Agency Information Collection Activities: Submitted for Office of Management and Budget Review; Comment Request

AGENCY:

Minerals Management Service (MMS), Interior.

ACTION:

Notice.

SUMMARY:

To comply with the Paperwork Reduction Act (PRA) (44 U.S.C. 3501 et seq.), we are notifying you that we have submitted an information collection request (ICR) to the Office of Management and Budget (OMB) for review and approval. We are also soliciting your comments on this ICR, which describes the information collection, its expected costs and burden, and how the data will be collected.

DATES:

Written comments should be received on or before May 18, 2000.

ADDRESSES:

You may submit comments directly to the Office of Information and Regulatory Affairs, OMB, Attention: Desk Officer for the Department of the Interior (OMB Control Number 1010-0129), 725 17th Street, NW, Washington, DC 20503. Copies of these comments should also be sent to us. The U.S. Postal Service address is Minerals Management Service, Royalty Management Program, Rules and Publications Staff, PO Box 25165, MS 3021, Denver, Colorado 80225-0165; the courier address is Building 85, Room A-613, Denver Federal Center, Denver, Colorado 80225; and the email address is RMP.comments@mms.gov. Our practice is to make comments, including names and home addresses of respondents, available for public review during regular business hours. Individual respondents may request that we withhold their home address from the record, which we will honor to the extent allowable by law. There may be circumstances in which we would withhold from the record a respondent's identity, as allowable by the law. If you wish us to withhold your name and/or address, you must state this prominently at the beginning of your comments. 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.

FOR FURTHER INFORMATION CONTACT:

For questions concerning this collection of information, please contact Anne Ewell, RIK Study Team, telephone (703) 787-1584. You may also obtain copies of this collection of information at no cost by contacting Jo Ann Lauterbach, MMS's Information Collection Clearance Officer, at (202) 208-7744.

SUPPLEMENTARY INFORMATION:

Title: Bids and Financial Statements for Sale of Royalty Oil and Gas (RIK Pilots).

OMB Control Number: 1010-0129.

Bureau Form Number: Form MMS-4440, Summary of Receipt and Delivery Volumes.

Abstract: The Secretary of the Interior, under the Mineral Leasing Act (30 U.S.C. 192) and the Outer Continental Shelf Lands Act (43 U.S.C. 1353), is responsible for the management of royalties on minerals produced from leased Federal lands. MMS carries out these responsibilities for the Secretary. Most royalties are now paid in value—when a company or individual enters into a contract to develop, produce, and dispose of minerals from Federal lands, that company or individual agrees to pay the United States a share (royalty) of the full value received for the minerals taken from leased lands. MMS has undertaken several pilot programs to study the feasibility of taking the Government's royalty in the form of production, that is, as RIK. The collections of information addressed in this information collection request (ICR) are necessary because the Secretary of the Interior must hold competition when selling to the public; protect actual RIK production before, during, and after any sale; and obtain a fair return on royalty production sold. MMS must fulfill those obligations for the Secretary. The reporting requirements are as follows:

a. The actual bids potential purchasers will submit when MMS offers production for competitive sale;

b. Bidders' statements of financial qualification;

c. Form MMS-4440, Summary of Receipt and Delivery Volumes;

d. Report of Gas Analysis (RGA); and

e. Letters of Credit (LOC).

On May 24, 1999, OMB granted emergency approval for MMS to collect, from potential purchasers, their financial statements and their bids on Federal RIK oil or gas offered for sale by MMS. On August 4, 1999, MMS published a 60-day Federal Register Notice (64 FR 42410) soliciting public comments on MMS's request to renew OMB's approval to collect those two items of information. No comments were received.

As the pilots progressed, MMS recognized the need to collect three additional items-Form MMS-4440, RGA, and LOCs.

MMS will evaluate the bids to determine which competitive offer to purchase RIK is most advantageous to the Government. The financial statements will be used to evaluate the risk of a bidder not following through on all aspects of its offer, including timely taking of RIK and payment for it. At the request of some small businesses, MMS will accept LOCs to help offset that risk. A small number of purchasers will pay for RIK production by delivering like quality and quantities to a location designated by MMS. They will report monthly to MMS on Form MMS-4440, for each pipeline, the specific daily volumes and qualities (usually expressed as MMBtu's) of MMS's RIK natural gas volumes that the respondent has been nominated to receive/actually has received and similar information on volumes the respondent has been nominated to deliver and actually has delivered to MMS or its agent. MMS may occasionally ask for an RGA to verify the reported quality of such production at the delivery point.

If a company does not submit a timely competitive bid, MMS may not sell Federal RIK to them. Failure of MMS to evaluate a bidder's financial qualifications would increase the risk that a purchaser might fail to take the production, fail to reserve pipeline transportation to move it, fail to pay for it, or fail to deliver it to a delivery point designated by MMS. Such failures would likely incur storage costs, monetary penalties for failure to meet delivery due dates, or loss of the production. Administrative costs could be incurred to recover those costs as well. MMS would be unable to identify late delivery or under-delivery by contractors paying for RIK they have taken by delivering like value production to an MMS-designated delivery point if the contractors did not file Form MMS-4440. Failure to submit an RGA could impair MMS's ability to assure a full return on the sale of Federal royalty natural gas. If MMS could not accept LOCs, some small businesses might be disqualified from purchasing Federal royalty production.

No proprietary information will be submitted to MMS under this collection. No items of a sensitive nature are collected. Responses are required to obtain or retain benefits.

The PRA 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.

Estimated Number and Type of Respondents/Affected Entities: Approximately 37 companies who will submit one or multiple bids on Federal royalty oil or gas; 25 of them will also submit a financial statement and 5 may also submit an LOC. Of those who submit winning bids, a subset six will also submit Form MMS-4440 and an RGA.

Frequency of Response: Depending on the contract terms of MMS's offer, bids are accepted monthly, twice annually, or annually; bidders have the option to submit one or multiple bids. Form MMS-4440 is required monthly from a small subset of successful bidders who might also be asked to submit an RGA about once a year. Financial statements and LOCs are required about once a year.

Burden Statement and Estimated Annual Reporting and Recordkeeping “Hour”

Burden: We estimate the respondent burden to average 1 hour for each bid, financial statement, or LOC. Hard copies must be submitted for these three items. We estimate the respondent burden to average .5 hour per pipeline for Form MMS-4440 and .5 hour delivery point for each RGA, both of which may be submitted electronically. The total hour burden for these five requirements is 1,324 hours annually, including recordkeeping. Refer to the following chart:

Estimated Annual Reporting and Recordkeeping “Non-Hour Cost” Burden: This collection of information will require total capital start-up costs of $1,500 ($250 x 6 respondents) to adjust their automated production reporting systems to provide information to MMS in Form MMS-4440 format.

Comments: Section 3506(c)(2)(A) of the PRA 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.

Send your comments directly to the offices listed under the ADDRESSES section of this notice. OMB has up to 60 days to approve or disapprove the information collection but may respond after 30 days. Therefore, to ensure maximum consideration, OMB should receive public comments by May 18, 2000.

MMS Information Collection Clearance Officer: Jo Ann Lauterbach (202) 208-7744.