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Update on Financial Assurance NTL No. 2016-N01-BOEM
Published September 27, 2016

Implementation Timeline as of September 26, 2016

In reference to recent conversations with BOEM regarding the implementation timeline of the BOEM Financial Assurance NTL No. 2016-N01, Requiring Additional Security, effective September 12, 2016, please note comments below, including three (3) upcoming Letters from BOEM: Self-Insurance Letter, Proposal Letter, and Order Letter.

Implementation Timeline

1. September 12, 2016Self-Insurance Letter
BOEM did not meet its original deadline (September 12, 2016) to send Self-Insurance Letters to OCS companies, but is projecting to do so the week of September 26, 2016. If a Company has the ability to self-insure some portion or all of their obligations, the Self-Insurance Letters will be mailed to each Company including the determination amount.

1(a). Allocations – Companies are requested to submit to BOEM within 30 calendar days (to October 12, 2016*) self-insurance allocations for their properties. Also, Companies are to note whether the allocations will cover their co-owners in the respective properties. *Note: It is not clear if this date will be extended to address 30 calendar days from actual date of mailing of Self-Insurance Letters.

2.  October 12, 2016Proposal Letter
BOEM expects to begin sending out Proposal Letters to all Designated Operators, ROW Holders, and RUE Holders outlining the proposed amounts of additional financial security that will be required. Note:  BSEE has completed a Global Update of decommissioning costs, and the revised P&A liability numbers are on the BOEM website.

2(a). Disputes – Companies are requested to submit disputes in writing to BOEM within 30 calendar days (to November 14, 2016; slight extension past 30 days due to Veteran’s Day holiday) of the Proposal Letter if they do not agree with the proposed amounts of additional security, with supporting documentation of discrepancies.  

3. November 14, 2016Order Letter
If BOEM receives no response from a Company to a Proposal Letter, or they do not agree to full bonding, BOEM will begin sending out Order Letters to Designated Operators, ROW Holders and RUE Holders.

3(a). November 25, 2016Notice of Intent to Submit a Tailored Financial Plan
A Company has 10 calendar days from date of the Order Letter (to November 25, 2016) to provide BOEM with written notification of Intent to Submit a Tailored Financial Plan. A Company may include any additional information, including a spreadsheet listing each property and how the Company intends to satisfy the requested additional security.  

3(b). January 13, 2017Sole Liability Properties Covered
A Company has 60 calendar days from date of the Order Letter (to January 13, 2017) to provide additional security for Sole Liability Properties (properties for which there is no other current or prior owner who is liable). If Company does not self-insure, then they must provide Bonds or US treasury securities. Note: There is no phase-in for sole liability properties. Also, ROWs are considered sole liability properties.

3(c). March 14, 2017Tailored Plans for Financial Assurance Submitted
Company has 120 calendar days from date of the Order Letter (to March 14, 2017) to provide additional security for the remaining properties and/or submit a Tailored Plan for financial assurance.  Note: A phase-in is provided under a Tailored Plan.

4. September 11, 2017Tailored Plans Approval or Denial
BOEM to issue approval or denial of Tailored Plans by September 11, 2017; however, extensions may be granted to Companies actively working with BOEM to finalize Tailored Plans. Penalties may be issued to Companies not actively working with BOEM to finalize the Tailored Plans. 

The Regional Director may allow some variation to the phase-in schedule of Tailored Plans, but the NTL has the following timelines for providing security after plan approval:

  • Within 120 calendar days, provide at least 1/3 of the Additional Security
  • Within 240 calendar days, provide at least 2/3 of the Additional Security
  • Within 360 calendar days, provide the full amount of the Additional Security

If you have any questions or comments, or if we can be of further assistance, please contact Rand.Sterling@jccteam.com or Lance.Labiche@jccteam.com.

 

This Regulatory Alert was prepared by J. Connor Consulting, Inc. to advise our clients of impending deadlines and applicable regulatory requirements. No official agency policy is implied.