§ 585.528. May I use a third-party guaranty to meet the financial assurance requirement for lease or grant activities?
455 words·~2 min read·
/us/cfr/t30/s§ 585.528·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
(a)You may use a third-party guaranty to secure all or part of the obligations for which financial assurance was demanded by BOEM if the guarantor:
(1)Meets the credit rating or proxy credit rating criterion set forth in § 585.527(a); and
(2)Submits an agreement containing each of the provisions in paragraph
(d)of this section.
(b)A third-party guarantor may limit its cumulative obligations to a fixed dollar amount as agreed to by BOEM at the time the third-party guaranty is provided.
(c)If, during the life of your third-party guaranty, your guarantor no longer meets the criterion referred to in paragraph (a)(1) of this section, you must:
(1)Notify BOEM within 72 hours of so learning; and
(2)Submit a surety bond or other financial assurance covering the obligations previously secured by the third-party guaranty.
(d)Your guarantor must submit an agreement executed by the guarantor and all parties bound by the agreement. All parties are bound jointly and severally, and the guarantor must meet the legal and financial qualifications set forth in §§ 585.107 and 585.108.
(1)When any party is a corporation, two corporate officers authorized to execute the guaranty agreement on behalf of the corporation must sign the agreement.
(2)When any party is a partnership, joint venture, or syndicate, the guaranty agreement must bind each party who has a beneficial interest in your guarantor and provide that, upon BOEM demand under your guaranty, each party is jointly and severally liable for compliance with all terms and conditions of your lease(s) or grant(s) covered by the agreement.
(3)When forfeiture of the guaranty is called for, the agreement must provide that your guarantor will either bring your lease(s) or grant(s) into compliance or provide, within 7 days, sufficient funds to permit BOEM to complete corrective action.
(4)The guaranty agreement must contain a confession of judgment, providing that, if BOEM determines that you or your operator is in default, the guarantor must not challenge the determination and must remedy the default.
(5)If your guarantor wants to terminate the period of liability, your guarantor must notify you and BOEM at least 90 days before the proposed termination date, obtain BOEM's approval for termination of all or a specified portion of the guarantee for liabilities arising after that date, and remain liable for all your work performed during the period the agreement is in effect.
(6)Each guaranty submitted pursuant to this section is deemed to contain all the terms described in paragraphs (d)(1) through
(5)of this section, even if they are not actually in the agreement.
(e)Before the termination of your guaranty, you must provide an acceptable replacement in the form of a bond or other security.
Connections1 cite this
Cited by 1 section
Citation graph
cites case law
§ 585.528
May I use a third-party guaranty to meet the financial assurance requirement for lease or grant activities?
Fed. Reg.×1
Cites 0Cited by 1 across 1 source