or is proposed to be the site of gathering, 
transmitting, or distributing energy or is otherwise receiving, 
processing, refining, or transshipping products, or services derived 
from activities approved under this part; or
    (2) That is used, or is scheduled to be used, as a support base for 
activities approved under this part; or
    (3) In which there is a reasonable probability of significant 
effect on land or water uses from activities approved under this part.
    Alternative Energy means energy resources other than oil and gas 
and minerals as defined in 30 CFR part 280. Such resources include, but 
are not limited to, wind, solar, and ocean waves, tides and current.
    Alternate Use refers to the energy- or marine-related use of an 
existing OCS facility for activities not otherwise authorized by this 
subchapter or other applicable law.
    Alternate Use RUE means a right-of-use and easement issued for 
activities authorized under subpart J of this part.
    Archaeological resource means any material remains of human life or 
activities that are at least 50 years of age and that are of 
archaeological interest (i.e., which are capable of providing 
scientific or humanistic understanding of past human behavior, cultural 
adaptation, and related topics through the application of scientific or 
scholarly techniques, such as controlled observation, contextual 
measurement, controlled collection, analysis, interpretation, and 
explanation).
    Best available and safest technology (BAST) means the best 
available and safest technologies that MMS determines to be 
economically feasible wherever failure of equipment would have a 
significant effect on safety, health, or the environment.
    Best management practices means practices recognized within their 
respective industry, or by government, as one of the best for achieving 
the desired output while reducing undesirable outcomes.
    Certified Verification Agent (CVA) means an individual or 
organization, experienced in the design, fabrication, and installation 
of offshore marine facilities or structures, who will conduct specified 
third-party reviews, inspections and verifications in accordance with 
this part.
    Coastline means the same as the term ``coast line'' in section 2 of 
the Submerged Lands Act (43 U.S.C. 1301(c)).
    Commercial activities means all activities associated with the 
generation, storage, or transmission of electricity or other energy 
product from an alternative energy project on the OCS, and for which 
such electricity or other energy product is intended for distribution, 
sale or other commercial use. This term also includes activities 
associated with all stages of development, including initial site 
characterization and assessment, facility construction, and project 
decommissioning.
    Commercial lease means a lease issued under this part that 
specifies the terms and conditions under which a person can conduct 
commercial activities.
    Commercial operations means the generation of electricity or other 
energy product for commercial use, sale, or distribution.
    Decommissioning means removing MMS-approved facilities and 
returning the site of the lease or grant to a condition that meets the 
requirements under subpart I.
    Director means the Director of MMS of the U.S. Department of the 
Interior, or an official authorized to act on the Director's behalf.
    Distance means the minimum great circle distance.
    Eligible State means a coastal State meeting either or both of the 
following criteria: Having submerged lands within 3 miles of any 
portion of a qualified project area or having a coastline no more than 
15 miles from the geographic center of a qualified project.
    Facility means an installation that is permanently or temporarily 
attached to the seabed of the OCS. Facilities include any structures; 
devices; appurtenances; gathering, transmission, and distribution 
cables; pipelines; and permanently moored vessels. Any group of OCS 
installations interconnected with walkways, or any group of 
installations that includes a central or primary installation with one 
or more satellite or secondary installations is a single facility. The 
MMS may decide that the complexity of the installations justifies their 
classification as separate facilities.
    Geographic center of a project means the centroid (geometric center 
point) of a qualified project area that is used to determine State 
eligibility and the distribution of revenues among States. The centroid 
represents the point that is the weighted average of coordinates of the 
same dimension within the mapping system, with the weights determined 
by the density function of the system. For example, in the case of a 
project area

[[Page 39464]]

shaped as a rectangle or other parallelogram, the geographic center 
would be that point where lines between opposing corners intersected. 
The geographic center of a project could be outside the project area 
itself if that area is irregularly shaped.
    Governor means the Governor of a State or the person or entity 
lawfully designated by or under State law to exercise the powers 
granted to a Governor.
    Grant means a right-of-way, right-of-use and easement, or alternate 
use right-of-use and easement issued under the provisions of this part.
    Human environment means the physical, social, and economic 
components, conditions, and factors that interactively determine the 
state, condition, and quality of living conditions, employment, and 
health of those affected, directly or indirectly, by activities 
occurring on the OCS.
    Income, unless clearly specified to the contrary, refers to the 
money received by the project owner or holder of the lease or grant 
issued under this part. As such, use of the term does not require that 
project receipts exceed project expenses.
    Lease means an authorization to use a designated portion of the OCS 
for activities authorized under this part. The term also means the area 
covered by that authorization, when the context requires.
    Lessee means the holder of a lease and, depending upon the context, 
all persons authorized by the holder of a lease, to conduct activities 
authorized in this part.
    Limited lease means a lease issued under this part that specifies 
the terms and conditions under which a person may conduct activities on 
the OCS that support the production of energy, but do not result in the 
production of electricity or other energy product for sale, 
distribution, or other commercial use.
    Marine environment means the physical, atmospheric, and biological 
components, conditions, and factors that interactively determine the 
productivity, state, condition, and quality of the marine ecosystem. 
These include the waters of the high seas, the contiguous zone, 
transitional and intertidal areas, salt marshes, and wetlands within 
the coastal zone and on the OCS.
    Miles, for the purpose of distributing revenues from alternate 
energy and alternate use projects, under this part, means nautical 
miles, as opposed to statute miles.
    MMS means the Minerals Management Service of the Department of the 
Interior.
    Natural resources includes, without limiting the generality 
thereof, alternative energy, oil, gas, and all other minerals (as 
``minerals'' is defined in Section 2(q) of the OCS Lands Act), and 
marine animal and marine plant life.
    Operator means the individual, corporation, or association having 
control or management of activities on the lease or grant under this 
part. The operator may be a lessee, grant holder, or a contractor 
designated by the lessee or holder of a grant under this part.
    Outer Continental Shelf (OCS) means all submerged lands lying 
seaward and outside of the area of lands beneath navigable waters as 
defined in section 2 of the Submerged Lands Act (43 U.S.C. 1301) whose 
subsoil and seabed appertain to the United States and are subject to 
its jurisdiction and control.
    Person means, in addition to a natural person, an association 
(including partnerships and joint ventures), a State, a political 
subdivision of a State, a Native American Tribal Government or a 
private, public, or municipal corporation.
    Project, for the purposes of revenue sharing under this part, means 
the activities conducted on the OCS that are authorized and/or 
regulated under this part. The term project can also be used to refer 
to the facilities used to conduct those activities or to the project 
area.
    Project area means the geographic surface area necessary, or 
granted, for the purpose of a specific project: A lease block, a group 
of lease blocks, or equivalent acreage that the Federal Government 
determines to be a source of the generation of income subject to 
revenue payments under this part. If OCS acreage is granted for a 
project under some form of agreement other than a lease (i.e., a ROW, 
RUE or Alternate Use RUE issued under this part), the Federal acreage 
granted generally would be considered the project area. To avoid having 
projects distant from shore being designated a qualified project, and 
to mitigate distortions in the calculation of the geometric center of 
the project area, project easements issued under this part are not 
considered part of the qualified project's area, though any fees paid 
for such acreage would constitute part of the revenues from the 
qualified project.
    Project easement means an easement to which, upon approval of your 
Construction and Operations Plan or General Activities Plan, you are 
entitled as part of the lease for the purpose of installing gathering, 
transmission and distribution cables, pipelines, and appurtenances on 
the OCS as necessary for the full enjoyment of the lease.
    Qualified project is a project as defined above whose area is 
located wholly or partially within the area extending 3 miles seaward 
of State submerged lands, determined by the seaward boundary of any 
coastal State as established under 43 U.S.C. 1312.
    Qualified project area is the MMS-determined project area for a 
qualified project.
    Revenues means bonuses, rents, operating fees, and similar payments 
made in connection with a project or project area. It does not include 
administrative fees such as those assessed for cost recovery.
    Right-of-use and easement (RUE) grant means an easement issued by 
MMS under this part that authorizes use of a designated portion of the 
OCS to support activities on an alternative energy lease or other 
approval issued by a State or private party. The term also means the 
area covered by the authorization.
    Right-of-way (ROW) grant means an authorization issued by MMS under 
this part that allows for the construction and use of a cable or 
pipeline for the purpose of gathering, transmitting, distributing or 
otherwise transporting electricity or other energy product generated or 
produced from alternative energy, but does not constitute a project 
easement under this part. The term also means the area covered by the 
authorization.
    Secretary means the Secretary of the Interior or an official 
authorized to act on the Secretary's behalf.
    Significant archaeological resource means an archaeological 
resource that meets the criteria of significance for eligibility to the 
National Register of Historic Places as defined in 36 CFR 60.4, or its 
successor.
    Site assessment activities means those initial activities conducted 
to characterize a site on the OCS, including physical characterization 
studies (e.g., geological and geophysical surveys, hazard and 
archaeological surveys), resource assessment surveys (e.g., 
meteorological and oceanographic), and baseline collection studies 
(e.g., biological, economic).
    You and your mean an applicant, lessee, the operator, a designated 
agent of the lessee(s) or designated operator, ROW grant holder, RUE 
grant holder, or Alternate Use RUE grant holder under this part, or the 
possessive of each, as applicable.
    We, us and our mean the Minerals Management Service of the 
Department of the Interior, or its possessive, as applicable.

[[Page 39465]]

Sec.  285.113  How will data and information obtained by MMS under this 
part be disclosed to the public?

    (a) The MMS will make data and information available in accordance 
with the requirements and subject to the limitations of the Freedom of 
Information Act (5 U.S.C. 552), the regulations contained in 43 CFR 
part 2 (Records and Testimony), and the requirements of the Act.
    (b) If MMS determines that any data or information is exempt from 
disclosure under the Freedom of Information Act (5 U.S.C. 552(b)(4)), 
MMS will not disclose the data and information unless the submitter 
agrees to the disclosure except to the extent required by law.


Sec.  285.114  Paperwork Reduction Act statements--information 
collection.

    (a) Office of Management and Budget (OMB) has approved the 
information collection requirements in 30 CFR part 285 under 44 U.S.C. 
3501, et seq., and assigned OMB Control Number 1010-XXXX. The table in 
paragraph (e) of this section lists the subpart in the rule requiring 
the information, its title, summarizes the reasons for collecting the 
information, and how MMS uses the information.
    (b) Respondents are primarily alternative energy applicants, 
lessees, ROW grant holders, RUE grant holders, Alternate Use RUE grant 
holders, and operators. The requirement to respond to the information 
collection in this part is mandated under subsection 8(p) of the OCS 
Lands Act. Some responses are also required to obtain or retain a 
benefit or may be voluntary.
    (c) The Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) 
requires us to inform the public that an agency may not conduct or 
sponsor, and you are not required to respond to, a collection of 
information unless it displays a currently valid OMB control number.
    (d) Send comments regarding any aspect of the collections of 
information under this part, including suggestions for reducing the 
burden, to the Information Collection Clearance Officer, Minerals 
Management Service, Mail Stop 5438, 1849 C Street, NW., Washington, DC 
20240.
    (e) The MMS is collecting this information for the reasons given in 
the following table:

------------------------------------------------------------------------
                                     Reasons for collecting information
     30 CFR 285 subpart/title                   and how used
------------------------------------------------------------------------
(1) Subpart A--General Provisions.  To inform MMS of actions taken to
                                     comply with general operational
                                     requirements on the OCS. To ensure
                                     that operations on the OCS meet
                                     statutory and regulatory
                                     requirements, are safe and protect
                                     the environment, and result in
                                     diligent development on OCS leases.
(2) Subpart B--Issuance of OCS      To provide MMS with information
 Alternative Energy Leases.          needed to determine when to use a
                                     competitive process for issuing an
                                     alternative energy lease and to
                                     identify auction formats and
                                     bidding systems and variables that
                                     we may use when that determination
                                     is affirmative; to determine the
                                     terms under which we will issue
                                     alternative energy leases.
(3) Subpart C--Rights-of-Way        To issue ROW grants and RUE grants
 Grants and Rights-of-Use and        for OCS alternative energy
 Easement Grants for Alternative     activities that are not associated
 Energy Activities.                  with an MMS-issued alternative
                                     energy lease.
(4) Subpart D--Lease and Grant      To ensure compliance with
 Administration.                     regulations pertaining to a lease
                                     or grant, assignment and
                                     designation of operator, and
                                     suspension, renewal, termination,
                                     relinquishment, and cancellation of
                                     leases and grants.
(5) Subpart E--Payments and         To provide a payment structure for
 Financial Assurance Requirements.   alternative energy leases that
                                     complies with subsection 8(p)(2) of
                                     the OCS Lands Act, to ensure a fair
                                     return to the government for use of
                                     the OCS. To ensure that lessee and
                                     grant holders provide the required
                                     financial assurance on their lease
                                     or grant.
(6) Subpart F--Plans and            The lessee, grant holder, or
 Information Requirements.           operator must submit the
                                     appropriate plan to MMS for review
                                     and approval, before beginning any
                                     activities covered by that plan.
                                     MMS needs the information for
                                     compliance with NEPA, CZMA, and
                                     other Federal laws and to ensure
                                     the safety of the environment on
                                     the OCS.
(7) Subpart G--Facility Design,     MMS would require lessees,
 Fabrication, and Installation.      operators, and grant holders to
                                     submit reports that address the
                                     final design, fabrication, and
                                     installation of facilities on a
                                     lease or grant to ensure that these
                                     facilities are designed,
                                     fabricated, and installed according
                                     to appropriate standards, in
                                     compliance with MMS regulations,
                                     and according to the approved plan.
(8) Subpart H--Environmental and    To ensure that lease and grant
 Safety Management, Inspections,     operations are conducted in a manor
 and Facility Assessments.           that is safe and protects the
                                     environment.
                                    To ensure compliance with other
                                     Federal laws, these regulations,
                                     the lease or grant, and approved
                                     plans.
(9) Subpart I--Decommissioning....  To determine that decommissioning
                                     activities comply with regulatory
                                     requirements and approvals. To
                                     ensure that site clearance and
                                     platform or pipeline removal are
                                     properly performed to protect
                                     marine life and the environment and
                                     do not conflict with other users of
                                     the OCS.
(10) Subpart J--Rights of Use and   To provide MMS with information
 Easement for Energy and Marine-     regarding the design, installation,
 Related Activities Using Existing   and operation of RUEs on the OCS.
 OCS Facilities.                     To ensure that RUE operations are
                                     safe and protect the human, marine,
                                     and coastal environment. To ensure
                                     compliance with other Federal laws,
                                     these regulations, the RUE grant,
                                     and approved plans.
------------------------------------------------------------------------

Sec.  285.115  Documents incorporated by reference.

    (a) The MMS is incorporating by reference the documents listed in 
the table in paragraph (e) of this section. The Director of the Federal 
Register has approved this incorporation by reference according to 5 
U.S.C. 552(a) and 1 CFR part 51.
    (1) The MMS will publish any changes to the incorporation by 
reference of these documents in the Federal Register.
    (2) The MMS may make a rule amending the incorporation by reference 
of the document effective without prior opportunity for public comment 
when MMS:
    (i) Determines that the revisions to a document result in safety 
improvements or represent new industry standard technology and do not 
impose undue costs on the affected parties; and
    (ii) Meets the requirements for making a rule immediately effective 
under 5 U.S.C. 553; and

[[Page 39466]]

    (iii) Obtains approval from the Director of the Federal Register 
pursuant to 5 U.S.C. 552(a) and 1 CFR part 51.
    (b) The MMS is incorporating each document or specific portion by 
reference in the sections noted. The entire document is incorporated by 
reference, unless the text of the corresponding sections in this part 
calls for compliance with specific portions of the listed documents. In 
each instance, the applicable document is the specific edition or 
specific edition and supplement or addendum cited in this section.
    (c) You may comply with a later edition of a specific document 
incorporated by reference, only if:
    (1) You show that complying with the later edition provides a 
degree of protection, safety, or performance equal to or better than 
what would be achieved by compliance with the listed edition; and
    (2) You obtain the prior written approval for alternative 
compliance from the authorized MMS official.
    (d) You may inspect these documents at the Minerals Management 
Service, 381 Elden Street, Room 3313, Herndon, Virginia; or at the 
National Archives and Records Administration (NARA). For information on 
the availability of this material at NARA, call 202-741-6030, or go to: 
http://www.archives.gov/federal_register/code_of_federal_
regulations/ibr_locations.html You may obtain the documents from the 
publishing organizations at the addresses given in the following table:

------------------------------------------------------------------------
               For . . .                          Write to . . .
------------------------------------------------------------------------
API Recommended Practices..............  American Petroleum Institute,
                                          1220 L Street, NW.,
                                          Washington, DC 20005-4070.
------------------------------------------------------------------------

    (e) This paragraph lists documents incorporated by reference. To 
easily reference text of the corresponding sections with the list of 
documents incorporated by reference, the list is in alphanumerical 
order by organization and document.

------------------------------------------------------------------------
                                               Incorporated by reference
             Title of documents                        at . . .
------------------------------------------------------------------------
API RP 2A--WSD, Recommended Practice for      Sec.   285.825
 Planning, Designing and Constructing Fixed
 Offshore Platforms? Working Stress Design,
 Twenty-first Edition, December 2000: Errata
 and Supplement 1, December 2002: Errata and
 Supplement 2, October 2005.
------------------------------------------------------------------------

Sec.  285.116  Requests for information on the state of the offshore 
alternative energy industry.

    (a) The Director may, from time to time and at his discretion, 
solicit information from industry and other relevant stakeholders 
(including State and local agencies) as necessary to evaluate the state 
of the offshore alternative energy industry, including the 
identification of potential challenges or obstacles to its continued 
development. Such requests for information could relate to the 
identification of environmental, technical or economic matters that 
promote or detract from continued development of alternative energy 
technologies on the OCS. You must respond to such at request in a 
timely manner, as established in the request. From the information 
received, the Director may evaluate potential refinements to the OCS 
Alternative Energy Program that promote development of the industry in 
a safe and environmentally responsible manner, and that ensures fair 
value for use of the Nation's OCS.
    (b) MMS may make such requests for information on a regional basis, 
and may tailor the requests to specific types of alternative energy 
technologies.
    (c) MMS will publish such requests for information by the Director 
of the Federal Register.


Sec.  285.117  [Reserved]


Sec.  285.118  What are my appeal rights?

    (a) Any party adversely affected by a decision of an MMS official 
made under the provisions of this part has the right of appeal under 
part 290, subpart A, of this title, except for bid acceptance, as 
covered under paragraph (c) of this section.
    (b) A decision will remain in full force and effect during the 
period in which an appeal may be filed and during an appeal, unless a 
stay is granted pursuant to 43 CFR 4.21.
    (c) Our decision on a bid is the final action of the Department, 
except that an unsuccessful bidder may apply for reconsideration by the 
Director.
    (1) A bidder whose bid we reject may file a written request for 
reconsideration with the Director within 15 calendar days of the date 
of the receipt of the notice of rejection, accompanied by a statement 
of reasons with one copy to us. The Director will respond in writing 
either affirming or reversing the decision.
    (2) The delegation of review authority to the Office of Hearings 
and Appeals does not apply to decisions on high bids for leases or 
grants under this part.

Subpart B--Issuance of OCS Alternative Energy Leases

General Lease Information


Sec.  285.200  What rights are granted with a lease issued under this 
part?

    (a) A lease issued under this part grants the lessee the right, 
subject to obtaining the necessary approvals and complying with all 
provisions of this part, to occupy, and install and operate facilities 
on, a designated portion of the OCS for the purpose of conducting:
    (1) Commercial activities; or
    (2) Other limited activities that support, result from, or relate 
to the production of energy from an alternative energy source.
    (b) A lease issued under this part confers on the lessee the right 
to one or more project easements without further competition for the 
purpose of installing gathering, transmission, and distribution cables, 
pipelines, and appurtenances on the OCS as necessary for the full 
enjoyment of the lease.
    (1) You must apply for the project easement as part of your 
Construction and Operations Plan (COP) or General Activities Plan 
(GAP), as provided under subpart F of this part; and
    (2) The MMS will incorporate your approved project easement as an 
addendum to your lease.
    (c) A commercial lease issued under this part may be developed in 
phases

[[Page 39467]]

with MMS approval as provided in Sec.  285.629.


Sec.  285.201  How will MMS issue leases?

    The MMS will issue leases on a competitive basis as provided under 
Sec. Sec.  285.210 through 285.225. However, if we determine after 
public notice of a proposed lease that there is no competitive 
interest, we will issue leases noncompetitively as provided under 
Sec. Sec.  285.230 through 285.231. We will issue leases on forms 
approved by MMS, and will include terms, conditions and stipulations 
identified and developed through the process set forth in Sec. Sec.  
285.211 and 285.231.


Sec.  285.202  What types of leases will MMS issue?

    The MMS may issue leases on the OCS for the assessment and 
production of alternative energy and may authorize a combination of 
specific activities. We may issue commercial leases or limited leases.


Sec.  285.203  With whom will MMS consult before issuance of a lease?

    For leases issued under this part, by either the competitive or 
noncompetitive process, MMS will coordinate and consult with relevant 
Federal agencies, with the Governor of any affected State, and the 
executive of any affected local government, as directed by subsections 
8(p)(4) and (7) of the OCS Lands Act and by other relevant Federal 
statutory requirements (e.g. Endangered Species Act (ESA), and the 
Magnuson-Stevens Fishery Conservation and Management Act (MSA)).


Sec.  285.204  What areas are available for leasing consideration?

    The MMS may offer any appropriately platted area of the OCS as 
provided in Sec.  285.205 for an alternative energy lease, except any 
area within the exterior boundaries of any unit of the National Park 
System, National Wildlife Refuge System, National Marine Sanctuary 
System, or any National Monument.


Sec.  285.205  How will leases be mapped?

    The MMS will prepare leasing maps and official protraction diagrams 
of areas of the OCS. The areas included in each lease will be in 
accordance with the appropriate leasing map or official protraction 
diagram.


Sec.  285.206  What is the lease size?

    (a) The MMS will determine the size for each lease based on the 
area required to accommodate the anticipated activities. The processes 
leading to both competitive and noncompetitive issuance of leases will 
provide public notice of the lease size adopted. We will delineate 
leases by using mapped OCS blocks or aggregations of blocks.
    (b) The lease size includes the minimum area that will allow the 
lessee sufficient space to develop the project and manage activities in 
a manner that is consistent with the provisions of this part. The lease 
may include whole lease blocks or portions of a lease block.


Sec.  285.207 through 285.209  [Reserved]

Competitive Lease Process


Sec.  285.210  How does MMS initiate the competitive leasing process?

    The MMS may publish in the Federal Register a public notice of 
Request for Interest to assess interest in leasing all or part of the 
OCS for activities authorized in this part. The MMS will consider 
information received in response to a Request for Interest to determine 
whether there is competitive interest for scheduling sales and issuing 
leases. We may prepare and issue a national, regional, or more specific 
schedule of lease sales pertaining to one or more types of alternative 
energy.


Sec.  285.211  What is the process for competitive issuance of leases?

    The MMS will use auctions to award leases on a competitive basis. 
We will publish details of each lease sale auction in the Federal 
Register. For each lease sale we will publish a Proposed Sale Notice 
and a Final Sale Notice. Individual lease sales will include steps such 
as:
    (a) Call for Information and Nominations (Call). The MMS will 
publish in the Federal Register Calls for Information and Nominations 
for leasing in specified areas. In this document we may:
    (1) Request comments on areas which should receive special 
consideration and analysis;
    (2) Request comments concerning geological conditions (including 
bottom hazards); archaeological sites on the seabed or nearshore; 
multiple uses of the proposed leasing area (including navigation, 
recreation, and fisheries); and other socioeconomic, biological, and 
environmental information; and
    (3) Suggest areas to be considered by the respondents for leasing.
    (b) Area Identification. The MMS will identify areas for 
environmental analysis and consideration for leasing. We will do this 
in consultation with appropriate Federal agencies, States, local 
governments, and other interested parties.
    (1) We may consider for lease those areas nominated in response to 
the Call for Information and Nominations, together with other areas 
that MMS determines are appropriate for leasing.
    (2) We will evaluate the potential effect of leasing on the human, 
marine environments, and develop measures to mitigate adverse impacts, 
including lease stipulations.
    (3) We will consult to develop measures, including lease 
stipulations and conditions, to mitigate adverse impacts on the 
environment; and
    (4) We may hold public hearings on the environmental analysis after 
appropriate notice.
    (c) Proposed Sale Notice. The MMS will publish the Proposed Sale 
Notice in the Federal Register and send it to the Governor of any 
affected State.
    (d) Final Sale Notice. The MMS will publish the Final Sale Notice 
in the Federal Register.


Sec.  285.212  What must I submit in response to a Request for Interest 
or a Call for Information and Nominations?

    If you are a potential lessee, when you respond to a Request for 
Interest or a Call, your response must include all of the items listed 
in paragraphs (a) through (g) of this section.
    (a) The area of interest for a possible lease.
    (b) A general description of your objectives and the facilities 
that you would use to achieve those objectives.
    (c) A general schedule of proposed activities, including those 
leading to commercial operations.
    (d) Available and pertinent data and information concerning 
alternative energy and environmental conditions in the area of 
interest, including energy and resource data and information used to 
evaluate the area of interest. The MMS will protect these data and 
information from public disclosure to the extent allowed by law.
    (e) If available from the appropriate State or local government 
authority, certification that the proposed activity conforms with State 
and local energy planning requirements, initiatives or guidance.
    (f) Documentation showing that you are qualified to hold a lease, 
as specified in Sec.  285.107.
    (g) Any other information requested by MMS in Request for Interest 
or Call for Information and Nominations.


Sec.  285.213  What will MMS do with information from the Requests for 
Information or Calls for Information and Nominations?

    The MMS will use the information received in response to Requests 
or Calls to:
    (a) Identify the lease area;
    (b) Develop options for the environmental analysis and leasing

[[Page 39468]]

provisions (stipulations, payments, terms and conditions); and
    (c) Prepare appropriate documentation to satisfy applicable Federal 
requirements, such as NEPA, CZMA, the Endangered Species Act (ESA), and 
the Magnuson-Stevens Fishery Conservation and Management Act (MSA).


Sec.  285.214  What areas will MMS offer in a lease sale?

    The MMS will offer areas for leasing as identified in Sec.  
285.211(b) of this part. We will not accept nominations after the Call 
for Information and Nominations closes.


Sec.  285.215  What information will MMS publish in the Proposed Sale 
Notice and Final Sale Notice?

    For each lease sale, MMS will publish a Proposed Sale Notice and a 
Final Sale Notice in the Federal Register. In the Proposed Sale Notice, 
we will request public comment on the items listed in paragraphs (a) 
through (h) of this section. We will consider all public comments 
received in developing the final lease sale terms and conditions. We 
will publish the final terms and conditions in the Final Sale Notice. 
The Proposed Sale Notice and Final Sale Notice will include, or 
describe the availability of, information pertaining to:
    (a) The area available for leasing.
    (b) Proposed and final lease provisions and conditions, including, 
but not limited to:
    (1) Lease size;
    (2) Lease term;
    (3) Payment requirements;
    (4) Performance requirements; and
    (5) Site specific lease stipulations.
    (c) Auction details, including:
    (1) Bidding procedures and systems;
    (2) Minimum bid;
    (3) Deposit amount;
    (4) The place and time for filing bids and the place, date and hour 
for opening bids;
    (5) Lease award method; and
    (6) Bidding or application instructions.
    (d) The official MMS lease form to be used or a reference to that 
form.
    (e) Criteria MMS will use to evaluate competing bids or 
applications and how the criteria will be used in decision-making for 
awarding a lease.
    (f) Award procedures, including how and when MMS will award leases 
and how MMS will handle unsuccessful bids or applications.
    (g) Procedures for appealing the lease issuance decision.
    (h) Execution of the lease instrument.


Sec.  285.216 through 285.219  [Reserved]

Competitive Lease Award Process


Sec.  285.220  What auction format may MMS use in a lease sale?

    (a) Except as provided in Sec.  285.231, we will hold competitive 
auctions to award alternative energy leases and will use one of the 
following auction formats, as determined through the lease sale process 
and specified in the Proposed Sale Notice and in the Final Sale Notice:

------------------------------------------------------------------------
        Type of auction            Bid variable       Bidding process
------------------------------------------------------------------------
(1) Sealed bidding............  A cash bonus or    One sealed bid per
                                 an operating fee   company per lease or
                                 rate.              packaged unit.
(2) Ascending bidding.........  A cash bonus or    Continuous bidding
                                 an operating fee   per lease.
                                 rate.
(3) Two-stage bidding           An operating fee   Ascending or sealed
 (combination of ascending and   rate in one,       bidding until:
 sealed bidding).                both or neither   (i) Only two bidders
                                 stage and a cash   remain, or
                                 bonus in one,     (ii) More than one
                                 both or neither    bidder offers to pay
                                 stage.             the maximum bid
                                                    amount.
                                                   Stage two sealed or
                                                    ascending bidding
                                                    commences at some
                                                    predetermined time
                                                    after the end of
                                                    stage one bidding.
------------------------------------------------------------------------

    (b) You must submit your bid and a deposit as specified in 
Sec. Sec.  285.500 and 285.501 to cover the bid for each lease area, 
according to the terms specified in the Final Sale Notice.


Sec.  285.221  What bidding systems may MMS use for commercial leases 
and limited leases?

    (a) For commercial leases, we will specify minimum bids in the 
Final Sale Notice and use one of the following bidding systems, as 
specified in the Proposed Sale Notice and in the Final Sale Notice:

------------------------------------------------------------------------
            Bid system                          Bid variable
------------------------------------------------------------------------
(1) Cash bonus with a constant fee  Cash bonus.
 rate (decimal).
(2) Constant operating fee rate     A fee rate used in the formula found
 with fixed cash bonus.              in Sec.   285.505 of this part to
                                     set the operating fee per year
                                     during the operations term of your
                                     lease.
(3) Sliding operating fee rate      A fee rate used in formula in Sec.
 with a fixed cash bonus.            285.505 of this part to set the
                                     operating fee for the first year of
                                     the operations term of your lease.
                                     The fee rate for subsequent years
                                     changes by a mathematical function
                                     we specify in the Final Sale
                                     Notice.
(4) Cash bonus and constant         Cash bonus as in paragraph (1) of
 operating fee rate.                 this section and operating fee rate
                                     as in paragraph (2) of this
                                     section. (Two-stage auction format
                                     only.)
(5) Cash bonus and sliding          Cash bonus as in paragraph (1) of
 operating fee rate.                 this section and operating fee rate
                                     as in paragraph (3) of this
                                     section. (Two-stage auction format
                                     only.)
------------------------------------------------------------------------

    (b) For limited leases, the bid variable will be a cash bonus with 
a minimum bid as we specify in the Final Sale Notice.


Sec.  285.222  What does MMS do with my bid?

    (a) If sealed bidding is used:
    (1) We open the sealed bids at the place, date, and hour specified 
in the Final Sale Notice for the sole purpose of publicly announcing 
and recording the bids. We do not accept or reject any bids at that 
time.
    (2) We reserve the right to reject any and all high bids, 
regardless of the amount offered or bidding system used. We intend to 
accept or reject all high bids within 90 calendar days, but we may 
extend that time if necessary.
    (b) If we use ascending bidding, we may designate the winning bid 
solely based on its being the highest bid submitted by a qualified 
bidder

[[Page 39469]]

(qualified to be an OCS lessee under Sec.  285.107).
    (c) If we use two-stage bidding, the winning bid will be determined 
as in paragraph (b) of this section if the auction concludes with an 
ascending bidding stage or as in paragraph (a) of this section if the 
auction process concludes with a sealed bidding stage.
    (d) We will send a written notice of our decision to accept or 
reject bids to all bidders whose deposits we hold.


Sec.  285.223  What does MMS do if there is a tie for the highest bid?

    (a) Unless otherwise specified in the Final Sale Notice, except in 
the first stage of a two-stage bidding auction, if more than one bidder 
on a lease submits the same high bid amount, the winning bidder will be 
determined by random selection by lot.
    (b) The winning bidder will be subject to final confirmation 
following determination of bid adequacy.


Sec.  285.224  What happens if MMS accepts my bid?

    If we accept your bid, we will send you a notice with three copies 
of the lease form.
    (a) Within 10 business days after you receive the lease copies, you 
must:
    (1) Execute the lease;
    (2) Pay the first 6 months' rental as required in Sec.  285.503;
    (3) Pay the balance of the bonus bid as specified in the lease sale 
notice or in the lease agreement as required in Sec.  285.500;
    (4) File financial assurance as required under Sec. Sec.  285.515 
through 285.537.
    (b) When you execute three copies of the lease and return the 
copies to us, we will execute the lease on behalf of the United States 
and send you one fully executed copy.
    (c) You will forfeit your deposit if you do not execute and return 
the lease within 10 business days of receipt, or otherwise fail to 
comply with applicable regulations or stipulations in the Final Sale 
Notice.
    (d) We may extend the 10 business day time period for executing and 
returning the lease if we determine the delay to be caused by events 
beyond your control.
    (e) We reserve the right to withdraw an OCS area in which we have 
held a lease sale before both you and we execute the lease in that 
area. If we exercise this right, we will refund your bid deposit, 
without interest.
    (f) If the awarded lease is executed by an agent acting on behalf 
of the bidder, the bidder must submit, along with the executed lease, 
written evidence that the agent is authorized to act on behalf of the 
bidder.
    (g) MMS will only accept the highest bid. We will refund the 
deposit on all other bids.


Sec.  285.225  What happens if my bid is rejected and what are my 
appeal rights?

    (a) If we reject your bid, we will provide a written statement of 
reasons and refund any money deposited with your bid, without interest.
    (b) You may ask the MMS Director for reconsideration in writing, 
within 15 business days of bid rejection, under Sec.  285.118(c)(1). We 
will send you a written response either affirming or reversing the 
rejection.


Sec.  285.226 through 285.229  [Reserved]

Noncompetitive Lease Award Process


Sec.  285.230  May I request a lease if there is no call?

    You may submit an unsolicited request for a commercial lease or a 
limited lease under this part. Your unsolicited request must contain 
the following information:
    (a) The area you are requesting for lease;
    (b) A general description of your objectives and the facilities 
that you would use to achieve those objectives;
    (c) A general schedule of proposed activities including those 
leading to commercial operations;
    (d) Available and pertinent data and information concerning 
alternative energy and environmental conditions in the area of 
interest, including energy and resource data and information used to 
evaluate the area of interest. We will protect proprietary data and 
information from public disclosure to the extent allowed by law;
    (e) If available from the appropriate State or local government 
authority, certification that the proposed activity conforms with State 
and local energy planning requirements, initiatives or guidance;
    (f) Documentation showing that you meet the qualifications to 
become a lessee, as specified in Sec.  285.107; and
    (g) An acquisition fee as specified in Sec.  285.502(a).


Sec.  285.231  How will MMS process my unsolicited request for a 
noncompetitive lease?

    (a) The MMS will consider unsolicited requests for a lease on a 
case-by-case basis and may issue a lease noncompetitively in accordance 
with this part. We will not consider an unsolicited request for a lease 
under this part that is proposed in an area of the OCS that is 
scheduled for a lease sale under this part.
    (b) The MMS will issue a public notice of the request and consider 
comments received to determine if competitive interest exists.
    (c) If MMS determines that competitive interest exists in the lease 
area:
    (1) The MMS will proceed with the competitive process set forth in 
Sec. Sec.  285.210 through 285.225; and
    (2) If you submit a bid for the lease area in a competitive lease 
sale, your acquisition fee will be applied to the deposit for your 
bonus bid.
    (3) If you do not submit a bid for the lease area in a competitive 
lease sale, MMS will not refund your acquisition fee.
    (d) If MMS determines that there is no competitive interest in a 
lease:
    (1) We will publish a notice, in the Federal Register, of such 
determination; and
    (2) You must submit within 60 days of the date of the notice to 
MMS:
    (i) For a commercial lease, a Site Assessment Plan (SAP), as 
described in Sec. Sec.  285.605 through 285.612; or
    (ii) For a limited lease, a General Activities Plan (GAP), as 
described in Sec.  285.640 through 285.647.
    (e) If we approve or approve with conditions your SAP or GAP, we 
may offer you a noncompetitive lease.
    (f) If you accept the terms and conditions of the lease then we 
will issue the lease and you must comply with all terms and conditions 
of your lease and all applicable provisions of this part.
    (g) If you do not accept the terms and conditions, MMS will not 
issue a lease and we will not refund your acquisition fee.


Sec.  285.232 through 285.234  [Reserved]

Commercial and Limited Lease Terms


Sec.  285.235  If I have a commercial lease, how long will my lease 
remain in effect?

    (a) For commercial leases the lease terms are as shown in the 
following table:

[[Page 39470]]



------------------------------------------------------------------------
         Lease term               Requirements      Automatic extensions
------------------------------------------------------------------------
(1) Each commercial lease     The SAP must meet     If we receive a SAP
 issued competitively will     the requirements of   that satisfies the
 have a preliminary term of    Sec.  Sec.            requirements of
 6 months to submit a Site     285.605 through       Sec.  Sec.
 Assessment Plan (SAP).        285.612. The          285.605 through
                               preliminary term      285.612. The
                               begins on the         preliminary term
                               effective date of     will be
                               the lease.            automatically
                                                     extended for the
                                                     time necessary for
                                                     us to conduct
                                                     technical and
                                                     environmental
                                                     reviews of the SAP.
(2) A commercial lease        The SAP must meet     ....................
 issued noncompetitively       the requirements of
 does not have a preliminary   Sec.  Sec.
 term. You must submit your    285.605 through
 SAP within 60 calendar days   285.612. The site
 of MMS issuing a public       assessment term
 notice of the                 begins when MMS
 determination. Before MMS     approves your SAP
 will issue a lease we must    and issues your
 receive your SAP and          lease.
 approve.
(3) A commercial lease will   The COP must meet     If we receive a COP
 have a site assessment term   the requirements of   that satisfies the
 of 5 years to conduct site    Sec.  Sec.            requirements of
 assessment activities and     285.620 through       Sec.  Sec.
 to submit a Construction      285.629 of this       285.620 through
 and Operations Plan (COP).    part. The site        285.629, the site
                               assessment term       assessment term
                               begins on the date    will be
                               that we approve       automatically
                               your SAP.             extended for the
                                                     period of time
                                                     necessary for us to
                                                     conduct technical
                                                     and environmental
                                                     reviews of the COP.
(4) A commercial lease will   The operations term
 have an operations term of    begins on the date
 25 years, unless a longer     that we approve
 term is negotiated by         your COP. The lease
 applicable parties.           renewal request
A request for lease renewal    must meet the
 must be submitted 2 years     requirements of
 before the end of the         Sec.  Sec.
 operations term.              285.425 through 428.
(5) A commercial lease may    The lease renewal     We may order or
 have additional time added    term begins upon      grant a suspension
 to the operations term        expiration of the     of the operations
 through a lease renewal,      original operations   term as provided in
 not to exceed the original    term.                 Sec.  Sec.
 term of the lease.                                  285.415 through
                                                     421.
------------------------------------------------------------------------

    (b) If you do not timely submit a SAP or COP, as appropriate, you 
may request additional time to extend the preliminary or site 
assessment term of your commercial lease that includes a revised 
schedule for submission of a SAP or COP, as appropriate.


Sec.  285.236  If I have a limited lease, how long will my lease remain 
in effect?

    (a) For limited leases the lease terms are as shown in the 
following table:

------------------------------------------------------------------------
                                                        Extension or
         Lease term               Requirements           suspension
------------------------------------------------------------------------
(1) Each limited lease        The GAP must meet     If we receive a GAP
 issued competitively has a    the requirements of   that satisfies the
 preliminary term of 6         Sec.  Sec.            requirements of
 months to submit a General    285.640 through       Sec.  Sec.
 Activities Plan (GAP).        285.647. The          285.640 through
                               preliminary term      285.647 of this
                               begins on the         part, the
                               effective date of     preliminary term
                               the lease.            will be
                                                     automatically
                                                     extended for the
                                                     period of time
                                                     necessary for us to
                                                     conduct a technical
                                                     and environmental
                                                     review of the
                                                     plans.
(2) A limited lease issued    The GAP must meet     ....................
 noncompetitively does not     the requirements of
 have a preliminary term.      Sec.  Sec.
 You must submit and MMS       285.640 through
 must approve your GAP         285.647. The
 before we will issue a        operations term
 lease.                        begins when MMS
                               approves your GAP
                               and issues your
                               lease.
(3) Each limited lease has    The operations term   We may order or
 an operations term of 5       begins on the date    grant a suspension
 years for conducting site     that we approve       of the operations
 assessment, technology        your GAP.             term as provided in
 testing, or other                                   Sec.  Sec.
 activities.                                         285.415 through
                                                     285.421.
------------------------------------------------------------------------

    (b) If you do not timely submit a GAP, as appropriate, you may 
request additional time extend the preliminary term of your limited 
lease that includes a revised schedule for submission of a GAP.


Sec.  285.237  What is the effective date of a lease?

    (a) A lease issued under this part must be dated and becomes 
effective as of the first day of the month following the date a lease 
is signed by the lessor.
    (b) If the lessee submits a written request and MMS approves, a 
lease may be dated and become effective the first day of the month in 
which it is signed by the lessor.


Sec.  285.238  How can I conduct alternative energy research activities 
on the OCS?

    (a) The Director may make areas available on the OCS for 
alternative energy research activities that support the future 
production, transportation, and transmission of alternative energy 
managed by the U.S. Department of Energy (DOE).
    (b) In making areas available on the OCS for DOE-managed 
alternative energy research under this provision, MMS will coordinate 
and consult with the Department of Energy and other relevant Federal 
Agencies and affected State and affected local government executives.
    (c) MMS may issue leases for DOE-managed research activities only 
in areas for which the Director has determined, after public notice and 
opportunity to comment, that no competitive interest exists.
    (d) The Director and the Secretary of Energy, or their authorized 
representatives, will negotiate alternative energy leases under this 
provision on a case-by-case basis. The framework for such negotiations, 
and standard terms and conditions of such leases, may be set forth in a 
memorandum of agreement or other interagency agreement between the MMS 
and the Department of Energy.

[[Page 39471]]

Subpart C--Rights-of-Way Grants and Rights-of-Use and Easement 
Grants for Alternative Energy Activities

ROW Grant and RUE Grants


Sec.  285.300  What types of activities are authorized by ROW grants 
and RUE grants issued under this part?

    (a) A ROW grant authorizes the holder to install on the OCS cables, 
pipelines and associated facilities that involve the transportation or 
transmission of electricity or other energy product from alternative 
energy projects not on the OCS.
    (b) A RUE grant authorizes the holder to construct and maintain 
facilities or other installations on the OCS that support the 
production, transportation or transmission of electricity or other 
energy product from any alternative energy, provided the generation or 
production of such electricity or other energy product does not occur 
on an alternative energy lease issued under this part.
    (c) You do not need a ROW grant or RUE grant for a project easement 
authorized under subpart B of this part to serve your lease.


Sec.  285.301  What do ROW grants and RUE grants include?

    (a) A ROW grant:
    (1) Includes the full length of the corridor on which a cable, 
pipeline or associated facility is located;
    (2) Is 200 feet (61 meters) in width, centered on the cable or 
pipeline, unless safety and environmental factors during construction 
and maintenance of the associated cable or pipeline require a greater 
width; and
    (3) For the associated facility, is limited to the area reasonably 
necessary for a power or pumping station or other accessory facility.
    (b) A RUE grant includes the site on which a facility or other 
structure is located and the areal extent of anchors, chains and other 
equipment associated with a facility or other structure. The specific 
boundaries of a RUE will be determined by MMS on a case-by-case basis 
and set forth in each RUE grant.


Sec.  285.302  What are the general requirements for ROW grant and RUE 
grant holders?

    (a) To acquire a ROW grant or RUE grant you must provide evidence 
that you meet the qualifications as required in Sec.  285.107; and
    (b) A ROW grant or RUE grant is subject to the following 
conditions:
    (1) The rights granted will not prevent or interfere in any way 
with the management, administration, or the granting of other rights by 
the United States, either before or after the granting of the ROW or 
RUE, provided that any subsequent authorization issued by MMS in the 
area of a previously issued ROW grant or RUE grant may not unreasonably 
interfere with activities approved under such a grant; and
    (2) The holder agrees that the United States, its lessees, or other 
ROW grant or RUE grant holders, may use or occupy any part of the ROW 
grant or RUE grant not actually occupied or necessarily incident to its 
use for any necessary activities.


Sec.  285.303  How long will my ROW grant or RUE grant remain in 
effect?

    Your ROW grant or RUE grant will remain in effect for as long as 
the associated activities are properly maintained and used for the 
purpose for which the grant was made, unless otherwise expressly stated 
in the grant.


Sec.  285.304  [Reserved]

Obtaining ROW Grants and RUE Grants


Sec.  285.305  How do I request a ROW grant or RUE grant?

    You must submit to MMS one paper copy and one electronic copy of a 
request for a new or modified ROW grant or RUE grant. You must submit a 
separate request for each ROW grant or RUE grant you are requesting. 
The request must contain the following information:
    (a) The area you are requesting for a ROW grant or RUE grant;
    (b) A general description of your objectives and the facilities 
that you would use to achieve those objectives;
    (c) A general schedule of proposed activities; and
    (d) Pertinent information concerning environmental conditions in 
the area of interest.


Sec.  285.306  What action will MMS take on my request?

    The MMS will consider requests for ROW grants and RUE grants on a 
case-by-case basis and may issue a grant competitively, as provided in 
Sec.  285.308, or noncompetitively if we determine after public notice 
that there is no competitive interest. The MMS will coordinate and 
consult with relevant Federal agencies, with the Governor of any 
affected State, and the executive of any affected local government.
    (a) In response to an unsolicited request for a ROW grant or RUE 
grant, the MMS will first determine if there is competitive interest as 
provided in Sec.  285.307.
    (b) If MMS determines that there is no competitive interest in a 
ROW grant or RUE grant, we will:
    (1) In consultation with you, establish the terms and conditions 
for the grant;
    (2) Require you to submit a General Activities Plan (GAP), as 
described in Sec. Sec.  285.640 through 285.647, within 60 calendar 
days of the determination of no competitive interest; and
    (3) Evaluate your request for a noncompetitive grant and GAP 
simultaneously.
    (c) If we award your ROW grant or RUE grant competitively, you must 
submit and receive MMS approval of your GAP as provided in Sec. Sec.  
285.640 through 285.647.


Sec.  285.307  How will MMS determine whether competitive interest 
exists for ROW grants and RUE grants?

    To determine whether or not there is competitive interest:
    (a) We will publish a public notice, describing the parameters of 
the project, to give affected and interested parties an opportunity to 
comment on the proposed ROW grant or RUE grant area.
    (b) We will evaluate any comments received on the notice and make a 
determination of the level of competitive interest.


Sec.  285.308  How will MMS conduct an auction for ROW grants and RUE 
grants?

    (a) If MMS determines that there is competitive interest, we will:
    (1) Publish a notice of each grant auction in the Federal Register 
describing auction procedures, allowing interested persons 30 calendar 
days to comment; and
    (2) Conduct a competitive auction for issuing the ROW grant or RUE 
grant. The auction process for ROW grants and RUE grants will be 
conducted following the same process for leases set forth in Sec. Sec.  
285.211 through 285.225.
    (b) If you are the successful bidder in an auction, you must pay 
the first year's rental as provided in Sec.  285.316.


Sec.  285.309  When will MMS issue a noncompetitive ROW grant or RUE 
grant?

    If we approve or approve with conditions your GAP, we may offer you 
a noncompetitive grant.
    (a) If you accept the terms and conditions of the grant then we 
will issue the grant and you must comply with all terms and conditions 
of your grant and all applicable provisions of this part; and
    (b) If you do not accept the terms and conditions, MMS will not 
issue a grant.


Sec.  285.310  What is the effective date of a ROW grant or RUE grant?

    Your ROW grant or RUE grant becomes effective on the date 
established by MMS on the ROW grant or RUE grant instrument.

[[Page 39472]]

Sec.  285.311 through 285.314  [Reserved]

Financial Requirements for ROW Grants and RUE Grants


Sec.  285.315  What deposits are required for a competitive ROW grant 
or RUE grant?

    (a) You must make a deposit as required in Sec.  285.501(a) 
regardless of whether the auction is sealed-bid, oral, electronic, or 
other auction format. MMS will specify in the sale notice the official 
to whom you must submit the payment, the time by which the official 
must receive the payment, and the forms of acceptable payment.
    (b) If your high bid is rejected, we will provide a written 
statement of reasons.
    (c) For all rejected bids, we will refund, without interest, any 
money deposited with your bid.


Sec.  285.316  What payments are required for ROW grants or RUE grants?

    Before we issue the ROW grant or RUE grant you must pay:
    (a) Any balance on accepted high bids to MMS, as provided in the 
sale notice; and
    (b) An annual rental for the first year of the grant, as specified 
in Sec.  285.507(a).

Subpart D--Lease and Grant Administration

Noncompliance and Cessation Orders


Sec.  285.400  What happens if I fail to comply with this part?

    (a) The MMS may take appropriate corrective action under this part 
if you fail to comply with applicable provisions of Federal law, the 
regulations in this part, other applicable regulations, any order of 
the Director, the provisions of a lease or grant issued under this 
part, or the requirements of an approved plan or other approval under 
this part.
    (b) The MMS may issue to you a notice of noncompliance if it 
determines that there has been a violation of the regulations in this 
part, any order of the Director, or any provision of your lease, grant 
or other approval issued under this part. When issuing a notice of 
noncompliance, MMS will serve you at your last known address.
    (c) A notice of noncompliance will tell you how you failed to 
comply with this part, any order of the Director, and/or the provisions 
of your lease, grant or other approval, and will specify what you must 
do to correct the noncompliance and the time limits within which you 
must act.
    (d) Failure of a lessee, operator, or grant holder under this part 
to take the actions specified in a notice of noncompliance within the 
time limit specified provides the basis for MMS to issue a cessation 
order as provided in Sec.  285.401, and/or a cancellation of the lease 
or grant as provided in Sec.  285.437.
    (e) If the MMS determines that any incident of noncompliance poses 
an imminent threat of serious or irreparable damage to natural 
resources, life (including human and wildlife), property, or the 
marine, coastal, or human environment, or to sites, structures, or 
objects of historical or archaeological significance, MMS may include 
with its notice of noncompliance an order directing you to take 
immediate remedial action, including, when appropriate, a cessation 
order, to alleviate threats and to abate the violation.
    (f) The MMS may assess civil penalties as authorized by Section 24 
of the OCS Lands Act if you fail to comply with any provision of this 
part or any term of a lease, grant or order issued under the authority 
of this part, after notice of such failure and expiration of any 
reasonable period allowed for corrective action. Civil penalties will 
be determined and assessed in accordance with the procedures set forth 
in 30 CFR Part 250, subpart N.
    (g) You may be subject to criminal penalties as authorized by 
Section 24 of the OCS Lands Act.


Sec.  285.401  When may MMS issue a cessation order?

    (a) The MMS may issue a cessation order during the term of your 
lease or grant when you fail to comply with an applicable law, 
regulation, order, or provision of a lease, grant, plan or other MMS 
approval under this part. Except as provided in Sec.  285.400(e), MMS 
will allow you a period of time to correct any noncompliance before 
issuing an order to cease activities.
    (b) A cessation order will set forth what measures you are required 
to take, including reports you are required to prepare and submit to 
MMS, in order to resume activities on your lease or grant.


Sec.  285.402  What is the effect of a cessation order?

    (a) Upon receiving a cessation order, you must cease all activities 
on your lease or grant as specified in the order. The MMS may authorize 
certain activities during the period of the cessation order.
    (b) A cessation order will last for the period specified in the 
order or as otherwise specified by MMS. If MMS determines that the 
circumstances giving rise to the cessation order cannot be resolved 
within a reasonable time period, the Secretary may initiate 
cancellation of your lease or grant as provided in Sec.  285.437.
    (c) A cessation order does not extend the term of your lease or 
grant for the period you are prohibited from conducting activities.
    (d) You must continue to make all required payments on your lease 
or grant during the period a cessation order is in effect.


Sec.  285.403  [Reserved]


Sec.  285.404  [Reserved]

Designation of Operator


Sec.  285.405  How do I designate an operator?

    (a) If you intend to designate an operator who is not the lessee or 
grant holder, you must identify the proposed operator in your SAP 
(under Sec.  285.610(a)(3)), COP (under Sec.  285.626(b)), or GAP 
(under Sec.  285.645(a)(3)), as applicable. If no operator is 
designated in a SAP, COP, or GAP, MMS will deem the lessee or grant 
holder to be the operator.
    (b) An operator must be designated in any SAP, COP, or GAP if there 
is more than one lessee or grant holder for any individual lease or 
grant.
    (c) Once approved in your plan, the designated operator is 
authorized to act on your behalf and authorized to perform activities 
necessary to fulfill your obligations under the OCS Lands Act, the 
lease or grant, and the regulations in this part.
    (d) You, or your designated operator, must immediately provide MMS 
a written notification of any change of address.
    (e) If there is a change in the designated operator, you must 
immediately provide written notice to MMS and identify the new 
designated operator. The lessee(s) or grant holders is the operator and 
responsible for compliance until MMS approves designation of the new 
operator.
    (f) Designation of an operator under any lease or grant issued 
under this part does not relieve the lessee or grant holder of its 
obligations under this part or its lease or grant.
    (g) A designated operator performing activities on the lease must 
comply with all regulations governing those activities and may be held 
liable or penalized for any noncompliance, notwithstanding their 
resignation as operator.


Sec.  285.406  Who is responsible for fulfilling lease and grant 
obligations?

    (a) When you are not the sole lessee or grantee, you and your co-
lessee(s) or co-grantee(s) are jointly and severally responsible for 
fulfilling your obligations under the lease or grant and the provisions 
of this part, unless otherwise provided in these regulations.

[[Page 39473]]

    (b) If your designated operator fails to fulfill any of your 
obligations under the lease or grant and this part, MMS may require you 
or any or all of your co-lessees or co-grantees to fulfill those 
obligations or other operational obligations under the Act, the lease, 
grant, or the regulations.
    (c) Whenever the regulations in this part require the lessee or 
grantee to conduct an activity in a prescribed manner, the lessee or 
grantee, and operator (if one has been designated) are jointly and 
severally responsible for complying with the regulation.


Sec.  285.407  [Reserved]

Lease or Grant Assignment


Sec.  285.408  May I assign my lease or grant interest?

    (a) You may assign all or part of your lease or grant interest, 
including record title, subject to MMS approval under this subpart. 
Each instrument that creates or transfers an interest must describe the 
entire tract or describe by officially designated subdivisions the 
interest you propose to create or transfer.
    (b) You may assign a lease or grant interest by submitting one 
paper copy and one electronic copy of an assignment application to MMS. 
The assignment application must include:
    (1) The MMS-assigned lease or grant number;
    (2) A description of the geographic you are assigning;
    (3) The names of both the assignor and the assignee, if applicable;
    (4) The names and telephone numbers of the contacts for both the 
assignor and the assignee;
    (5) The names, titles, and signatures of the authorizing officials 
for both the assignor and the assignee;
    (6) A statement that the assignee agrees to comply with and to be 
bound by the terms and conditions of the lease or grant;
    (7) The qualifications of the assignee as required of an applicant 
for a lease or grant in Sec.  285.107; and
    (8) A statement on how the assignee complies with the financial 
assurance requirements of Sec. Sec.  285.515 through 285.536. No 
assignment will be approved until the assignee provides the required 
financial assurance.
    (c) If you submit an application to assign a lease or grant, you 
will be billed for all payments that are or become due on the lease or 
grant until the date MMS approves the assignment.
    (d) The assignment takes effect on the date MMS approves your 
application.


Sec.  285.409  How do I request approval of a lease or grant 
assignment?

    (a) You must request approval of each assignment on a form approved 
by MMS and submit originals of each instrument that creates or 
transfers ownership of record title or certified copies thereof within 
90 calendar days after the last party executes the transfer agreement.
    (b) Any assignee will be subject to all the terms and conditions of 
your original lease or grant, including the requirement to furnish 
financial assurance in the amount required in Sec. Sec.  285.515 
through 285.536.
    (c) The assignee must submit proof of eligibility and other 
qualifications specified in Sec.  285.107.
    (d) An authorized official, on behalf of the holder of a lease or 
grant or portion thereof, must furnish evidence of authority to execute 
the assignment.


Sec.  285.410  How does an assignment affect the assignor's liability?

    As assignor, you are liable for all obligations, monetary and non-
monetary, that accrued under your lease or grant before MMS approves 
your assignment. Our approval of the assignment does not relieve you of 
these accrued obligations. MMS may require you to bring the lease or 
grant into compliance to the extent the obligation accrued before the 
effective date of your assignment if your assignee, or subsequent 
assignees, fails to perform any obligation under the lease or grant.


Sec.  285.411  How does an assignment affect the assignee's liability?

    (a) As assignee, you and any subsequent assignees are liable for 
all lease or grant obligations that accrue after MMS approves the 
assignment. As assignee, you must comply with all the terms and 
conditions of the lease or grant and all applicable regulations, remedy 
all existing environmental and operational problems on the lease or 
grant and reclaim the site as required under subpart I of this part.
    (b) Assignees are bound to comply with each term or condition of 
the lease or grant and the regulations in this subchapter. You are 
jointly and severally liable for the performance of all obligations 
under the lease or grant and under the regulations in this part with 
each prior lessee who held an interest at the time the obligation 
accrued, unless this part provides otherwise.


Sec.  285.412 through 285.414  [Reserved]

Lease or Grant Suspension


Sec.  285.415  What is a lease or grant suspension?

    (a) A suspension is an interruption of the term of your lease or 
grant that may occur:
    (1) As approved by MMS at your request, as provided in Sec.  
285.416; or
    (2) As ordered by MMS, as provided in Sec.  285.417.
    (b) A suspension extends the term of your lease or grant for the 
length of time the suspension is in effect.
    (c) Activities may not be conducted on your lease or grant during 
the period of a suspension except as expressly authorized by MMS by the 
terms of the suspension.


Sec.  285.416  How do I request a lease or grant suspension?

    You must submit a written request to MMS that includes the 
following information no later than 90 calendar days prior to the 
expiration of your appropriate lease or grant term:
    (a) The reasons you are requesting suspension of your lease or 
grant term, and the length of additional time requested;
    (b) An explanation of why the suspension is necessary in order to 
ensure full enjoyment of your lease or grant and why it is in the 
Lessor's or Grantor's interest to approve the suspension;
    (c) If you do not timely submit a SAP, COP, or GAP, as required, 
you may request a suspension to extend the preliminary or site 
assessment term of your lease or grant, as applicable that includes a 
revised schedule for submission of a SAP, COP, or GAP as appropriate; 
and
    (d) Any other information MMS may require.


Sec.  285.417  When may MMS order a suspension?

    (a) The MMS may order a suspension under the following 
circumstances:
    (1) When necessary to comply with judicial decrees prohibiting some 
or all activities under your lease;
    (2) When continued activities pose an imminent threat of serious or 
irreparable harm or damage to natural resources, life (including human 
and wildlife), property, or the marine, coastal, or human environment; 
or to sites, structures, or objects of historical or archaeological 
significance; or
    (3) When the suspension is necessary for reasons of national 
security or defense.
    (b) If MMS orders a suspension under paragraph (a)(2) of this 
section, and if

[[Page 39474]]

you wish to resume activities, we may require you to conduct a site-
specific study that evaluates the cause of the harm, the potential 
damage, and the available mitigation measures.
    (1) You may be required to pay for the study.
    (2) You must furnish one paper copy and one electronic copy of the 
study and results to us.
    (3) We will make the results available to other interested parties 
and to the public.
    (4) We will use the results of the study and any other information 
that becomes available:
    (i) To decide if the suspension order can be lifted; and
    (ii) To determine any actions that you must take to mitigate or 
avoid any damage to natural resources, life (including human and 
wildlife), property, or the marine, coastal, or human environment; or 
to sites, structures, or objects of historical or archaeological 
significance.


Sec.  285.418  How will MMS issue a suspension?

    (a) The MMS will issue a suspension order orally or in writing.
    (b) A suspension order issued orally will be followed by a written 
explanation by MMS as soon as practicable.
    (c) The written explanation will describe the effect of the 
suspension order on your lease or grant and any associated activities. 
The MMS may authorize certain activities during the period of the 
suspension, as set forth in the suspension order.


Sec.  285.419  What are my immediate responsibilities if I receive a 
suspension order?

    You must take action to comply fully with the terms of a suspension 
order upon receipt.


Sec.  285.420  What effect does a suspension order have on my payments?

    (a) While MMS evaluates your request for a suspension under Sec.  
285.416, you must continue to fulfill your payment obligation until the 
end of the original term of your lease or grant. If our evaluation goes 
beyond the end of the original term of your lease or grant, the term of 
your lease or grant will be extended for the period of time necessary 
for MMS to complete its evaluation of your request but you will not be 
required to make payments.
    (b) If MMS approves your request for a suspension as provided in 
Sec.  285.416, we may suspend your payment obligation, as appropriate 
for the term that is suspended, depending on the reasons for the 
requested suspension.
    (c) If MMS orders a suspension as provided in Sec.  285.417, your 
payments, as appropriate for the term that is suspended, will be waived 
during the suspension period.


Sec.  285.421  How long will a suspension be in effect?

    (a) Except as provided below, a suspension will be in effect for 
the period specified by MMS.
    (b) The MMS will not approve a suspension request pursuant to Sec.  
285.416 for a period longer than 2 years.
    (c) If MMS determines that the circumstances giving rise to a 
suspension ordered under Sec.  285.417 cannot be resolved within 5 
years, the Secretary may initiate cancellation of the lease or grant as 
provided in Sec.  285.437.


Sec.  285.422 through 285.424  [Reserved]

Lease or Grant Renewal


Sec.  285.425  May I obtain a renewal of my lease or grant before it 
terminates?

    You may request renewal of the operations term of your lease or the 
original authorized term of your grant. The MMS, at its discretion, may 
approve a renewal request to conduct substantially similar activities 
as were originally authorized under the lease or grant. The MMS will 
not approve a renewal request that involves development of alternative 
energy not originally authorized in the lease or grant. The MMS may 
revise or adjust payment terms of the original lease, as a condition of 
lease renewal.


Sec.  285.426  When must I submit my request for renewal?

    (a) You must request a renewal from MMS:
    (1) No later than 180 calendar days before the termination date of 
your limited lease or grant.
    (2) No later than 2 years before the termination date of the 
operations term of your commercial lease.
    (b) You must submit to MMS all information it requests pertaining 
to your lease or grant and your renewal request.


Sec.  285.427  How long is a renewal?

    The MMS will set the term of a renewal on a case-by-case basis not 
to exceed the original term of the lease or grant.


Sec.  285.428  What effect does applying for a renewal have on my 
activities and payments?

    If you timely request a renewal:
    (a) You may continue to conduct activities approved under your 
lease or grant under the original terms and conditions.
    (b) You may request a suspension of your lease or grant as provided 
in Sec.  285.416 while MMS considers your request.
    (c) For the period MMS considers your request for renewal, you must 
continue to make all payments in accordance with the original terms and 
conditions of your lease or grant.


Sec.  285.429 through 285.431  [Reserved]

Lease or Grant Termination


Sec.  285.432  When does my lease or grant terminate?

    Your lease or grant terminates on whichever of the following dates 
occurs first:
    (a) The expiration of the applicable term of your lease or grant, 
unless your term is automatically extended under Sec. Sec.  285.235 or 
285.236, or your lease or grant is suspended or renewed as provided in 
this subpart;
    (b) A cancellation, as set forth in Sec.  285.437; or
    (c) Relinquishment, as set forth in Sec.  285.435.


Sec.  285.433  What must I do after my lease or grant terminates?

    (a) After your lease or grant terminates, you must:
    (1) Make all payments due, including any accrued rentals and 
deferred bonuses; and
    (2) Perform any other outstanding obligations under the lease or 
grant within 6 months.
    (b) Within 1 year following termination of a lease or grant, you 
must remove or dispose of all facilities, installations, and other 
devices permanently or temporarily attached to the seabed on the OCS in 
accordance with a plan or application approved by MMS under subpart I 
of this part.
    (c) If you fail to comply with your approved decommissioning plan 
or application:
    (1) The MMS may call for the forfeiture of your financial 
assurance; and
    (2) You remain liable for removal or disposal costs and responsible 
for accidents or damages that might result from such failure.


Sec.  285.434  [Reserved]

Lease or Grant Relinquishment


Sec.  285.435  How can I relinquish a lease or a grant or parts of a 
lease or grant?

    (a) You may surrender the lease or grant or an officially 
designated subdivision thereof by filing one paper copy and one 
electronic copy of a


[[Continued on page 39475]]


From the Federal Register Online via GPO Access [wais.access.gpo.gov]
]                         
 
[[pp. 39475-39504]] Alternative Energy and Alternate Uses of Existing Facilities on 
the Outer Continental Shelf

[[Continued from page 39474]]

[[Page 39475]]

relinquishment application with MMS. A relinquishment takes effect on 
the date we approve your application, subject to the continued 
obligation of the lessee and the surety to:
    (1) Make all payments due, including any accrued rentals and 
deferred bonuses;
    (2) Decommission all facilities on the lease or grant to be 
relinquished to the satisfaction of MMS; and
    (3) Perform any other outstanding obligations under the lease or 
grant.
    (b) Your relinquishment application must include:
    (1) Company name;
    (2) Contact name;
    (3) Telephone number;
    (4) Fax number;
    (5) E-mail address;
    (6) The MMS-assigned lease or grant number, and, if applicable, the 
name of any facility;
    (7) A description of the geographic area you are relinquishing;
    (8) The name, title, and signature of your authorizing official 
(the name, title, and signature must match exactly the name, title, and 
signature in MMS qualification records); and
    (9) A statement that you will adhere to the requirements of subpart 
I of this part.
    (c) If you have submitted an application to relinquish a lease or 
grant, you will be billed for any outstanding payments that are due 
before the relinquishment takes effect as provided in paragraph (a) of 
this section.

Lease or Grant Contraction


Sec.  285.436  Can MMS require lease or grant contraction?

    At an interval no more frequent than every 5 years, the MMS may 
review your lease or grant area to determine whether the lease or grant 
area is larger than needed to develop the project and manage activities 
in a manner that is consistent with the provisions of this part. MMS 
will notify you of our proposal to contract the lease or grant area.
    (a) MMS will give you the opportunity to present orally or in 
writing information demonstrating that you need the area in question to 
manage lease activities consistent with these regulations.
    (b) Prior to taking action to contract the lease or grant area, MMS 
will issue a decision addressing your contentions that the area is 
needed.
    (c) You may appeal this decision under Sec.  285.118 of this part.

Lease or Grant Cancellation


Sec.  285.437  When can my lease or grant be canceled?

    (a) The Secretary will cancel any lease or grant issued under this 
part upon proof that it was obtained by fraud or misrepresentation, and 
after notice and opportunity to be heard has been afforded to the 
lessee or grant holder.
    (b) The Secretary may cancel any lease or grant issued under this 
part when:
    (1) The Secretary determines after notice and opportunity for a 
hearing that with respect to the lease that would be canceled, the 
lessee has failed to comply with any applicable provision of the OCS 
Lands Act or these regulations, any order of the Director, or any term, 
condition or stipulation contained in the lease or grant and the 
failure to comply continued 30 calendar days (or other period MMS 
specifies) after you receive notice from MMS. The Secretary will mail a 
notice by registered or certified letter to the lessee or grant holder 
at its record post office address.
    (2) The Secretary determines after notice and opportunity for a 
hearing that you have terminated commercial operations as provided in 
Sec.  285.635, or other approved activities as provided in Sec.  
285.656.
    (3) Required by national security or defense; or
    (4) The Secretary determines after notice and opportunity for a 
hearing that continued activity under the lease or grant:
    (i) Would cause serious harm or damage to natural resources; life 
(including human and wildlife); property; the marine, coastal, or human 
environment; or sites, structures, or objects of historical or 
archaeological significance; and
    (ii) That the threat of harm or damage would not disappear or 
decrease to an acceptable extent within a reasonable period of time; 
and
    (iii) The advantages of cancellation outweigh the advantages of 
continuing the lease or grant in force.
    (c) If the Secretary cancels a lease or grant under (b)(3) or 
(b)(4) of this section, the Federal government may provide compensation 
as appropriate to the extent funds are authorized and appropriated for 
such purposes.

Subpart E--Payments and Financial Assurance Requirements

Payments


Sec.  285.500  How do I make payments under this part?

    (a) For acquisition fees, or rentals paid for the preliminary term 
of your lease, you must make credit card or automated clearing house 
(ACH) payments through the Pay.Gov Web site, and you must include one 
copy of the Pay.Gov confirmation receipt page with your unsolicited 
request or signed lease instrument. You may access the Pay.Gov Web site 
through links on the MMS Offshore Web site at: http://www.mms.gov/
offshore/homepage or directly through Pay.Gov at: https://www.pay.gov/
paygov/.
    (b) For rentals during the preliminary term or site assessment term 
or operating fees during the operations term, you must make your 
payments as required in Sec.  218.51 of this chapter.
    (c) This table summarizes payments you must make for leases and 
grants, unless otherwise specified in the Final Sale Notice.
BILLING CODE 4310-MR-P

[[Page 39476]]

[GRAPHIC] [TIFF OMITTED] TP09JY08.004

Sec.  285.501  What deposits will MMS collect for a competitively 
issued lease, ROW grant, or RUE grant?

    (a) For a competitive lease or grant we offer through sealed 
bidding, you must submit a deposit of 20 percent of the total bid 
amount unless some other amount is specified in the Final Sale Notice.
    (b) For a competitive lease we offer through ascending bidding, you 
must submit a deposit as established in the Final Sale Notice.
    (c) You must pay any balances on accepted high bids in accordance 
with the Final Sale Notice, these regulations and your lease or grant 
instrument.
    (d) The deposit will be forfeited for any successful bidder who 
fails to execute the lease within the prescribed time or otherwise does 
not comply with the applicable regulations or stipulations in the Final 
Sale Notice.


Sec.  285.502  What initial payments will MMS require to obtain a 
noncompetitive lease, ROW grant, or RUE grant?

    When requesting a noncompetitive lease, you must meet the initial 
payment requirements of this section, unless specified otherwise in 
your lease instrument. No advance payment is required when requesting 
noncompetitive ROW grants and RUE grants.
    (a) If you request a noncompetitive lease, you must submit an 
acquisition fee of $0.25 per acre as provided in Sec.  285.500.
    (b) If we determine that there is no competitive interest we will 
then:
    (1) Retain your acquisition fee if we issue you a lease.
    (2) Refund your acquisition fee, without interest, if we do not 
issue your requested lease.
    (c) If we determine that there is a competitive interest in an area 
you requested, then we will proceed with a competitive lease sale 
process provided for in subpart B of this part, and we will:
    (1) Apply your acquisition fee to the required deposit for your bid 
amount, if you submit a bid;
    (2) Apply your acquisition fee to your bonus bid, if you acquire 
the lease; or
    (3) Retain your acquisition fee if you do not bid for or acquire 
the lease.


Sec.  285.503  What rentals will MMS collect on a commercial lease?

    (a) The rental for a commercial lease is $3.00 per acre per year, 
unless otherwise established in the Final Sale Notice.
    (1) You must pay the first 6 months' rental as provided in Sec.  
285.500 when we issue your lease.
    (2) You must pay rentals at the beginning of each subsequent one 
year period in accordance with the regulations at Sec.  218.51 of this 
chapter on the entire lease area until we approve your COP or as 
otherwise specified in the Final Sale Notice.
    (b) After your lease enters its operations term, you must pay 
operating fees as specified in Sec.  285.505, unless we specify in the 
Final Sale Notice a rental payment instead of an operating fee during 
the operating term of the lease.
    (1) If you develop your commercial lease in phases, as approved by 
us in your COP under Sec.  285.629, you must pay:
    (i) Rentals on the portion of the lease that is not presently 
authorized for commercial operations, and

[[Page 39477]]

    (ii) Operating fees on the portion of the lease that is presently 
authorized for commercial operations, as specified in Sec.  285.505, 
unless we specify in the Final Sale Notice a rental payment instead of 
an operating fee during the operating term of the lease.
    (c) You must pay the rental for a project easement in addition to 
lease rental as provided in Sec.  285.506. You must commence rental 
payments for your project easement upon our approval of your COP or 
GAP.


Sec.  285.504  What rentals will MMS collect on a limited lease?

    (a) The rental for a limited lease is $3.00 per acre per year, 
unless otherwise established in the Final Sale Notice and your lease 
instrument.
    (b) You must pay the first 6 months' rental when MMS issues your 
limited lease as provided in Sec.  285.500.
    (c) You must pay rentals at the beginning of each subsequent one 
year period on the entire lease area for the duration of your 
operations term in accordance with the regulations at Sec.  218.51 of 
this chapter.


Sec.  285.505  What operating fees will MMS collect from a commercial 
lease?

    Unless we substitute a rental payment obligation, you must pay 
operating fees on your commercial lease during the operations term, as 
described in this section.
    (a) We will determine the annual operating fee for activities 
relating to the generation of electricity conducted during the 
operations term of your lease based on the following formula, F = M * H 
* c * P * r where:
    (1) F is the dollar amount of the annual operating fee;
    (2) M is facility installed capacity expressed in megawatts;
    (3) H is the number of hours in a year, equal to 8760, used to 
calculate an annual payment;
    (4) c is a ``capacity factor'' representing the anticipated 
efficiency of the facility's operation expressed as a decimal between 
zero and one;
    (5) P is a measure of the retail electric power price expressed in 
dollars per megawatt hour, as provided in paragraph (c)(2) of this 
section; and
    (6) r is the operating fee rate and expressed as a decimal between 
zero and one.
    (b) The annual operating fee formula relating to the value of 
annual electricity generation is restated below:


         F                          M                          H                          c                          P                         r

(annual operating     =          (installed      *    (hours per year)      *    (capacity factor)     *       (power price)      *      (operating fee
             fee)                 capacity)                                                                                                       rate)


    Example: The operating fee for a 150 megawatt facility with an 
anticipated capacity factor of 0.35 operating in a region with a 
typical power price of $65 per megawatt hour and a fee rate of 0.02 
would be just under $0.6 million per year (150 megawatts times 8,760 
hours per year times 0.35 times $65 per megawatt hour times 0.02).

    (c) We will specify operating fee parameters for commercial leases 
issued competitively in the Final Sale Notice and in the lease 
instrument for those issued noncompetitively.
    (1) Unless we specify otherwise, we intend to set the operating fee 
rate (r) at 0.01 for the first two years of the operations term, and at 
0.02 in the third and remaining years of the operations term. We may 
apply a different fee rate for new projects (i.e. a new generation 
based on new technology) after considering factors such as program 
objectives, state of the industry, project type, and project potential. 
Also, we may agree to reduce or waive the fee rate under Sec.  285.509 
for a given project.
    (2) The power price (P) will be determined based on the prior 
year's average retail power price in the State in which a project's 
transmission cables make landfall, as published by the Department of 
Energy, Energy Information Administration. If, at the time the annual 
operating fee payment is due, the prior year's average retail power 
price in unavailable, the lessee shall calculate the operating fee 
based on the most recent average annual retail power price published by 
the Department of Energy, Energy Information Administration.
    (3) We will select the capacity factor (C) based upon applicable 
analogs drawn from present and future domestic and foreign projects 
that operate in comparable conditions and on comparable scales. Upon 
the completion of the first year of commercial operations on the lease, 
MMS may adjust the capacity factor as necessary (to accurately 
represent a comparison of actual production over a given period of time 
with the amount of power a facility would have produced if it had run 
at full capacity). Thereafter, MMS may adjust the capacity factor (to 
accurately represent a comparison of actual production over a given 
period of time with the amount of power a facility would have produced 
if it had run at full capacity) no earlier than the completion of the 
sixth year of operation, or any five year period thereafter. The 
operator or lessee may request review and adjustment of the capacity 
factor under Sec.  285.509 of this part.
    (4) We will use the installed capacity (M) of the equipment you 
actually install.
    (d) You must submit all operating fee payments to MMS in accordance 
with the regulations at Sec.  218.51 of this chapter.
    (e) We will establish the operating fee in the final sale notice or 
in the lease instrument on a case-by-case basis for activities 
conducted during the operations term that do not relate to the 
generation of electricity (e.g. hydrogen).


Sec.  285.506  What rental payments will MMS collect on a project 
easement?

    (a) You must pay us a rental fee for your project easement of the 
greater of $5.00 per acre per year or $450 per year, unless specified 
otherwise in the Final Sale Notice.
    (1) The size of the project easement area for a cable or a pipeline 
is the full length of the corridor and a width of 200 feet (61 meters), 
centered on the cable or pipeline.
    (2) The size of a project easement area for an accessory platform 
is limited to the aerial extent of anchor chains and other facilities 
and devices associated with the accessory.
    (b) You must commence rental payments for your project easement 
upon our approval of your COP or GAP.
    (1) You must make the first rental payment as provided in Sec.  
285.500.
    (2) You must submit all subsequent rental payments to MMS in 
accordance with the regulations at Sec.  218.51 of this chapter.
    (3) You must continue to pay the rental for your project easement 
until your lease is terminated.


Sec.  285.507  What rental payments will MMS collect on ROW grants or 
RUE grants associated with alternative energy projects?

    (a) For each ROW grant we have approved under subpart C of this 
part, you must pay an annual rental as

[[Page 39478]]

follows, unless specified otherwise in the Final Sale Notice:
    (1) $70 for each nautical mile or part of a nautical mile of OCS 
that your right-of way crosses; and
    (2) An additional $5.00 per acre, subject to a minimum of $450 for 
use of the entire affected area, if you hold a ROW grant that includes 
a site outside the corridor of a 200-foot width (61 meters), centered 
on the cable or pipeline. The affected area includes the areal extent 
of anchor chains, risers, and other devices associated with a site 
outside the corridor.
    (b) For each RUE grant we have approved under subpart C of this 
part, you must pay a rental fee equal to the greater of:
    (1) $5.00 per acre per year; or
    (2) $450 per year.
    (c) You must make the rental payments required by paragraphs (a) 
and (b) of this section on:
    (1) An annual basis;
    (2) For a 5-year period; or
    (3) For multiples of 5 years.
    (c) You must make the first annual rental payment upon approval of 
your ROW grant or RUE grant request as provided in Sec.  285.500 and 
all subsequent rental payments to MMS in accordance with the 
regulations at Sec.  218.51 of this chapter.


Sec.  285.508  Who is responsible for submitting lease or grant 
payments to MMS?

    (a) For each lease, ROW grant, or RUE grant issued under this part, 
you must identify one person who is responsible for all payments due 
and payable under the provisions of the lease or grant. The responsible 
person identified is designated as the payor and you must document 
acceptance of such responsibilities as provided in Sec.  218.52 of this 
chapter.
    (b) All payors must submit payments, and maintain auditable records 
in accordance with guidance we issue or any applicable regulations in 
subchapter A of this chapter. In addition, the lessee or grant holder 
must also maintain such auditable records.


Sec.  285.509  May MMS reduce or waive lease or grant payments?

    (a) The MMS Director may reduce or waive the rental or operating 
fee, including components of the operating fee such as the fee rate or 
capacity factor, when the Director determines that it is necessary to 
encourage continued or additional activities.
    (b) When requesting a reduction or waiver, you must submit an 
application to us that includes all of the following:
    (1) The number of the lease, ROW grant, or RUE grant involved;
    (2) Name of each lessee or grant holder of record;
    (3) Name of each operator;
    (4) A demonstration that:
    (i) Continued activities would be uneconomic without the requested 
reduction or waiver or
    (ii) A reduction or waiver is necessary to encourage additional 
activities; and
    Any other information required by the Director.
    (c) No more than six years of your operations term will be subject 
to a full waiver of the operating fee.


Sec.  285.510 through 285.514  [Reserved]

Basic Financial Assurance Requirements for Commercial Leases


Sec.  285.515  What financial assurance must I provide when I obtain my 
commercial lease?

    (a) Before MMS will issue your commercial lease or approve an 
assignment of an existing commercial lease, you (or, for an assignment, 
the proposed assignee) must guarantee compliance with all terms and 
conditions of the lease by providing either:
    (1) A $100,000 minimum lease-specific bond; or
    (2) Another approved security as specified in Sec.  285.526.
    (b) You meet the financial assurance requirements under this 
subpart if your designated lease operator provides a minimum, lease-
specific bond that guarantees compliance with all terms and conditions 
of the lease.
    (1) The dollar amount of the minimum, lease-specific financial 
assurance in (a)(1) of this section will be adjusted to reflect changes 
in the Consumer Price Index-All Urban Consumers (CPI-U) or a 
substantially equivalent index if the CPI-U is discontinued.
    (2) The first CPI-U based adjustment can be made no sooner than the 
5-year anniversary of the adoption of this rule. Subsequent CPI-U-based 
adjustments may be made every 5 years thereafter.


Sec.  285.516  What are the financial assurance requirements for each 
stage of my commercial lease?

    (a) The basic financial assurance requirements for each stage of 
your commercial lease are as follows:

------------------------------------------------------------------------
     Before MMS will. . .                You must provide . . .
------------------------------------------------------------------------
(1) Issue a commercial lease   A $100,000 minimum lease-specific
 or approve an assignment of    financial assurance.
 an existing commercial lease.
(2) Approve your Site          A SAP bond or other financial assurance,
 Assessment Plan (SAP).         in an amount determined by MMS, if upon
                                reviewing your SAP, MMS determines that
                                a SAP bond is required in addition to
                                your minimum lease-specific bond, due to
                                the complexity, number, and location of
                                any facilities involved in your site
                                assessment activities.
(3) Approve your Construction  A COP bond or other financial assurance,
 and Operations Plan (COP).     in an amount determined by MMS based on
                                the complexity, number, and location of
                                all facilities involved in your planned
                                activities, including commercial
                                operation, and your anticipated
                                decommissioning costs. The COP financial
                                assurance requirement will be in
                                addition to your lease-specific bond
                                and, if applicable, SAP bond.
------------------------------------------------------------------------

    (b) Each bond or other financial assurance must guarantee 
compliance with all terms and conditions of the lease. You may provide 
a new bond or increase the amount of your existing bond, to satisfy any 
additional financial assurance requirements.


Sec.  285.517  How will MMS determine the amounts of the SAP and COP 
financial assurance requirements associated with commercial leases?

    (a) The MMS will base the determination for the amounts of the SAP 
and COP financial assurance requirements on estimates of the cost to 
meet all accrued lease obligations.
    (b) We determine the amount of the SAP and COP financial assurance 
requirements on a case-by-case basis. The amount of the financial 
assurance must be no less than the amount

[[Page 39479]]

required to meet all lease obligations, including:
    (i) The projected amount of rentals and other payments due the 
Government over the next 12 months;
    (ii) Any past due rentals and other payments;
    (iii) Other monetary obligations; and
    (iv) The estimated costs of lease decommissioning, as required by 
subpart I of this part.
    (c) You may satisfy the requirement for a COP bond and, if 
applicable, a SAP bond by increasing the amount of your existing bond 
or replacing your existing bond.
    (d) If your cumulative potential obligations and liabilities 
increase or decrease, we may adjust the amount of COP bond or, if 
applicable, SAP bond.
    (1) If we propose adjusting your financial assurance amount, we 
will notify you of the proposed adjustment and give you an opportunity 
to comment.
    (2) We may approve a reduced financial assurance amount if you 
request it and if the reduced amount that you request continues to be 
greater than the sum of:
    (i) The projected amount of rentals and other payments due the 
Government over the next 12 months;
    (ii) Any past due rentals and other payments;
    (iii) Other monetary obligations; and
    (iv) The estimated costs of lease decommissioning.


Sec.  285.518  [Reserved]


Sec.  285.519  [Reserved]

Financial Assurance for Limited Leases, ROW Grants, and RUE Grants


Sec.  285.520  What financial assurance amount must I provide when I 
obtain my limited lease, ROW grant or RUE grant?

    (a) You must post a minimum limited lease or grant-specific bond in 
the amount of $300,000.
    (b) You meet the financial assurance requirements under this 
subpart if your designated lease or grant operator provides a minimum 
limited lease-specific or grant-specific bond in an amount sufficient 
to guarantee compliance with all terms and conditions of the limited 
lease or grant.
    (1) The MMS may adjust the dollar amount of the minimum, lease-
specific or grant-specific bond by the CPI-U or a substantially 
equivalent index if the CPI-U is discontinued.
    (2) The first CPI-U-base adjustment can be made no earlier than the 
5-year anniversary of the adoption of this rule. Subsequent CPI-U-based 
adjustments may be made every 5 years thereafter.


Sec.  285.521  Do my financial assurance requirements change as 
activities progress on my limited lease or grant?

    (a) The MMS may require you to increase the level of your financial 
assurance as activities progress on your limited lease or grant. We 
will base the determination for the amount of financial assurance 
requirements on our estimate of the cost to meet all accrued lease or 
grant obligations, including:
    (1) The projected amount of rentals and other payments due the 
Government over the next 12 months;
    (2) Any past due rentals and other payments;
    (3) Other monetary obligations; and
    (4) The estimated costs of lease abandonment and cleanup.
    (b) You may satisfy the requirement for increased financial 
assurance levels for the limited lease or grant by increasing the 
amount of your existing bond or replacing your existing bond.


Sec.  285.522 through 285.524  [Reserved]

Requirements for Financial Assurance Instruments


Sec.  285.525  What general requirements must a financial assurance 
instrument meet?

    (a) Any bond or other acceptable financial assurance instrument 
that you provide must:
    (1) Be payable to MMS upon demand; and
    (2) Guarantee compliance of all lessees, operators and grant 
holders with all terms and conditions of the lease or grant, any 
subsequent approvals and authorizations, and all applicable 
regulations.
    (b) All bonds and other forms of financial assurance must be on or 
in a form approved by MMS. You may submit this on an approved form that 
you have reproduced or generated by use of a computer. If the document 
you submit omits any terms and conditions that are included on the MMS-
approved form, your bond is deemed to contain the omitted terms and 
conditions.
    (c) Surety bonds must be issued by an approved surety listed in the 
current Treasury Circular 570, as required by 31 CFR 223.16. You may 
obtain one copy of Circular 570 from the Treasury Web site at http://
www.fms.treas.gov/c570/.
    (d) Your surety bond cannot exceed the underwriting limit listed in 
the current Treasury Circular 570, except as permitted therein.
    (e) You and a qualified surety must execute your bond. When the 
surety is a corporation, an authorized corporate officer must sign the 
bond and attest to it over the corporate seal.
    (f) You may not terminate the period of liability of your bond or 
cancel your bond, except as provided in this subpart. Bonds must 
continue in full force and effect even though an event has occurred 
that could diminish, terminate, or cancel a surety's obligation under 
State law.
    (g) Your surety must notify you and MMS within 5 business days 
after:
    (1) It initiates any judicial or administrative proceeding alleging 
its insolvency or bankruptcy, or
    (2) The Treasury decertifies the surety.


Sec.  285.526  What instruments other than a surety bond may I use to 
meet the financial assurance requirement?

    (a) You may use other types of security instruments, if MMS 
determines that such security protects MMS to the same extent as the 
surety bond. MMS will accept pledges of the following:
    (1) U.S. Department of Treasury securities identified in 31 CFR 
part 225;
    (2) Cash in an amount equal to the required dollar amount of the 
financial assurance, to be deposited and maintained in a Federal 
depository account of the United States Treasury by MMS; and
    (3) Certificates of deposit or savings accounts in a bank or 
financial institution organized or authorized to transact business in 
the United States with:
    (i) Minimum net assets of $500,000,000; and
    (ii) Minimum Bankrate.com Safe & Sound rating of 3 Stars and 
Capitalization, Assets, Equity and Liquidity (CAEL) of 3 or less.
    (b) If you use a Treasury security:
    (1) You must post one hundred fifteen (115) percent of your 
financial assurance amount.
    (2) You must monitor the collateral value of your security. If the 
collateral value of your security as determined in accordance with the 
31 CFR part 203 Collateral Margins Table (which can be found at http://
www.treasurydirect.gov) falls below the required level of coverage, you 
must pledge additional security to provide the required amount.
    (3) You must include with your pledge authority for us to sell the 
security and use the proceeds if we determine that you have failed to 
comply with any of the terms and conditions of your lease or grant, any 
subsequent approval or authorization, or applicable regulations.


Sec.  285.527  Can I use a lease or grant-specific decommissioning 
account to meet the financial assurance requirements?

    (a) In lieu of a surety bond, MMS may authorize you to establish a 
lease, ROW

[[Page 39480]]

grant, or RUE grant-specific decommissioning account in a federally 
insured institution. The funds may not be withdrawn from the account 
without our written approval.
    (1) The funds must be payable to MMS and pledged to meet your lease 
or grant decommissioning and site clearance obligations.
    (2) You must fully fund the account within the time MMS prescribes 
to cover all costs of decommissioning including site clearance. The MMS 
will estimate the cost of decommissioning, including site clearance.
    (b) Any interest paid on the account will be treated as account 
funds unless we authorize in writing that any interest be paid to the 
depositor.
    (c) We may allow you to pledge Treasury securities payable to MMS 
on demand to satisfy your obligation to make payments into the account. 
Acceptable Treasury securities and their collateral value are 
determined in accordance with the 31 CFR part 203 Collateral Margins 
Table (which can be found at http://www.treasurydirect.gov).
    (d) We may require you to commit a specified stream of revenues as 
payment into the account so that the account will be fully funded as 
prescribed in paragraph (a)(2). The commitment may include revenue from 
another lease, ROW grant, or RUE grant issued under this part.


Sec.  285.528  [Reserved]


Sec.  285.529  [Reserved]

Changes in Financial Assurance


Sec.  285.530  What must I do if my financial assurance lapses?

    (a) If your surety is decertified by the Treasury, becomes bankrupt 
or insolvent, or if your surety's charter or license is suspended or 
revoked, or if any other approved security expires for any reason, you 
must:
    (1) Inform MMS within 3 business days about the financial assurance 
lapse; and
    (2) Provide new financial assurance to MMS in the amount set by MMS 
as provided in this subpart.
    (b) You must notify MMS within 3 business days after you learn of 
any action filed alleging that you are, or your surety is, insolvent or 
bankrupt.


Sec.  285.531  What happens if the value of my financial assurance is 
reduced?

    If the value of your financial assurance is reduced below the 
required financial assurance amount, because of a default or any other 
reason, you must provide additional financial assurance sufficient to 
meet the requirements of this subpart within 45 calendar days or within 
a different period as specified by MMS.


Sec.  285.532  What happens if my surety wants to terminate the period 
of liability of my bond?

    (a) Terminating the period of liability of a bond ends the period 
during which surety liability continues to accrue. The surety continues 
to be responsible for obligations and liabilities that accrued during 
the period of liability and before the date on which MMS terminates the 
period of liability under paragraph (b) of this section. The 
liabilities that accrue during a period of liability include:
    (1) Obligations that started to accrue before the beginning of the 
period of liability and have not been met; and
    (2) Obligations that began accruing during the period of liability.
    (b) Your surety must submit to MMS its request to terminate the 
period of liability under its bond and notify you of that request. The 
MMS will terminate that period of liability within 90 calendar days 
after MMS receives the request. If you intend to continue activities, 
or have not met all obligations of your lease or grant, MMS will 
require you to provide a replacement bond or alternative form of 
security of equivalent or greater value.


Sec.  285.533  How does my surety obtain cancellation of my bond?

    (a) The MMS will release a bond or allow a surety to cancel a bond, 
and will relieve the surety from accrued obligations only if:
    (1) The MMS determines that there are no outstanding obligations 
covered by the bond; or
    (2)(i) The MMS accepts a replacement bond or an alternative form of 
security in an amount equal to or greater than the bond to be cancelled 
to cover the terminated period of liability;
    (ii) The surety issuing the new bond has expressly agreed to assume 
all outstanding liabilities under the original bond that accrued during 
the period of liability that was terminated; and
    (iii) The surety issuing the new bond has agreed to assume that 
portion of the outstanding liabilities that accrued during the 
terminated period of liability that exceeds the coverage of the bond 
prescribed under Sec. Sec.  285.515, 285.516, 285.520, or 285.521, and 
of which you were notified.
    (b) When your lease or grant ends, your surety(ies) remain(s) 
responsible and MMS will retain any financial assurance as follows:
    (1) The period of liability ends when you cease all operations and 
activities under the lease or grant, including decommissioning and site 
clearance.
    (2) Your surety or collateral financial assurance will not be 
released until seven years after the lease ends or a longer period as 
necessary to complete any appeals or judicial litigation related to 
your bonded obligation or for MMS to determine that all of your 
obligations under the lease or grant have been satisfied.
    (3) MMS will reduce the amount of your bond or return a portion of 
your financial assurance if MMS determines that we need less than the 
full amount of the bond or financial assurance to meet any possible 
future obligations.


Sec.  285.534  When may MMS cancel my bond?

    When your lease or grant ends, your surety(ies) remain(s) 
responsible and MMS will retain any pledged security as shown in the 
following table:

------------------------------------------------------------------------
                                  The period of    Your bond will not be
            Bond--               liability ends--     released until--
------------------------------------------------------------------------
(a) Bonds for commercial        When MMS           Seven years after the
 leases submitted under Sec.     determines that    lease ends or a
 285.515.                        you have met all   longer period as
                                 of your            necessary to
                                 obligations        complete any appeals
                                 under the lease.   or judicial
                                                    litigation related
                                                    to your bond
                                                    obligation. The MMS
                                                    will reduce the
                                                    amount of your bond
                                                    or return a portion
                                                    of your security if
                                                    MMS determines that
                                                    you need less than
                                                    the full amount of
                                                    the bond to meet any
                                                    possible future
                                                    obligations.
(b) SAP or COP bonds submitted  When MMS           (i) Seven years after
 under Sec.   285.516.           determines that    the lease ends or a
                                 you have met all   longer period as
                                 your               necessary to
                                 decommissioning,   complete any appeals
                                 site clearance     or judicial
                                 and other          litigation related
                                 obligations.       to your bond
                                                    obligation. The MMS
                                                    will reduce the
                                                    amount of your bond
                                                    or return a portion
                                                    of your security if
                                                    MMS determines that
                                                    you need less than
                                                    the full amount of
                                                    the bond to meet any
                                                    possible future
                                                    obligations; and

[[Page 39481]]


                                                   (ii) The MMS
                                                    determines that the
                                                    potential liability
                                                    resulting from any
                                                    undetected
                                                    noncompliance is not
                                                    greater than the
                                                    amount of the base
                                                    bond.
(c) Bonds submitted under Sec.  When MMS           Seven years after the
  Sec.   285.520 and 285.521     determines that    limited lease or a
 for limited leases, ROW         you have met all   longer period as
 grants or RUE grants.           of your            necessary to
                                 obligations        complete any appeals
                                 under the          or judicial
                                 limited lease or   litigation related
                                 grant.             to your bond
                                                    obligation. The MMS
                                                    will reduce the
                                                    amount of your bond
                                                    or return a portion
                                                    of your security if
                                                    MMS determines that
                                                    you need less than
                                                    the full amount of
                                                    the bond to meet any
                                                    possible future
                                                    obligations.
------------------------------------------------------------------------

Sec.  285.535  Why might MMS call for forfeiture of my bond?

    (a) The MMS may call for forfeiture of all or part of the bond or 
pledged security or other form of guaranty if:
    (1) After notice and demand for performance by MMS, you refuse or 
fail, within the timeframe we prescribe, to comply with any term or 
condition of your lease or grant, other authorization or approval, or 
applicable regulations; or
    (2) You default on one of the conditions under which we accepted 
your bond.
    (b) We may pursue forfeiture without first making demands for 
performance against any other lessee, ROW grant holder, RUE grant 
holder, or other person approved to perform obligations under a lease 
or grant.


Sec.  285.536  How will I be notified of a call for forfeiture?

    (a) The MMS will notify you and your surety in writing of the call 
for forfeiture and provide the reasons for the forfeiture and the 
amount to be forfeited. We will base the amount upon an estimate of the 
total cost of corrective action to bring your lease or grant into 
compliance.
    (b) We will advise you and your surety that you may avoid 
forfeiture if, within 10 business days:
    (1) You agree to and demonstrate in writing to MMS that you will 
bring your lease or grant into compliance within the timeframe we 
prescribe and do so; or
    (2) Your surety agrees to and demonstrates that it will bring your 
lease or grant into compliance within the timeframe we prescribe, even 
if the cost of compliance exceeds the face amount of the bond.


Sec.  285.537  How will MMS proceed once my bond or other security is 
forfeited?

    (a) If MMS determines that your bond or other security is 
forfeited, we will collect the forfeited amount and use the funds to 
bring your lease or grant(s) into compliance and correct any default.
    (b) If the amount collected under your bond or other security is 
insufficient to pay the full cost of corrective action, MMS may take or 
direct action to obtain full compliance and recover all costs in excess 
of the forfeited bond from you or any co-lessee or co-grantee.
    (c) If the amount collected under your bond or other security 
exceeds the full cost of corrective action to bring your lease or 
grant(s) into compliance, we will return the excess funds to the party 
from whom the excess was collected.


Sec.  285.538  [Reserved]


Sec.  285.539  [Reserved]

Revenue Sharing With States


Sec.  285.540  How will MMS equitably distribute revenues to States?

    (a) The MMS will distribute among all eligible States 27 percent of 
revenues derived from qualified projects. Those revenues include all 
revenues derived from the entire qualified project area and are not 
limited to revenues attributable to the portion of the project area 
within 3 miles of the seaward boundary of a coastal State.
    (b) The MMS will determine and announce the qualified project area 
at the time it grants or issues a lease, easement, or right-of-way on 
the OCS for the purpose of a specific project. If a qualified project 
changes in some way that may affect the equitable distribution of 
revenues, MMS may re-evaluate the project area to restore the equitable 
distribution of revenues. If a re-evaluation results in a change in the 
project area, MMS will re-calculate the geographic center of the 
project upon which the allocation of revenues is based.
    (c) To determine each State's share of the 27 percent of the 
revenues for a qualified project, MMS will use the inverse distance 
formula, which apportions shares according to the relative proximity of 
the nearest point on the coastline of each eligible State to the 
geographic center of the project. If Si is equal to the nearest 
distance from the geographic center of the project to the i = 1, 2, ... 
n\th\ eligible State's coastline, then State i would be entitled to the 
fraction Fi of the 27-percent aggregate revenue share due all the 
States according to the formula:

Fi = (1/Si) / ([Sigma] i = 1...n (1/Si)).


Sec.  285.541  How will a qualified project's location affect an 
eligible State's share of revenues?

    (a) For qualified projects, the criteria for determining a State's 
eligibility and its share of revenues under this part are illustrated 
in the three examples shown in the following table. The interpretations 
of the criteria provided in the examples can be applied to the range of 
other possible situations that are not specifically included in the 
table.

------------------------------------------------------------------------
 If the qualified project area       and the
extends into the zone within 3  geographic center
miles seaward of the submerged  of the project is        Then . . .
          lands . . .                 . . .
------------------------------------------------------------------------
(1) Of only 1 State,..........  Any distance from  The single eligible
                                 that State's       State would receive
                                 coastline and      the entire 27
                                 farther than 15    percent of the
                                 miles from the     revenues from the
                                 coastline of any   project.
                                 other State,
(2) Of only 1 State,..........  Farther than 15    The 2 eligible States
                                 miles from the     would share the 27
                                 coastline of       percent of revenues
                                 that State,        under the inverse
                                 within 15 miles    distance formula
                                 of the coastline   based on their
                                 of a second        distance from the
                                 State, and         geographic center of
                                 farther than 15    the project area.
                                 miles from the     The second State
                                 coastline of any   would receive a
                                 other State,       larger share of the
                                                    revenues.

[[Page 39482]]


(3) Of 2 States,..............  More than 15       All 3 eligible States
                                 miles from the     would share the 27
                                 coastline of one   percent of revenues
                                 State, within 15   under the inverse
                                 miles of the       distance formula
                                 coastline of the   based on their
                                 second State,      distance from the
                                 within 15 miles    geographic center of
                                 from the           the project area.
                                 coastline of a     The States closest
                                 third State, and   to the geographic
                                 farther than 15    center of the
                                 miles from the     project would
                                 coastline of any   receive
                                 other State,       proportionally
                                                    higher revenue
                                                    shares. The second
                                                    State would not get
                                                    a larger share for
                                                    meeting both
                                                    eligibility
                                                    criteria, but it
                                                    would receive a
                                                    larger share of the
                                                    revenues than would
                                                    the first State
                                                    based on its
                                                    relative proximity
                                                    to the geographic
                                                    center of the
                                                    project.
------------------------------------------------------------------------

    (b)(1) The following calculations use the hypothetical situation in 
paragraph (a)(2) in the table to demonstrate how the inverse distance 
formula would be used to distribute revenue shares. Assume that the 
geographic center of the project lies 20 miles from the closest 
coastline point of State A and 10 miles from the closest coastline 
point of State B. The MMS will round dollar shares to the nearest whole 
dollar. The proportional share due each State would be calculated as 
follows:
    (i) State A's share = [(1/20) / (1/20 + 1/10)] = 1/3.
    (ii) State B's share = [(1/10) / (1/20 + 1/10)] = 2/3.
    (2) Therefore, State B's coastline, being half the distance to the 
geographic center of the qualified project as State A's coastline, 
qualifies State B to receive a share that is twice as large as State 
A's share.
    (3) The sharing rate of the total revenues is mandated to be 27 
percent under the EPAct. Hence, if the qualified project generates 
$1,000,000 of Federal revenues in a given year, the Federal Government 
would distribute the States' 27-percent share as follows:
    (i) State A's share = $270,000 x 1/3 = $90,000.
    (ii) State B's share = $270,000 x 2/3 = $180,000.

Subpart F--Plans and Information Requirements


Sec.  285.600  What plans and information must I submit to MMS before I 
conduct activities on my lease or grant?

    You must submit a SAP, COP, or GAP and receive MMS approval as set 
forth below:

------------------------------------------------------------------------
              Before you:                           You must:
------------------------------------------------------------------------
(a) Conduct any site assessment          Submit and obtain approval for
 activities on your commercial lease.     your Site Assessment Plan
                                          (SAP) according to Sec.  Sec.
                                           285.605 through 285.612.
(b) Conduct any activities pertaining    Submit and obtain approval for
 to construction of facilities for        your Construction and
 commercial operations on your            Operations Plan (COP),
 commercial lease.                        according to Sec.  Sec.
                                          285.620 through 285.629.
(c) Conduct any activities on your       Submit and obtain approval for
 limited lease, ROW grant, or RUE grant   your General Activities Plan
 in any OCS area.                         (GAP) according to Sec.  Sec.
                                           285.640 through 285.647.
------------------------------------------------------------------------

Sec.  285.601  When am I required to submit my plans to MMS?

    Your plan submission requirements depend on whether your lease or 
grant was issued competitively or noncompetitively under subpart B or 
subpart C of this part.
    (a) If your lease or grant is issued competitively, you must submit 
your SAP or your GAP within 6 months of issuance.
    (b) If you request a lease or grant to be issued noncompetitively, 
you must submit your SAP or your GAP within 60 calendar days after the 
Director issues a determination that there is no competitive interest.
    (c) If you intend to request an operations term for your commercial 
lease, you must submit a COP at least 6 months before the end of your 
site assessment term.
    (d) You may submit your COP with your SAP.
    (1) You must provide sufficient data and information with your COP 
for MMS to complete the needed reviews and NEPA analysis.
    (2) You may need to revise your COP and MMS may need to conduct 
additional reviews, including NEPA analysis, if new information becomes 
available after you complete your site assessment activities.


Sec.  285.602  What records must I maintain?

    Until MMS releases your financial assurance under Sec.  285.533, 
you must maintain and provide to MMS upon request, all data and 
information related to compliance with required terms and conditions of 
your SAP, COP, or GAP.


Sec.  285.603  [Reserved]


Sec.  285.604  [Reserved]

Site Assessment Plan and Information Requirements for Commercial Leases


Sec.  285.605  What is a Site Assessment Plan (SAP)?

    (a) A SAP describes the surveys you plan to perform and other 
activities you propose to conduct for the characterization of your 
commercial lease, including your project easement. At a minimum, your 
SAP must describe how you will conduct the following surveys on your 
lease.
    (1) Physical characterization surveys (e.g., geological and 
geophysical surveys or hazards surveys);
    (2) Resource assessment surveys (e.g., meteorological and 
oceanographic data collection); and
    (3) Baseline environmental surveys (e.g., biological, 
archaeological, or socioeconomic surveys).
    (b) You must receive MMS approval of your SAP before you can begin 
any activities on your lease as provided in Sec.  285.613.
    (c) If you propose to install facilities on the OCS (e.g., single-
monopile meteorological towers), you must submit the information 
required in Sec.  285.610(b), as part of your SAP. If you propose to 
construct multiple facilities or a facility which MMS determines to be 
complex or significant, we will require you to submit the additional 
reports and information required in Sec.  285.614(b) and to nominate a 
Certified Verification Agent (CVA) as required in Sec.  285.706.

[[Page 39483]]

Sec.  285.606  What must I demonstrate in my SAP?

    (a) Your SAP must demonstrate that you have planned and are 
prepared to conduct the proposed site assessment activities in a manner 
that conforms to your responsibilities listed in Sec.  285.105(a) and:
    (1) Conforms to all applicable laws, implementing regulations, 
lease provisions and stipulations or conditions of your commercial 
lease;
    (2) Is safe;
    (3) Does not unreasonably interfere with other uses of the OCS, 
including those involved with national security or defense;
    (4) Does not cause undue harm or damage to natural resources, life 
(including human and wildlife), property, or the marine, coastal, or 
human environment; or to sites, structures, or objects of historical or 
archaeological significance;
    (5) Uses best available and safest technology;
    (6) Uses best management practices; and
    (7) Uses properly trained personnel.
    (b) You must also demonstrate that your site assessment activities 
will include the necessary surveys and other activities to gather 
information and data required for your COP, as provided in Sec.  
285.625.


Sec.  285.607  How do I submit my SAP?

    You must submit one paper copy and one electronic version of your 
SAP to MMS at the address listed in Sec.  285.110.


Sec.  285.608  [Reserved]


Sec.  285.609  [Reserved]

Contents of the Site Assessment Plan


Sec.  285.610  What must I include in my SAP?

    Your SAP must include the following information, as applicable. We 
will keep this information confidential to the extent allowed by law.
    (a) For all activities you propose to conduct under your SAP, you 
must provide the following information:

------------------------------------------------------------------------
     Project information:                      Including:
------------------------------------------------------------------------
(1) Contact information......  The name, address, e-mail address, and
                                phone number of a company authorized
                                representative.
(2) The site assessment        A discussion of the objectives;
 concept.                       description of the proposed activities,
                                including the technology you will use
                                and any surveys you will conduct; and
                                proposed schedule from start to
                                completion.
(3) Designation of operator,   As provided in Sec.   285.405.
 if applicable.
(4) Commercial lease           A description of the measures you took,
 stipulations and compliance.   or will take, to satisfy the conditions
                                of any lease stipulations related to
                                your proposed activities.
(5) A listing of all Federal,  A statement indicating whether such
 State, and local               authorization or approval has been
 authorizations, or approvals   applied for or obtained.
 required to conduct site
 assessment activities on
 your lease.
(6) A list of agencies and     Contact information and issues discussed.
 persons with whom you
 consulted, or with whom you
 will be consulting,
 regarding potential impacts
 associated with your
 proposed activities.
(7) Financial assurance        Statements attesting that the activities
 information.                   and facilities proposed in your SAP are
                                or will be covered by an appropriate
                                bond or other approved security as
                                required in Sec.  Sec.   285.515 and
                                285.516.
(8) Other information........  Additional information as requested by
                                MMS.
------------------------------------------------------------------------

    (b) For site assessment activities that include the installation of 
any facilities (e.g., single monopile meteorological tower) in addition 
to the information requirements in paragraph (a) of this section, you 
must provide the following information or a description of how you will 
acquire the information:

------------------------------------------------------------------------
     Project information:                      Including:
------------------------------------------------------------------------
(1) A location plat..........  The surface location and water depth for
                                all proposed and existing structures,
                                facilities, and appurtenances both
                                located offshore and onshore.
(2) Geotechnical.............  A description of how you will conduct
                                geotechnical surveys to gather all
                                relevant seabed and engineering data and
                                information to allow for the design of
                                the foundation for that facility. You
                                must provide data and information to
                                depths below which the underlying
                                conditions will not influence the
                                integrity or performance of the
                                structure. This could include a series
                                of sampling locations (borings and in
                                situ tests) as well as laboratory
                                testing of soil samples, but may consist
                                of a minimum of one deep boring with
                                samples.
(3) General structural and     Information for each type of facility
 project design, fabrication,   associated with your project.
 and installation.
(4) A description of the       Safety, prevention, and environmental
 deployment activities.         protection features or measures that you
                                will use.
(5) Shallow hazards..........  A description of how you will conduct the
                                shallow hazards survey to gather
                                information sufficient to determine the
                                presence of the following features and
                                their likely effects on your proposed
                                facility, including:
                               (i) Shallow faults;
                               (ii) Gas seeps or shallow gas;
                               (ii) Slump blocks or slump sediments;
                               (iv) Hydrates; or
                               (v) Ice scour of seabed sediments.
(6) Archaeological resources.  (i) A description of how you will conduct
                                the archaeological resource survey, if
                                required.
                               (ii) Historic and prehistoric
                                archaeological resources, as required by
                                National Historic Preservation Act of
                                1966, as amended.

[[Page 39484]]


(7) Geological...............  A description of how you will conduct a
                                geological survey to assess:
                               (i) Seismic activity at your proposed
                                site;
                               (ii) Fault zones;
                               (iii) The possibility and effects of
                                seabed subsidence; and
                               (iv) The extent and geometry of faulting
                                attenuation effects of geologic
                                conditions near your site.
(8) Biological...............  A description of how you will conduct
                                biological surveys to determine the
                                presence of live bottoms, hard bottoms,
                                topographic features and surveys of
                                other marine resources such as fish
                                populations (including migratory
                                populations), marine mammals, sea
                                turtles, and sea birds.
(9) Socio-economic...........  A description of how you will conduct
                                socio-economic analyses to determine
                                visual impacts, competing uses (e.g.,
                                commercial fishing, recreation, tourism,
                                military, oil and gas activities, sand
                                and gravel activities), and other
                                impacts as determined by MMS on a case-
                                by-case basis.
(10) A description of any      An estimate of the frequency and duration
 vessels, offshore vehicles,    of vessel/vehicle/aircraft traffic.
 and aircraft you will use to
 support your activities.
(11) Your proposed measures    A description of the measures you will
 for avoiding, minimizing,      use to avoid or minimize adverse effects
 reducing, eliminating, and     and any potential incidental take,
 monitoring environmental       before you conduct activities on your
 impacts.                       lease and how you will mitigate
                                environmental impacts from your proposed
                                activities, including a description of
                                the measures you will use as required by
                                subpart H of this part.
(12) CVA nomination, if        CVA nominations for reports in subpart G
 required.                      of this part, as required by Sec.
                                285.706.
(13) Reference information...  A list of any document or published
                                source that you cite as part of your
                                plan. You may reference information and
                                data discussed in other plans you
                                previously submitted or that are
                                otherwise readily available to MMS.
(14) Decommissioning and site  A discussion of methodologies.
 clearance procedures.
(15) Other information.......  Additional information as requested by
                                MMS.
------------------------------------------------------------------------

Sec.  285.611  What information and certifications must I submit with 
my SAP to assist MMS in complying with NEPA and other relevant laws?

    (a) You must submit with your SAP detailed information to assist 
MMS in complying with NEPA and other relevant laws. The information 
must include the resources, conditions, and activities listed in this 
section that could be affected by or could affect your proposed 
activities.
    (b) You must submit one copy of your consistency certification for 
CZMA. Your consistency certification must include:
    (1) One copy of your consistency certification under subsection 
307(c)(3)(B) of the CZMA (16 U.S.C. 1456(c)(3)(B)) and 15 CFR 930.76 
stating that the proposed activities described in detail in your plans 
comply with the State(s) approved coastal management program(s) and 
will be conducted in a manner that is consistent with such program(s); 
and
    (2) ``Information'' as required by 15 CFR 930.76(a) and 15 CFR 
930.58(a)(2) and ``Analysis'' as required by 15 CFR 930.58(a)(3).


Sec.  285.612  How will MMS process my SAP?

    (a) The MMS will review your submitted SAP, and additional 
information provided pursuant to Sec.  285.611, to determine if it 
contains the information necessary to conduct our technical and 
environmental reviews. We will notify you if your submitted SAP lacks 
any necessary information.
    (b) The MMS will prepare appropriate NEPA analysis.
    (c) The MMS will forward one copy of your SAP, consistency 
certification, and associated data and information under the CZMA to 
the State's CZM Agency after all information requirements for the SAP 
are met.
    (d) As appropriate, we will coordinate and consult with relevant 
Federal, State, and local agencies and provide to other Federal, State, 
and local agencies relevant non-proprietary data and information 
pertaining to your proposed activities.
    (e) During the review process we may request additional information 
if we determine that the information provided is not sufficient to 
complete the review and approval process. If you fail to provide the 
requested information, MMS may disapprove your SAP.
    (f) Upon completion of our technical and environmental reviews MMS 
may approve, disapprove, or approve with modifications your SAP.
    (1) If we approve your SAP, we will specify terms and conditions to 
be incorporated into your SAP. You must certify compliance with certain 
of those terms and conditions as required under Sec.  285.615(c).
    (2) If we disapprove your SAP, we will inform you of the reasons 
and allow you an opportunity to resubmit a revised plan addressing the 
concerns identified and may suspend the term of your lease, as 
appropriate, to allow this to occur.

Activities Under an Approved SAP


Sec.  285.613  When may I begin conducting activities under my approved 
SAP?

    After MMS approves your SAP, you may begin conducting the survey 
activities and any other activities approved in your SAP that do not 
involve the construction of facilities or any other seabed disturbing 
activities on the OCS.


Sec.  285.614  When may I construct OCS facilities proposed under my 
SAP?

    (a) Before you may begin construction of any OCS facility described 
in your SAP, you must complete the initial survey activities described 
in Sec.  285.610(b) that relate to the construction and installation of 
your facility or facilities or to the seabed disturbing activities 
(i.e., anchoring, coring, etc.), and submit an initial survey report 
identifying and describing locations where you propose to install 
facilities and conduct related activities such as coring, anchoring, 
and mooring. If MMS determines that the facilities are complex or 
significant, you must also submit the additional information required 
in paragraph (b) of this section.
    (1) You may begin to construct and install your facility or 
facilities after MMS notifies you that it has received the initial 
survey report and has no objections. If MMS receives the initial survey 
report, but does not respond

[[Page 39485]]

with objections within 60 calendar days of receipt, MMS is deemed not 
to have objections to the report and you may commence construction and 
installation of your facility or facilities.
    (2) If MMS has any objections to your initial survey report, we 
will notify you verbally or in writing within 60 calendar days of 
receipt. Following initial notification of objections, MMS may follow-
up with written correspondence outlining its specific objections to the 
initial survey report and requesting certain actions necessary to 
resolve our objections. You cannot begin construction until you resolve 
any objections to MMS's satisfaction.
    (b) If you are constructing multiple facilities or a facility 
deemed by MMS to be complex or significant as provided in Sec.  
285.605(c), you must complete the activities described in Sec.  
285.610(b) and submit an initial survey report of the results of those 
activities to MMS. You also must submit the following before 
construction may begin:
    (1) Facility Design Report described in Sec.  285.701;
    (2) Facility Fabrication and Installation Report described inSec.  
285.702; and
    (3) Your Safety Management System described in Sec.  285.810.


Sec.  285.615  What other reports or notices must I submit to MMS under 
my approved SAP?

    (a) You must notify MMS in writing within 30 calendar days of 
completing construction and installation activities approved in your 
SAP.
    (b) You must prepare and submit to MMS annually a report that 
summarizes your site assessment activities and the results of those 
activities. We will protect the information from public disclosure as 
provided in Sec.  285.113.
    (c) You must submit a certification of compliance annually (or 
other frequency as determined by MMS) with certain terms and conditions 
of your SAP that MMS identifies under Sec.  285.612(f)(i). Together 
with your certification, you must submit:
    (1) Summary reports that show compliance with the terms and 
conditions which require certification; and
    (2) A statement identifying and describing any mitigation measures 
and monitoring and their effectiveness. If you identified measures that 
were not effective, you must include your recommendations for new 
mitigation measures or monitoring methods.


Sec.  285.616  [Reserved]


Sec.  285.617  What activities require a revision to my SAP and when 
will MMS approve the revision?

    (a) You must notify MMS in writing before conducting any activities 
not described in your approved SAP, describing in detail the type of 
activities you propose to conduct. We will determine whether the 
activities you propose are authorized by your existing SAP or require a 
revision to your SAP. We may request additional information from you if 
necessary to make this determination.
    (b) The MMS will periodically review the activities conducted under 
an approved SAP. The frequency and extent of the review will be based 
on the significance of any changes in available information; and on 
onshore or offshore conditions affecting, or affected by, the 
activities conducted under your SAP. If the review indicates that the 
SAP should be revised to meet the requirement of this part, we will 
require you to submit the needed revisions.
    (c) Activities for which a proposed revision to your SAP will 
likely be necessary include:
    (1) Activities not described in your approved SAP;
    (2) Modifications to the size or type of facility or equipment you 
will use;
    (3) Changes in the surface location of a facility or structure;
    (4) Addition of a facility or structure not contemplated in your 
approved SAP;
    (5) Changes in the location of your onshore support base from one 
State to another or to a new base requiring expansion;
    (6) Changes in the location of bottom disturbances (anchors, 
chains, etc.) by 500 feet (152 meters) or greater from the approved 
locations. If a specific anchor pattern was approved as a mitigation 
measure to avoid contact with bottom features, any change in the 
proposed bottom disturbances would likely trigger the need for a 
revision; or
    (7) Changes to any other activity specified by MMS.
    (d) We may begin the appropriate NEPA analysis and other relevant 
consultations when we determine that a proposed revision could:
    (1) Result in a significant change in the impacts previously 
identified and evaluated;
    (2) Require any additional Federal authorizations; or
    (3) Involve activities not previously identified and evaluated.
    (e) When you propose a revision, we may approve the revision, if we 
determine that the revision is:
    (1) Designed not to cause undue harm or damage to natural 
resources, life (including human and wildlife), property, or the 
marine, coastal, or human environment; or to sites, structures, or 
objects of historical or archaeological significance; and
    (2) Otherwise consistent with the provisions of subsection 8(p) of 
the OCS Lands Act.


Sec.  285.618  What must I do upon completion of approved site 
assessment activities?

    (a) If, prior to the expiration of your site assessment term, you 
timely submit a COP meeting the requirements of this subpart that 
describes the continued use of existing facilities approved in your 
SAP, you may keep such facilities in place on your lease during the 
time that MMS reviews your COP for approval.
    (b) You are not required to initiate the decommissioning process 
for facilities that are authorized to remain in place under your 
approved COP.
    (c) If, following the technical and environmental review of your 
submitted COP, MMS determines that such facilities may not remain in 
place, you must initiate the decommissioning process as provided in 
subpart I of this part.
    (d) You must initiate the decommissioning process as set forth in 
subpart I of this part upon the termination of your lease.


Sec.  285.619  [Reserved]

Construction and Operations Plan for Commercial Leases


Sec.  285.620  What is a Construction and Operations Plan (COP)?

    The COP describes your construction, operations, and conceptual 
decommissioning plans under your commercial lease, including your 
project easement.
    (a) Your COP must describe all planned facilities that you will 
construct and use for your project including onshore and support 
facilities and all anticipated project easements.
    (b) Your COP must describe all proposed activities including your 
proposed construction activities, commercial operations, and conceptual 
decommissioning plans for all planned facilities, including onshore and 
support facilities.
    (c) You must receive MMS approval of your COP before you can begin 
activities on your lease or grant.


Sec.  285.621  What must I demonstrate in my COP?

    Your COP must demonstrate that you have planned and are prepared to 
conduct the proposed activities in a

[[Page 39486]]

manner that conforms to your responsibilities listed in Sec.  
285.105(a) and:
    (a) Conforms to all applicable laws, implementing regulations, 
lease provisions and stipulations or conditions of your commercial 
lease;
    (b) Is safe;
    (c) Does not unreasonably interfere with other uses of the OCS, 
including those involved with national security or defense;
    (d) Does not cause undue harm or damage to natural resources, life 
(including human and wildlife), property, or the marine, coastal, or 
human environment; or to sites, structures, or objects of historical or 
archaeological significance;
    (e) Uses best available and safest technology;
    (f) Uses best management practices; and
    (g) Uses properly trained personnel.


Sec.  285.622  How do I submit my COP?

    (a) You must submit one paper copy and one electronic version of 
your COP to MMS at the address listed in Sec.  285.110.
    (b) You may submit information on any project easement as part of 
your original COP submission or as a revision to your COP.


Sec.  285.623  [Reserved]


Sec.  285.624  [Reserved]

Contents of the Construction and Operations Plan


Sec.  285.625  What survey activities must I conduct to obtain approval 
for the proposed site of facilities?

    You must conduct the following surveys and submit the results 
before MMS will approve the proposed site of your facility(ies). The 
MMS will keep such information confidential to the extent allowed by 
law. Your COP must include the following information:

------------------------------------------------------------------------
         Information             Report contents         Including--
------------------------------------------------------------------------
(a) Shallow hazards.........  The results of the    Information
                               shallow hazards       sufficient to
                               survey.               determine the
                                                     presence of the
                                                     following features
                                                     and their likely
                                                     effects on your
                                                     proposed facility,
                                                     including:
                                                       (1) Shallow
                                                        faults;
                                                       (2) Gas seeps or
                                                        shallow gas;
                                                       (3) Slump blocks
                                                        or slump
                                                        sediments;
                                                       (5) Hydrates; or
                                                       (6) Ice scour of
                                                        seabed
                                                        sediments.
(b) Geological survey         The results of the    Assessment of:
 relevant to the design and    geological survey.   (1) Seismic activity
 siting of your facility.                            at your proposed
                                                     site;
                                                    (2) Fault zones;
                                                       (3) The
                                                        possibility and
                                                        effects of
                                                        seabed
                                                        subsidence; and
                                                       (4) The extent
                                                        and geometry of
                                                        faulting
                                                        attenuation
                                                        effects of
                                                        geologic
                                                        conditions near
                                                        your site.
(c) Biological..............  The biological        A description of how
                               project information.  you conducted
                                                     biological surveys
                                                     to determine the
                                                     presence of live
                                                     bottoms, hard
                                                     bottoms,
                                                     topographic
                                                     features and
                                                     surveys of other
                                                     marine resources
                                                     such as fish
                                                     populations
                                                     (including
                                                     migratory
                                                     populations),
                                                     marine mammals, sea
                                                     turtles, and sea
                                                     birds.
(d) Socio-economic..........  The socio-economic    A description of how
                               project information.  you conducted socio-
                                                     economic analyses
                                                     to determine visual
                                                     impacts, competing
                                                     uses (e.g.,
                                                     commercial fishing,
                                                     recreation,
                                                     tourism, military,
                                                     oil and gas
                                                     activities, sand
                                                     and gravel
                                                     activities), and
                                                     other impacts as
                                                     determined by MMS
                                                     on a case-by-case
                                                     basis.
(e) Geotechnical survey.....  The results of your   (1) A testing
                               sediment testing      program to
                               program, the          investigate the
                               various field and     stratigraphic and
                               laboratory test       engineering
                               methods employed,     properties of the
                               and the               sediment that may
                               applicability of      affect the
                               these methods as      foundations or
                               they pertain to the   anchoring systems
                               quality of the        for your facility.
                               samples, the type    (2) Adequate in situ
                               of sediment, and      testing, boring,
                               the anticipated       and sampling at
                               design application.   each foundation
                               You must explain      location, to
                               how the engineering   examine all
                               properties of each    important sediment
                               sediment stratum      and rock strata to
                               affect the design     determine its
                               of your facility.     strength
                               In your explanation   classification,
                               you must describe     deformation
                               the uncertainties     properties, and
                               inherent in your      dynamic
                               overall testing       characteristics.
                               program, and the     (3) At a minimum one
                               reliability and       deep boring (with
                               applicability of      soil sampling and
                               each test method.     testing) at each
                                                     edge of the project
                                                     area and within the
                                                     project area as
                                                     needed to determine
                                                     the vertical and
                                                     lateral variation
                                                     in seabed
                                                     conditions and to
                                                     provide the
                                                     relevant
                                                     geotechnical data
                                                     required for
                                                     design.
(f) Archaeological resources  A summary that        Historic and
                               describes the         prehistoric
                               results of the        archaeological
                               archaeological        resources, as
                               resource survey.      required by
                                                     National Historic
                                                     Preservation Act of
                                                     1966, as amended.

[[Page 39487]]


(g) Overall site              An overall site       An analysis of the
 investigation.                investigation         potential for:
                               report for your      (1) Scouring of the
                               facility that         seabed;
                               integrates the       (2) Hydraulic
                               findings of your      instability;
                               shallow hazards      (3) The occurrence
                               surveys and           of sand waves;
                               geologic surveys,    (4) Instability of
                               and, if required,     slopes at the
                               your subsurface       facility location;
                               surveys.             (5) Liquefaction, or
                                                     possible reduction
                                                     of sediment
                                                     strength due to
                                                     increased pore
                                                     pressures;
                                                       (6) Degradation
                                                        of subsea
                                                        permafrost
                                                        layers;
                                                       (7) Cyclic
                                                        loading;
                                                       (8) Lateral
                                                        loading;
                                                       (9) Dynamic
                                                        loading;
                                                       (10) Settlements
                                                        and
                                                        displacements;
                                                       (11) Plastic
                                                        deformation and
                                                        formation
                                                        collapse
                                                        mechanisms; and
                                                       (12) Sediment
                                                        reactions on the
                                                        facility
                                                        foundations or
                                                        anchoring
                                                        systems.
------------------------------------------------------------------------

Sec.  285.626  What must I include in my COP?

    Your COP must include the following project-specific information, 
as applicable. We will keep this information confidential to the extent 
allowed by law.

------------------------------------------------------------------------
          Project information                      Including--
------------------------------------------------------------------------
(a) Contact information................  The name, address, e-mail
                                          address, and phone number of a
                                          company authorized
                                          representative.
(b) Designation of operator, if          As provided in Sec.   285.405.
 applicable.
(c) The construction and operation       A discussion of the objectives,
 concept.                                 description of the proposed
                                          activities, tentative schedule
                                          from start to completion, and
                                          plans for phased development
                                          as provided in Sec.   285.629.
(d) Commercial lease stipulations and    A description of the measures
 compliance.                              you took, or will take, to
                                          satisfy the conditions of any
                                          lease stipulations related to
                                          your proposed activities.
(e) A location plat....................  The surface location and water
                                          depth for all proposed and
                                          existing structures,
                                          facilities, and appurtenances
                                          both located offshore and
                                          onshore, including all anchor/
                                          mooring data.
(f) General structural and project       Information for each type of
 design, fabrication, and installation.   structure associated with your
                                          project and, unless MMS
                                          provides otherwise, how you
                                          will use a CVA to review and
                                          verify each stage of the
                                          project.
(g) All cables and pipelines, including  Describe the location, design
 cables on project easements.             and installation methods,
                                          testing, maintenance, repair,
                                          safety devices, exterior
                                          corrosion protection,
                                          inspections, and
                                          decommissioning.
(h) A description of the deployment      Safety, prevention, and
 activities.                              environmental protection
                                          features or measures that you
                                          will use.
(i) A list of solid and liquid wastes    Disposal methods and locations.
 generated.
(j) A listing of chemical products used  A list of chemical products
 (if stored volume exceeds USEPA          used, the volume stored on
 Reportable Quantities).                  location, their treatment,
                                          discharge, or disposal methods
                                          used, and the name and
                                          location of the onshore waste
                                          receiving, treatment, and/or
                                          disposal facility. A
                                          description of how these
                                          products would be brought
                                          onsite, the number of
                                          transfers that may take place,
                                          and the quantity that will be
                                          transferred each time.
(k) A description of any vessels,        An estimate of the frequency
 vehicles, and aircraft you will use to   and duration of vessel/vehicle/
 support your activities.                 aircraft traffic.
(l) A general description of the         (1) Under normal conditions.
 operating procedures and systems.
                                         (2) In the case of accidents or
                                          emergencies, including those
                                          that are natural or manmade.
(m) Decommissioning and site clearance   A discussion of general
 procedures.                              concepts and methodologies.
(n) A listing of all Federal, State,     (1) USCG, USACE, and any other
 and local authorizations, approvals or   applicable authorizations,
 permits that are required to conduct     approvals, or permits,
 the proposed activities, including       including any Federal, State
 commercial operations.                   or local authorizations
                                          pertaining to energy
                                          gathering, transmission or
                                          distribution (e.g.,
                                          interconnection
                                          authorizations).
                                         (2) A statement indicating
                                          whether such authorization,
                                          approval or permit has been
                                          applied for or obtained.
(o) Commercial lease stipulations and    A description of the measures
 compliance.                              you took, or will take, to
                                          satisfy the conditions of any
                                          lease stipulations related to
                                          your proposed activities.
(p) Your proposed measures for           A description of the measures
 avoiding, minimizing, reducing,          you will use to avoid or
 eliminating, and monitoring              minimize adverse effects and
 environmental impacts.                   any potential incidental take,
                                          before you conduct activities
                                          on your lease and how you will
                                          mitigate environmental impacts
                                          from your proposed activities,
                                          including a description of the
                                          measures you will use as
                                          required by subpart H of this
                                          part.
(q) Information you incorporate by       A listing of the documents you
 reference.                               referenced.

[[Page 39488]]


(r) A list of agencies and persons with  Contact information and issues
 whom you consulted, or with whom you     discussed.
 will be consulting, regarding
 potential impacts associated with your
 proposed activities.
(s) Reference..........................  A list of any document or
                                          published source that you cite
                                          as part of your plan. You may
                                          reference information and data
                                          discussed in other plans you
                                          previously submitted or that
                                          are otherwise readily
                                          available to MMS.
(t) Financial assurance................  Statements attesting that the
                                          activities and facilities
                                          proposed in your COP are or
                                          will be covered by an
                                          appropriate bond or security
                                          as required by Sec.  Sec.
                                          285.515 and 285.516.
(u) CVA nominations for reports          The information required in
 required in subpart G of this part.      Sec.   285.706.
(v) Construction schedule..............  A reasonable schedule of
                                          construction activity showing
                                          significant milestones leading
                                          to the commencement of
                                          commercial operations.
(w) Other..............................  Additional information as
                                          required by MMS.
------------------------------------------------------------------------

Sec.  285.627  What information and certifications must I submit with 
my COP to assist the MMS in complying with NEPA and other relevant 
laws?

    (a) You must submit with your COP detailed information to assist 
MMS in complying with NEPA and other relevant laws. The information 
must include the resources, conditions, and activities listed in this 
section, that could be affected by or could affect your proposed 
activities.
    (b) You must submit one copy of your consistency certification. 
Your consistency certification must include:
    (1) One copy of your consistency certification under subsection 
307(c)(3)(B) of the CZMA (16 U.S.C. 1456(c)(3)(B)) and 15 CFR 930.76 
stating that the proposed activities described in detail in your plans 
comply with the State(s) approved coastal management program(s) and 
will be conducted in a manner that is consistent with such program(s); 
and
    (2) ``Information'' as required by 15 CFR 930.76(a) and 15 CFR 
930.58(a)(2) and ``Analysis'' as required by 15 CFR 930.58(a)(3).
    (c) You must submit your oil spill response plan as required by 
part 254 of this subchapter.
    (d) You must submit your Safety Management System as required by 
Sec.  285.810 of this part.


Sec.  285.628  How will MMS process my COP?

    (a) The MMS will review your submitted COP, and the information 
provided pursuant to Sec.  285.627, to determine if it contains all the 
required information necessary to conduct our technical and 
environmental reviews. We will notify you if your submitted COP lacks 
any necessary information.
    (b) The MMS will prepare appropriate NEPA analysis.
    (c) The MMS will forward one copy of your COP, consistency 
certification, and associated data and information under the CZMA to 
the State's CZM Agency after all information requirements for the COP 
are met.
    (d) As appropriate, MMS will coordinate and consult with relevant 
Federal, State, and local agencies and provide to other local, State, 
and Federal agencies relevant non-proprietary data and information 
pertaining to your proposed activities.
    (e) During the review process we may request additional information 
if we determine that the information provided is not sufficient to 
complete the review and approval process. If you fail to provide the 
requested information, MMS may disapprove your COP.
    (f) Upon completion of our technical and environmental reviews MMS 
may approve, disapprove, or approve with modifications your COP.
    (1) If we approve your COP, we will specify terms and conditions to 
be incorporated into your COP. You must certify compliance with certain 
of those terms and conditions as required under Sec.  285.633(b).
    (2) If we disapprove your COP, we will inform you of the reasons 
and allow you an opportunity to resubmit a revised plan addressing the 
concerns identified and may suspend the term of your lease, as 
appropriate, to allow this to occur.
    (g) If MMS approves your project easement, MMS will issue an 
addendum to your lease specifying the terms of the project easement. A 
project easement may include off-lease areas that:
    (1) Contain the sites on which cable, pipeline or associated 
facilities are located;
    (2) Do not exceed 200 feet (61 meters) in width, unless safety and 
environmental factors during construction and maintenance of the 
associated cables or pipelines require a greater width; and
    (3) For associated facilities, is limited to the area reasonably 
necessary for power or pumping stations or other accessory facilities.


Sec.  285.629  May I develop my lease in phases?

    In your COP, you may request development of your commercial lease 
in phases. In support of your request, you must provide details as to 
what portions of the lease will be initially developed for commercial 
operations, and what portions of the lease will be reserved for 
subsequent phased development.


Sec.  285.630  [Reserved]

Activities Under an Approved COP


Sec.  285.631  When must I initiate activities under an approved COP?

    After your COP is approved you must commence construction by the 
date given in the construction schedule required by Sec.  285.626(v), 
and included as a part of your approved COP, unless MMS approves a 
deviation from your schedule.


Sec.  285.632  What documents must I submit before I may construct and 
install facilities under my approved COP?

    (a) You must submit to MMS the documents listed in the following 
table:

------------------------------------------------------------------------
                Document                   Requirements are found in--
------------------------------------------------------------------------
(1) Facility Design Report.............  Sec.   285.701
(2) Fabrication and Installation Report  Sec.   285.702
------------------------------------------------------------------------


[[Page 39489]]

    (b) These activities must fall within the scope of your approved 
COP. If they do not fall within the scope of your approved COP, you 
will be required to submit a revision to your COP under Sec.  285.634 
for MMS approval before commencing the activity.


Sec.  285.633  How do I comply with my COP?

    (a) Based on MMS's environmental and technical reviews, we will 
specify terms and conditions to be incorporated into your COP.
    (b) You must submit a certification of compliance annually (or 
other frequency as determined by MMS) with certain terms and conditions 
of your COP that MMS identifies. Together with your certification, you 
must submit:
    (1) Summary reports that show compliance with the terms and 
conditions which require certification; and
    (2) A statement identifying and describing any mitigation measures 
and monitoring and their effectiveness. If you identified measures that 
were not effective then you must make recommendations for new 
mitigation measures or monitoring methods.
    (c) As provided at Sec.  285.105(i), MMS may require you to submit 
any supporting data and information.


Sec.  285.634  What activities require a revision to my COP and when 
will MMS approve the revision?

    (a) You must notify MMS in writing before conducting any activities 
not described in your approved COP, describing in detail the type of 
activities you propose to conduct. We will determine whether the 
activities you propose are authorized by your existing COP or require a 
revision to your COP. We may request additional information from you if 
necessary to make this determination.
    (b) The MMS will periodically review the activities conducted under 
an approved COP. The frequency and extent of the review will be based 
on the significance of any changes in available information, and on 
onshore or offshore conditions affecting, or affected by, the 
activities conducted under your COP. If the review indicates that the 
COP should be revised to meet the requirement of this part, we will 
require you to submit the needed revisions.
    (c) Activities for which a proposed revision to your COP will 
likely be necessary include:
    (1) Activities not described in your approved COP;
    (2) Modifications to the size or type of facility or equipment you 
will use;
    (3) Change in the surface location of a facility or structure;
    (4) Addition of a facility or structure not described in your 
approved COP;
    (5) Changes in the location of your onshore support base from one 
State to another or to a new base requiring expansion;
    (6) Changes in the location of bottom disturbances (anchors, 
chains, etc.) by 500 feet (152 meters) or greater from the approved 
locations. If a specific anchor pattern was approved as a mitigation 
measure to avoid contact with bottom features, any change in the 
proposed bottom disturbances would likely trigger the need for a 
revision; or
    (7) Changes in any other activity specified by MMS.
    (d) We may begin the appropriate NEPA analysis and other relevant 
consultations when we determine that a proposed revision could:
    (1) Result in a significant change in the impacts previously 
identified and evaluated;
    (2) Require any additional Federal authorizations; or
    (3) Involve activities not previously identified and evaluated.
    (e) When you propose a revision, we may approve the revision, if we 
determine that the revision is:
    (1) Designed not to cause undue harm or damage to natural 
resources, life (including human and wildlife), property, or the 
marine, coastal, or human environment; or to sites, structures, or 
objects of historical or archaeological significance; and
    (2) Otherwise consistent with the provisions of subsection 8(p) of 
the OCS Lands Act.


Sec.  285.635  What must I do if I cease activities approved in my COP 
before the end of my commercial lease?

    You must notify the MMS within 5-business days, any time you cease 
commercial operations, without an approved suspension, under your 
approved COP. If you cease commercial operations for an indefinite 
period which extends longer than 6 months, we may cancel your lease 
under Sec.  285.437 and you must initiate the decommissioning process, 
as set forth in subpart I of this part.


Sec.  285.636  What notices must I provide MMS following approval of my 
COP?

    You must notify MMS in writing of the following events, within the 
time periods provided:
    (a) No later than 30 calendar days after commencing activities 
associated with the placement of facilities on the lease area under a 
Fabrication and Installation Report;
    (b) No later than 30 calendar days after completion of construction 
and installation activities under a Fabrication and Installation 
Report; and
    (c) At least 7 calendar days before commencing commercial 
operations.


Sec.  285.637  When may I commence commercial operations on my 
commercial lease?

    You may commence commercial operations 30 calendar days after the 
CVA has submitted to MMS the final Fabrication and Installation Report 
for the fabrication and installation review, as provided in Sec.  
285.708.


Sec.  285.638  What must I do upon completion of my commercial 
operations as approved in my COP?

    Upon completion of your approved activities under your COP, you 
must initiate the decommissioning process as set forth in subpart I of 
this part. You must submit your decommissioning application as provide 
in Sec. Sec.  285.905 through 906.


Sec.  285.639  [Reserved]

General Activities Plan Requirements for Limited Leases, ROW Grants, 
and RUE Grants


Sec.  285.640  What is a General Activities Plan (GAP)?

    (a) A GAP describes your proposed activities for the assessment and 
development of your limited lease or grant including, if applicable, 
your project easement. Such activities include:
    (1) Physical characterization surveys (e.g., geological and 
geophysical surveys or hazards surveys);
    (2) Resource assessment surveys (e.g., meteorological and 
oceanographic data collection);
    (3) Baseline environmental surveys (e.g., biological, 
archaeological, or socioeconomic surveys); and
    (4) Your construction, activities, and conceptual decommissioning 
plans for all planned facilities, including onshore and support 
facilities, that you will construct and use for your project including 
any project easements.
    (b) If you are installing any facilities, you must submit the 
information required in Sec.  285.645(b), as part of your GAP. If MMS 
determines that the proposed facilities are complex or significant, or 
you intend to apply for a project easement, you must submit the 
information required in Sec. Sec.  285.645(c) and 285.651(b), with your 
GAP.
    (c) You must receive MMS approval of your GAP before you can begin 
activities on your lease or grant. For a ROW grant or RUE grant issued 
competitively, you must submit your GAP within 6 months of issuance.

[[Page 39490]]

Sec.  285.641  What must I demonstrate in my GAP?

    Your GAP must demonstrate that you have planned and are prepared to 
conduct the proposed activities in a manner that:
    (a) Conforms to all applicable laws, implementing regulations, 
lease provisions and stipulations;
    (b) Is safe;
    (c) Does not unreasonably interfere with other uses of the OCS, 
including those involved with national security or defense;
    (d) Does not cause undue harm or damage to natural resources, life 
(including human and wildlife), property, or the marine, coastal, or 
human environment; or to sites, structures, or objects of historical or 
archaeological significance;
    (e) Uses best available and safest technology;
    (f) Uses best management practices; and
    (g) Uses properly trained personnel.


Sec.  285.642  How do I submit my GAP?

    (a) You must submit one paper copy and one electronic version of 
your GAP to MMS at the address listed in Sec.  285.110.
    (b) If you have a limited lease, you may submit information on any 
project easement as part of your original GAP submission or as a 
revision to your GAP.


Sec.  285.643  [Reserved]


Sec.  285.644  [Reserved]

Contents of the General Activities Plan


Sec.  285.645  What must I include in my GAP?

    Your GAP must include the following information, as applicable. We 
will keep this information confidential to the extent allowed by law.
    (a) For all activities you propose to conduct under your GAP, you 
must provide the following information:

------------------------------------------------------------------------
        Project information                      Including--
------------------------------------------------------------------------
(1) Contact.......................  The name, address, e-mail address,
                                     and phone number of a company
                                     authorized representative.
(2) The site assessment concept...  A discussion of the objectives;
                                     description of the proposed
                                     activities, including the
                                     technology you will use and any
                                     surveys you will conduct; and
                                     tentative schedule from start to
                                     completion.
(3) Designation of operator, if     As provided in Sec.   285.405.
 applicable.
(4) ROW, RUE or limited lease       A description of the measures you
 grant stipulations, if known.       took or will take to satisfy any or
                                     grant stipulation.
(5) A listing of all Federal,       A statement indicating whether such
 State, and local authorizations,    authorization, approval or permit
 approvals, or permits required to   has been applied for or obtained.
 conduct activities on your lease
 or grant.
(6) Financial assurance...........  Statements attesting that the
                                     activities and facilities proposed
                                     in your GAP are or will be covered
                                     by an appropriate bond or other
                                     approved security as required in
                                     Sec.  Sec.   285.520 and 285.521.
(7) Other.........................  Additional information as requested
                                     by MMS.
------------------------------------------------------------------------

    (b) For activities that include the installation of any facilities 
(e.g., single monopile meteorological tower, anchored vessels, 
transmission substations) in addition to the information requirements 
in paragraph (a) of this section, you must provide the following 
information or a description of how you will acquire the information:

------------------------------------------------------------------------
        Project information                      Including--
------------------------------------------------------------------------
(1) A location plat...............  The surface location and water depth
                                     for all proposed and existing
                                     structures, facilities, and
                                     appurtenances both located offshore
                                     and onshore, including all anchor/
                                     mooring data.
(2) Geotechnical..................  All relevant seabed and engineering
                                     data and information to allow for
                                     the design of the foundation for
                                     that facility. You must provide
                                     data and information to depths
                                     below which the underlying
                                     conditions will not influence the
                                     integrity or performance of the
                                     structure. This could include a
                                     series of sampling locations
                                     (borings and in situ tests) as well
                                     as laboratory testing of soil
                                     samples, but may consist of a
                                     minimum of one deep boring with
                                     samples.
(3) General structural and project  Information for each type of
 design, fabrication, and            facility associated with your
 installation.                       project.
(4) A description of the            Safety, prevention, and
 deployment activities.              environmental protection features
                                     or measures that you will use.
(5) A list of solid and liquid      Disposal methods and locations.
 wastes generated.
(6) A listing of chemical products  A list of chemical products used,
 used (only if stored volume         the volume stored on location,
 exceeds USEPA Reportable            their treatment, discharge, or
 Quantities).                        disposal methods used, and the name
                                     and location of the onshore waste
                                     receiving, treatment, and/or
                                     disposal facility. A description of
                                     how these products would be brought
                                     onsite, the number of transfers
                                     that may take place, and the
                                     quantity that will be transferred
                                     each time.
(7) Shallow hazards...............  A description of how you will
                                     conduct the shallow hazards survey
                                     to gather information sufficient to
                                     determine the presence of the
                                     following features and their likely
                                     effects on your proposed facility,
                                     including:
                                       (i) Shallow faults;
                                    (ii) Gas seeps or shallow gas;
                                    (ii) Slump blocks or slump
                                     sediments;
                                    (iv) Hydrates; or
                                    (v) Ice scour of seabed sediments.
(8) Archaeological resources......  (i) The results of the
                                     archaeological resource survey, if
                                     required.
                                    (ii) Historic and prehistoric
                                     archaeological resources, as
                                     required by National Historic
                                     Preservation Act of 1966, as
                                     amended.
(9) Geological survey relevant to   A description of how you will
 the design and siting of your       conduct a geological survey to
 facility.                           assess:
                                    (i) Seismic activity at your
                                     proposed site;
                                       (ii) Fault zones;

[[Page 39491]]


                                       (iii) The possibility and effects
                                        of seabed subsidence; and
                                       (iv) The extent and geometry of
                                        faulting attenuation effects of
                                        geologic conditions near your
                                        site.
(10) Biological...................  A description of how you will
                                     conduct biological surveys to
                                     determine the presence of live
                                     bottoms, hard bottoms, topographic
                                     features and surveys of other
                                     marine resources such as fish
                                     populations (including migratory
                                     populations), marine mammals, sea
                                     turtles, and sea birds.
(11) Socio-economic...............  A description of how you will
                                     conduct socio-economic analyses to
                                     determine visual impacts, competing
                                     uses (e.g., commercial fishing,
                                     recreation, tourism, military, oil
                                     and gas activities, sand and gravel
                                     activities), and other impacts as
                                     determined by MMS on a case-by-case
                                     basis.
(12) Your proposed measures for     A description of the measures you
 avoiding, minimizing, reducing,     will use to avoid or minimize
 eliminating, and monitoring         adverse effects and any potential
 environmental impacts.              incidental take, before you conduct
                                     activities on your lease and how
                                     you will mitigate environmental
                                     impacts from your proposed
                                     activities, including a description
                                     of the measures you will use as
                                     required by subpart H of this part.
(13) A description of any vessels,  An estimate of the frequency and
 offshore vehicles, and aircraft     duration of vessel/vehicle/aircraft
 you will use to support your        traffic.
 activities.
(14) Decommissioning and site       A discussion of methodologies.
 clearance procedures.
(15) Reference....................  A list of any document or published
                                     source that you cite as part of
                                     your plan. You may reference
                                     information and data discussed in
                                     other plans you previously
                                     submitted or that are otherwise
                                     readily available to MMS.
(16) Other........................  Additional information as requested
                                     by MMS.
------------------------------------------------------------------------

    (c) If you are applying for a project easement, or constructing 
multiple facilities, or a facility deemed by MMS to be complex or 
significant, you must provide the following information in addition to 
what is required in paragraphs (a) and (b) of this section:

------------------------------------------------------------------------
        Project information                      Including--
------------------------------------------------------------------------
(1) The construction and operation  A discussion of the objectives,
 concept.                            description of the proposed
                                     activities, and tentative schedule
                                     from start to completion.
(2) All cables and pipelines,       Describe the location, design and
 including cables on project         installation methods, testing,
 easements.                          maintenance, repair, safety
                                     devices, exterior corrosion
                                     protection, inspections, and
                                     decommissioning.
(3) A description of the            Safety, prevention, and
 deployment activities.              environmental protection features
                                     or measures that you will use.
(4) A general description of the    (i) Under normal conditions.
 operating procedures and systems.
                                    (ii) In the case of accidents or
                                     emergencies, including those that
                                     are natural or manmade.
(5) A list of agencies and persons  Contact information and issues
 with whom you consulted, or with    discussed.
 whom you will be consulting,
 regarding potential impacts
 associated with your proposed
 activities.
(6) CVA nominations for reports     The information required in Sec.
 required in subpart G of this       285.706.
 part.
(7) Construction schedule.........  A reasonable schedule of
                                     construction activity showing
                                     significant milestones leading to
                                     the commencement of activities.
(8) Other information.............  Additional information as required
                                     by the MMS.
------------------------------------------------------------------------

Sec.  285.646  What information and certifications must I submit with 
my GAP to assist MMS in complying with NEPA and other relevant laws?

    (a) You must submit with your GAP detailed information to assist 
MMS in complying with NEPA and other relevant laws. The information 
must include the resources, conditions, and activities listed in this 
section, that could be affected by or could affect your proposed 
activities.
    (b) Your consistency certification must include:
    (1) One copy of your consistency certification under subsection 
307(c)(3)(B) of the CZMA (16 U.S.C. 1456(c)(3)(B)) and 15 CFR 930.76 
stating that the proposed activities described in detail in your plans 
comply with the State(s) approved coastal management program(s) and 
will be conducted in a manner that is consistent with such program(s); 
and
    (2) ``Information'' as required by 15 CFR 930.76(a) and 15 CFR 
930.58(a)(2) and ``Analysis'' as required by 15 CFR 930.58(a)(3).


Sec.  285.647  How will MMS process my GAP?

    (a) The MMS will review your submitted GAP, along with the 
information and certifications provided pursuant to Sec.  285.646, to 
determine if it contains all the required information necessary to 
conduct our technical and environmental reviews. We will notify you if 
your submitted GAP lacks any necessary information.
    (b) The MMS will prepare appropriate NEPA analysis.
    (c) The MMS will forward one copy of your GAP, consistency 
certification, and associated data and information under the CZMA to 
the State's CZM Agency, after all information requirements for the GAP 
are met.
    (d) When appropriate, we will coordinate and consult with relevant 
State and Federal agencies and provide to other local, State and 
Federal agencies relevant non-proprietary data and information 
pertaining to your proposed activities.
    (e) During the review process we may request additional 
information, if we

[[Page 39492]]

determine that the information provided is not sufficient to complete 
the review and approval process. If you fail to provide the requested 
information, MMS may disapprove your GAP.
    (f) Upon completion of our technical and environmental reviews MMS 
may approve, disapprove, or approve with modifications your GAP.
    (1) If we approve your GAP, we will specify terms and conditions to 
be incorporated into your GAP. You must certify compliance with certain 
of those terms and conditions as required under Sec.  285.653(b).
    (2) If we disapprove your GAP, we will inform you of the reasons 
and allow you an opportunity to resubmit a revised plan addressing the 
concerns identified and may suspend the term of your lease or grant, as 
appropriate, to allow this to occur.


Sec.  285.648  [Reserved]


Sec.  285.649  [Reserved]

Activities Under an Approved GAP


Sec.  285.650  When may I begin conducting activities under my GAP?

    After MMS approves your GAP, you may begin conducting the survey 
activities and any other activities approved in your GAP that do not 
involve the construction of facilities on the OCS.


Sec.  285.651  When may I construct OCS facilities proposed under my 
GAP?

    (a) Before you may begin construction of any OCS facility or any 
related seabed disturbing activities proposed in your GAP, you must 
complete the initial survey activities described in Sec.  285.645(b) 
that relate to the construction and installation of your proposed 
facility or facilities, or to the seabed disturbing activities (i.e., 
anchoring, coring, etc.) and submit an initial survey report 
identifying and describing locations where you propose to install 
facilities and conduct related activities such as coring, anchoring, 
and mooring. If MMS determines that the proposed facilities are complex 
or significant, you must submit the additional information required in 
Sec.  285.645(c) and paragraph (b) of this section.
    (1) You may begin to construct and install your facility or 
facilities once MMS notifies you that it has received the initial 
survey report and has no objections. If MMS receives the initial survey 
report, but does not respond with objections within 60 calendar days of 
receipt, MMS is deemed not to have objections to the report and you may 
commence construction and installation of your facility or facilities.
    (2) If MMS has any objections to your initial survey report, we 
will notify you verbally or in writing within 60 calendar days of 
receipt. Following initial notification of objections, MMS may follow-
up with written correspondence outlining its specific objections to the 
initial survey report and requesting certain actions necessary to 
resolve the agency's objections. You cannot begin construction until 
you resolve any objections to MMS's satisfaction.
    (b) If you are applying for a project easement, or constructing 
multiple facilities or a facility deemed by MMS to be complex or 
significant as provided in Sec.  285.640(b), you must complete the 
activities described in Sec.  285.645(c). You also must submit the 
following before construction may begin:
    (1) Facility design report required by Sec.  285.701;
    (2) Facility fabrication and installation report required by Sec.  
285.702; and
    (3) Your Safety Management System required by Sec.  285.810.


Sec.  285.652  How long do I have to conduct activities under an 
approved GAP?

    After MMS approves your GAP, you have:
    (a) For a limited lease, 5 years to conduct your approved 
activities, unless we renew the term under Sec. Sec.  285.425 through 
285.428.
    (b) For a ROW grant or RUE grant, the time provided in the terms of 
the grant.


Sec.  285.653  What other reports or notices must I submit to MMS, 
under my approved GAP?

    (a) You must notify MMS in writing within 30 calendar days after 
completing construction and installation activities approved in your 
GAP.
    (b) You must prepare and submit to MMS annually a report that 
summarizes the findings from any activities you conduct under your 
approved GAP and the results of those activities. We will protect the 
information from public disclosure as provided in Sec.  285.113.
    (c) You must submit a certification of compliance annually (or 
other frequency as determined by MMS) with certain terms and conditions 
of your GAP that MMS identifies under Sec.  285.647(f)(i). Together 
with your certification, you must submit:
    (1) Summary reports that show compliance with the terms and 
conditions which require certification; and
    (2) A statement identifying and describing any mitigation measures 
and monitoring and their effectiveness. If you identified measures that 
were not effective, you must include your recommendations for new 
mitigation measures or monitoring methods.


Sec.  285.654  [Reserved]


Sec.  285.655  What activities require a revision to my GAP and when 
will MMS approve the revision?

    (a) You must notify MMS in writing before conducting any activities 
not described in your approved GAP, describing in detail the type of 
activities you propose to conduct. We will determine whether the 
activities you propose are authorized by your existing GAP or require a 
revision to your GAP. We may request additional information from you if 
necessary to make this determination.
    (b) The MMS will periodically review the activities conducted under 
an approved GAP. The frequency and extent of the review will be based 
on the significance of any changes in available information; and on 
onshore or offshore conditions affecting, or affected by, the 
activities conducted under your GAP. If the review indicates that the 
GAP should be revised to meet the requirement of this part, we will 
require you to submit the needed revisions.
    (c) Activities for which a proposed revision to your GAP will 
likely be necessary include:
    (1) Activities not described in your approved GAP;
    (2) Modifications to the size or type of facility or equipment you 
will use;
    (3) Changes in the surface location of a facility or structure;
    (4) Addition of a facility or structure not contemplated in your 
approved GAP;
    (5) Change in the location of your onshore support base from one 
State to another or to a new base requiring expansion; or
    (6) Change the location of bottom disturbances (anchors, chains, 
etc.) by 500 feet (152 meters) or greater from the approved locations. 
If a specific anchor pattern was approved as a mitigation measure to 
avoid contact with bottom features, any change in the proposed bottom 
disturbances would likely trigger the need for a revision.
    (7) Changes to any other activity specified by MMS.
    (d) We may begin the appropriate NEPA analysis and any relevant 
consultations when we determine that a proposed revision could:
    (1) Result in a significant change in the impacts previously 
identified and evaluated;
    (2) Require any additional Federal authorizations; or

[[Page 39493]]

    (3) Involve activities not previously identified and evaluated.
    (e) When you propose a revision, we may approve the revision if we 
determine that the revision is:
    (1) Designed not to cause undue harm or damage to natural 
resources, life (including human and wildlife), property, or the 
marine, coastal, or human environment; or to sites, structures, or 
objects of historical or archaeological significance; and
    (2) Otherwise consistent with the provisions of subsection 8(p) of 
the OCS Lands Act.


Sec.  285.656  What must I do if I cease activities approved in my GAP 
before the end of my term?

    You must notify the MMS any time you cease activities under your 
approved GAP without an approved suspension. If you cease activities 
for an indefinite period that exceeds 6 months, MMS may cancel your 
lease or grant under Sec.  285.437, as applicable, and you must 
initiate the decommissioning process, as set forth in subpart I of this 
part.


Sec.  285.657   What must I do upon completion of approved activities 
under my GAP?

    Upon completion of your approved activities under your GAP, you 
must initiate the decommissioning process as set forth in subpart I of 
this part. You must submit your decommissioning application as provided 
in Sec. Sec.  285.905 through 906.

Cable and Pipeline Deviations


Sec.  285.658  Can my cable or pipeline construction deviate from my 
approved COP or GAP?

    (a) You must make every effort to ensure that all cables and 
pipelines are constructed in a manner that minimizes deviations from 
the approved plan under your lease or grant.
    (b) If MMS determines that a significant change in conditions has 
occurred that would necessitate a deviation after issuing the lease or 
granting a ROW grant or RUE grant but before the commencement of 
construction of the cable or pipeline on the lease or grant, MMS may 
suspend the start of construction of the cable or pipeline until MMS 
modifies the lease or grant.
    (c) If, after construction, it is determined that a deviation from 
the approved plan has occurred, you must:
    (1) Notify the operators of all leases (including mineral leases 
issued under this subchapter) and holders of all ROW grants or RUE 
grants (including all grants issued under this subchapter) which 
include the area where a deviation has occurred and provide MMS with 
evidence of such notification; and
    (2) Relinquish any unused portion of your lease or grant; and
    (3) Submit a revised plan for MMS approval as necessary.
    (d) Construction of a cable or pipeline that substantially deviates 
from the approved plan may be grounds for cancellation of the lease or 
grant.

Subpart G--Facility Design, Fabrication, and Installation

Reports


Sec.  285.700  What reports must I submit to MMS before installing 
facilities described in my approved SAP, COP, or GAP?

    (a) You must submit the following reports to MMS before installing 
facilities described in your approved COP (as provided in Sec.  
285.632(a)) and, when required by this part, your SAP (as provided in 
Sec.  285.614(b)) or GAP (as provided in Sec.  285.651(b)):
    (1) A Facility Design Report; and
    (2) A Fabrication and Installation Report.
    (b) You may begin to construct and install the approved facilities 
after MMS notifies you that it has received your reports and has no 
objections. If MMS receives the reports, but does not respond with 
objections within 60 calendar days of receipt, MMS is deemed not to 
have objections to the reports and you may commence construction and 
installation of your facility or facilities.
    (c) If MMS has any objections, we will notify you verbally or in 
writing within 60 calendar days of receipt of the report. Following 
initial notification of objections, MMS may follow up with written 
correspondence outlining its specific objections to the report and 
requesting certain actions necessary to resolve the agency's 
objections. You cannot commence activities addressed in such report 
until you resolve any objections to MMS's satisfaction.


Sec.  285.701  What must I include in my Facility Design Report?

    Your Facility Design Report provides specific details of the design 
of any facilities, including cables and pipelines, that are outlined in 
your approved SAP, COP, or GAP. Your Facility Design Report must 
demonstrate that your design conforms to your responsibilities listed 
in Sec.  285.105(a). You must include the following items in your 
Facility Design Report:

------------------------------------------------------------------------
     Required documents         Required contents    Other requirements
------------------------------------------------------------------------
(a) Cover letter............  (1) Proposed          You must submit 1
                               facility              paper copy and 1
                               designations;         electronic copy.
                              (2) Lease, ROW grant
                               or RUE grant
                               number;
                              (3) Area; name and
                               block numbers; and
                              (4) The type of
                               facility.
(b) Location plat...........  (1) Latitude and      Your plat must be
                               longitude             drawn to a scale of
                               coordinates,          1 inch equals 100
                               Universal Mercator    feet and include
                               grid-system           the coordinates of
                               coordinates, state    the lease, ROW
                               plane coordinates     grant, or RUE grant
                               in the Lambert or     block boundary
                               Transverse Mercator   lines. You must
                               Projection System;    submit three paper
                                                     copies.
                              (2) Distances in
                               feet from the
                               nearest block
                               lines. These
                               coordinates must be
                               based on the NAD
                               (North American
                               Datum) 83 datum
                               plane coordinate
                               system; and
                              (3) The location of
                               any proposed
                               project easement.
(c) Front, Side, and Plan     (1) Facility          Your drawing sizes
 View drawings.                dimensions and        must not exceed
                               orientation;          11
                              (2) Elevations         x17. You
                               relative to Mean      must submit three
                               Lower Low Water       paper copies.
                               (MLLW); and.
                              (3) Pile sizes and
                               penetration..

[[Page 39494]]


(d) Complete set of           The approved for      Your drawing sizes
 structural drawings.          construction          must not exceed
                               fabrication           11 x
                               drawings should be    17. You
                               submitted             must submit 1 paper
                               including, e.g.:      copy.
                              (1) Cathodic
                               protection systems;.
                              (2) Jacket design;..
                              (3) Pile
                               foundations;.
                              (4) Mooring and
                               tethering systems;.
                              (5) Foundations and
                               anchoring systems;
                               and.
                              (6) Associated cable
                               and pipeline
                               designs..
(e) Summary of environmental  A summary of the      You must submit 1
 data used for design.         environmental data    electronic copy. If
                               used in the design    you submitted these
                               or analysis of the    data as part of
                               facility. Examples    your SAP, COP, or
                               of relevant data      GAP you may
                               include information   reference the plan.
                               on:
                              (1) Extreme weather;
                              (2) Seafloor
                               conditions; and
                              (3) Waves, wind,
                               current, tides,
                               temperature, snow
                               and ice effects,
                               marine growth, and
                               water depth.
(f) Summary of the            (1) Loading           You must submit 1
 engineering design data.      information (e.g.,    electronic copy.
                               live, dead,
                               environmental);
                              (2) structural
                               information (e.g.,
                               design-life;
                               material types;
                               cathodic protection
                               systems; design
                               criteria; fatigue
                               life; jacket
                               design; deck
                               design; production
                               component design;
                               foundation pilings
                               and templates, and
                               mooring or
                               tethering systems;
                               fabrication and
                               installation
                               guidelines);
                              (3) Location of
                               foundation
                               boreholes and
                               foundation piles;
                               and
                              (4) Foundation
                               information (e.g.,
                               soil stability,
                               design criteria).
(g) A complete set of design                        You must submit 1
 calculations.                                       electronic copy.
(h) Project-specific studies  All studies           You must submit 1
 used in the facility design   pertinent to          electronic copy of
 or installation.              facility design or    each study.
                               installation, e.g.,
                               oceanographic and
                               soil reports
                               including the
                               results of the
                               surveys required in
                               Sec.  Sec.
                               285.610(b),
                               285.626, or
                               285.645(b).
(i) Description of the loads  (1) Loads imposed by  You must submit 1
 imposed on the facility.      jacket;.              electronic copy.
                              (2) Decks;..........
                              (3) Production
                               components;.
                              (4) Foundations,
                               foundation pilings
                               and templates, and
                               anchoring systems;
                               and
                              (5) Mooring or
                               tethering systems.
(j) Geotechnical Report.....  A list of all data    You must submit 1
                               from borings and      electronic copy.
                               recommended design
                               parameters.
(k) Certification statement   The following         An authorized lessee
 and location of records as    statement: ``The      or grantee
 required in Sec.              design of this        representative must
 285.714(c).                   structure has been    sign the statement.
                               certified by a MMS    You must submit 1
                               approved Certified    paper copy.
                               Verification Agent
                               to be in accordance
                               with accepted
                               engineering
                               practices and the
                               approved SAP, GAP,
                               or COP as
                               appropriate. The
                               certified design
                               and as-built plans
                               and specifications
                               will be on file at
                               (given location).''
------------------------------------------------------------------------

Sec.  285.702  What must I include in my Fabrication and Installation 
Report?

    Your Fabrication and Installation Report must describe how your 
facilities will be fabricated and installed in accordance with the 
design criteria identified in the Facility Design Report, your approved 
SAP, COP, or GAP, and generally accepted industry standards and 
practices. Your Fabrication and Installation Report must demonstrate 
how your facilities will be fabricated and installed in a manner that 
conforms to your responsibilities listed in Sec.  285.105(a). You must 
include the following items in your Fabrication and Installation 
Report:

------------------------------------------------------------------------
     Required documents         Required contents    Other requirements
------------------------------------------------------------------------
(a) Cover letter............  (1) Proposed          You must submit 1
                               facility              paper copy and 1
                               designation, lease,   electronic copy.
                               ROW grant, or RUE
                               grant number;
                              (2) Area, name, and
                               block number; and
                              (3) The type of
                               facility.
(b) Schedule................  Fabrication and       You must submit 1
                               installation.         paper copy and 1
                                                     electronic copy.

[[Page 39495]]


(c) Fabrication information.  The industry          You must submit 1
                               standards you will    paper copy and 1
                               use to ensure the     electronic copy.
                               facilities are
                               fabricated to the
                               design criteria
                               identified in your
                               Facility Design
                               Report.
(d) Installation process      Details associated    You must submit 1
 information.                  with the deployment   paper copy and 1
                               activities,           electronic copy.
                               equipment, and
                               materials including
                               onshore and
                               offshore equipment
                               and support, and
                               anchoring and
                               mooring patterns.
(e) Federal, State, and       Either 1 copy of the  You must submit 1
 Local Permits (e.g. EPA,      permit or             paper copy and 1
 USACE).                       information on the    electronic copy.
                               status of the
                               application.
(f) Environmental             (1) Water discharge;  You must submit 1
 information.                 (2) Waste disposal;.   paper copy and 1
                              (3) Vessel             electronic copy. If
                               information; and.     you submitted these
                              (4) Onshore waste      data as part of
                               receiving             your SAP, COP, or
                               treatment, or         GAP you may
                               disposal              reference the plan.
                               facilities..
(g) Project easement........  Design of any         You must submit 1
                               cables, pipelines     hard copy and 1
                               or facilities.        electronic copy.
                               Information on
                               burial methods and
                               vessels.
------------------------------------------------------------------------

Sec.  285.703  [Reserved]


Sec.  285.704  [Reserved]

Certified Verification Agent


Sec.  285.705  What is the function of a Certified Verification Agent 
(CVA)?

    (a) You must use a Certified Verification Agent to:
    (1) Ensure that your facilities are designed, fabricated, and 
installed in conformance with accepted engineering practices and the 
Facility Design Report and Fabrication and Installation Report; and
    (2) Ensure that repairs and major modifications are completed in 
conformance with accepted engineering practices.
    (b) The CVA is directly responsible for providing to MMS immediate 
reports of all incidents that affect the design, fabrication, and 
installation of the project and its components.


Sec.  285.706  How do I nominate a CVA for MMS approval?

    (a) As part of your COP (as provided in Sec.  285.626(u)) and, when 
required by this part, your SAP (as provided in Sec.  285.610(b)(11)), 
or GAP (as provided in Sec.  285.645(c)(6)), you must nominate a CVA 
for MMS approval. You must specify whether the nomination is for the 
Facility Design Report, Fabrication and Installation Report, 
Modification and Repair Report, or for any combination of these.
    (b) For each CVA that you nominate, you must submit to MMS a list 
of documents used in your design that you will forward to the CVA and a 
qualification statement that includes the following:
    (1) Previous experience in third-party verification or experience 
in the design, fabrication, installation, or major modification of 
offshore energy facilities;
    (2) Technical capabilities of the individual or the primary staff 
for the specific project;
    (3) Size and type of organization or corporation;
    (4) In-house availability of, or access to, appropriate technology 
(including computer programs, hardware, and testing materials and 
equipment);
    (5) Ability to perform the CVA functions for the specific project 
considering current commitments;
    (6) Previous experience with MMS requirements and procedures, if 
any; and
    (7) The level of work to be performed by the CVA.
    (c) Individuals or organizations acting as CVAs must not function 
in any capacity that would create a conflict of interest, or the 
appearance of a conflict of interest.
    (d) The verification must be conducted by or under the direct 
supervision of registered professional engineers.
    (e) The MMS will approve or disapprove your CVA as part of its 
review of the COP or, when required, for your SAP or GAP.
    (f) You must nominate a new CVA for MMS approval if the previously 
approved CVA:
    (1) Is no longer able to serve in a CVA capacity for the project; 
or
    (2) No longer meets the requirements for a CVA set forth in this 
subpart.


Sec.  285.707  What are the CVA's primary duties for facility design 
review?

    (a) The CVA must use good engineering judgment and practices in 
conducting an independent assessment of the design of the facility. The 
CVA must certify in the Facility Design Report to MMS that the facility 
is designed to withstand the environmental and functional load 
conditions appropriate for the intended service life at the proposed 
location.
    (b) The CVA must conduct an independent assessment of all proposed:
    (1) Planning criteria;
    (2) Operational requirements;
    (3) Environmental loading data;
    (4) Load determinations;
    (5) Stress analyses;
    (6) Material designations;
    (7) Soil and foundation conditions;
    (8) Safety factors; and
    (9) Other pertinent parameters of the proposed design.
    (c) For any floating facility, the CVA must ensure that the 
requirements of the U.S. Coast Guard for structural integrity and 
stability (e.g., verification of center of gravity), have been met. The 
CVA must also consider:
    (1) Foundations, foundation pilings and templates, and anchoring 
systems; and
    (2) Mooring or tethering systems.


Sec.  285.708  What are the CVA's primary duties for fabrication and 
installation review?

    (a) The CVA must do all of the following:
    (1) Use good engineering judgment and practice in conducting an 
independent assessment of the fabrication and installation activities;
    (2) Monitor the fabrication and installation of the facility as 
required by paragraph (b) of this section;
    (3) Make periodic onsite inspections while fabrication is in 
progress and must verify the items required by Sec.  285.709;
    (4) Make periodic onsite inspections while installation is in 
progress and must satisfy the requirements of Sec.  295.710; and
    (5) Certify in a report that project components are fabricated and 
installed in accordance with accepted engineering practices, your 
approved COP, SAP, or GAP (as applicable), and the Fabrication and 
Installation Report.

[[Page 39496]]

    (i) The report must also identify the location of all records 
pertaining to fabrication and installation.
    (ii) You may commence commercial operations or other approved 
activities 30 calendar days after MMS receives the certification 
report, unless MMS notifies you within that time period of its 
objections to the certification report.
    (b) To comply with paragraph (a)(5) of this section, the CVA must 
monitor the fabrication and installation of the facility to ensure that 
it has been built and installed according to the Facility Design Report 
and Fabrication and Installation Report.
    (1) If the CVA finds that fabrication and installation procedures 
are changed or design specifications are modified, the CVA must inform 
you.
    (2) If you accept the modifications, then you must also inform MMS.


Sec.  285.709  When conducting on-site fabrication inspections, what 
must the CVA verify?

    (a) To comply with Sec.  285.708(a)(3), the CVA must make periodic 
on-site inspections while fabrication is in progress and must verify 
the following fabrication items, as appropriate:
    (1) Quality control by lessee (or grant holder) and builder;
    (2) Fabrication site facilities;
    (3) Material quality and identification methods;
    (4) Fabrication procedures specified in the Fabrication and 
Installation Report, and adherence to such procedures;
    (5) Welder and welding procedure qualification and identification;
    (6) Structural tolerances specified and adherence to those 
tolerances;
    (7) The nondestructive examination requirements, and evaluation 
results of the specified examinations;
    (8) Destructive testing requirements and results;
    (9) Repair procedures;
    (10) Installation of corrosion-protection systems and splash-zone 
protection;
    (11) Erection procedures to ensure that overstressing of structural 
members does not occur;
    (12) Alignment procedures;
    (13) Dimensional check of the overall structure, including any 
turrets, turret-and-hull interfaces, any mooring line and chain and 
riser tensioning line segments; and
    (14) Status of quality-control records at various stages of 
fabrication.
    (b) For any floating facilities, the CVA must ensure that the 
requirements of the U.S. Coast Guard for structural integrity and 
stability (e.g., verification of center of gravity), have been met. The 
CVA must also consider:
    (1) Foundations, foundation pilings and templates, and anchoring 
systems; and
    (2) Mooring or tethering systems.


Sec.  285.710  When conducting on-site installation inspections, what 
must the CVA do?

    To comply with Sec.  285.708(a)(4), the CVA must make periodic 
onsite inspections while installation is in progress and must, as 
appropriate, verify, witness, survey, or check, the installation items 
required by this section.
    (a) The CVA must verify, as appropriate, all of the following:
    (1) Loadout and initial flotation activities;
    (2) Towing operations to the specified location, and review the 
towing records;
    (3) Launching and uprighting activities;
    (4) Submergence activities;
    (5) Pile or anchor installations;
    (6) Installation of mooring and tethering systems;
    (7) Final deck and component installations; and
    (8) Installation at the approved location according to the Facility 
Design Report and the Fabrication and Installation Report.
    (b) For a fixed or floating facility, the CVA must witness all of 
the following:
    (1) The loadout of the jacket, decks, piles, or structures from 
each fabrication site; and
    (2) The actual installation of the facility or major modification 
and the related installation activities.
    (c) For a floating facility, the CVA must witness all of the 
following:
    (1) The loadout of the facility;
    (2) The installation of foundation pilings and templates, and 
anchoring systems; and
    (3) The installation of the mooring and tethering systems.
    (d) The CVA must conduct an onsite survey of the facility after 
transportation to the approved location.
    (e) The CVA must spot-check the equipment, procedures, and 
recordkeeping as necessary to determine compliance with the applicable 
documents incorporated by reference and the regulations under this 
part.


Sec.  285.711  What reports must the CVA submit for project 
modifications and repairs?

    (a) The CVA must verify and, in a report to us, certify that major 
repairs and major modifications to the project conform with accepted 
engineering practices.
    (1) A major repair is a corrective action involving structural 
members affecting the structural integrity of a portion of or all the 
facility.
    (2) A major modification is an alteration involving structural 
members affecting the structural integrity of a portion of or all the 
facility.
    (b) The report must also identify the location of all records 
pertaining to the major repairs or major modifications.


Sec.  285.712  What are the CVA's reporting requirements?

    (a) The CVA must prepare and submit to you and MMS all reports 
required by this subpart. The CVA must also submit interim reports to 
you and MMS, as requested by the MMS.
    (b) For each report required by this subpart, the CVA must submit 
one electronic copy and one paper copy of each final report to MMS. In 
each report, the CVA must:
    (1) Give details of how, by whom, and when the CVA activities were 
conducted;
    (2) Describe the CVA's activities during the verification process;
    (3) Summarize the CVA's findings; and
    (4) Provide any additional comments that the CVA deems necessary.


Sec.  285.713  What must I do after the CVA confirms conformance with 
the Fabrication and Installation Report on my commercial lease?

    After the CVA confirms conformance with the Fabrication and 
Installation Report, you must notify MMS within 10 business days after 
commencing commercial operations.


Sec.  285.714  What records must I keep?

    (a) Until MMS releases your financial assurance under Sec.  
285.533, you must compile, retain, and make available to MMS 
representatives, within the time specified by MMS, all of the 
following:
    (1) The as-built drawings;
    (2) The design assumptions and analyses;
    (3) A summary of the fabrication and installation examination 
records;
    (4) The inspection results from the inspections and assessments 
required by Sec. Sec.  285.820 through 285.825; and
    (5) Records of repairs not covered in the inspection report 
submitted under Sec.  285.824(b)(3).
    (b) You must record and retain the original material test results 
of all primary structural materials during all stages of construction 
until MMS releases your financial assurance under Sec.  285.533. 
Primary material is material that, should it fail, would lead to a 
significant reduction in facility safety, structural reliability, or 
operating capabilities. Items such as steel brackets, deck stiffeners 
and secondary

[[Page 39497]]

braces or beams would not generally be considered primary structural 
members (or materials).
    (c) You must provide MMS with the location of these records in the 
certification statement as required in Sec. Sec.  285.701(k), 
285.708(a)(5)(i), and 285.711(b).

Subpart H--Environmental and Safety Management, Inspections, and 
Facility Assessments


Sec.  285.800  How must I conduct my activities to comply with safety 
and environmental requirements?

    (a) You must conduct all activities on your lease or grant under 
this part in a manner that conforms with your responsibilities in Sec.  
285.105(a) and using:
    (1) Trained personnel; and
    (2) Technologies, precautions, and techniques to minimize the 
likelihood of harm or damage to human life, the marine environments, 
including their physical, atmospheric, and biological components.
    (b) You must certify compliance with those terms and conditions 
identified in your approved SAP, COP, or GAP as required under 
Sec. Sec.  285.615(c), 285.633(b), or 285.653(c).


Sec.  285.801  What must I do to protect marine mammals, threatened and 
endangered species, and designated critical habitat?

    (a) You must not conduct any activity under your lease or grant 
that may affect threatened or endangered species or that may affect 
designated critical habitat of such species until the appropriate level 
of consultation is conducted as required under the Endangered Species 
Act of 1973 (ESA), as amended (16 U.S.C. 1531 et seq.) to ensure that 
your actions are not likely to jeopardize a threatened or endangered 
species and are not likely to destroy or adversely modify designated 
critical habitat.
    (b) You must not conduct any activity under your lease or grant 
that may result in an incidental taking of marine mammals until the 
appropriate authorization has been issued under the Marine Mammal 
Protection Act of 1972 (MMPA) as amended (16 U.S.C. 1361 et seq.).
    (c) You must submit plans (SAP, COP, and GAP) to MMS containing 
sufficient information to ensure that the proposed activities will be 
conducted in a manner consistent with provisions of the ESA and the 
MMPA.
    (d) If there is reason to believe that a threatened or endangered 
species may be present while you conduct your MMS approved activities 
or may be affected by the direct or indirect effects of your actions:
    (1) You must notify us that endangered or threatened species may be 
present in the vicinity of the lease or grant or may be affected by 
your actions; and
    (2) We will consult with appropriate State and Federal fish and 
wildlife agencies and, after consultation, shall identify whether, and 
under what conditions, you may proceed.
    (e) If there is reason to believe that designated critical habitat 
of a threatened or endangered species may be affected by the direct or 
indirect effects of your MMS approved activities:
    (1) You must notify us that designated critical habitat of a 
threatened or endangered species in the vicinity of the lease or grant 
may be affected by your actions; and
    (2) We will consult with appropriate State and Federal fish and 
wildlife agencies and, after consultation, shall identify whether, and 
under what conditions, you may proceed.
    (f) If there is reason to believe that marine mammals may be 
incidentally taken as a result of your proposed activities:
    (1) You must agree to secure an authorization from NOAA or the U.S. 
Fish and Wildlife Service (FWS) for incidental taking, including taking 
by harassment, that may result from your actions; and
    (2) You must comply with all measures required by the NOAA or FWS 
including measures to effect the least practicable impact on such 
species and its habitat and ensure no unmitigable adverse impact on 
availability of the species for subsistence use.
    (g) Submit to us:
    (1) Measures designed to avoid or minimize adverse effects and any 
potential incidental take of the endangered or threatened species or 
marine mammals;
    (2) Measures designed to avoid likely adverse modification or 
destruction of designated critical habitat of such endangered or 
threatened species; and
    (3) Your agreement to monitor for the incidental take of the 
species and adverse effects on the critical habitat and provide the 
results of the monitoring to MMS as required; and,
    (4) Your agreement to perform any relevant terms and conditions of 
the Incidental Take Statement that may result from the ESA 
consultation.
    (5) Your agreement to perform any relevant mitigation measures 
under a MMPA incidental take authorization.


Sec.  285.802  How must I protect archaeological resources?

    (a) When you prepare your SAP, COP, GAP, or decommissioning 
application, you must consult with MMS about archaeological resources.
    (1) If an archaeological resource is known to exist or if we have 
reason to believe that an archaeological resource may exist in the area 
of a proposed lease or grant, you must include an archaeological report 
with your SAP, COP, GAP, or decommissioning application. If you are 
uncertain of the archaeological survey requirements for your proposed 
lease or grant, you must consult with the MMS Federal Preservation 
Officer.
    (2) We will specify the survey methods and instrumentation for 
conducting the archaeological survey and specify the issues to be 
addressed in the archaeological report.
    (b) If the MMS review of your archaeological report included with 
your SAP, COP, GAP, or decommissioning application concludes that an 
archaeological resource may be present, we will determine a minimum 
distance that you must maintain between your activity and the resource, 
and you must either:
    (1) Locate all proposed seafloor-disturbing activities in such a 
way to avoid the potential archaeological resource by no less than the 
distance we determine; or
    (2) Establish to our satisfaction that an archaeological resource 
is either unlikely to be present or, if present, that your proposed 
seafloor disturbing activities have been designed to minimize adverse 
affects on such resource.
    (c) In making a determination under paragraph (b) of this section, 
we may require you to conduct further archaeological investigations, 
using personnel, equipment, and techniques we consider appropriate. You 
must submit the investigation report to us for review. We will notify 
you if our review of your report determines that an archaeological 
resource exists and may be adversely affected by your proposed 
seafloor-disturbing activities.


Sec.  285.803  What must I do if I discover a potential archaeological 
resource?

    (a) If you, your subcontractors, or any agent acting on your 
behalf, discover a potential archaeological resource while conducting 
surveys, construction activities, or any other activity related to your 
project, you must:
    (1) Immediately halt all seafloor-disturbing activities within the 
area of the discovery;
    (2) Notify MMS of the discovery within 72 hours; and
    (3) Keep the location of the discovery confidential and not take 
any action that may adversely affect the archaeological

[[Page 39498]]

resource until we have made an evaluation and instructed you how to 
proceed.
    (b) We may require you to conduct additional investigations to 
determine if the resource is eligible for listing on the National 
Register of Historic Places under 36 CFR 60.4. We will do this if 
either:
    (1) The site has been impacted by your project activities; or
    (2) Impacts to the site or to the area of potential effect cannot 
be avoided.
    (c) If investigations under paragraph (b) of this section indicate 
that the resource is potentially eligible for the National Register of 
Historic Places, we will tell you how to protect the resource, or how 
to mitigate adverse effects to the site.
    (d) If we incur costs in protecting the resource, under section 
110(g) of the National Historic Preservation Act, we may charge you 
reasonable costs for carrying out preservation responsibilities under 
the OCS Lands Act.


Sec.  285.804  How must I protect essential fish habitats identified 
and described under MSA?

    (a) If MMS finds essential fish habitat or habitat areas of 
particular concern may be adversely affected by the proposed action, 
MMS must consult with NMFS.
    (b) Any conservation recommendations adopted by MMS to avoid or 
minimize adverse affects on EFH will be incorporated as terms and 
conditions in the lease and must be adhered to by the applicant. The 
MMS may require additional surveys to define boundaries and avoidance 
distances.
    (c) If required, MMS will specify the survey methods and 
instrumentations for conducting the biological survey and specify the 
contents of the biological report.


Sec.  285.805  [Reserved]


Sec.  285.806  [Reserved]

Air Quality


Sec.  285.807  What requirements must I meet regarding air quality?

    (a) You must comply with the Clean Air Act (42 U.S.C. 7409) and its 
implementing regulations, according to the following table.

------------------------------------------------------------------------
 If your project is located . . .              You must . . .
------------------------------------------------------------------------
(1) In the Gulf of Mexico west of   Provide to MMS any information
 87.5[deg] west longitude (western   required to make the appropriate
 Gulf of Mexico).                    air quality determinations for your
                                     project.
(2) Anywhere else on the OCS......  Follow the appropriate implementing
                                     regulations as promulgated by the
                                     U.S. Environmental Protection
                                     Agency under 40 CFR part 55.
------------------------------------------------------------------------

    (b) For air quality modeling you perform in support of the 
activities proposed in your plans, you should contact the 
jurisdictional agency to establish a modeling protocol to ensure that 
the agency's needs are met and that the meteorological files used are 
acceptable before initiating the modeling work. In addition, in the 
western Gulf of Mexico (west of 87.5[deg] west longitude ) you must 
submit to MMS three copies of the modeling report and three sets of 
digital files as supporting information. The digital files must contain 
the formatted meteorological files used in the modeling runs, the model 
input file and the model output file.


Sec.  285.808  [Reserved]


Sec.  285.809  [Reserved]

Safety Management Systems


Sec.  285.810  What must I include in my Safety Management System?

    You must submit a description of the Safety Management System you 
will use with your COP (provided under Sec.  285.627(d)) and, when 
required by this part, your SAP (as provided in Sec.  285.614(b)(3)) or 
GAP (as provided in Sec.  285.651(b)(3)). You must describe:
    (a) How you will ensure the safety of personnel or anyone on or 
near your facilities;
    (b) Remote monitoring, control, and shut down capabilities;
    (c) Emergency response procedures;
    (d) Fire suppression equipment, if needed;
    (e) How and when you will test your Safety Management System; and
    (f) How you will ensure personnel who operate your facilities are 
properly trained.


Sec.  285.811  [Reserved]


Sec.  285.812  [Reserved]

Maintenance and Shutdowns


Sec.  285.813  When do I have to report removing equipment from 
service?

    (a) The removal of any equipment from service may result in MMS 
applying remedies as provided in this part, when such equipment is 
necessary for implementing your approved plan. Such remedies may 
include an order from MMS requiring you to remove such equipment or 
facilities from the lease.
    (b) For safety equipment:
    (1) You must report within 24 hours when any required safety 
equipment is taken out of service for more than 12 hours. If you 
provide an oral notification, you must submit a written confirmation of 
this notice within 3 business days as required by Sec.  285.105(c).
    (2) If you remove any required safety equipment from service for 
greater than 60 calendar days you must submit written confirmation to 
MMS.
    (3) You must notify MMS when you return the safety equipment to 
service


Sec.  285.814  [Reserved]

Equipment Failure and Adverse Environmental Effects


Sec.  285.815  What must I do if I have facility damage or an equipment 
failure?

    (a) If you have facility damage or the failure of a pipeline, 
cable, or other equipment necessary for you to implement your approved 
plan, you must make repairs as soon as practicable.
    (b) You must notify MMS, as soon as practicable, but no later than 
3 business days, of the repair of any pipeline, cable, equipment, or 
facility associated with your lease or grant. The initial notice can be 
oral or written.
    (c) The MMS may require that you analyze cable, pipeline, or 
facility failures or damage to determine the cause. If requested by 
MMS, you must submit a comprehensive written report of the failure or 
damage to MMS as soon as available.


Sec.  285.816  What must I do if environmental or other conditions 
adversely affect a cable, pipeline, or facility?

    If environmental or other conditions adversely affect a cable, 
pipeline, or facility so as to endanger the safety or the environment, 
you must:
    (a) Submit a plan of corrective action to MMS within 30 calendar 
days of the discovery of the adverse effect;
    (b) Take remedial action as described in your corrective action 
plan; and

[[Page 39499]]

    (c) Submit to the MMS a report of the remedial action taken within 
30 calendar days after completion.


Sec.  285.817 through 285.819  [Reserved]

Inspections and Assessments


Sec.  285.820  Will MMS conduct inspections?

    The MMS will inspect OCS facilities and any vessels engaged in 
activities authorized under this part. We conduct these inspections:
    (a) To verify that you are conducting activities in compliance with 
subsection 8(p) of the OCS Lands Act, the regulations in this part, the 
terms, conditions and stipulations of your lease or grant, approved 
plans, and other applicable laws and regulations; and
    (b) To determine whether proper safety equipment has been installed 
and is operating properly according to your Safety Management System, 
as required in Sec.  285.810.


Sec.  285.821  Will MMS conduct scheduled and unscheduled inspections?

    The MMS will conduct both scheduled and unscheduled inspections.


Sec.  285.822  What must I do when MMS conducts an inspection?

    (a) When MMS conducts an inspection, you must:
    (1) Provide access to all facilities on your lease (including your 
project easement), or grant; and
    (2) You must make the following available for MMS to inspect:
    (i) The area covered under a lease, ROW grant, or RUE grant;
    (ii) All improvements, structures, and fixtures on these areas; and
    (iii) All records of design, construction, operation, maintenance, 
repairs, or investigations on or related to the area.
    (b) You must retain these records in paragraph (a)(2)(iii) of this 
section until MMS releases your financial assurance under Sec.  285.533 
and provide them to MMS upon request, within the time period specified 
by MMS.
    (c) You must demonstrate to the inspector how you are in compliance 
with your safety management system.


Sec.  285.823  Will MMS reimburse me for my expenses related to 
inspections?

    Upon request, MMS will reimburse you for food, quarters, and 
transportation that you provide for our representatives while they 
inspect lease or grant facilities and associated activities. You must 
send us your reimbursement request within 90 calendar days of the 
inspection.


Sec.  285.824  How must I conduct self-inspections?

    (a) You must develop a comprehensive annual self-inspection plan 
covering all of your facilities. You must keep this plan wherever you 
keep your records and make it available to MMS inspectors upon request. 
Your plan must specify:
    (1) The type, extent, and frequency of in-place inspections that 
you will conduct for both the above-water and the below-water structure 
of all facilities and pertinent components of the mooring systems for 
any floating facilities; and
    (2) How you are monitoring the corrosion protection for both the 
above-water and below-water structure.
    (b) You must submit a report annually no later than November 1 to 
us that must include:
    (1) A list of facilities inspected in the preceding 12 months;
    (2) The type of inspection employed, (i.e., visual, magnetic 
particle, ultrasonic testing); and
    (3) A summary of the inspection indicating what repairs, if any, 
were needed and the overall structural condition of the facility.


Sec.  285.825  When must I assess my facilities?

    (a) You must perform an assessment of the structure, when needed, 
based on the platform assessment initiators listed in sections 17.2.1-
17.2.5 of API RP 2A-WSD, Recommended Practice for Planning, Designing 
and Constructing Fixed Offshore Platforms--Working Stress Design 
(incorporated by reference as specified in Sec.  285.115).
    (b) You must initiate mitigation actions for structures that do not 
pass the assessment process of API RP 2A-WSD.
    (c) You must perform other assessments as required by MMS.


Sec.  285.826 through 285.829  [Reserved]

Incident Reporting and Investigation


Sec.  285.830  What are my incident reporting requirements?

    (a) You must report all incidents listed in Sec.  285.831 to MMS, 
according to the reporting requirements for these incidents in 
Sec. Sec.  285.832 and 285.833.
    (b) These reporting requirements apply to incidents that occur on 
the area covered by your lease or grant under this part and that are 
related to activities resulting from the exercise of your rights under 
your lease or grant under this part.
    (c) Nothing in this subpart relieves you from making notices and 
reports of incidents that may be required by other regulatory agencies.
    (d) You must report all spills of oil or other liquid pollutants in 
accordance with 30 CFR 254.46.


Sec.  285.831  What incidents must I report and when must I report 
them?

    (a) You must report the following incidents to us immediately via 
oral communication, and provide a written follow-up report (paper copy 
or electronically transmitted) within 15 business days after the 
incident:
    (1) Fatalities;
    (2) Incidents that require the evacuation of person(s) from the 
facility to shore or to another offshore facility;
    (3) Fires and explosions;
    (4) Collisions that result in property or equipment damage greater 
than $25,000 (Collision means the act of a moving vessel (including an 
aircraft) striking another vessel, or striking a stationary vessel or 
object. ``Property or equipment damage'' means the cost of labor and 
material to restore all affected items to their condition before the 
damage, including, but not limited to, the OCS facility, a vessel, 
helicopter, or equipment. It does not include the cost of salvage, 
cleaning, dry docking, or demurrage.);
    (5) Incidents involving structural damage to an OCS facility 
(Structural damage means damage severe enough so that activities on the 
facility cannot continue until repairs are made.);
    (6) Incidents involving crane or personnel/material handling 
activities, if they result in a fatality, injury, structural damage, or 
significant environmental damage;
    (7) Incidents that damage or disable safety systems or equipment 
(including firefighting systems);
    (8) Other incidents resulting in property or equipment damage 
greater than $25,000; and
    (9) Any other incidents involving significant environmental damage, 
or harm.
    (b) You must provide a written report of the following incidents to 
us within 15 calendar days after the incident:
    (1) Any injuries that result in one or more days away from work or 
one or more days on restricted work or job transfer (One or more days 
means the injured person was not able to return to work or to all of 
their normal duties the day after the injury occurred.); and
    (2) All incidents that require personnel on the facility to muster 
for evacuation for reasons not related to weather or drills.


Sec.  285.832  How do I report incidents requiring immediate 
notification?

    For an incident requiring immediate notification under Sec.  
285.831(a), you

[[Page 39500]]

must notify MMS orally immediately after aiding the injured and 
stabilizing the situation. Your oral communication must provide the 
following information:
    (a) Date and time of occurrence;
    (b) Identification and contact information for the lessee, grant 
holder, or operator;
    (c) Contractor, and contractor representative's name and telephone 
number (if a contractor is involved in the incident or injury/
fatality);
    (d) Lease number, OCS area, and block;
    (e) Platform/facility name and number, or cable or pipeline segment 
number;
    (f) Type of incident or injury/fatality;
    (g) Activity at time of incident; and
    (h) Description of the incident, damage, or injury/fatality.


Sec.  285.833  What are the reporting requirements for incidents 
requiring written notification?

    (a) For any incident covered under Sec.  285.831, you must submit a 
written report within 15 calendar days after the incident to MMS. The 
report must contain the following information:
    (1) Date and time of occurrence;
    (2) Identification and contact information for each lessee, grant 
holder, or operator;
    (3) Name and telephone number of the contractor and the 
contractor's representative, if a contractor is involved in the 
incident or injury;
    (4) Lease number, OCS area, and block;
    (5) Platform/facility name and number, or cable or pipeline segment 
number;
    (6) Type of incident or injury;
    (7) Activity at time of incident;
    (8) Description of incident, damage, or injury (including days away 
from work, restricted work or job transfer), and any corrective action 
taken; and
    (9) Property or equipment damage estimate (in U.S. dollars).
    (b) You may submit a report or form prepared for another agency in 
lieu of the written report required by paragraph (a) of this section, 
if the report or form contains all required information.
    (c) The MMS may require you to submit additional information about 
an incident on a case-by-case basis.

Subpart I--Decommissioning

Decommissioning Obligations and Requirements


Sec.  285.900  Who must meet the decommissioning obligations in this 
subpart?

    (a) Lessees are jointly and severally responsible for meeting 
decommissioning obligations for facilities on their leases, including 
all obstructions, as the obligations accrue and until each obligation 
is met.
    (b) Grant holders are jointly and severally liable for meeting 
decommissioning obligations for facilities on their grant, including 
all obstructions, as the obligations accrue and until each obligation 
is met.


Sec.  285.901  When do I accrue decommissioning obligations?

    You accrue decommissioning obligations when you are or become a 
lessee or grant holder, and you either install, construct, or acquire 
by an MMS-approved assignment, a facility, cable, or pipeline, or you 
create an obstruction to other users of the OCS.


Sec.  285.902  What are the general requirements for decommissioning?

    (a) Except as otherwise authorized by MMS under Sec.  285.909, 
within 1 year following termination of a lease or grant, you must:
    (1) Remove or decommission all facilities, projects, cables, 
pipelines, and obstructions;
    (2) Clear the seafloor of all obstructions created by activities on 
your lease, including your project easement, or grant, as required by 
the MMS.
    (b) Before decommissioning, you must submit a decommissioning 
application and receive approval from the MMS.
    (c) The approval of the decommissioning concept in the SAP, COP, or 
GAP is not an approval of a decommissioning application. However, you 
may submit your complete decommissioning application simultaneously 
with the SAP, COP, or GAP, so that it may undergo appropriate technical 
and regulatory reviews at that time.
    (d) Following approval of your decommissioning application, you 
must submit a decommissioning notice under Sec.  285.908 to MMS at 
least 60 calendar days before commencing decommissioning activities.
    (e) If you, your subcontractors, or any agent acting on your behalf 
discover any archaeological resource while conducting decommissioning 
activities you must immediately halt bottom-disturbing activities 
within 1,000 feet of the discovery and report the discovery to us 
within 72 hours. We will inform you how to conduct investigations to 
determine if the resource is significant and how to protect it. You, 
your subcontractors, or any agent acting on your behalf must keep the 
location of the discovery confidential and must not take any action 
that may adversely affect the archaeological resource until we have 
made an evaluation and told you how to proceed.


Sec.  285.903  [Reserved]


Sec.  285.904  [Reserved]

Decommissioning Applications


Sec.  285.905  When must I submit my decommissioning application?

    You must submit your decommissioning application upon the earliest 
of the following dates:
    (a) 2 years before the expiration of your lease;
    (b) 90 calendar days after completion of your commercial activities 
on a commercial lease;
    (c) 90 calendar days after completion of your approved activities 
under a limited lease on a ROW grant or RUE grant; or
    (d) 90 calendar days after cancellation, relinquishment, or other 
termination of your lease or grant.


Sec.  285.906  What must my decommissioning application include?

    You must provide one paper copy and one electronic copy of the 
application. Include the following information in the application, as 
applicable.
    (a) Identification of the applicant including:
    (1) Lease operator, ROW grant holder, or RUE grant holder;
    (2) Address;
    (3) Contact person and telephone number; and
    (4) Shore base.
    (b) Identification and description of the facilities, cables, or 
pipelines you plan to remove or propose to leave in place as provided 
in Sec.  285.909.
    (c) A proposed decommissioning schedule for your lease, ROW grant, 
or RUE grant including the expiration or relinquishment date and 
proposed month and year of removal.
    (d) A description of the removal methods and procedures, including 
the types of equipment, vessels, and moorings (i.e., anchors, chains, 
lines, etc.) you will use.
    (e) A description of your site clearance activities.
    (f) Your plans for transportation and disposal (including as an 
artificial reef) or salvage of the removed facilities, cables, or 
pipelines and any required approvals.
    (g) A description of those resources, conditions, and activities 
that could be affected by or could affect your proposed decommissioning 
activities. The description must be as detailed as necessary to assist 
MMS in complying with the NEPA and other relevant Federal laws.

[[Page 39501]]

    (h) The results of any recent biological surveys conducted in the 
vicinity of the structure and recent observations of turtles or marine 
mammals at the structure site.
    (i) Mitigation measures you will use to protect archaeological and 
sensitive biological features during removal activities.
    (j) A statement whether or not you will use divers to survey the 
area after removal to determine any effects on marine life.


Sec.  285.907  How will MMS process my decommissioning application?

    (a) Based upon your inclusion of all the information required by 
Sec.  285.906, MMS will compare your decommissioning application with 
the decommissioning general concept in your approved SAP, COP, or GAP 
to determine what technical and environmental reviews are needed.
    (b) You will likely have to revise your SAP, COP, or GAP, and MMS 
will begin the appropriate NEPA analysis and other regulatory reviews 
as required, if MMS determines that your decommissioning application 
would:
    (1) Result in a significant change in the impacts previously 
identified and evaluated in your SAP, COP, or GAP;
    (2) Require any additional Federal permits; or
    (3) Propose activities not previously identified and evaluated in 
your SAP, COP, or GAP.
    (c) During the review process we may request additional 
information, if we determine that the information provided is not 
sufficient to complete the review and approval process.
    (d) Upon completion of the technical and environmental reviews we 
may approve, approve with conditions, or disapprove your 
decommissioning application.
    (e) If MMS disapproves your decommissioning application, you must 
resubmit your application to address the concerns identified by MMS.


Sec.  285.908  What must I include in my decommissioning notice?

    (a) The decommissioning notice is distinct from your 
decommissioning application and may only be submitted following 
approval of your decommissioning application as described in Sec. Sec.  
285.905 through 285.907. You must submit a decommissioning notice at 
least 60 calendar days before you plan to begin decommissioning 
activities.
    (b) Your decommissioning notice must include:
    (1) A description of any changes to the approved removal methods 
and procedures in your approved decommissioning application, including 
changes to the types of vessels and equipment you will use; and
    (2) An updated decommissioning schedule.
    (c) We will review your decommissioning notice and may require you 
to resubmit a decommissioning application if MMS determines that your 
decommissioning activities would:
    (1) Result in a significant change in the impacts previously 
identified and evaluated;
    (2) Require any additional Federal permits; or
    (3) Propose activities not previously identified and evaluated.

Facility Removal


Sec.  285.909  When may MMS authorize facilities to remain in place 
following termination of a lease or grant?

    (a) In your decommissioning application, you may request that 
certain facilities authorized in your lease or grant remain in place 
for other activities authorized in this part, elsewhere in this 
subchapter, or by other applicable Federal laws.
    (b) The MMS may approve such requests on a case-by-case basis 
considering the following:
    (1) Potential impacts to the marine environment;
    (2) Competing uses of the OCS;
    (3) Impacts on marine safety and national defense;
    (4) Maintenance of adequate financial assurance; and
    (5) Other factors determined by the Director.
    (c) Except as provided in paragraph (d) of this section, if MMS 
authorizes facilities to remain in place, the former lessee or grantee 
under this part remains jointly and severally liable for 
decommissioning the facility unless satisfactory evidence is provided 
to MMS showing that another party has assumed that responsibility and 
has secured adequate financial assurances.
    (d) In your decommissioning application, you may request that 
certain facilities authorized in your lease or grant be converted to an 
artificial reef or otherwise toppled in place. The MMS will evaluate 
all such requests as provided in Sec.  250.1730 of this subchapter.


Sec.  285.910  What must I do when I remove my facility?

    (a) You must remove all facilities to a depth of 15 feet below the 
mudline, unless otherwise authorized by MMS.
    (b) Within 60 days after you remove a facility, you must verify to 
MMS that you have cleared the site.


Sec.  285.911  [Reserved]

Decommissioning Report


Sec.  285.912  After I remove a facility, cable, or pipeline, what 
information must I submit?

    Within 60 calendar days after you remove a facility, cable, or 
pipeline, you must submit a written report to MMS that includes the 
following:
    (a) A summary of the removal activities including the date they 
were completed;
    (b) A description of any mitigation measures you took; and
    (c) If you used explosives, a statement signed by your authorized 
representative that certifies that the types and amount of explosives 
you used in removing the facility were consistent with those in the 
approved decommissioning application.

Compliance With an Approved Decommissioning Application


Sec.  285.913  What happens if I fail to comply with my approved 
decommissioning application?

    If you fail to comply with your approved decommissioning plan or 
application:
    (a) The MMS may call for the forfeiture of your bond or other 
financial assurance;
    (b) You remain liable for removal or disposal costs and responsible 
for accidents or damages that might result from such failure;
    (c) The MMS may take enforcement action under Sec.  285.400.

Subpart J--Rights of Use and Easement for Energy and Marine-Related 
Activities Using Existing OCS Facilities

Regulated Activities


Sec.  285.1000  What activities does this subpart regulate?

    (a) This subpart provides the general provisions for authorizing 
and regulating activities that use (or propose to use) an existing OCS 
facility for energy or marine-related purposes, that are not otherwise 
authorized under any other part of this subchapter or any other 
applicable Federal statute. Activities authorized under any other part 
of this subchapter or under any other Federal law, that use (or propose 
to use) an existing OCS facility are not subject to this subpart.
    (b) The MMS will issue an alternate use right-of-use and easement 
(Alternate Use RUE) for activities authorized under this subpart.
    (c) At the discretion of the Director, an Alternate Use RUE may:
    (1) Permit alternate use activities to occur at an existing 
facility that is

[[Page 39502]]

currently in use under an approved OCS lease; or
    (2) Limit alternate use activities at the existing facility until 
after previously authorized activities at the facility have ceased and 
the OCS lease terminates.


Sec.  285.1001 through 285.1003  [Reserved]

Requesting an Alternate Use RUE


Sec.  285.1004  What must I do before I request an Alternate Use RUE?

    If you are not the owner of the existing facility on the OCS and 
the lessee of the area in which the facility is located, you must 
contact the lessee and owner of the facility and reach preliminary 
agreement as to the proposed activity for the use of the existing 
facility.


Sec.  285.1005  How do I request an Alternate Use RUE?

    To request an Alternate Use RUE, you must submit to MMS all of the 
following:
    (a) A summary of the proposed activities for the use of an existing 
OCS facility, including:
    (1) The type of activities that would involve the use of the 
existing OCS facility;
    (2) A description of the existing OCS facility, including a map 
providing its location on the lease block;
    (3) The names of the owners of the existing OCS facility, the 
operator, the lessee, and any owner of operating rights on the lease at 
which the facility is located;
    (4) A description of additional structures or equipment that will 
be required to be located on or in the vicinity of the existing OCS 
facility in connection with the proposed activities;
    (5) A statement indicating whether any of the proposed activities 
are intended to occur before existing activities on the OCS facility 
have ceased; and
    (6) A statement describing how existing activities at the OCS 
facility will be affected, if proposed activities are to occur at the 
same time as existing activities at the OCS facility.
    (b) A statement affirming that the proposed activities sought to be 
approved under this subpart are not otherwise authorized by other 
provisions in this subchapter or any other Federal law;
    (c) Evidence that you meet the requirements of Sec.  285.106 as 
required by Sec.  285.107.
    (d) Any request for an Alternate Use RUE must include the 
signatures of the applicant, the owner of the existing OCS facility, 
and the lessee of the area in which the existing facility is located.


Sec.  285.1006  How will MMS decide whether to issue an Alternate Use 
RUE?

    (a) We will consider requests for an Alternate Use RUE on a case-
by-case basis. In considering such requests, we will consult with 
relevant Federal agencies and evaluate whether the proposed activities 
involving the use of an existing OCS facility can be conducted in a 
manner that:
    (1) Ensures safety and minimizes adverse effects to the coastal and 
marine environments, including their physical, atmospheric, and 
biological components to the extent practicable;
    (2) Does not inhibit or restrain orderly development of OCS mineral 
or energy resources; and
    (3) Avoids serious harm or damage to, or waste of, any natural 
resource (including OCS mineral deposits and oil, gas, and sulphur 
resources in areas leased or not leased), any life (including fish and 
other aquatic life), or property (including sites, structures, or 
objects of historical or archaeological significance);
    (4) Is otherwise consistent with subsection 8(p) of the OCS Lands 
Act; and
    (5) MMS can effectively regulate.
    (b) Based on the evaluation that we perform under paragraph (a) of 
this section, the MMS may authorize, reject, or authorize with 
modifications or stipulations, the proposed activity.


Sec.  285.1007  What process will MMS use for competitively offering an 
Alternate Use RUE?

    (a) An Alternate Use RUE must be issued on a competitive basis 
unless MMS determines after public notice of the proposed Alternate Use 
RUE that there is no competitive interest.
    (b) We will issue a public notice in the Federal Register to 
determine if there is competitive interest in using the proposed 
facility for alternate use activities. The MMS will specify a time 
period for members of the public to express competitive interest.
    (c) If we receive indications of competitive interest within the 
published time frame, we will proceed with a competitive offering. As 
part of such competitive offering, each competing applicant must submit 
a description of the types of activities proposed for the existing 
facility, as well as satisfactory evidence that the competing applicant 
qualifies to hold a lease or grant on the OCS as required in Sec. Sec.  
285.106 and 285.107 by a date we specify. We may request additional 
information from competing applicants as necessary to adequately 
evaluate the competing proposals.
    (d) We will evaluate all competing proposals to determine whether:
    (1) The proposed activities are compatible with existing activities 
at the facility; and
    (2) We have the expertise and resources available to regulate the 
activities effectively.
    (e) We will evaluate all proposals under the requirements of NEPA, 
CZMA, and other applicable laws.
    (f) Following our evaluation, we will select one or more acceptable 
proposals for activities involving the alternate use of an existing OCS 
facility, notify the competing applicants, and submit each acceptable 
proposal to the lessee and owner of the existing OCS facility. If the 
lessee and owner of the facility agree to accept a proposal, we will 
proceed to issue an Alternate Use RUE. If the lessee and owner of the 
facility are unwilling to accept any of the proposals that we deem 
acceptable, we will not issue an Alternate Use RUE.


Sec.  285.1008  [Reserved]


Sec.  285.1009  [Reserved]

Alternate Use RUE Administration


Sec.  285.1010  How long may I conduct activities under an Alternate 
Use RUE?

    (a) We will establish on a case-by-case basis, and set forth in the 
Alternate Use RUE, the length of time for which you are authorized to 
conduct activities approved in your Alternate Use RUE instrument.
    (b) In establishing this term, MMS will consider the size and scale 
of the proposed alternate use activities, the type of alternate use 
activities, and any other relevant considerations.
    (c) The MMS may authorize renewal of Alternate Use RUEs at its 
discretion.


Sec.  285.1011  What payments are required for an Alternate Use RUE?

    We will establish rental or other payments for an Alternate Use RUE 
on a case-by-case basis as set forth in the Alternate Use RUE 
instrument, depending on our assessment of the following factors:
    (a) The effect on the original OCS Lands Act approved activity;
    (b) The size and scale of the proposed alternate use activities;
    (c) The income, if any, expected to be generated from the proposed 
alternate use activities; and
    (d) The type of alternate use activities.


Sec.  285.1012  What financial assurance is required for Alternate Use 
RUE?

    (a) The holder of an Alternate Use RUE will be required to secure 
financial assurances in an amount determined by MMS that is sufficient 
to cover all obligations, under the Alternate Use RUE, including 
decommissioning

[[Page 39503]]

obligations, and must retain such financial assurance amounts until all 
obligations have been fulfilled as determined by MMS.
    (b) We may revise financial assurance amounts as necessary to 
ensure that there is sufficient financial assurance to secure all 
obligations under the Alternate Use RUE.
    (c) We may reduce the amount of the financial assurance that you 
must retain if it is not necessary to cover existing obligations under 
the Alternate Use RUE.


Sec.  285.1013  Is an Alternate Use RUE assignable?

    (a) The MMS may authorize assignment of an Alternate Use RUE.
    (b) To request assignment of an Alternate Use RUE, you must submit 
a written request for assignment that includes the following 
information:
    (1) The MMS-assigned Alternate Use RUE number;
    (2) The names of both the assignor and the assignee, if applicable;
    (3) The names and telephone numbers of the contacts for both the 
assignor and the assignee;
    (4) The names, titles, and signatures of the authorizing officials 
for both the assignor and the assignee;
    (5) A statement affirming that the owner of the existing OCS 
facility and lessee of the lease in which the facility is located 
approve of the proposed assignment and assignee;
    (6) A statement that the assignee agrees to comply with and to be 
bound by the terms and conditions of the Alternate Use RUE;
    (7) Evidence required by Sec.  285.107 that the assignee satisfies 
the requirements of Sec.  285.106; and
    (8) A statement on how the assignee will comply with the financial 
assurance requirements as set forth in the Alternate Use RUE.
    (c) The assignment takes effect on the date we approve your 
request.
    (d) The assignor is liable for all obligations that accrue under an 
Alternate Use RUE before the date we approve your assignment request. 
An assignment approval by MMS does not relieve the assignor of 
liability for accrued obligations that the assignee, or a subsequent 
assignee fail to perform.
    (e) The assignee and each subsequent assignee are liable for all 
obligations that accrue under an Alternate Use RUE after the date we 
approve the assignment request.


Sec.  285.1014  When will MMS suspend an Alternate Use RUE?

    (a) The MMS may suspend an Alternate Use RUE if:
    (1) Necessary to comply with judicial decrees;
    (2) Continued activities pursuant to the Alternate Use RUE pose an 
imminent threat of serious or irreparable harm or damage to natural 
resources, life (including human and wildlife), property, or the 
marine, coastal, or human environment; or to sites, structures, or 
objects of historical or archaeological significance;
    (3) The suspension is necessary for reasons of national security or 
defense; or
    (4) We have suspended or temporarily prohibited operation of the 
facility that is subject to the Alternate Use RUE and have determined 
that continued activities under the Alternate Use RUE are unsafe or 
cause undue interference with the lessee's operation of the existing 
facility.
    (b) A suspension will extend the term of your Alternate Use RUE 
grant for the period of the suspension.


Sec.  285.1015  How do I relinquish an Alternate use RUE?

    (a) You may voluntarily surrender an Alternate Use RUE by 
submitting a written request to us that includes the following:
    (1) The company name and the physical address of its headquarters;
    (2) A contact official within the company, including his or her 
telephone and fax numbers and e-mail address;
    (3) The reason you are requesting relinquishment of the Alternate 
Use RUE;
    (4) The MMS-assigned Alternate Use RUE number;
    (5) The name of the associated OCS facility, its owner and the 
lessee for the lease in which the OCS facility is located;
    (6) The name, title, and signature of your authorizing official 
(which must match exactly the name, title, and signature in the MMS 
qualification records); and
    (7) A statement that you will adhere to the decommissioning 
requirements in the Alternate Use RUE.
    (b) We will not approve your relinquishment request until you have 
paid all outstanding rentals (or other payments) and fines.
    (c) The relinquishment takes effect on the date we approve your 
request.


Sec.  285.1016  When will an Alternate Use RUE be cancelled?

    The Secretary may cancel an Alternate Use RUE if:
    (a) You no longer qualify to hold an Alternate Use RUE;
    (b) You fail to provide any additional security required by MMS, 
replace or provide additional coverage for a de-valued bond, or replace 
a lapsed or forfeited bond within the prescribed time period;
    (c) Continued activity under the Alternate Use RUE is likely to 
cause serious harm or damage to natural resources, life (including 
human and wildlife), property, or the marine, coastal, or human 
environment; or to sites, structures, or objects of historical or 
archaeological significance;
    (d) Continued activity under the Alternate Use RUE is determined to 
be adversely impacting ongoing lease activities on the existing OCS 
facility;
    (e) You fail to comply with any of the terms and conditions of your 
approved Alternate Use RUE or your approved plan; or
    (f) You otherwise fail to comply with applicable laws or 
regulations.


Sec.  285.1017  [Reserved]

Decommissioning an Alternate Use RUE


Sec.  285.1018  Who is responsible for decommissioning an OCS facility 
subject to an Alternate Use RUE?

    (a) The holder of an Alternate Use RUE is responsible for all 
decommissioning obligations that accrue following the issuance of the 
Alternate Use RUE and which pertain to the Alternate Use RUE.
    (b) The lessee under the lease originally issued under this 
subchapter will remain responsible for decommissioning obligations that 
accrued before issuance of the Alternate Use RUE, as well as for 
decommissioning obligations that accrue following issuance of the 
Alternate Use RUE to the extent associated with continued activities 
authorized under other parts of this subchapter.


Sec.  285.1019  What are the decommissioning requirements for an 
Alternate Use RUE?

    (a) Decommissioning requirements will be determined by MMS on a 
case-by-case basis, and will be included as terms of each Alternate Use 
RUE.
    (b) Decommissioning activities must be completed within one year of 
termination of the Alternate Use RUE.
    (c) If you fail to satisfy all decommissioning requirements within 
the prescribed time period, we will call for the forfeiture of your 
bond or other financial guarantee, and you will remain liable for all 
accidents or damages that might result from such failure.

PART 290--APPEAL PROCEDURES

    7. Revise the authority citation for part 290 to read as follows:


[[Page 39504]]


    Authority: 5 U.S.C. 301 et seq.; 43 U.S.C. 1331

    8. Revise the last sentence in Sec.  290.2 to read as follows:


Sec.  290.2  Who may appeal?

    * * * A request for reconsideration of an MMS decision concerning a 
lease bid, authorized in 30 CFR 256.47(e)(3), 281.21(a)(1), or 285.118, 
is not subject to the procedures found in this part.

 [FR Doc. E8-14911 Filed 7-8-08; 8:45 am]

BILLING CODE 4310-MR-P