Agency Information Collection Activities: Proposed Collection, Comment Request

AGENCY:

Minerals Management Service (MMS), Interior.

ACTION:

Notice of a revision of a currently approved information collection (OMB control number 1010-0107).

SUMMARY:

To comply with the Paperwork Reduction Act of 1995 (PRA), we are inviting comments on a collection of information that we will submit to the Office of Management and Budget (OMB) for review and approval. We changed the title of this information collection request (ICR) to clarify the regulatory language we are covering under 30 CFR part 218. The previous title of this ICR was “30 CFR part 218, subpart B—Oil and Gas, General.” The new title of this ICR is “30 CFR part 218, subpart A—General Provisions, § 218.42 Cross-lease netting in calculation of late-payment interest; subpart B—Oil and Gas, General, § 218.52 How does a lessee designate a Designee? (Form MMS-4425, Designation Form for Royalty Payment Responsibility) and § 218.53 Recoupment of overpayments on Indian mineral leases; and subpart E—Solid Minerals—General, § 218.203 Recoupment of overpayments on Indian mineral leases.”

DATES:

Submit written comments on or before December 20, 2004.

ADDRESSES:

Submit written comments to Sharron L. Gebhardt, Lead Regulatory Specialist, Minerals Management Service, Minerals Revenue Management, P.O. Box 25165, MS 302B2, Denver, Colorado 80225. If you use an overnight courier service, our courier address is Building 85, Room A-614, Denver Federal Center, Denver, Colorado 80225. You may also e-mail your comments to us at mrm.comments@mms.gov. Include the title of the information collection and the OMB control number in the “Attention” line of your comment. Also include your name and return address. Submit electronic comments as an ASCII file avoiding the use of special characters and any form of encryption. If you do not receive a confirmation that we have received your e-mail, contact Ms. Gebhardt at (303) 231-3211.

FOR FURTHER INFORMATION CONTACT:

Sharron L. Gebhardt, telephone (303) 231-3211, FAX (303) 231-3781, or e-mail Sharron.Gebhardt@mms.gov.

SUPPLEMENTARY INFORMATION:

Title: 30 CFR part 218, subpart A—General Provisions, § 218.42 Cross-lease netting in calculation of late-payment interest; subpart B—Oil and Gas, General, § 218.52 How does a lessee designate a Designee? (Form MMS-4425, Designation Form for Royalty Payment Responsibility) and § 218.53 Recoupment of overpayments on Indian mineral leases; and subpart E—Solid Minerals—General, § 218.203 Recoupment of overpayments on Indian mineral leases.

OMB Control Number: 1010-0107.

Bureau Form Number: Form MMS-4425.

Abstract: The Secretary of the U.S. Department of the Interior is responsible for collecting royalties from lessees who produce minerals from leased Federal and Indian lands. The Secretary is required by various laws to manage mineral resources production on Federal and Indian lands, collect the royalties due, and distribute the funds in accordance with those laws. The Secretary also has an Indian trust responsibility to manage Indian lands and seek advice and information from Indian beneficiaries. The MMS performs the royalty management functions and assists the Secretary in carrying out the Department's Indian trust responsibility.

When a company or an individual enters into a lease to explore, develop, produce, and dispose of minerals from Federal or Indian lands, that company or individual agrees to pay the lessor a share (royalty) of the value received from production from the leased lands. The lease creates a business relationship between the lessor and the lessee. The lessee is required to report various kinds of information to the lessor relative to the disposition of the leased minerals. Such information is similar to data reported to private and public mineral interest owners and is generally available within the records of the lessee or others involved in developing, transporting, processing, purchasing, or selling of such minerals. The information collected includes data necessary to ensure that the royalties are paid appropriately.

This ICR includes unique reporting circumstances including designation of designee, cross-lease netting in calculation of late-payment interest, and tribal permission for recoupment on Indian leases.

Applicable Public Laws

Applicable citations of the laws pertaining to mineral leases include Public Law 97-451—Jan. 12, 1983 (Federal Oil and Gas Royalty Management Act of 1982 [FOGRMA]), Public Law 104-185—Aug. 13, 1996 (Federal Oil and Gas Royalty Simplification and Fairness Act of 1996 [RFSA]) as corrected by Public Law 104-200—Sept. 22, 1996), and the Indian Mineral Development Act of 1982 (25 U.S.C. 2101 et seq.). Public laws pertaining to mineral royalties are located on our Web site at http://www.mrm.mms.gov/Laws_R_D/PublicLawsAMR.htm.

Designation of Designee

The RSFA established that owners of, primarily, operating rights or, secondarily, lease record title (both referred to as “lessees”) are responsible for making royalty and related payments on Federal oil and gas leases. These RSFA requirements were promulgated in regulations at 30 CFR 218.52. It is common, however, for a payor rather than a lessee to make these payments. When a payor makes payments on behalf of a lessee, RSFA section 6(g) requires that the lessee designate the payor as its designee and notify MMS of this arrangement in writing. The MMS designed Form MMS-4425, Designation Form for Royalty Payment Responsibility, to request all the information necessary for lessees to comply with these RSFA requirements when they choose to designate an agent to pay for them. The MMS requires this information to ensure proper mineral revenue collection.

Cross-Lease Netting in Calculation of Late-Payment Interest

Regulations at 30 CFR 218.54 require MMS to assess interest on unpaid or underpaid amounts. The MMS distributes these interest revenues to states, Indians, and the U.S. Treasury, based on financial lease distribution information. Current regulations at 30 CFR 218.42 provide that an overpayment on a lease or leases may be offset against an underpayment on a different lease or leases to determine the net payment subject to interest, when certain conditions are met. This is called cross-lease netting.

However, RSFA sections 6(a), (b), and (c) require MMS to pay interest on lessees' Federal oil and gas overpayments made on or after the February 13, 1997, enactment of RSFA. The MMS implemented this RSFA provision in 1997, and began calculating interest on both underpayments and overpayments for Federal oil and gas leases, making the cross-lease netting provisions at 30 CFR 218.42 no longer applicable for these leases. The MMS is currently developing regulations to amend 30 CFR 218.42 to limit its applicability to payments made under Indian tribal leases and Federal leases for minerals other than oil and gas. The MMS estimates that in about 7 cases per year, lessees must comply with the provisions of 30 CFR 218.42(b) and (c) for Indian tribal leases or Federal leases other than oil and gas, demonstrating that cross-lease netting is correct by submitting production reports, pipeline allocation reports, or other similar documentary evidence. This information is necessary for MMS to determine the correct amount of interest owed by the lessee, and to ensure proper value is collected.

Tribal Permission for Recoupment on Indian Leases

In order to report cross-lease netting on Indian leases, lessees must also comply with regulations at 30 CFR 218.53(b) and 218.203(b), allowing only lessees with written permission from the tribe to recoup overpayments on one lease against a different lease for which the tribe is the lessor. The payor must furnish MMS with a copy of the tribe's written permission. Generally, a payor may recoup an overpayment against the current month's royalties or other revenues owed on the same tribal lease. For any month, a payor may not recoup more than 50 percent of the royalties or other revenues owed in that month under an individual allotted lease or more than 100 percent of the royalties or other revenues owed in that month under a tribal lease. Lessees use Form MMS-2014, Report of Sales and Royalty Remittance, for oil and gas lease recoupments (burden covered under ICR 1010-0140, expires October 31, 2006) and Form MMS-4430, Solid Mineral Production and Royalty Report, for solid mineral lease recoupments (burden covered under ICR 1010-0120, expires October 31, 2007). The MMS requires tribal permission to ensure tribes and individual Indian mineral owners receive correct revenues from production on their leases.

Frequency: On occasion.

Estimated Number and Description of Respondents: 1,613 Federal and Indian lessees.

Estimated Annual Reporting and Recordkeeping “Hour” Burden: 1,220 hours.

The following chart shows the estimated burden hours by CFR section and paragraph:

We are revising this ICR to cover regulations at 30 CFR 218.42 (b) and (c), Cross-Lease Netting in Calculation of Late-Payment Interest and 30 CFR 218.203(b), Recoupment of Overpayments on Indian Mineral Leases. Previously addressed burden hours for 30 CFR 218.57 are currently covered in ICR 1010-0120 (expires October 31, 2007).

Estimated Annual Reporting and Recordkeeping “Non-hour Cost” Burden: We have identified no “non-hour cost” burdens.

Comments: The PRA (44 U.S.C. 3501 et seq.) 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. Before submitting an ICR to OMB, PRA Section 3506(c)(2)(A) requires each agency “* * * to provide notice * * * and otherwise consult with members of the public and affected agencies concerning each proposed collection of information * * *.” Agencies must specifically solicit comments to: (a) Evaluate whether the proposed collection of information is necessary for the agency to perform its duties, including whether the information is useful; (b) evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information; (c) enhance the quality, usefulness, and clarity of the information to be collected; and (d) minimize the burden on the respondents, including the use of automated collection techniques or other forms of information technology.

The PRA also requires agencies to estimate the total annual reporting “non-hour cost” burden to respondents or recordkeepers resulting from the collection of information. We have not identified non-hour cost burdens for this information collection. If you have costs to generate, maintain, and disclose this information, you should comment and provide your total capital and startup cost components or annual operation, maintenance, and purchase of service components. You should describe the methods you use to estimate major cost factors, including system and technology acquisition, expected useful life of capital equipment, discount rate(s), and the period over which you incur costs. Capital and startup costs include, among other items, computers and software you purchase to prepare for collecting information; monitoring, sampling, and testing equipment; and record storage facilities. Generally, your estimates should not include equipment or services purchased: (i) Before October 1, 1995; (ii) to comply with requirements not associated with the information collection; (iii) for reasons other than to provide information or keep records for the Government; or (iv) as part of customary and usual business or private practices.

We will summarize written responses to this notice and address them in our ICR submission for OMB approval, including appropriate adjustments to the estimated burden. We will provide a copy of the ICR to you without charge upon request. The ICR also will be posted on our Web site at http://www.mrm.mms.gov/Laws_R_D/FRNotices/FRInfColl.htm .

Public Comment Policy: We will post all comments in response to this notice on our Web site at http://www.mrm.mms.gov/Laws_R_D/FRNotices/FRInfColl.htm . We also will make copies of the comments available for public review, including names and addresses of respondents, during regular business hours at our offices in Lakewood, Colorado. Upon request, we will withhold an individual respondent's home address from the public record, as allowable by law. There also may be circumstances in which we would withhold from the rulemaking record a respondent's identity, as allowable by law. If you request that we withhold your name and/or address, state your request prominently at the beginning of your comment. However, we will not consider anonymous comments. We will make all submissions from organizations or businesses, and from individuals identifying themselves as representatives or officials of organizations or businesses, available for public inspection in their entirety.

MMS Information Collection Clearance Officer: Arlene Bajusz (202) 208-7744.