In response to requests from the oil and natural gas industry, the federal Bureau of Safety and Environmental Enforcement (“BSEE”) recently issued a Notice to Lessees and Operators and Pipeline Right-of-Way (“ROW”) Holders (the “NTL”) clarifying the appropriate procedures for obtaining a pipeline ROW grant, assigning a grant, and identifying an operator to act on behalf of all pipeline grant ROW holders. Notably, the BSEE broadened its position with respect to assignment of ROW grants, determining that under its existing regulatory authority, the bureau will now consider requests to assign pipeline ROW grants to multiple pipeline ROW grant holders. The effective date of this NTL is August 18, 2017.
Among the BSEE’s regulatory duties is the obligation to consider and, as appropriate, approve requested assignments of pipeline ROW grants. Regulations set forth in 30 CFR § 250.1018 generally allow for the assignment of pipeline ROWs. Through the NTL process, the BSEE has elected to provide greater detail regarding the information that must be included in a ROW grant holder’s request for assignment and/or in the identification of a ROW pipeline operator. In the past, the BSEE allowed for only a single pipeline ROW grant holder for each pipeline ROW grant. However, in response to industry requests, the BSEE will now accept requests to assign pipeline ROW grants to multiple pipeline ROW grant holders. In agreeing to accept such requests, the BSEE acknowledges that Section 250.1018 provides sufficient flexibility to allow such assignments to multiple parties.
Consequently, the BSEE NTL provides specific guidance clarifying the documentation and associated forms that are required in connection with seeking pipeline ROW grants, including:
1. Requesting the establishment of a new pipeline grant:
- An application for a new pipeline ROW grant should continue to be submitted by a single pipeline ROW grant applicant, pursuant to 30 CFR § 250.1015.
2. Requesting assignment of existing or future pipeline ROW grants:
- A pipeline ROW grant holder who desires to assign an existing or any future grant (so long as such grant was previously approved by BSEE) to one or more proposed grant holders, may submit an application pursuant to 30 CFR § 1018 through the use of Form BSEE-0149.
- When there are to be multiple grant holders (or when a single grant holder will not be the operator), the pipeline ROW grant holder must also submit documentation identifying a ROW pipeline operator to act on behalf of all pipeline ROW grant holders pursuant to 30 CFR § 250.1000(c)(2). All pipeline ROW grant holders and the ROW pipeline operator identified in the documentation must sign.
- The grant holders must notify the BSEE Regional Supervisor of any change in a designated ROW pipeline operator by submitting documentation signed by all pipeline ROW grant holders and by the new ROW pipeline operator.
- Documentation identifying a ROW pipeline operator must specify (A) that the operator has authority to act on behalf of all pipeline ROW grant holders to fulfill the grant holders’ obligations under the Outer Continental Shelf Lands Act (“OCSLA”), in compliance with the terms and conditions of the ROW grant, and any applicable laws and regulations (with the NTL providing sample language to accomplish this task); (B) that the BSEE Regional Supervisor (or other authorized BSEE Regional Officer) may provide the operator with written or oral instructions in securing compliance with the applicant ROW grant, laws, and regulations; and (C) the proper identifying information relating to the applicable pipeline ROW grant including, for example, the ROW number and legal description.
BSEE’s issuance of this NTL does not change the liability scheme established under the OCSLA and applicable BSEE regulations. For example, all of the pipeline ROW grant holders remain responsible for compliance with the terms and conditions of the ROW grant and applicable laws and regulations, and, in the event of a default by the ROW pipeline operator, the grant holders must ensure full and prompt compliance with applicable legal requirements. Additionally, pursuant to 30 CFR § 250.1701(b), the pipeline ROW grant holders remain jointly and severally liable for meeting the decommissioning obligations for facilities on their ROW as the obligations accrue and until each obligation is satisfied.
Moreover, the qualification status of the proposed pipeline ROW grant holder assignees remains unchanged by the issuance of this NTL. In accordance with 30 CFR § 250.1018(b), each proposed pipeline ROW assignee must meet the same qualifications for grant holder status as is required of a single pipeline ROW grant applicant under 30 CFR § 250.1015(b). To clarify the legal interest being assigned to each assignee, the assignment documentation should identify the intended post-assignment interest held by each assignee. Finally, any approval by BSEE of a new pipeline ROW grant application or a pipeline ROW grant assignment shall be conditioned upon the following: (A) proper signatures on all documentation consistent with the federal Bureau of Ocean Energy Management qualification files; (B) appropriate financial assurance for lease obligations including decommissioning liabilities; and (C) payment of the appropriate service fee pursuant to 30 CFR § 250.125.