Oil and gas leasing regulations (43 CFR 3104) require, prior to commencement of surface disturbing activities related to drilling operations on a federal oil and gas lease, the operator on the ground shall be covered by a bond. A surety or personal bond may be posted by the lessee, sublessee (owner of operating rights) or operator.
Use of the June 1988 edition of Bond Form 3000-4, Oil and Gas or Geothermal Lease Bond is mandatory. Bond Form 3000-4 can be completed and applied, as shown below, to provide coverage for the operator on the ground. Any operator may conduct operations under its own bond by furnishing a statement that it is responsible under the terms and conditions of the lease for the operations conducted on the lease or portion of the lease and providing the bond number.
Contact your local BLM office about where to file your bonds.
Bonds for Individuals and Larger Operators
1. Individual Bond: This shall be in an amount of not less than $10,000 (more in some states) and provides coverage for one lease. An individual lease bond maintained by the lessee/sublessee may be conditioned by rider to cover operations conducted by an operator.
2. State, Nationwide or National Petroleum Reserve in Alaska Oil and Gas Bond: This may be filed in lieu of an individual lease bond. A statewide or nationwide bond can be used in the capacity of lessee, sublessee or operator. State and nationwide bonds accepted on bond forms in use prior to Form 3000-4 must be conditioned by rider to cover an operator where he holds no record title or operating rights interest in a lease.
A statewide bond shall be in an amount of not less than $25,000 (more in some states) and covers all leases and operations in one State. It must be filed in the BLM state office having jurisdiction over the affected lands. A nationwide bond shall be in an amount of not less than $150,000 and covers all leases or operations nationwide. It may be filed in any BLM state office.
3. Bond of Oil and Gas Unit Operator: This may be filed in lieu of individual lease bonds. The amount will be set by the authorized officer who approves Unit plans of development and supervises Unit Operations, such amount not to be less than that for a statewide bond. Bonds may be provided in the form of surety or personal bonds. All coverages are available through the use of the June 1988 edition of Form 3000-4, Oil and Gas or Geothermal Lease Bond. They must be filed in the proper BLM State Office.
Oil and Gas Bond Instruments
The surety for any Federal bond must be approved by the Department of Treasury as an acceptable surety. A list of acceptable sureties, Circular 570, can be obtained from: Bureau of the Fiscal Service of the Department of the Treasury.
The original copy of the surety bond must be filed in the proper BLM State Office on a form approved by the BLM along with a Power of Attorney for the person signing on the behalf of the surety.
The power of attorney to authorize use of the funds, in case of default, is incorporated within the terms of Form 3000-4. Form 3000-4 should be filed in the proper BLM office along with the amount required for the bond.
Personal bonds may be backed by a cashier's check, a certified check, negotiable Treasury security, or a certificate of deposit payable to the Department of the Interior. Certain requirements apply to each of these instruments. Please consult with your BLM office before executing one of these options.