MMS MOVES TO HIKE OCS BOND REQUIREMENT

The U.S. Minerals Management Service has proposed a rule to increase the amount of surety bond coverage it requires for operations on the Outer Continental Shelf. MMS termed the current coverage, established about 20 years ago at $50,000/lease or $300,000/area, "clearly insufficient" to cover the costs of removing platforms if companies fail to do so in accordance with terms of their leases. The agency will accept until Mar. 26 public comments on its proposal to add two tiers to OCS bonding

Jan. 29, 1990

The U.S. Minerals Management Service has proposed a rule to increase the amount of surety bond coverage it requires for operations on the Outer Continental Shelf.

MMS termed the current coverage, established about 20 years ago at $50,000/lease or $300,000/area, "clearly insufficient" to cover the costs of removing platforms if companies fail to do so in accordance with terms of their leases.

The agency will accept until Mar. 26 public comments on its proposal to add two tiers to OCS bonding provisions for lessees, operators, and assignees.

The first tier would require a $200,000 bond for an individual lease or $1 million for area-wide coverage before MMS review and approval of an exploration plan.

The second tier would require a $500,000 bond for an individual lease or $3 million for area-wide coverage before review and approval of a development and production plan or a development operations coordination document.