[Federal Register: March 26, 2008 (Volume 73, Number 59)]
[Rules and Regulations]
[Page 15885-15898]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26mr08-16]
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DEPARTMENT OF THE INTERIOR
Minerals Management Service
30 CFR Parts 203, 206, 210, 216, 218, and 227
[Docket No. MMS-2008-MRM-0021]
RIN 1010-AD20
Reporting Amendments
AGENCY: Minerals Management Service (MMS), Interior.
ACTION: Final rule.
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SUMMARY: The MMS is amending existing regulations for reporting
production and royalties on oil, gas, coal and other solid minerals,
and geothermal resources produced from Federal and Indian leases in
order to align the regulations with current MMS business practices.
These amendments reflect changes that were implemented as a result of
major reengineering of MMS financial systems and other legal
requirements.
DATES: Effective Date: April 25, 2008.
[[Page 15886]]
FOR FURTHER INFORMATION CONTACT: Hyla Hurst, Regulatory Specialist,
Minerals Management Service, Minerals Revenue Management, P.O. Box
25165, MS 302B2, Denver, Colorado 80225; telephone (303) 231-3495; FAX
(303) 231-3781; e-mail Hyla.Hurst@mms.gov. The principal authors of
this rule are Lorraine Corona, Louise Williams, Sarah Inderbitzin,
Richard Adamski, and Paul Knueven of Minerals Revenue Management, MMS,
Department of the Interior.
SUPPLEMENTARY INFORMATION:
I. Background
The MMS implemented integrated reengineered systems on November 1,
2001. This process included a major reengineering of the Minerals
Revenue Management (MRM) financial system. The new systems are the core
systems support for MMS implementation of new royalty management
business processes for the 21st century. The new systems were developed
around new business processes and have been designed to be more
effective and efficient. The reengineering, as well as other changes
required by law, resulted in changes to, or elimination of, some forms
and requirements. This final rule eliminates references to forms that
are no longer used. However, elimination of these forms does not
eliminate the requirements for record retention and making records
available for audits and reviews of royalty payments.
This final rule amends the Code of Federal Regulations (CFR) in
order to (1) align MMS regulations with the updated Form MMS-2014,
Report of Sales and Royalty Remittance, which is approved by the Office
of Management and Budget (OMB) under OMB Control Number 1010-0140; (2)
eliminate references in the regulations to report forms, designations,
systems, and codes that are no longer used; (3) update references to
OMB-approved information collections; (4) revise the due date for
production reports submitted electronically; (5) clarify the
requirement for production reporting of inventory on leases and units
until all production has ceased and all inventory has been disposed of;
(6) eliminate references to Federal oil and gas late and incorrect
(erroneous) reporting assessments and failure to report; (7) eliminate
references to some electronic reporting options that no longer exist as
a result of reengineering; and (8) clarify the reporting requirement
for taxpayer identification numbers.
In the proposed rule published on July 7, 2006 (71 FR 38545), we
overlooked a number of references in 30 CFR part 206 to the term
selling arrangement, which was eliminated under revised reporting
practices. As explained in the proposed rule, before October 1, 2001,
MMS required payors to report at the selling arrangement level on Form
MMS-2014, which entailed reporting one line for each sale under each
type of contract. Effective October 1, 2001, the revised Form MMS-2014
allows payors to ``roll up'' all sales (including pooled sales) under a
contract type--referred to as a ``sales type code''--to one line per
lease.
For transportation allowances, the existing rules prescribe a limit
of 50 percent of the sales value on the basis of a ``selling
arrangement,'' which is currently defined as the individual contractual
arrangements under which production is sold or disposed of. Under the
new regulations, a transportation allowance limit would apply to the
collective sales of a specific sales type such as all of the lessee's
arm's-length sales from a lease. For Indian leases in an index zone,
this change will have no effect on gas valued based upon the index-
based methodology in 30 CFR 206.172. We have not received any requests
to exceed the 50-percent allowance limit for Indian leases, resulting
in no effect on Indian lease revenue. We have, however, received
requests to exceed the 50-percent allowance limit for Federal leases.
However, the impact to Federal revenue due to this reporting change is
insignificant.
Appropriate changes to the regulatory text are included in this
final rule. In addition, several technical updates are made in parts
203 and 227 to align with the revised 30 CFR citations.
II. Comments on the Proposed Rule
The MMS received comments from one respondent on the proposed rule.
The respondent represents a tribal organization.
Comment 1: The respondent states that the proposed rule applies the
Federal Oil and Gas Royalty Simplification and Fairness Act of 1996
(RSFA) to Indian lands by applying the reengineered systems to Indian
lease reporting in order to increase effectiveness and efficiency.
MMS Response: The MMS does not agree. The MMS is not applying RSFA
to Indian lands. Rather, MMS is applying several laws dating back to
the early part of the 20th century that are designed to ensure that all
Federal agencies conduct operations in the most effective, efficient,
and economical manner possible. The Budget and Accounting Act of 1921,
31 U.S.C. 702, established the Government Accountability Office (then
the General Accounting Office) (GAO) as an independent agency, with its
current mission to help improve the performance and ensure the
accountability of the Federal Government. The GAO accomplishes its
mission by providing reliable information and informed analysis to
Congress, Federal agencies, and the public. Furthermore, GAO recommends
improvements through financial and other performance audits to
determine whether public funds are being spent efficiently and
effectively. The Inspector General Act of 1978, Public Law 95-452,
established the Department of the Interior Office of Inspector General
to provide leadership and coordination and to recommend policies for
activities designed to promote economy, efficiency, and effectiveness.
The goal of the Government Performance and Results Act of 1993, Public
Law 103-62, is to improve public confidence in Federal agency
performance by requiring that federally funded agencies develop and
implement an accountability system based on performance measurement,
including setting goals and objectives and measuring progress toward
achieving them. The Paperwork Reduction Act of 1995 (PRA) requires
Federal agencies to reduce, minimize, and control burdens and maximize
the public benefit of information collections. Therefore, our
information collections are independent of RSFA mandates. The MMS
operates under all these mandates to ensure that our business practices
are efficient, effective, and economical.
Comment 2: The respondent disagrees with the proposed changes to
improve reporting requirements, saying they are unjustified when
applied to Indian lease reporting. The respondent states that the
proposed elimination of forms and the reduced information available to
the Government appear to be a retrenchment to the ``we'll catch it on
the audit'' mentality. The respondent further states that the
reengineering processes described in the proposed rulemaking might
serve the purposes of increased automation and efficiency contemplated
or mandated by RSFA, but those requirements to simplify royalty
reporting ``emphatically do not apply to Indian lands.''
MMS Response: The MMS does not agree. This final rule does not
change current MMS reporting requirements, but simply aligns the
regulations with our current business processes. Furthermore, as stated
above, the MMS has a responsibility to ensure that all its operations
are efficient, effective, and economical, which predates and is
[[Page 15887]]
independent of RSFA mandates. Furthermore, the reengineered reporting
systems were developed with the full involvement of all MMS
stakeholders, including the respondent. In 1995, the Department of the
Interior established a Royalty Policy Committee (RPC) under the
Minerals Management Advisory Board. The purpose of RPC is to provide
advice on the Department's management of Federal and Indian mineral
leases, revenues, and other minerals-related policies. The RPC included
representatives from states, Indian tribes and allottee organizations,
minerals industry associations, the general public, and Federal
agencies. At its first meeting in September 1995, the RPC established
eight subcommittees, including the Reporting and Production Accounting
Subcommittee. This Subcommittee (whose membership included four Indian
representatives) was established to focus on improving and streamlining
reporting for production and royalties on Federal and Indian mineral
leases. The Subcommittee published a report in July 1996 that was
approved by RPC during the June 4, 1996, meeting. The record of that
RPC meeting contains no objections to the Subcommittee's proposed
improved processing of Indian lease reporting from either the
respondent or any other Indian representative. Reengineered reporting
was discussed at subsequent RPC meetings and other public meetings as
MMS continued to accept stakeholder input.
The MMS does not agree with the respondent's statement that this
rulemaking is a retrenchment to a ``we'll catch it on the audit''
mentality. The proposed rule addressed reporting, not compliance. The
changes to MMS reporting and financial systems as a result of
reengineering required a comprehensive review of our information
collections to eliminate duplication and to ensure that all remaining
collections are efficient, effective, and economical while fully
supporting compliance activities. The elimination of some forms did not
eliminate the requirement for the information, but consolidated the
information on fewer forms. These changes resulted in a reduction of
44,501 industry reporting burden hours and are in compliance with the
PRA. Using a rate of $50 per hour, the reengineered reporting saved
industry $2.2 million per year (44,501 burden hours x $50 =
$2,225,050), without compromising MMS compliance and audit activities.
The elimination of the Report of Monthly Operations (Form MMS-3160)
and reliance on the Oil and Gas Operations Report (Form MMS-4054)
enables an integrated, computerized comparison of production and
royalty reports to verify that proper royalties are received for the
minerals produced. This approach is more effective and efficient than a
manually intensive comparison. The reengineering processes served the
purposes of increased automation and efficiency as mandated by law. No
MMS operation is exempt from those requirements.
III. Procedural Matters
1. Summary Cost and Royalty Impact Data
This rule does not impose any additional costs/savings or royalty
impacts on any of the potentially affected groups. There will be no
change in royalties or administrative burdens to industry, state and
local governments, Indian tribes, individual Indian mineral owners, or
the Federal Government.
This rule amends existing MMS regulations to align the CFR with
current MMS business practices, which were implemented as a result of
major reengineering of MMS financial systems. The net impact of
reengineering resulted in an overall estimated annual savings in
reporting costs (on a continuing basis) of $2,225,050 (44,501-burden-
hour reduction x $50). However, the reporting changes and reduced costs
of reengineering have already been incorporated into 13 information
collection requests (ICR), which have been published in the Federal
Register and approved by OMB. The effects of the seven eliminated
report forms were either incorporated into these ICRs or were
associated with insignificant burden hour reduction. For a current
listing of OMB-approved ICRs, see the chart in 30 CFR 210.10.
Under this rule, MMS no longer accepts social security numbers
(SSNs) to meet the requirement to report using a taxpayer
identification number (TIN). To protect an individual's privacy, MMS
requires the use of an Employer Identification Number (EIN) as a TIN
for reporting purposes. The one-time cost to obtain an EIN from the
Internal Revenue Service (IRS) is covered under an IRS information
collection request (OMB Control Number 1545-0003, expires August 31,
2008).
2. Regulatory Planning and Review (E.O. 12866)
This document is not a significant rule, and OMB has not reviewed
this rule under Executive Order 12866.
1. This rule will not have an effect of $100 million or more on the
economy. It will not adversely affect in a material way the economy,
productivity, competition, jobs, the environment, public health or
safety, or state, local, or tribal governments or communities. This
rule amends the CFR to align the regulations with current MMS business
processes. It does not change current MMS reporting requirements in any
material way.
2. This rule will not create a serious inconsistency or otherwise
interfere with an action taken or planned by another agency. This rule
amends the CFR to align the regulations with current MMS business
processes. It does not change current MMS reporting requirements in any
material way.
3. This rule does not alter the budgetary effects of entitlements,
grants, user fees, or loan programs or the rights or obligations of
their recipients. This rule amends the CFR to align the regulations
with current MMS business processes. It does not change current MMS
reporting requirements in any material way.
4. This rule does not raise novel legal or policy issues. This rule
amends the CFR to align the regulations with current MMS business
processes. It does not change current MMS reporting requirements in any
material way.
3. Regulatory Flexibility Act
The Department of the Interior certifies that this document will
not have a significant economic effect on a substantial number of small
entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.).
This rule amends the CFR to align the regulations with current MMS
business processes. It does not change current MMS reporting
requirements in any material way.
4. Small Business Regulatory Enforcement Fairness Act (SBREFA)
This rule is not a major rule under 5 U.S.C. 804(2), the Small
Business Regulatory Enforcement Fairness Act. This rule:
1. Does not have an annual effect on the economy of $100 million or
more. This rule amends the CFR to align the regulations with current
MMS business processes. It does not change current MMS reporting
requirements in any material way. Small businesses were among those in
industry affected by reengineering our business processes. New
reporting requirements were covered in the appropriate ICRs, published
for public comment in the Federal Register, and approved by OMB. The
effects on small businesses included a reduction in reporting costs, as
shown in the ``Summary Cost and Royalty Impact Data'' above.
[[Page 15888]]
2. Will not cause a major increase in costs or prices for
consumers, individual industries, Federal, state, or local government
agencies, or geographic regions. This rule amends the CFR to align the
regulations with current MMS business processes. It does not change
current MMS reporting requirements in any material way.
3. Does not have significant adverse effects on competition,
employment, investment, productivity, innovation, or the ability of
U.S.-based enterprises to compete with foreign-based enterprises. This
rule amends the CFR to align the regulations with current MMS business
processes. It does not change current MMS reporting requirements in any
material way.
5. Unfunded Mandates Reform Act
This rule does not impose an unfunded mandate on state, local, or
tribal governments or the private sector of more than $100 million per
year. The rule does not have a significant or unique effect on state,
local, or tribal governments or the private sector. This rule amends
the CFR to align the regulations with current MMS business processes.
It does not change current MMS reporting requirements in any material
way. A statement containing the information required by the Unfunded
Mandates Reform Act (2 U.S.C. 1531 et seq.) is not required.
6. Takings (E.O. 12630)
Under the criteria in Executive Order 12630, this rule does not
have significant takings implications. This rule amends the CFR to
align the regulations with current MMS business processes. It does not
change current MMS reporting requirements in any material way. A
takings implication assessment is not required.
7. Federalism (E.O. 13132)
Under the criteria in Executive Order 13132, this rule does not
have sufficient federalism implications to warrant the preparation of a
Federalism Assessment. This rule amends the CFR to align the
regulations with current MMS business processes. It does not change
current MMS reporting requirements in any material way. A Federalism
Assessment is not required.
8. Civil Justice Reform (E.O. 12988)
This rule complies with the requirements of Executive Order 12988.
Specifically, this rule:
1. Meets the criteria of section 3(a) requiring that all
regulations be reviewed to eliminate errors and ambiguity and be
written to minimize litigation; and
2. Meets the criteria of section 3(b)(2) requiring that all
regulations be written in clear language and contain clear legal
standards.
9. Consultation with Indian Tribes (E.O. 13175)
Under the criteria in Executive Order 13175, we have evaluated this
rule and determined that it has no potential effects on federally
recognized Indian tribes. This rule amends the CFR to align the
regulations with current MMS business processes. It does not change
current MMS reporting requirements in any material way. This rule does
not have tribal implications that impose substantial direct compliance
costs on Indian tribal governments. This rule also has no significant
impact on individual Indian mineral owners.
10. Paperwork Reduction Act
This rule does not contain new information collection requirements
or significantly change existing information collections; therefore, a
submission to OMB is not required. There was no change in the
information collection from the proposed to the final rule. The MMS
received one comment on the proposed rule concerning the reporting
requirements for Indian lands; however, it did not pertain to the
currently approved burden hours. The MMS response is explained in
Section II of the Preamble.
The 13 information collections referenced in this rule and listed
in the chart below are currently approved by OMB and include a total
burden of 273,101 hours.
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OMB control number, short Form or information Annual burden
title, and expiration date collected hours
------------------------------------------------------------------------
1010-0073, 30 CFR Part 220, Net No form for the 1,583
Profit Share Payment-- following collection:
September 30, 2008. Net profit
share payment
information..
1010-0087, 30 CFR Parts 227, No forms for the 6,194
228, and 229, Delegation to following collections:.
States and Cooperative Written
Activities with States and delegation proposal to
Indian Tribes--August 31, 2009. perform auditing and
investigative
activities..
Request for
cooperative agreement
and subsequent
requirements..
1010-0090, 30 CFR Part 216, Form MMS-4377, Stripper 180
Stripper Royalty Rate Royalty Rate Reduction
Reduction Notification-- Notification.
December 31, 2010.
1010-0103, 30 CFR Parts 202 and Form MMS-4109, Gas 1,276
206, Indian Oil and Gas Processing Allowance
Valuation--June 30, 2009. Summary Report.
Form MMS-4295, Gas
Transportation
Allowance Report..
Form MMS-4110, Oil
Transportation
Allowance Report..
Form MMS-4411, Safety
Net Report.
Form MMS-4410,
Accounting for
Comparison [Dual
Accounting].
Form MMS-4393, Request
to Exceed Regulatory
Allowance Limitation
\1\.
1010-0107, 30 CFR Part 218, Form MMS-4425, 1,220
Collection of Monies Due the Designation Form for
Federal Government--August 31, Royalty Payment
2008. Responsibility.
No forms for the
following collections:
Cross-lease
netting documentation..
Indian
recoupment approval..
1010-0119, 30 CFR Part 208, Form MMS-4070, 2,284
Royalty in Kind (RIK) Oil and Application for the
Gas--February 28, 2009. Purchase of Royalty
Oil.
Form MMS-4071, Letter
of Credit (RIK)..
Form MMS-4072, Royalty-
in-Kind Contract
Surety Bond..
No form for the
following collection:
Royalty oil
sales to eligible
refiners..
[[Page 15889]]
1010-0120, 30 CFR Parts 202, Form MMS 4430, Solid 3,670
206, 210, 212, 217, and 218, Minerals Production
Solid Minerals and Geothermal and Royalty Report.
Collections--December 31, 2010. Form 4292, Coal Washing
Allowance Report..
Form 4293, Coal
Transportation
Allowance Report..
No forms for the
following collections:
Facility data-
solid minerals..
Sales
contracts-solid
minerals..
Sales
summaries-solid
minerals..
1010-0122, 30 CFR Part 243, Form MMS-4435, 300
Suspensions Pending Appeal and Administrative Appeal
Bonding--July 31, 2008. Bond.
Form MMS-4436, Letter
of Credit..
Form MMS-4437,
Assignment of
Certificate of
Deposit..
No forms for the
following collections:
Self bonding..
U.S. Treasury
securities..
1010-0136, 30 CFR Parts 202 and Form MMS-4393, Request 20,504
206, Federal Oil and Gas to Exceed Regulatory
Valuation--June 30, 2009. Allowance Limitation
\1\..
No form for the
following collection:
Federal oil
valuation support
information..
1010-0139, 30 CFR Parts 210 and Form MMS-4054, Oil and \2\ 76,631
216, Production Accounting-- Gas Operations Report.
October 31, 2009. Form MMS-4058 (Parts A,
B, and C), Production
Allocation Schedule
Report..
1010-0140, 30 CFR Part 210, Form MMS-2014, Report 158,821
Forms and Reports--November of Sales and Royalty
30, 2009. Remittance.
1010-0155, 30 CFR Part 204, No form for the 406
Alternatives for Marginal following collection:.
Properties--June 30, 2009. Notification
and relief request for
accounting and
auditing relief..
1010-0162, CFO Act of 1992, No form for the 32
Accounts Receivable following collection:.
Confirmations--March 31, 2009. Accounts
receivable
confirmations..
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Total Burden Hours......... ....................... 273,101
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\1\ Form MMS-4393 is used for both Federal and Indian oil and gas
leases. The form resides with ICR 1010-0136, but the burden hours for
Indian leases are included in ICR 1010-0103.
\2\ Nonhour cost: $600,000.
The Paperwork Reduction Act provides that an agency may not conduct
or sponsor, and a person is not required to respond to, a collection of
information unless it displays a currently valid OMB Control Number.
11. National Environmental Policy Act
This rule does not constitute a major Federal action significantly
affecting the quality of the human environment. A detailed statement
under the National Environmental Policy Act of 1969 is not required.
This rule deals with financial matters and has no direct effect on MMS
decisions on environmental activities. Royalties and audits are
considered to be routine financial transactions that are subject to
categorical exclusion from the requirement to prepare a detailed
statement or environmental assessment.
12. Data Quality Act
In developing this rule, we did not conduct or use a study,
experiment, or survey requiring peer review under the Data Quality Act
(Pub. L. 106-554).
13. Effects on the Energy Supply (E.O. 13211)
This rule is not a significant energy action under the definition
in Executive Order 13211. A Statement of Energy Effects is not
required.
14. Government-to-Government Relationship With Tribes
In accordance with the President's memorandum of April 29, 1994,
``Government-to-Government Relations with Native American Tribal
Governments'' (59 FR 22951) and 512 DM 2, we have evaluated potential
effects on federally recognized Indian tribes, and found no significant
impacts. We also extended our review to individual Indian mineral
owners and determined no significant impact on them.
List of Subjects in 30 CFR Parts 203, 206, 210, 216, 218, and 227
Coal, Solid minerals, Continental Shelf, Electronic funds
transfers, Geothermal energy, Government contracts, Indian lands,
Mineral royalties, Natural gas, Penalties, Petroleum, Oil and gas,
Public lands--mineral resources, Reporting and recordkeeping
requirements.
Dated: March 13, 2008.
C. Stephen Allred,
Assistant Secretary for Land and Minerals Management.
0
For reasons stated in the preamble, MMS is amending 30 CFR parts 203,
206, 210, 216, 218, and 227 as follows:
PART 203--RELIEF OR REDUCTION IN ROYALTY RATES
0
1. The authority citation for part 203 continues to read as follows:
Authority: 25 U.S.C. 396 et seq., 396a et seq., 2101 et seq.; 30
U.S.C. 181 et seq., 351 et seq., 1001 et seq., 1701 et seq.; 31
U.S.C. 9701; 43 U.S.C. 1301 et seq., 1331 et seq., and 1801 et seq.
Subpart B--OCS Oil, Gas, and Sulfur General
0
2. Amend Sec. 203.41 by revising paragraphs (b) introductory text and
(d) introductory text to read as follows:
Sec. 203.41 If I have a qualified well, what royalty relief will my
lease earn?
* * * * *
(b) We will suspend royalties on gas volumes produced on or after
May 3, 2004, reported on the Oil and Gas Operations Report, Part A
(OGOR-A) for your lease under 30 CFR part 210, Subpart C--Production
Reports--Oil and Gas, as and to the extent prescribed in Sec. 203.42.
* * * * *
(d) We will suspend royalties on gas volumes produced on or after
May 3, 2004, reported on the Oil and Gas Operations Report, Part A
(OGOR-A) for your lease under 30 CFR part 210,
[[Page 15890]]
Subpart C--Production Reports--Oil and Gas, as and to the extent
prescribed in Sec. 203.42.
* * * * *
0
3. Amend Sec. 203.44 by revising paragraph (b) introductory text to
read as follows:
Sec. 203.44 If I drill a certified unsuccessful well, what royalty
relief will my lease earn?
* * * * *
(b) We will suspend royalties on oil and gas volumes produced on or
after May 3, 2004, reported on the Oil and Gas Operations Report, Part
A (OGOR-A) for your lease under 30 CFR part 210, Subpart C--Production
Reports--Oil and Gas, as and to the extent prescribed in Sec. 203.45.
* * * * *
PART 206--PRODUCT VALUATION
0
4. The authority citation for part 206 continues to read as follows:
Authority: 5 U.S.C. 301 et seq.; 25 U.S.C. 396 et seq., 396a et
seq., 2101 et seq.; 30 U.S.C. 181 et seq., 351 et seq., 1001 et
seq., 1701 et seq.; 31 U.S.C. 9701; 43 U.S.C. 1301 et seq., 1331 et
seq., and 1801 et seq.
Subpart B--Indian Oil
0
5. Amend Sec. 206.51 as follows:
0
A. Remove the definition of ``selling arrangement.''
0
B. Add in alphabetical order the definition of ``sales type code'' to
read as follows:
Sec. 206.51 What definitions apply to this subpart?
* * * * *
Sales type code means the contract type or general disposition
(e.g., arm's-length or non-arm's-length) of production from the lease.
The sales type code applies to the sales contract, or other
disposition, and not to the arm's-length or non-arm's-length nature of
a transportation allowance.
* * * * *
0
6. Amend Sec. 206.56 by revising paragraphs (b)(1), (b)(2), and (d) to
read as follows:
Sec. 206.56 Transportation allowances--general.
* * * * *
(b)(1) Except as provided in paragraph (b)(2) of this section, the
transportation allowance deduction on the basis of a sales type code
may not exceed 50 percent of the value of the oil at the point of sale
as determined under Sec. 206.52 of this subpart. Transportation costs
cannot be transferred between sales type codes or to other products.
(2) Upon request of a lessee, MMS may approve a transportation
allowance deduction in excess of the limitation prescribed by paragraph
(b)(1) of this section. The lessee must demonstrate that the
transportation costs incurred in excess of the limitation prescribed in
paragraph (b)(1) of this section were reasonable, actual, and
necessary. An application for exception (using Form MMS-4393, Request
to Exceed Regulatory Allowance Limitation) must contain all relevant
and supporting documentation necessary for MMS to make a determination.
Under no circumstances may the value, for royalty purposes, under any
sales type code, be reduced to zero.
* * * * *
(d) If, after a review or audit, MMS determines that a lessee has
improperly determined a transportation allowance authorized by this
subpart, then the lessee will pay any additional royalties, plus
interest determined in accordance with 30 CFR 218.54, or will be
entitled to a credit without interest.
0
7. Amend Sec. 206.57 by revising paragraphs (c)(4) and (e)(1) to read
as follows:
Sec. 206.57 Determination of transportation allowances.
* * * * *
(c) * * *
(4) Transportation allowances must be reported as a separate entry
on Form MMS-2014, unless MMS approves a different reporting procedure.
* * * * *
(e) Adjustments. (1) If the actual transportation allowance is less
than the amount the lessee has taken on Form MMS-2014 for each month
during the allowance form reporting period, the lessee must pay
additional royalties due plus interest computed under 30 CFR 218.54,
retroactive to the first day of the first month the lessee is
authorized to deduct a transportation allowance. If the actual
transportation allowance is greater than the amount the lessee has
taken on Form MMS-2014 for each month during the allowance form
reporting period, the lessee will be entitled to a credit without
interest.
* * * * *
Subpart C--Federal Oil
0
8. Revise Sec. 206.116 to read as follows:
Sec. 206.116 What interest applies if I improperly report a
transportation allowance?
(a) If you or your affiliate deducts a transportation allowance on
Form MMS-2014 that exceeds 50 percent of the value of the oil
transported without obtaining MMS's prior approval under Sec. 206.109,
you must pay interest on the excess allowance amount taken from the
date that amount is taken to the date you or your affiliate files an
exception request that MMS approves. If you do not file an exception
request, or if MMS does not approve your request, you must pay interest
on the excess allowance amount taken from the date that amount is taken
until the date you pay the additional royalties owed.
(b) If you or your affiliate takes a deduction for transportation
on Form MMS-2014 by improperly netting an allowance against the oil
instead of reporting the allowance as a separate entry, MMS may assess
a civil penalty under 30 CFR part 241.
Subpart D--Federal Gas
0
9. Amend Sec. 206.151 as follows:
0
A. Revise the definition of ``netting.''
0
B. Add in alphabetical order the definition of ``sales type code.''
0
C. Remove the definition of ``selling arrangement.''
The revision and addition read as follows:
Sec. 206.151 Definitions.
* * * * *
Netting means the deduction of an allowance from the sales value by
reporting a net sales value, instead of correctly reporting the
deduction as a separate entry on Form MMS-2014.
* * * * *
Sales type code means the contract type or general disposition
(e.g., arm's-length or non-arm's-length) of production from the lease.
The sales type code applies to the sales contract, or other
disposition, and not to the arm's-length or non-arm's-length nature of
a transportation or processing allowance.
* * * * *
0
10. Amend Sec. 206.156 by revising paragraphs (c) and (d) to read as
follows:
Sec. 206.156 Transportation allowances--general.
* * * * *
(c)(1) Except as provided in paragraph (c)(3) of this section, for
unprocessed gas valued in accordance with Sec. 206.152 of this
subpart, the transportation allowance deduction on the basis of a sales
type code may not exceed 50 percent of the value of the unprocessed gas
determined under Sec. 206.152 of this subpart.
(2) Except as provided in paragraph (c)(3) of this section, for gas
production valued in accordance with Sec. 206.153 of this subpart, the
transportation allowance deduction on the basis of a sales type code
may not exceed 50 percent of the value of the residue gas
[[Page 15891]]
or gas plant product determined under Sec. 206.153 of this subpart.
For purposes of this section, natural gas liquids will be considered
one product.
(3) Upon request of a lessee, MMS may approve a transportation
allowance deduction in excess of the limitations prescribed by
paragraphs (c)(1) and (c)(2) of this section. The lessee must
demonstrate that the transportation costs incurred in excess of the
limitations prescribed in paragraphs (c)(1) and (c)(2) of this section
were reasonable, actual, and necessary. An application for exception
(using Form MMS-4393, Request to Exceed Regulatory Allowance
Limitation) must contain all relevant and supporting documentation
necessary for MMS to make a determination. Under no circumstances may
the value for royalty purposes under any sales type code be reduced to
zero.
(d) If, after a review or audit, MMS determines that a lessee has
improperly determined a transportation allowance authorized by this
subpart, then the lessee must pay any additional royalties, plus
interest, determined in accordance with 30 CFR 218.54, or will be
entitled to a credit, with interest. If the lessee takes a deduction
for transportation on Form MMS-2014 by improperly netting the allowance
against the sales value of the unprocessed gas, residue gas, and gas
plant products instead of reporting the allowance as a separate entry,
MMS may assess a civil penalty under 30 CFR part 241.
Sec. 206.157 [Amended]
0
11. Amend Sec. 206.157 as follows:
0
A. In the last sentence of paragraph (a)(1)(i), remove the word
``line.''
0
B. In the third sentence of paragraph (b)(1), remove the word ``line.''
0
C. Remove paragraph (d)(1) and redesignate paragraphs (d)(2) through
(d)(4) as paragraphs (d)(1) through (d)(3), respectively.
0
12. Amend Sec. 206.158 by revising paragraph (e) to read as follows:
Sec. 206.158 Processing allowances--general.
* * * * *
(e) If MMS determines that a lessee has improperly determined a
processing allowance authorized by this subpart, then the lessee must
pay any additional royalties, plus interest determined under 30 CFR
218.54, or will be entitled to a credit with interest. If the lessee
takes a deduction for processing on Form MMS-2014 by improperly netting
the allowance against the sales value of the gas plant products instead
of reporting the allowance as a separate entry, MMS may assess a civil
penalty under 30 CFR part 241.
Sec. 206.159 [Amended]
0
13. Amend Sec. 206.159 as follows:
0
A. In the last sentence of paragraph (a)(1)(i), remove the word
``line.''
0
B. In the third sentence of paragraph (b)(1), remove the word ``line.''
0
C. In paragraph (c)(1)(i), remove the word ``line.''
0
D. In paragraph (c)(2)(i), remove the word ``line.''
0
E. In paragraph (d) heading, remove the words ``and assessments''.
0
F. Remove paragraph (d)(1) and redesignate paragraphs (d)(2) through
(d)(4) as paragraphs (d)(1) through (d)(3), respectively.
0
G. In the last sentence of paragraph (e)(1), remove the words ``without
interest'' and add in their place ``with interest.''
Subpart E--Indian Gas
0
14. Amend Sec. 206.171 as follows:
0
A. Remove the definition of ``selling arrangement.''
0
B. Add in alphabetical order the definition of ``sales type code'' to
read as follows:
Sec. 206.171 What definitions apply to this subpart?
* * * * *
Sales type code means the contract type or general disposition
(e.g., arm's-length or non-arm's-length) of production from the lease.
The sales type code applies to the sales contract, or other
disposition, and not to the arm's-length or non-arm's-length nature of
a transportation or processing allowance.
* * * * *
Sec. 206.177 [Amended]
0
15. Amend Sec. 206.177 as follows:
0
A. In the first sentence of paragraph (c)(1) remove the words ``selling
arrangement'' and add in their place ``sales type code.''
0
B. In the last sentence of paragraph (c)(2), remove the words ``selling
arrangement'' and add in their place ``sales type code.''
Sec. 206.178 [Amended]
0
16. In Sec. 206.178, in the first sentence of paragraph (d)(2), remove
the words ``line item'' and add in their place the word ``entry.''
Sec. 206.180 [Amended]
0
17. In Sec. 206.180, in the first sentence of paragraph (c)(2), remove
the words ``line item'' and add in their place the word ``entry.''
Subpart F--Federal Coal
0
18. Amend Sec. 206.251 as follows:
0
A. Remove the definition of ``selling arrangement.''
0
B. Add in alphabetical order the definition of ``sales type code'' to
read as follows:
Sec. 206.251 Definitions.
* * * * *
Sales type code means the contract type or general disposition
(e.g., arm's-length or non-arm's-length) of production from the lease.
The sales type code applies to the sales contract, or other
disposition, and not to the arm's-length or non-arm's-length nature of
a transportation or washing allowance.
* * * * *
0
19. Revise Sec. 206.252 to read as follows:
Sec. 206.252 Information collection.
The information collection requirements contained in this subpart
have been approved by the Office of Management and Budget (OMB) under
44 U.S.C. 3501 et seq. The forms, filing date, and approved OMB control
numbers are identified in 30 CFR 210--Forms and Reports.
0
20. Amend Sec. 206.254 by revising the last sentence to read as
follows:
Sec. 206.254 Quality and quantity measurement standards for reporting
and paying royalties.
* * * Coal quantity information will be reported on appropriate
forms required under 30 CFR part 210--Forms and Reports.
Sec. 206.259 [Amended]
0
21. In Sec. 206.259, in paragraph (d)(1), remove the words ``selling
arrangement'' and add in their place the words ``sales type code.''
Sec. 206.262 [Amended]
0
22. In Sec. 206.262, in paragraph (d)(1), remove the words ``selling
arrangement'' and add in their place the words ``sales type code.''
Subpart J--Indian Coal
0
25. Amend Sec. 206.451 as follows:
0
A. Remove the definition of ``selling arrangement.''
0
B. Add in alphabetical order the definition of ``sales type code'' to
read as follows:
Sec. 206.451 Definitions.
* * * * *
Sales type code means the contract type or general disposition
(e.g. arm's-length or non-arm's-length) of
[[Page 15892]]
production from the lease. The sales type code applies to the sales
contract, or other disposition, and not to the arm's-length or non-
arm's-length nature of a transportation or washing allowance.
* * * * *
0
26. Amend Sec. 206.453 by revising the last sentence to read as
follows:
Sec. 206.453 Quality and quantity measurement standards for reporting
and paying royalties.
* * * Coal quantity information will be reported on appropriate
forms required under 30 CFR part 210--Forms and Reports.
PART 210--FORMS AND REPORTS
0
27. The authority citation for part 210 continues to read as follows:
Authority: 5 U.S.C. 301 et seq.; 25 U.S.C. 396, 2107; 30 U.S.C.
189, 190, 359, 1023, 1751(a); 31 U.S.C. 3716, 9701; 43 U.S.C. 1334,
1801 et seq.; and 44 U.S.C. 3506(a).
0
28. Revise subparts A and B and add subparts C and D to read as
follows:
Subpart A--General Provisions
Sec.
210.01 What is the purpose of this subpart?
210.02 To whom do these regulations apply?
210.10 What are the OMB-approved information collections?
210.20 What if I disagree with the burden hour estimates?
210.21 How do I report my taxpayer identification number?
210.30 What are my responsibilities as a reporter/payor?
210.40 Will MMS keep the information I provide confidential?
Subpart B--Royalty Reports--Oil, Gas, and Geothermal Resources
210.50 What is the purpose of this subpart?
210.51 Who must submit royalty reports?
210.52 What royalty reports must I submit?
210.53 When are my royalty reports and payments due?
210.54 Must I submit this royalty report electronically?
210.55 May I submit this royalty report manually?
210.56 Where can I find more information on how to complete the
royalty report?
210.60 What definitions apply to this subpart?
Subpart C--Production Reports--Oil and Gas
210.100 What is the purpose of this subpart?
210.101 Who must submit production reports?
210.102 What production reports must I submit?
210.103 When are my production reports due?
210.104 Must I submit these production reports electronically?
210.105 May I submit these production reports manually?
210.106 Where can I find more information on how to complete these
production reports?
Subpart D--Special-Purpose Forms and Reports--Oil, Gas, and Geothermal
Resources
210.150 What is the purpose of this subpart?
210.151 What reports must I submit to claim an excess allowance?
210.152 What reports must I submit to claim allowances on an Indian
lease?
210.153 What reports must I submit for Indian gas valuation
purposes?
210.154 What documents or other information must I submit for
Federal oil valuation purposes?
210.155 What reports must I submit for Federal onshore stripper oil
properties?
210.156 What reports must I submit for net profit share leases?
210.157 What reports must I submit to suspend an MMS order under
appeal?
210.158 What reports must I submit to designate someone to make my
royalty payments?
Subpart A--General Provisions
Sec. 210.01 What is the purpose of this subpart?
This subpart identifies information collections required by the
Minerals Management Service (MMS), Minerals Revenue Management (MRM),
in the normal course of operations. This information is submitted by
various parties associated with Federal and Indian leases such as
lessees, designees, and operators. The information collected meets the
MMS congressionally mandated accounting and auditing responsibilities
relating to Federal and Indian minerals revenue management. Information
collected regarding production, royalties, and other payments due the
Government from activities on leased Federal or Indian land is
authorized by the Federal Oil and Gas Royalty Management Act of 1982,
as amended (30 U.S.C. 1701 et seq.), as well as 43 U.S.C. 1334 and 30
U.S.C. 189, 359, 396, and 396d for oil and gas production; and by 30
U.S.C. 189, 359, 396, and 396d for solid minerals production.
Sec. 210.02 To whom do these regulations apply?
The regulations apply to any person, referred to in this subpart as
``you,'' ``your,'' or ``reporter/payor,'' who is a lessee under any
Federal or Indian lease for any mineral or who is assigned or assumes
an obligation to report data or make payment to MMS. The term reporter/
payor may include lessees, designees, operators, purchasers, reporters,
other payors, and working interest owners, but is not restricted to
these parties. This section does not affect the liability to pay and
report royalties as established by other regulations, laws, and the
lease terms.
Sec. 210.10 What are the OMB-approved information collections?
The information collection requirements identified in this subpart
have been approved by the Office of Management and Budget (OMB) under
44 U.S.C. 3501 et seq. Detailed information about each information
collection request (ICR), including CFR citations, is included on the
MMS Web site at http://www.mrm.mms.gov/Laws_R_D/FRNotices/
FRNotices.htm. The ICRs and associated MMS form numbers, if applicable,
are listed below:
------------------------------------------------------------------------
OMB control number and short title Form or information collected
------------------------------------------------------------------------
1010-0073, 30 CFR Part 220, Net Profit No form for the following
Share Payment. collection:
Net profit share
payment information.
1010-0087, 30 CFR Parts 227, 228, and No forms for the following
229, Delegation to States and collections:
Cooperative Activities with States and Written delegation
Indian Tribes. proposal to perform auditing
and investigative activities.
Request for
cooperative agreement and
subsequent requirements.
1010-0090, 30 CFR Part 216, Stripper Form MMS-4377, Stripper Royalty
Royalty Rate Reduction Notification. Rate Reduction Notification.
1010-0103, 30 CFR Parts 202 and 206, Form MMS-4109, Gas Processing
Indian Oil and Gas Valuation. Allowance Summary Report.
Form MMS-4295, Gas
Transportation Allowance
Report.
Form MMS-4110, Oil
Transportation Allowance
Report.
Form MMS-4411, Safety Net
Report.
Form MMS-4410, Accounting for
Comparison [Dual Accounting].
Form MMS-4393, Request to
Exceed Regulatory Allowance
Limitation.\1\
[[Page 15893]]
1010-0107, 30 CFR Part 218, Collection Form MMS-4425, Designation Form
of Monies Due the Federal Government. for Royalty Payment
Responsibility.
No forms for the following
collections:
Cross-lease netting
documentation.
Indian recoupment
approval.
1010-0119, 30 CFR Part 208, Royalty in Form MMS-4070, Application for
Kind (RIK) Oil and Gas. the Purchase of Royalty Oil.
Form MMS-4071, Letter of Credit
(RIK).
Form MMS-4072, Royalty-in-Kind
Contract Surety Bond.
No form for the following
collection:
Royalty oil sales to
eligible refiners.
1010-0120, 30 CFR Parts 202, 206, 210, Form MMS 4430, Solid Minerals
212, 217, and 218, Solid Minerals and Production and Royalty Report.
Geothermal Collections. Form 4292, Coal Washing
Allowance Report.
Form 4293, Coal Transportation
Allowance Report.
No forms for the following
collections:
Facility data--solid
minerals.
Sales contracts--solid
minerals.
Sales summaries--solid
minerals.
1010-0122, 30 CFR Part 243, Suspensions Form MMS-4435, Administrative
Pending Appeal and Bonding. Appeal Bond.
Form MMS-4436, Letter of
Credit.
Form MMS-4437, Assignment of
Certificate of Deposit.
No forms for the following
collections:
Self bonding.
U.S. Treasury
securities.
1010-0136, 30 CFR Parts 202 and 206, Form MMS-4393, Request to
Federal Oil and Gas Valuation. Exceed Regulatory Allowance
Limitation.\1\
No form for the following
collection:
Federal oil valuation
support information.
1010-0139, 30 CFR Parts 210 and 216, Form MMS-4054, Oil and Gas
Production Accounting. Operations Report.
Form MMS-4058 (Parts A, B, and
C), Production Allocation
Schedule Report.
1010-0140, 30 CFR Part 210, Forms and Form MMS-2014, Report of Sales
Reports. and Royalty Remittance.
1010-0155, 30 CFR Part 204, No form for the following
Alternatives for Marginal Properties. collection:
Notification and
relief request for accounting
and auditing relief.
1010-0162, CFO Act of 1992, Accounts No form for the following
Receivable Confirmations. collection:
Accounts receivable
confirmations.
------------------------------------------------------------------------
\1\ Form MMS-4393 is used for both Federal and Indian oil and gas
leases. The form resides with ICR 1010-0136, but the burden hours for
Indian leases are included in ICR 1010-0103.
Sec. 210.20 What if I disagree with the burden hour estimates?
Burden hour estimates are included on the MMS Web site at http://
www.mrm.mms.gov/Laws_R_D/FRNotices/FRNotices.htm. Send comments on
the accuracy of these burden estimates or suggestions on reducing the
burden to the Minerals Management Service, Attention: Information
Collection Clearance Officer (OMB Control Number 1010-XXXX [insert
appropriate OMB control number]), Mail Stop 4230, 1849 C Street, NW.,
Washington, DC 20240. An agency may not conduct or sponsor, and a
person is not required to respond to, a collection of information
unless it displays a currently valid OMB control number.
Sec. 210.21 How do I report my taxpayer identification number?
(a) Before paying or reporting to MMS, you must obtain a payor code
(see the MMS Minerals Revenue Reporter Handbook, which is available on
the Internet at http://www.mrm.mms.gov/ReportingServices/PDFDocs/
RevenueHandbook.pdf; also see Sec. 210.56 for further information on
how to obtain a handbook). At the time you request a payor code, you
must provide your Employer Identification Number (EIN) by submitting:
(1) An IRS Form W-9; or
(2) An equivalent certification containing:
(i) Your name;
(ii) The name of your business, if different from your name;
(iii) The form of your business entity; for example, a sole
proprietorship, corporation, or partnership;
(iv) The address of your business;
(v) The EIN of your business; and
(vi) A signed and dated certification that you are a U.S. citizen
or resident alien and that the EIN number provided is correct.
(b) If you are already paying or reporting to MMS but do not have
an EIN, MMS may request that you submit an IRS Form W-9 or equivalent
certification containing the information required under paragraph
(a)(2) of this section.
(c) The collection of this data is not subject to the provisions of
the Paperwork Reduction Act because only information necessary to
identify the respondent [5 CFR 1320.3(h)] is required.
(d) The EIN you provide to MMS under paragraph (a) of this section:
(1) Means the taxpayer identification number (TIN) of an individual
or other person (whether or not an employer), which is assigned under
26 U.S.C. 6011(b), or a corresponding version of prior law, or under 26
U.S.C. 6109;
(2) Must contain nine digits separated by a hyphen as follows: 00-
0000000; and
(3) May not be a Social Security Number.
Sec. 210.30 What are my responsibilities as a reporter/payor?
Each reporter/payor must submit accurate, complete, and timely
information to MMS according to the requirements in this part. If you
discover an error in a previous report, you must file an accurate and
complete amended report within 30 days of your discovery of the error.
If you do not comply, MMS may assess civil penalties under 30 CFR part
241.
[[Page 15894]]
Sec. 210.40 Will MMS keep the information I provide confidential?
The MMS will treat information obtained under this part as
confidential to the extent permitted by law as specified at 43 CFR part
2.
Subpart B--Royalty Reports--Oil, Gas, and Geothermal Resources
Sec. 210.50 What is the purpose of this subpart?
The purpose of this subpart is to explain royalty reporting
requirements when energy and mineral resources are removed from Federal
and Indian oil and gas and geothermal leases and federally approved
agreements. This includes leases and agreements located onshore and on
the Outer Continental Shelf (OCS).
Sec. 210.51 Who must submit royalty reports?
(a) Any person who pays royalty to MMS must submit royalty reports
to MMS.
(b) Before you pay or report to MMS, you must obtain a payor code.
To obtain a payor code, refer to the MMS Minerals Revenue Reporter
Handbook for instructions and MMS contact information (also see Sec.
210.56 for information on how to obtain a handbook).
Sec. 210.52 What royalty reports must I submit?
You must submit a completed Form MMS-2014, Report of Sales and
Royalty Remittance, to MMS with:
(a) All royalty payments; and
(b) Rents on nonproducing leases, where specified in the lease.
Sec. 210.53 When are my royalty reports and payments due?
(a) Completed Forms MMS-2014 for royalty payments and the
associated payments are due by the end of the month following the
production month (see also Sec. 218.50).
(b) Completed Forms MMS-2014 for rental payments, where applicable,
and the associated payments are due as specified by the lease terms
(see also Sec. 218.50).
(c) You may submit reports and payments early.
Sec. 210.54 Must I submit this royalty report electronically?
(a) You must submit Form MMS-2014 electronically unless you qualify
for an exception under Sec. 210.55(a).
(b) You must use one of the following electronic media types,
unless MMS instructs you differently:
(1) Electronic Data Interchange (EDI)--The direct computer-to-
computer interchange of data using standards set forth by the X12
American National Standards Institute (ANSI) Accredited Standards
Committee (ASC). The interchange uses the services of a third party
with which either party may contract.
(2) Web-based reporting--Reporters/payors may enter report data
directly or upload files using the MMS electronic web form located at
http://www.mrmreports.net. The uploaded files must be in one of the
following formats: the American Standard Code for Information
Interchange (ASCII) or Comma Separated Values (CSV) formats. External
files created by the sender must be in the proprietary ASCII and CSV
file layout formats defined by MMS. These external files can be
generated from a reporter's system application.
(c) Refer to our electronic reporting guidelines in the MMS
Minerals Revenue Reporter Handbook, for the most current reporting
options, instructions, and security measures. The handbook may be found
on our Internet Web site or you may call your MMS customer service
representative (see Sec. 210.56 for further information on how to
obtain a handbook).
Sec. 210.55 May I submit this royalty report manually?
(a) The MMS will allow you to submit Form MMS-2014 manually if:
(1) You have never reported to MMS before. You have 3 months from
the date your first report is due to begin reporting electronically;
(2) You report only rent, minimum royalty, or other annual
obligations on Form MMS-2014; or
(3) You are a small business, as defined by the U.S. Small Business
Administration, and you have no computer.
(b) If you meet the qualifications under paragraph (a) of this
section, you may submit your form manually to MMS by:
(1) U.S. Postal Service regular or express mail addressed to
Minerals Management Service, P.O. Box 5810, Denver, Colorado 80217-
5810; or
(2) Special courier or overnight mail addressed to Minerals
Management Service, Building 85, Room A-614, Denver Federal Center,
West 6th Ave. and Kipling Blvd., Denver, Colorado 80225.
Sec. 210.56 Where can I find more information on how to complete the
royalty report?
(a) Specific guidance on how to prepare and submit Form MMS-2014 is
contained in the MMS Minerals Revenue Reporter Handbook. The handbook
is available on our Internet Web site at http://www.mrm.mms.gov/
ReportingServices/Handbooks/Handbks.htm or from MMS at P.O. Box 5760,
Denver, Colorado 80217-5760.
(b) Reporters/payors should refer to the handbook for specific
guidance on royalty reporting requirements. If you require additional
information, you should contact MMS at the above address. A customer
service telephone number is also listed in our handbook.
(c) You may find Form MMS-2014 on our Internet Web site at http://
www.mrm.mms.gov/ReportingServices/Forms/AFSOil_Gas.htm, or you may
request the form from MMS at P.O. Box 5760, Denver, Colorado 80217-
5760.
Sec. 210.60 What definitions apply to this subpart?
Terms used in this subpart have the same meaning as in 30 U.S.C.
1702.
Subpart C--Production Reports--Oil and Gas
Sec. 210.100 What is the purpose of this subpart?
The purpose of this subpart is to explain production reporting
requirements when energy and mineral resources are removed from Federal
and Indian oil and gas leases and federally approved agreements. This
includes leases and unit and communitization agreements located onshore
and on the Outer Continental Shelf (OCS).
Sec. 210.101 Who must submit production reports?
(a) If you operate a Federal or Indian oil and gas lease or
federally approved unit or communitization agreement, you must submit
production reports.
(b) Before reporting production to MMS, you must obtain an operator
number. To obtain an operator number, refer to the MMS Minerals
Production Reporter Handbook for instructions and MMS contact
information (also see Sec. 210.106 for information on how to obtain a
handbook).
Sec. 210.102 What production reports must I submit?
(a) Form MMS-4054, Oil and Gas Operations Report. If you operate a
Federal or Indian onshore or OCS oil and gas lease or federally
approved unit or communitization agreement that contains one or more
wells that are not permanently plugged or abandoned, you must submit
Form MMS-4054 to MMS:
(1) You must submit Form MMS-4054 for each well for each calendar
month, beginning with the month in which you complete drilling, unless:
(i) You have only test production from a drilling well; or
(ii) The MMS tells you in writing to report differently.
[[Page 15895]]
(2) You must continue reporting until:
(i) The Bureau of Land Management (BLM) or MMS approves all wells
as permanently plugged or abandoned or the lease or unit or
communitization agreement is terminated; and
(ii) You dispose of all inventory.
(b) Form MMS-4058, Production Allocation Schedule Report. If you
operate an offshore facility measurement point (FMP) handling
production from a Federal oil and gas lease or federally approved unit
agreement that is commingled (with approval) with production from any
other source prior to measurement for royalty determination, you must
file Form MMS-4058.
(1) You must submit Form MMS-4058 for each calendar month beginning
with the month in which you first handle production covered by this
section.
(2) Form MMS-4058 is not required whenever all of the following
conditions are met:
(i) All leases involved are Federal leases;
(ii) All leases have the same fixed royalty rate;
(iii) All leases are operated by the same operator;
(iv) The facility measurement device is operated by the same person
as the leases/agreements;
(v) Production has not been previously measured for royalty
determination; and
(vi) The production is not subsequently commingled and measured for
royalty determination at an FMP for which Form MMS-4058 is required
under this part.
Sec. 210.103 When are my production reports due?
(a) The MMS must receive your completed Forms MMS-4054 and MMS-4058
by the 15th day of the second month following the month for which you
are reporting.
(b) A report is considered received when it is delivered to MMS by
4 p.m. mountain time at the addresses specified in Sec. 210.105.
Reports received after 4 p.m. mountain time are considered received the
following business day.
Sec. 210.104 Must I submit these production reports electronically?
(a) You must submit Forms MMS-4054 and MMS-4058 electronically
unless you qualify for an exception under Sec. 210.105.
(b) You must use one of the following electronic media types,
unless MMS instructs you differently:
(1) Electronic Data Interchange (EDI)--The direct computer-to-
computer interchange of data using standards set forth by the X12
American National Standards Institute (ANSI) Accredited Standards
Committee (ASC). The interchange uses the services of a third party
with which either party may contract.
(2) Web-based reporting--Reporters/payors may enter report data
directly or upload files using the MMS electronic Web form located at
http://www.mrmreports.net. The uploaded files must be in one of the
following formats: the American Standard Code for Information
Interchange (ASCII) or Comma Separated Values (CSV) formats. External
files created by the sender must be in the proprietary ASCII and CSV
file layout formats defined by MMS. These external files can be
generated from a reporter's system application.
(c) Refer to our electronic reporting guidelines in the MMS
Minerals Production Reporter Handbook for the most current reporting
options, instructions, and security measures. The handbook may be found
on our Internet Web site or you may call your MMS customer service
representative (see Sec. 210.106 for further information on how to
obtain a handbook).
Sec. 210.105 May I submit these production reports manually?
(a) The MMS will allow you to submit Forms MMS-4054 and MMS-4058
manually if:
(1) You have never reported to MMS before. You have 3 months from
the day your first report is due to begin reporting electronically; and
(2) You are a small business, as defined by the U.S. Small Business
Administration, and you have no computer.
(b) If you meet the qualifications under paragraph (a) of this
section, you may submit your forms manually to MMS by:
(1) U.S. Postal Service regular or express mail addressed to
Minerals Management Service, P.O. Box 17110, Denver, Colorado 80217-
0110; or
(2) Special courier or overnight mail addressed to Minerals
Management Service, Building 85, Room A-614, Denver Federal Center,
West 6th Ave. and Kipling Blvd., Denver, Colorado 80225.
Sec. 210.106 Where can I find more information on how to complete
these production reports?
(a) Specific guidance on how to prepare and submit production
reports to MMS is contained in the MMS Minerals Production Reporter
Handbook. The handbook is available on our Internet Web site at http://
www.mrm.mms.gov/ReportingServices/Handbooks/Handbks.htm or from MMS at
P.O. Box 17110, Denver, Colorado 80217-0110.
(b) Production reporters should refer to the handbook for specific
guidance on production reporting requirements. If you require
additional information, you should contact MMS at the above address. A
customer service telephone number is also listed in our handbook.
(c) You may find Forms MMS-4054 and MMS-4058 on our Internet Web
site at http://www.mrm.mms.gov/ReportingServices/Forms/PAASOff.htm, or
you may request the forms from MMS at P.O. Box 17110, Denver, Colorado
80217-0110.
Subpart D--Special-Purpose Forms and Reports--Oil, Gas, and
Geothermal Resources
Sec. 210.150 What is the purpose of this subpart?
This subpart identifies specific special-purpose reports and
provides general information, reporting options, and reporting
addresses. See Sec. 210.10 for a complete listing of all information
collections, including forms and references for specific information
collections.
Sec. 210.151 What reports must I submit to claim an excess allowance?
(a) General. If you are a lessee, you must submit Form MMS-4393,
Request to Exceed Regulatory Allowance Limitation, to request approval
from MMS to exceed prescribed transportation and processing allowance
limits on Federal oil and gas leases and prescribed transportation
allowance limits on Indian oil and gas leases under part 206 of this
chapter.
(b) Reporting options. You may find Form MMS-4393 on our Web site
at http://www.mrm.mms.gov/ReportingServices/Forms/AFSOil_Gas.htm. You
may also request the form from MMS at P.O. Box 25165, MS 392B2, Denver,
Colorado 80217-0165.
(c) Reporting address. Submit completed Form MMS-4393 as follows:
(1) Complete and submit the form electronically as an e-mail
attachment;
(2) Send the form by U.S. Postal Service regular or express mail
addressed to Minerals Management Service, P.O. Box 25165, MS 392B2,
Denver, Colorado 80217-0165; or
(3) Deliver the form to MMS by special courier or overnight mail
addressed to Minerals Management Service, Building 85, Room A-614, MS
392B2, Denver Federal Center, West 6th Ave. and Kipling Blvd., Denver,
Colorado 80225.
[[Page 15896]]
Sec. 210.152 What reports must I submit to claim allowances on an
Indian lease?
(a) General. You must submit three additional forms to MMS to claim
transportation or processing allowances on Indian oil and gas leases:
(1) You must submit Form MMS-4110, Oil Transportation Allowance
Report, to claim an allowance for expenses incurred by a reporter/payor
to transport oil from the lease site to a point remote from the lease
where value is determined under Sec. 206.55 of this chapter.
(2) You must submit Form MMS-4109, Gas Processing Allowance Summary
Report, to claim an allowance for the reasonable, actual costs of
removing hydrocarbon and nonhydrocarbon elements or compounds from a
gas stream under Sec. 206.180 of this chapter.
(3) You must submit Form MMS-4295, Gas Transportation Allowance
Report, to claim an allowance for the reasonable, actual costs of
transporting gas from the lease to the point of first sale under Sec.
206.178 of this chapter.
(b) Reporting options. You may submit Forms MMS-4110, MMS-4109, and
MMS-4295 manually. You may find the forms on our Internet Web site at
http://www.mrm.mms.gov/ReportingServices/Forms/AFSOil_Gas.htm, or you
may request the forms from MMS at P.O. Box 25165, MS 396B2, Denver,
Colorado 80217-0165.
(c) Reporting address. You may submit completed Forms MMS-4110,
MMS-4109, and MMS-4295 by:
(1) U.S. Postal Service regular or express mail addressed to
Minerals Management Service, P.O. Box 25165, MS 396B2, Denver, Colorado
80217-0165; or
(2) Special courier or overnight mail addressed to Minerals
Management Service, Building 85, Room A-614, MS 396B2, Denver Federal
Center, West 6th Ave. and Kipling Blvd., Denver, Colorado 80225.
Sec. 210.153 What reports must I submit for Indian gas valuation
purposes?
(a) General. For Indian gas valuation, under certain conditions
under Sec. 206.172 of this chapter, lessees must submit the following
forms:
(1) Form MMS-4410, Accounting for Comparison (Dual Accounting),
Part A or Part B; and/or
(2) Form MMS-4411, Safety Net Report.
(b) Reporting options. You must submit Forms MMS-4410 and MMS-4411
manually. You may find the forms on our Internet Web site at http://
www.mrm.mms.gov/ReportingServices/Forms/AFSOil_Gas.htm or request
forms from MMS at P.O. Box 25165, MS 396B2, Denver, Colorado 80217-
0165.
(c) Reporting address. You must submit completed Forms MMS-4410 and
MMS-4411 by:
(1) U.S. Postal Service regular or express mail addressed to
Minerals Management Service, P.O. Box 25165, MS 396B2, Denver, Colorado
80217-0165; or
(2) Special courier or overnight mail addressed to Minerals
Management Service, Building 85, Room A-614, MS 396B2, Denver Federal
Center, West 6th Ave. and Kipling Blvd., Denver, Colorado 80225.
Sec. 210.154 What documents or other information must I submit for
Federal oil valuation purposes?
(a) General. The MMS may require you to submit documents or other
information to MMS to support your valuation of Federal oil under part
206 as part of audit compliance.
(b) Reporting options. You must submit the documents or other
information manually.
(c) Reporting address. You must submit required documents or other
information by:
(1) U.S. Postal Service regular or express mail addressed to
Minerals Management Service, P.O. Box 25165, MS 392B2, Denver, Colorado
80217-0165; or
(2) Special courier or overnight mail addressed to Minerals
Management Service, Building 85, Room A-614, MS 392B2, Denver Federal
Center, West 6th Ave. and Kipling Blvd., Denver, Colorado 80225.
Sec. 210.155 What reports must I submit for Federal onshore stripper
oil properties?
(a) General. Operators who have been granted a reduced royalty rate
by the Bureau of Land Management (BLM) under 43 CFR 3103.4-2 must
submit Form MMS-4377, Stripper Royalty Rate Reduction Notification,
under 43 CFR 3103.4-2(b)(3).
(b) Reporting options. You may find Form MMS-4377 on our Internet
Web site at http://www.mrm.mms.gov/ReportingServices/Forms/AFSOil_
Gas.htm or request the form from MMS at P.O. Box 17110, Denver,
Colorado 80217-0110. You may file the form:
(1) Electronically by filling the form out in electronic format and
submitting it to MMS as an e-mail attachment; or
(2) Manually by filling out the form and submitting it by:
(i) U.S. Postal Service regular or express mail addressed to
Minerals Management Service, P.O. Box 25165, MS 392B2, Denver, Colorado
80217-0165; or
(ii) Special courier or overnight mail addressed to Minerals
Management Service, Building 85, Room A-614, MS 392B2, Denver Federal
Center, West 6th Ave. and Kipling Blvd., Denver, Colorado 80225.
Sec. 210.156 What reports must I submit for net profit share leases?
(a) General. After entering into a net profit share lease (NPSL)
agreement, a lessee must report under part 220 of this chapter.
(b) Reporting options. You must submit the required report
manually.
(c) Reporting address. You must submit the required documents by:
(1) U.S. Postal Service regular or express mail addressed to
Minerals Management Service, P.O. Box 25165, MS 382B2, Denver, Colorado
80217-0165; or
(2) Special courier or overnight mail addressed to Minerals
Management Service, Building 85, Room A-614, MS 382B2, Denver Federal
Center, West 6th Ave. and Kipling Blvd., Denver, Colorado 80225.
Sec. 210.157 What reports must I submit to suspend an MMS order under
appeal?
(a) General. Reporters/payors or other recipients of MMS Minerals
Revenue Management (MRM) orders who appeal an order may be required to
post a bond or other surety, under part 243 of this chapter. The MMS
accepts the following surety types: Form MMS-4435, Administrative
Appeal Bond; Form MMS-4436, Letter of Credit; Form MMS-4437, Assignment
of Certificate of Deposit; Self-bonding; and U.S. Treasury Securities.
(b) Reporting options. You must submit these forms and other
documents manually. You may find the forms and other documents under
Surety Instrument Posting Instructions on our Internet Web site at
http://www.mrm.mms.gov/Law_R_D/FRNotices/ICR0122.htm.
(c) Reporting address. You may submit the required forms and other
documents as specified in the Surety Instrument Posting Instructions or
by:
(1) U.S. Postal Service regular or express mail addressed to
Minerals Management Service, P.O. Box 25165, MS 370B2, Denver, Colorado
80217-0165;
(2) Special courier or overnight mail addressed to Minerals
Management Service, Building 85, Room A-614, MS 370B2, Denver Federal
Center, West 6th Ave. and Kipling Blvd., Denver, Colorado 80225.
[[Page 15897]]
Sec. 210.158 What reports must I submit to designate someone to make
my royalty payments?
(a) General. You must submit Form MMS-4425, Designation Form for
Royalty Payment Responsibility, if you want to designate a person to
make royalty payments on your behalf under Sec. 218.52.
(b) Reporting options. You must submit Form MMS-4425 manually. You
may find the form on our Internet Web site at http://www.mrm.mms.gov/
ReportingServices/Forms/AFSOil_Gas.htm or request the form from MMS at
P.O. Box 5760, Denver, Colorado 80217-5760.
(c) Reporting address. You must submit completed Form MMS-4425 by:
(1) U.S. Postal Service regular or express mail addressed to
Minerals Management Service, P.O. Box 25165, MS 357B1, Denver, Colorado
80217-0165; or
(2) Special courier or overnight mail addressed to Minerals
Management Service, Building 85, Room A-614, MS 357B1, Denver Federal
Center, West 6th Ave. and Kipling Blvd., Denver, Colorado 80225.
Subpart E--Production and Royalty Reports--Solid Minerals
0
29. Revise the heading of subpart E to read as set forth above.
Sec. Sec. 210.205 and 210.206 [Redesignated as Sec. Sec. 210.206 and
210.207]
0
30. Redesignate Sec. Sec. 210.205 and 210.206 as Sec. Sec. 210.206
and 210.207.
0
31. Add new Sec. 210.205 to read as follows:
Sec. 210.205 What reports must I submit to claim allowances on Indian
coal leases?
General. You must submit the following MMS forms to claim a
transportation or washing allowance, as applicable, on Indian coal
leases:
(1) Form MMS-4292, Coal Washing Allowance Report, to claim an
allowance for the reasonable, actual costs incurred to wash coal under
Sec. 206.458 of this chapter.
(2) Form MMS-4293, Coal Transportation Allowance Report, to claim
an allowance for the reasonable, actual costs of transporting coal to a
sales point or a washing facility remote from the mine or lease under
Sec. 206.461 of this chapter.
(b) Reporting options. You must submit the forms manually. You may
find the forms on our Internet Web site at http://www.mrm.mms.gov/
ReportingServices/Forms/AFSSol_Min.htm or request forms from MMS at
P.O. Box 25165, MS 390B2, Denver, Colorado 80217-0165.
(c) Reporting address. You must submit completed Forms MMS-4292 and
MMS-4293 by:
(1) U.S. Postal Service regular or express mail addressed to
Minerals Management Service, P.O. Box 25165, MS 390B2, Denver, Colorado
80217-0165; or
(2) Special courier or overnight mail addressed to Minerals
Management Service, Building 85, Room A-614, MS 390B2, Denver Federal
Center, West 6th Ave. and Kipling Blvd., Denver, Colorado 80225.
PART 216--[REMOVED]
0
32. Remove part 216.
PART 218--COLLECTION OF MONIES AND PROVISION FOR GEOTHERMAL CREDITS
AND INCENTIVES
0
33. Revise the heading of part 218 to read as set forth above.
0
34. The authority citation for part 218 continues to read as follows:
Authority: 25 U.S.C. 396 et seq., 396a et seq., 2101 et seq.; 30
U.S.C. 181 et seq., 351 et seq., 1001 et seq., 1701 et seq.; 31
U.S.C. 3335; 43 U.S.C. 1301 et seq., 1331 et seq., and 1801 et seq.
Subpart A--General Provisions
0
35. Amend Sec. 218.40 by revising paragraphs (a) through (c) to read
as follows:
Sec. 218.40 Assessments for incorrect or late reports and failure to
report.
(a) An assessment of an amount not to exceed $10 per day may be
charged for each report not received by MMS by the designated due date
for geothermal, solid minerals, and Indian oil and gas leases.
(b) An assessment of an amount not to exceed $10 per day may be
charged for each incorrectly completed report for geothermal, solid
minerals, and Indian oil and gas leases.
(c) For purpose of assessments discussed in this section, a report
is defined as follows:
(1) For coal and other solid minerals leases, a report is each line
on Form MMS-4430, Solid Minerals Production and Royalty Report; or on
Form MMS-2014, Report of Sales and Royalty Remittance, as appropriate.
(2) For Indian oil and gas and all geothermal leases, a report is
each line on Form MMS-2014.
* * * * *
0
36. Amend Sec. 218.41 by revising paragraphs (a) through (e) to read
as follows:
Sec. 218.41 Assessments for failure to submit payment of same amount
indicated on Form MMS-2014, Form MMS-4430, or a bill document; or to
provide adequate information.
(a) The MMS may assess an amount not to exceed $250 when the amount
of a payment submitted by a reporter/payor for geothermal, solid
minerals, and Indian oil and gas leases is not equivalent in amount to
the total of individual line items on the associated Form MMS-2014,
Form MMS-4430, or a bill document, unless MMS has authorized the
difference in amount.
(b) The MMS may assess an amount not to exceed $250 for each
payment for geothermal, solid minerals, and Indian oil and gas leases
submitted by a reporter/payor that cannot be automatically applied to
the associated Form MMS-2014, Form MMS-4430, or a bill document because
of inadequate or erroneous information submitted by the reporter/payor.
(c) For purposes of this section, inadequate or erroneous
information is defined as:
(1) Absent or incorrect payor-assigned document number, required to
be identified by the reporter/payor in Block 4 on Form MMS-2014
(document 4 number), or the reuse of the same incorrect payor-assigned
document 4 number in a subsequent reporting period.
(2) Absent or incorrect bill document invoice number (to include
the three-character alpha prefix and the nine-digit number) or the
payor-assigned document 4 number required to be identified by the
reporter/payor on the associated payment document, or the reuse of the
same incorrect payor-assigned document 4 number in a subsequent
reporting period.
(3) Absent or incorrect name of the administering Bureau of Indian
Affairs Agency/Area office; or the word ``allotted'' or the tribe name
on payment documents remitted to MMS for an Indian tribe or allottee.
If the payment is made by EFT, the reporter/payor must identify the
tribe/allottee on the EFT message by a pre-established five-digit code.
(4) Absent or incorrect MMS-assigned payor code on a payment
document.
(5) Absent or incorrect identification on a payment document.
(d) For purposes of this section, the term ``Form MMS-2014''
includes submission of reports of royalty information, such as Form
MMS-4430.
(e) For purposes of this section, a bill document is defined as any
invoice that MMS has issued for assessments, late-payment interest
charges, or other amount owed. A payment document is
[[Page 15898]]
defined as a check or wire transfer message.
* * * * *
Subpart B--Oil and Gas, General
0
37. Amend Sec. 218.50 by revising paragraph (b) to read as follows:
Sec. 218.50 Timing of payment.
* * * * *
(b) Invoices will be issued and payable as final collection
actions. Payments made on an invoice are due as specified by the
invoice.
* * * * *
0
38. Amend Sec. 218.51 by revising the definition of ``Invoice Document
Identification'' in paragraph (a) and revising paragraphs (f)(1) and
(f)(2) to read as follows:
Sec. 218.51 How to make payments.
(a) * * *
Invoice Document Identification--The MMS-assigned invoice document
identification (three-alpha and nine-numeric characters).
* * * * *
(f) * * * (1) For Form MMS-2014 payments, you must include both
your payor code and your payor-assigned document number.
(2) For invoice payments, including RIK invoice payments, you must
include both your payor code and invoice document identification.
* * * * *
0
39. Amend Sec. 218.52 by revising paragraphs (a) introductory text,
(a)(1), (a)(4)(i) and (c) introductory text to read as follows:
Sec. 218.52 How does a lessee designate a Designee?
(a) If you are a lessee under 30 U.S.C. 1702(7), and you want to
designate a person to make all or part of the payments due under a
lease on your behalf under 30 U.S.C. 1712(a), you must notify MMS or
the applicable delegated state in writing of such designation by
submitting Form MMS-4425, Designation Form for Royalty Payment
Responsibility. Your notification for each lease must include the
following:
(1) The lease number for the lease;
* * * * *
(4) * * *
(i) A lessee of record (record title owner) in the lease; or
* * * * *
(c) If you want to terminate a designation you made under paragraph
(a) of this section, you must submit a revised Form MMS-4425 before the
termination stating:
* * * * *
Sec. 218.57 [Removed]
0
40. Remove Sec. 218.57.
Subpart D--Oil, Gas and Sulfur Offshore
Sec. 218.154 [Amended]
0
41. Amend Sec. 218.154, paragraph (c), by removing the words
``paragraph (a) of this section'' and adding in their place the words
``paragraph (b) of this section.''
0
42. Amend Sec. 218.155, paragraph (b)(2), by revising the fourth and
fifth sentences to read as follows:
Sec. 218.155 Method of payment.
* * * * *
(b) * * *
(2) * * * The one-fifth bonus amounts submitted with bids other
than the highest valid bid will be returned to respective bidders after
bids are opened, recorded, and ranked. Return of such amounts will not
affect the status, validity, or ranking of bids. * * *
* * * * *
PART 227--DELEGATION TO STATES
0
43. Amend Sec. 227.401(f) by revising to read as follows:
Sec. 227.401 What are a state's responsibilities if it processes
production reports or royalty reports?
* * * * *
(f) For production reports, maintain adequate system software edits
to ensure compliance with the provisions of 30 CFR part 210--Forms and
Reports, the MMS Minerals Production Reporter Handbook, any interagency
memorandum of understanding to which MMS is a party, and the Standards;
* * * * *
[FR Doc. E8-5929 Filed 3-25-08; 8:45 am]
BILLING CODE 4310-MR-P