Section 585.527 - [Effective 7/15/2024] May I demonstrate financial strength and reliability to meet the financial assurance requirement for lease or grant activities?BOEM may allow you to use your financial strength and reliability to meet financial assurance requirements if:
(a) You have an investment grade issuer credit rating. If any Securities and Exchange Commission (SEC)-recognized NRSRO provides a credit rating that differs from any other SEC-recognized NRSRO credit rating, BOEM will apply the highest rating for the purposes of determining your financial assurance requirements.(b) You have a proxy credit rating determined by BOEM, which must be based on audited financial information for the most recent fiscal year (which must include an income statement, balance sheet, statement of cash flows, and the auditor's certificate). (1) The audited financial information for your most recent fiscal year must cover a continuous twelve-month period within the twenty-four-month period prior to the lessee's receipt of the determination that you must provide supplemental financial assurance.(2) In determining your proxy credit rating, BOEM may include the value of the offshore decommissioning liabilities associated with any lease(s) or grants in which you have an ownership interest. Upon BOEM's request, you must provide the information that BOEM determines is necessary to properly evaluate your offshore decommissioning liabilities, including joint ownership interests and liabilities associated with your OCS leases and grants.(c) Your co-lessee or co-grant-holder has an issuer credit rating or a proxy credit rating that meets the criteria set forth in paragraph (a) of this section; however, BOEM may require you to provide financial assurance for decommissioning obligations for which such co-lessee or co-grant-holder is not liable.(d) You have a contract with a counterparty that projects net income will exceed three times the estimated decommissioning expenses associated with the facilities that will generate that income.(e) If we approve your request to use your financial strength and reliability to meet your financial assurance requirements, you must submit annual updates.(f) If the annual updates do not continue to demonstrate financial strength and reliability or BOEM has reason to believe that you are unable to meet the requirements of this section, after notice and opportunity for a hearing, BOEM will terminate your ability to use financial strength and reliability for financial assurance and require you to provide another type of financial assurance. You must provide this new financial assurance instrument within 90 days after we terminate your use of financial strength and reliability.88 FR 6430, 1/31/2023; 89 FR 42740, 7/15/2024