42062 Federal Register / Vol. 62, No. 150 / Tuesday, August 5, 1997 / Rules and Regulations

been had the cost of goods sold for that

inventory property been determined under

S’s new method. Assume that the cost of the

inventory under this method would have

been $110, had the method applied to S’s

manufacture of the property in 1996. Thus,

S is required to revalue the amount of its

intercompany item to $40 (that is, $150 less

$110), necessitating a negative adjustment to

the intercompany item of $10. Moreover, S is

required to increase its adjustment under

section 481(a) by $10 in order to prevent the

omission of such amount by virtue of the

decrease in the intercompany item.

(iii) Availability of revaluation

methods. In revaluing the amount of any

intercompany item resulting from the

sale or exchange of inventory property

in an intercompany transaction to an

amount equal to the intercompany item

that would have resulted had the cost of

goods sold for that inventory property

been determined under the taxpayer’s

new method, a taxpayer may use the

other methods and procedures

otherwise properly available to that

particular taxpayer in revaluing

inventory under section 263A and the

regulations thereunder, including, if

appropriate, the various simplified

methods provided in section 263A and

the regulations thereunder and the

various procedures described in this

paragraph (c). (4) Anti-abuse rule—(i) In general.

Section 263A(i)(1) provides that the

Secretary shall prescribe such

regulations as may be necessary or

appropriate to carry out the purposes of

section 263A, including regulations to

prevent the use of related parties, passthru entities, or intermediaries to avoid

the application of section 263A and the

regulations thereunder. One way in

which the application of section 263A

and the regulations thereunder would

be otherwise avoided is through the use

of entities described in the preceding

sentence in such a manner as to

effectively avoid the necessity to restate

beginning inventory balances under the

change in method of accounting

required or permitted under section

263A and the regulations thereunder. (ii) Deemed avoidance of this

section—(A) Scope. For purposes of this

paragraph (c), the avoidance of the

application of section 263A and the

regulations thereunder will be deemed

to occur if a taxpayer using the LIFO

method of accounting for inventories,

transfers inventory property to a related

corporation in a transaction described in

section 351, and such transfer occurs:

(1) On or before the beginning of the

transferor’s taxable year beginning in

1987; and

(2) After September 18, 1986.

(B) General rule. Any transaction

described in paragraph (c)(4)(ii)(A) of

this section will be treated in the

following manner:

(1) Notwithstanding any provision to

the contrary (for example, section 381),

the transferee corporation is required to

revalue the inventories acquired from

the transferor under the provisions of

this paragraph (c) relating to the change

in method of accounting and the

adjustment required by section 481(a),

as if the inventories had never been

transferred and were still in the hands

of the transferor; and

(2) Absent an election as described in

paragraph (c)(4)(iii) of this section, the

transferee must account for the

inventories acquired from the transferor

by treating such inventories as if they

were contained in the transferee’s LIFO

layer(s). (iii) Election to use transferor’s LIFO

layers. If a transferee described in

paragraph (c)(4)(ii) of this section so

elects, the transferee may account for

the inventories acquired from the

transferor by allocating such inventories

to LIFO layers corresponding to the

layers to which such properties were

properly allocated by the transferor,

prior to their transfer. The transferee

must account for such inventories for all

subsequent periods with reference to

such layers to which the LIFO costs

were allocated. Any such election is to

be made on a statement attached to the

timely filed federal income tax return of

the transferee for the first taxable year

for which section 263A and the

regulations thereunder applies to the

transferee.

(iv) Tax avoidance intent not

required. The provisions of paragraph

(c)(4)(ii) of this section will apply to any

transaction described therein, without

regard to whether such transaction was

consummated with an intention to

avoid federal income taxes.

(v) Related corporation. For purposes

of this paragraph (c)(4), a taxpayer is

related to a corporation if— (A) the relationship between such

persons is described in section

267(b)(1), or

(B) such persons are engaged in trades

or businesses under common control

(within the meaning of paragraphs (a)

and (b) of section 52).

(d) Non-inventory property—(1) Need

for adjustments. A taxpayer that

changes its method of accounting for

costs subject to section 263A with

respect to non-inventory property must

revalue the non-inventory property on

hand at the beginning of the year of

change as set forth in paragraph (d)(2)

of this section, and compute an

adjustment under section 481(a). The

adjustment under section 481(a) will

equal the difference between the

adjusted basis of the property as

revalued using the taxpayer’s new

method and the adjusted basis of the

property as originally valued using the

taxpayer’s former method.

(2) Revaluing property. A taxpayer

must revalue its non-inventory property

as of the beginning of the year of change

in method of accounting. The facts and

circumstances revaluation method of

paragraph (c)(2)(iii) of this section must

be used to revalue this property. In

revaluing non-inventory property,

however, the only additional section

263A costs that must be taken into

account are those additional section

263A costs incurred after the later of

December 31, 1986, or the date the

taxpayer first becomes subject to section

263A, in taxable years ending after that

date. See § 1.263A–1(d)(3) for the

definition of additional section 263A

costs.

§ 1.263A–7T [Removed]

Par. 5. Section 1.263A–7T is removed.

§ 1.263A–15 [Amended]

Par. 6. Section 1.263A–15 is amended

by removing ‘‘1.263A–7T (e) generally’’

from the last sentence in paragraph

(a)(1) and replacing it with ‘‘1.263A–7’’.

Dated: July 28, 1997.

Michael P. Dolan,

Acting Commissioner of Internal Revenue.

Donald C. Lubick,

Acting Assistant Secretary of the Treasury.

[FR Doc. 97–20530 Filed 8–4–97; 8:45 am]

BILLING CODE 4830–01–U

DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR Parts 210 and 218

RIN 1010–AC38

Designation of Payor Recordkeeping

AGENCY: Minerals Management Service,

Interior.

ACTION: Interim final rulemaking.

SUMMARY: The Minerals Management

Service (MMS) Royalty Management

Program (RMP) is amending its

regulations to authorize the collection of

information from lessees and payors

concerning designations by lessees of

other persons to make royalty and other

payments on their behalf.

DATES: This rule is effective August 5,

1997. Comments regarding this interim

final rulemaking and the information

collection must be received on or before

October 6, 1997.

ADDRESSES: Comments should be sent

to: David S. Guzy, Chief, Rules and

Publications Staff, Royalty Management
Federal Register / Vol. 62, No. 150 / Tuesday, August 5, 1997 / Rules and Regulations 42063

Program, Minerals Management Service,

P.O. Box 25165, MS 3021, Denver,

Colorado 80225–0165; courier delivery

to Building 85, Denver Federal Center,

Denver, Colorado 80225; or e-Mail

David—Guzy@mms.gov.

FOR FURTHER INFORMATION CONTACT:

David S. Guzy, Chief, Rules and

Publications Staff, Royalty Management

Program, Minerals Management Service,

telephone (303) 231–3432, Fax (303)

231–3385, e-Mail

DavidlGuzy@mms.gov.

SUPPLEMENTARY INFORMATION: The

principal authors of this rulemaking are

Kenneth R. Vogel, of the Minerals

Management Service Office of

Enforcement and Sarah Inderbitzin of

the Department of the Interior Office of

the Solicitor.

I. General

On August 13, 1996, Congress enacted

the Federal Oil and Gas Royalty

Simplification and Fairness Act of 1996,

Pub. L. 104–185, as corrected by Pub. L.

104–200 (RSFA). RSFA amends portions

of the Federal Oil and Gas Royalty

Management Act of 1982 (FOGRMA), 30

U.S.C. 1701 et seq., to provide that an

owner of operating rights in a Federal

oil and gas lease onshore or on the

Outer Continental Shelf (OCS) is

primarily liable for royalty payments

owed on its portion of its lease, and that

the owners of record title for such lease

are secondarily liable, 30 U.S.C. 1712(a).

It also allows lessees, which include

both operating rights and record title

owners, 30 U.S.C. 1701(7), to designate

another person to pay royalties on their

behalf by written notice to MMS, 30

U.S.C. 1712(a). Finally, it provides that

the persons so designated are not liable

for any payment obligations under such

leases. Id. This rule provides a

mechanism to make the match between

lessees and the persons they designate

to make royalty and other payments on

their behalf consistent with RSFA and

existing royalty collection practices.

Prior to the enactment of RSFA, MMS

would allow any person to report and

pay royalties and other payments on a

Federal oil and gas lease onshore or on

the OCS simply by declaring itself a

‘‘payor’’ for the lease and filing a Form

MMS–4025, Payor Information Form

(PIF) (OMB 1010–0033). 30 CFR

210.10(c)(3). MMS’s Auditing and

Financial System (AFS) requires that a

royalty payor file a PIF for oil and gas

or Form MMS–4030, Solid Minerals

Payor Information Form, and be

assigned a payor code before the system

will accept the monthly Form MMS–

2014, Report of Sales and Royalty

Remittance. See the MMS ‘‘Oil and Gas

Payor Handbook,’’ Volume 1, at Chapter

2; and the MMS ‘‘Solid Minerals Payor

Handbook’’ at Chapter 2.

A key to this reporting system is the

MMS Accounting Identification Number

(AID). The AID is a 13-digit number in

two parts. The first 10 digits are an

MMS assigned lease number, which is

converted from the Bureau of Land

Management (BLM) or MMS Offshore

Minerals Management (OMM) lease

number. It consists of a three-digit

prefix, a six-digit body, and a one or 2-

digit suffix. The last three digits of the

AID are the MMS assigned revenue

source number. A revenue source

generally is one of the following as

specified in MMS’s Oil and Gas Payor

Handbook:

• Lease production—one or more

wells on the lease where the lease is not

committed to a unit or communitization

agreement (CA);

• Unitized production allocation—the

participating area (PA) of a unit under

which a lease receives production

allocation, or a secondary recovery unit;

• Communitized production

allocation—the CA under which a lease

receives a production allocation; or

• Compensatory royalty—a

compensatory royalty assessment or

agreement.

These distinctions are not readily

discoverable from the legal descriptions

contained in lease assignments and

other legal documents.

Currently, when MMS determines

either through its automated compliance

procedures or an audit that royalties are

underpaid, MMS will bill or order

payment from the payor for the

deficiency. The payor is billed because

that is the person for whom MMS has

information in its system regarding that

production; RMP does not maintain data

on the record title owner(s) or operating

rights owner(s) for which the payor is

making payments. Therefore, while

other persons may be liable for some or

all of the royalty deficiency (such as the

record title owner or an operating rights

owner), MMS has historically

considered that the person who filed the

PIF would be liable for underpaid

royalties.

In Mesa Operating Limited

Partnership, 125 IBLA 28(1992)

(Modified on Reconsideration), 128

IBLA 174 (1994), Mesa filed PIFs and

paid MMS royalties on production it

purchased from several Indian oil and

gas leases. Mesa did not own any

interest in those leases. MMS ordered

Mesa to pay additional royalties found

to be owed on those leases. Mesa

administratively appealed MMS’s order

and the Interior Board of Land Appeals

held that a payor does not become liable

simply by filing a PIF with the MMS,

but rather some other evidence of

assignment of liability must be

presented. Although IBLA found Mesa

liable for other reasons, thereafter MMS

published a Federal Register notice of

proposed rulemaking titled

‘‘Amendments of Regulations to

Establish Liability for Royalty Due on

Federal and Indian Leases, and to

Establish Responsibility to Pay and

Report Royalty and Other Payments (60

FR 30492, 06/09/97). In that rulemaking,

MMS proposed to make payors, owners

of working interests and lessees of

record, among others, all potentially

liable for unpaid or underpaid royalties

and other payments.

RSFA resolved statutorily which

parties are liable for royalty and other

payments on Federal oil and gas leases

onshore and on the OCS for production

after September 1, 1996. Under RSFA,

the person owning operating rights in a

lease is primarily liable for its pro rata

share of payment obligations under a

lease, and the person owning record

title is secondarily liable for its pro rata

share of payment obligations under the

lease. 30 U.S.C. 1712(a). RSFA also

provides that the lessee may designate

a person (Designee) to make all or part

of the payments due under a lease on

the lessee’s behalf. Id. Under RSFA,

lessees must notify MMS (or a delegated

State, if applicable) in writing of such

designation. Id. The Designee may then

make payments, file reports, offset and

credit monies, make adjustments to

reports and request and receive refunds,

all in its own name on the lessee’s

behalf. However, RSFA mandates that

the Designee is not liable for the

obligations of the lessee for which it is

paying and reporting. Id.

RSFA is applicable to all royalties and

other payments due on production from

Federal oil and gas leases after

September 1, 1996. Thus, for royalty

payments made for September 1996,

which were due by the end of October

1996, RSFA required all lessees either to

pay on their own behalf or to designate

another person to make payments on

their behalf.

As stated above, MMS does not

maintain information on the lessee for

which a payor is paying royalties or

other payments. Although BLM is

responsible for maintaining record title

and operating rights ownership records

for Federal oil and gas leases onshore,

and MMS has the same responsibility

for such leases on the OCS, neither BLM

nor MMS Offshore have information

matching lessees to their payors.

Accordingly, in an attempt to decide

how to best collect payment

responsibility information to implement
42064 Federal Register / Vol. 62, No. 150 / Tuesday, August 5, 1997 / Rules and Regulations

RSFA, MMS met with the

representatives of several oil and gas

trade associations and several States

that share in oil and gas royalties under

the Mineral Leasing Act of 1920, 30

U.S.C. 191, and the Outer Continental

Shelf Lands Act of 1953, 43 U.S.C. 1339.

In those meetings, the participants

generally agreed that many lessees

would not be able to tell MMS how they

may have assigned royalty payment

responsibility for each portion of their

lease in terms that are readily

translatable into the MMS accounting

system. Therefore, lessees will require

assistance from MMS to comply with

RSFA’s mandate that they designate a

payor. The participants, many of whom

were royalty payors as well as lessees,

recommended that MMS get an initial

listing of supposed Designees, by

inquiring of the current payors whether

they were paying on their own behalf

(as lessee) or on behalf of someone else.

The participants generally agreed that

MMS should then send a notification to

all lessees, listing the leases they owned

by AID, and the person or persons who

were paying on each lease on the

lessee’s behalf, for each product on the

lease for which the person was paying,

when that was appropriate. Lessees

would then use that list to designate the

person(s) responsible for making lease

payments on the lessee’s behalf.

The term payor includes both

Designees, who are reporting and paying

royalties on behalf of lessees other than

themselves, and lessees who are

reporting and paying their own royalty.

In many cases, a payor may be both a

lessee and a Designee on the same lease.

In fact, they may (and commonly do)

report both their own payment and the

payments of lessees who (will)

designate them on the same royalty line.

If that line is either underpaid or paid

late, MMS will send a demand to the

payor, and for production subject to

RSFA, MMS will send a notice to those

lessees who have designated the payor

to pay for them with respect to that line.

This rule gives MMS the authority to

collect the information necessary to

match a lessee to that underpaid (or

untimely paid) royalty line.

Since enactment of RSFA, MMS

designed a database that will allow it to

match lessees with their Designees. To

gather the initial information matching

payors to lessees, on January 9, 1997,

MMS sent a letter to approximately

2,500 oil and gas payors. Attached to

that letter was a listing of all leases for

which MMS data showed that the payor

was reporting and making payments to

MMS. The payors were requested to

voluntarily fill in missing information,

listing the lessees for which they were

reporting, and making payments to

MMS by AID and product code, if

appropriate. The January 9, 1997, letter

was not in accordance with the

Paperwork Reduction Act (PRA), 44

U.S.C. 3512, because, due to an

unintentional oversight, MMS did not

properly send the Information

Collection Request (ICR) to the Office of

Management and Budget (OMB) for its

review, as the PRA mandates. MMS

apologizes for that oversight.

The purpose of this rule is to make

MMS’s requests to payors for

information missing in its database

mandatory, because, as stated above,

neither MMS, BLM, nor most lessees

have the information necessary to make

the match between lessees and their

payors. For this reason, MMS will

request data from time to time from

those parties who are payors in MMS’s

accounting system, and MMS will use

that data to send reports to lessees for

their confirmation of the designation of

payment responsibility to the payor.

Payors who voluntarily responded to

the January 9, 1997, letter requesting

similar information do not need to

provide the same information under the

rule that would duplicate information

already provided. However, the rule

does provide MMS with authority to

request clarification of information

submitted in response to the January 9,

1997, letter or the rule. Because the

information MMS requests is critical to

implementation of RSFA, and because

RSFA’s provisions relevant to this

information collection became effective

September 1, 1996, MMS is requesting

that OMB authorize emergency

processing and approval of this ICR.

This ICR and any requests in the future

will be mandatory under the provisions

of this regulation.

Respondents may respond to the

information requests required under this

rule electronically or in writing. MMS

prefers that respondents respond

electronically. MMS has created a

Comma Separated Value (CSV) file

structure, which is available as an

output type in most spreadsheet and

data base applications. MMS will offer

respondents a lease listing in computer

readable form (electronically) and also

will offer the telephone assistance of our

computer specialists.

III. Indian Lands and Non-Oil and Gas

Leases

RSFA is not applicable to Indian

leases and leases of minerals other than

oil and gas. MMS does not currently

need data in order to match lessees and

payors for such leases. However, MMS

may need the information for those

leases in the future. Therefore, this rule

also gives MMS the authority to collect

the data necessary to match the lessee

with the payor for each AID for Indian

leases and leases of minerals other than

oil and gas.

IV. Administrative Procedure Act

MMS has determined that the notice

and comment that the Administrative

Procedure Act (APA), 5 U.S.C. 553(b),

ordinarily mandates, are not required in

this interim final rulemaking. APA

authorizes agencies to waive notice and

comment procedures when the agency

‘‘for good cause finds * * * that notice

and public procedure thereon are

impracticable, unnecessary, or contrary

to the public interest.’’ 5 U.S.C.

553(b)(B). MMS for good cause finds

that notice and comment procedures for

this rulemaking are impracticable and

contrary to the public interest because

they would delay implementation of

RSFA’s liability scheme which became

effective for production after September

1, 1996. In addition, advance public

notice and comment are unnecessary

and contrary to public interest because

the interim rule substantially restates

the information collection provisions in

the January 9, 1997, letter sent to all

payors, and implements the request

from lessees at the meetings discussed

above that MMS assist them to comply

with RSFA’s mandate that they

designate a Designee.

MMS also has determined that the 30-

day delay of effectiveness provisions of

the APA may be waived in this

rulemaking. Section 553(d) of the APA

permits waiver of the 30-day delayed

effective date requirement for, inter alia,

good cause. MMS finds that good cause

exists for the same reasons stated above.

Accordingly, the interim final rule will

be immediately effective upon

publication in the Federal Register.

Nevertheless, MMS seeks the benefit of

public comment. Accordingly, MMS

invites interested persons to submit

comments during the 60-day comment

period. MMS may revise the interim

final rule later in a final rule as

appropriate based on those comments.

While this is an interim final rule,

MMS intends to publish a notice of

proposed rulemaking by the end of 1997

making more permanent the process for

collecting designations from lessees. To

aid public participation in that

rulemaking, MMS will post comments

received on this rule on the Internet at

http://www.rmp.mms.gov.
Federal Register / Vol. 62, No. 150 / Tuesday, August 5, 1997 / Rules and Regulations 42065

V. Section-by-Section Analysis

30 CFR Part 210

Section 210.55 Special Forms or

Reports.

This section’s contents are amended

to give MMS the authority to require

special reports by lessees and other

persons who report and pay royalties. In

particular, MMS may require such

persons to submit information necessary

for MMS to assure that lessees properly

designate their Designees in a form that

MMS can use in its database. The

information will document the

relationship between lessees, their

lease(s), or portion(s) thereof, and the

person(s) they designate to make

payments to MMS on their behalf. As

payors already are familiar with the

MMS accounting system, MMS may

require them to submit the information

connecting the AID on which they are

paying and the lessees for whom they

are paying.

In addition to the name of the lessee,

MMS may also require payors to tell

MMS the address of that person and, if

they have the information, the taxpayer

identification number (TIN) of the

lessee. MMS requires the current

address in order to communicate with

the lessee so that lessees are informed

of the requirements of RSFA to

designate a Designee, if they are not

making payments to MMS on their own.

MMS will also need the lessee’s address

to send notices to the lessee when

demands are sent to payors, who are

paying on their behalf. MMS requires

the TIN to inform the Internal Revenue

Service when MMS pays interest on

overpayments under the requirements of

RSFA, section 6. This section would

also require persons whom a payor

identifies it is making payments for to

provide information to MMS.

30 CFR Part 218

Section 30 CFR 218.52 How does a

lessee designate a Designee?

This section would be revised to

explain how lessees make designations

under RSFA section 6(g) and what

information must be in such

designations. MMS will need the name

and address of each Designee, as well as

the necessary accounting information to

identify the payments made on your

behalf as lessee. MMS will also need to

know the start and end dates of the

Designee’s responsibility and whether

the designation is limited to certain

payments, for instance, just minimum

royalty, or certain products, for

instance, if you choose to designate your

gas purchaser as the Designee for gas

royalty only.

VI. Procedural Matters

The Regulatory Flexibility Act

MMS has calculated a reporting

burden of $840 for a typical small entity

that reports and pays oil and gas

royalties on Federal leases. About 2,400

small entities in the oil and gas industry

will be affected by this rule.

Accordingly, this rule will not have a

significant economic impact on a

substantial number of small entities.

This rule provides for the format in

which information needed to comply

with the requirements of the Federal Oil

and Gas Royalty Simplification and

Fairness Act of 1996, Pub. L. 104–185,

August 13, 1996, as corrected by Pub. L.

104–200.

Executive Order 12630

The Department certifies that the rule

does not represent a governmental

action capable of interference with

constitutionally protected rights. Thus,

a Takings Implication Assessment need

not be prepared under Executive Order

12630, ‘‘Governmental Actions and

Interference with Constitutionally

Protected Property Rights.’’

Executive Order 12866

This rule is a significant rule under

executive Order 12866 and has been

reviewed by the Office of Management

and Budget. MMS’ analysis indicates

the rule will have a total reporting cost

of $3.1 million. Since the rule will have

an annual effect on the economy of less

than $100 million, the rule does not

have a significant economic effect as

defined by Executive Order 12866.

Executive Order 12988

The Department has certified to OMB

that this rule meets the applicable

reform standards provided in Section

3(a) and 3(b)(2) of Executive Order

12988.

Paperwork Reduction Act of 1995

The MMS submitted the information

collection contained in this interim final

rulemaking to the Office of Management

and Budget (OMB) with a request for

emergency processing. It was approved

by OMB and assigned OMB Control

Number 1010-0107.

With this notice, we are starting the

60-day comment period. As part of our

continuing effort to reduce paperwork

and respondent burdens, we invite the

public and other Federal agencies to

comment on any aspect of the reporting

burden imposed by this interim final

rulemaking. Submit your comments to

David, S. Guzy, Chief, Rules and

Publications Staff, Royalty Management

Program, Minerals Management Service,

P.O. Box 25165; courier delivery to

Building 85, Denver Federal Center,

Denver, Colorado 80225; or e-mail

DavidlGuzy@mms.gov.

The Paperwork Reduction Act of 1995

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.

OMB has up to 60 days to approve or

disapprove this collection of

information but may respond after 30

days from receipt of our request.

Therefore, your comments are best

assured of being considered by OMB if

they are received by OMB within 30

days of publication of this notice.

However, MMS will consider all

comments received during the comment

period for this notice of interim final

rulemaking.

In compliance with the Paperwork

Reduction Act of 1995, Section 3506

(c)(2)(A), we are notifying you, members

of the public and affected agencies, of

this collection of information, and are

inviting your comments. Is this

information collection necessary for us

to properly do our job? Have we

accurately estimated the industry

burden for responding to this

collection? Can we enhance the quality,

utility, and clarity of the information we

collect? Can we lessen the burden of

this information collection on the

respondents by using automated

collection techniques or other forms of

information technology?

This information collection is titled

Designation of Royalty Payment

Responsibility. RSFA provides that

owners of operating rights are primarily

liable for royalty payments on their

portions of their leases, and that owners

of record title are secondarily liable. The

Act allows lessees, operating rights

owners and/or record title owners, to

designate another person to pay

royalties on their behalf by a written

instrument filed with the Secretary.

Finally, RSFA provides that the

designated persons, designees, are not

liable. This collection of information

provides a mechanism for identifying

lessees and their designees.

Currently, it is common for a payor

rather than a lessee to make royalty and

related payments on a Federal lease.

When a payor pays royalties on a

Federal lease on behalf of a lessee,

RSFA requires that the lessee designate

the payor as its designee. We are

requiring each payor to provide us

information regarding the lessee on

whose behalf they are paying because

we need to know who all the lessees are

in order to inform them of their

obligation to designate a payor to be
42066 Federal Register / Vol. 62, No. 150 / Tuesday, August 5, 1997 / Rules and Regulations

their lawful designee by a written

instrument filed with the Secretary.

RSFA made this payor designation

requirement effective for lease

production beginning September 1,

1996. We are asking payors and lessees

to provide data required under RSFA so

that we can fully implement the Act.

The hour burden for approximately

2,500 payors to respond to this

collection of information is estimated at

60,000 hours. Payors have told us that

to gather, collate, and enter required

MMS data, line-by-line on a report or

computer generated file, takes them

approximately 1/2 hour per data line; an

average payor will have approximately

48 original data lines (one original line

of data will result in multiple lines of

data when the payor is the designee and

is reporting for multiple lessees). We

estimate that we will receive 120,000

original data lines.

2,500 payors × 48 original data lines × 1⁄2 hour per data line = 60,000

burden hours

The hour burden to lessees is

estimated at 30,000 hours. The MMS

will develop reports that consolidate the

payor-provided data for all leases for

which the lessees are presumed to have

designees. The lessee may confirm the

information on these reports and/or

modify the reports by amending and/or

correcting the report information. We

estimate that a lessee will take

approximately 3/4 hour per

confirmation request.

20,000 lessees × 2 confirmation requests

× 3/4 hour per request = 30,000

burden hours

Unfunded Mandate Reform Act of 1995

The Department has determined and

certifies according to the Unfunded

Mandates Reform Act, 2 U.S.C. 1502 et

seq., that this rule will not impose a cost

of $100 million or more in any given

year on local, Tribal, State governments

or the private sector.

National Environmental Policy Act of

1969

We have determined that this

rulemaking is not a major Federal action

significantly affecting the quality of the

human environment, and a detailed

statement under section 102(2)(C) of the

National Environmental Policy Act of

1969 (42 U.S.C. 4332(2)(C) is not

required.

List of Subjects

30 CFR Part 210

Coal, Continental shelf, Geothermal

energy, Government contracts, Indian

lands, Mineral royalties, Natural gas,

Petroleum, Public lands—mineral

resources, Reporting and recordkeeping

requirements.

30 CFR Part 218

Coal, Continental shelf, Electronic

funds transfers, Geothermal energy,

Government contracts, Indian lands,

Mineral royalties, Natural gas,

Petroleum, Penalties, Public lands—

mineral resources, Reporting and

recordkeeping requirements.

Dated: July 10, 1997.

Sylvia V. Baca,

Deputy Assistant Secretary for Land and

Minerals Management.

For the reasons stated in the

preamble, MMS amends 30 CFR parts

210 and 218 as follows:

PART 210—FORMS AND REPORTS

1. The authority citation for Part 210

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. 3716 et seq., 3720A

et seq., 9701 et seq.; 43 U.S.C. 1301 et seq.,

1331 et seq., and 1801 et seq.

2. Section 210.55 is revised to read as

follows:

§ 210.55 Special Forms or Reports.

(a) MMS may require you to submit

additional information, forms, or reports

other than those specifically referred to

in this subpart. MMS will give you

instructions for providing such

information or filing such reports or

forms. MMS will make requests for

additional information, forms, or reports

under this section in conformity with

the Paperwork Reduction Act of 1995,

44 U.S.C. 3501, and other applicable

laws.

(b) If you file a Form MMS–4025,

Payor Information Form (PIF) under

§ 210.51, you must provide the

following information to MMS upon

request for each PIF:

(1) The AID number for the lease;

(2) The name, address, Taxpayer

Identification Number (TIN), and phone

number of the person for whom you are

reporting and paying royalties or

making other payments under the PIF;

(3) Whether the person you named in

paragraph (b)(2) of this section with

respect to the lease for which you filed

the PIF is a:

(i) Lessee of record (record title

owner);

(ii) Operating rights owner (working

interest owner); or

(iii) Operator;

(4) The name, address, and phone

number of the individual to contact for

the person you named in paragraph

(b)(2) of this section;

(5) Your TIN; and

(6) Whether you are the Designee of

the person you named in paragraph

(b)(2) of this section under 30 U.S.C.

1712(a), and, if so:

(i) The date your designation became

effective; and

(ii) The date your designation

terminates, if applicable; and

(iii) A copy of the written designation;

(c) If you have been identified under

paragraph (b)(2) of this section, you

must provide the following information

to MMS upon request:

(1) Confirmation that you are the

person identified under paragraph (b)(2)

of this section;

(2) Confirmation that the person

identified in paragraph (b)(6) of this

section is your designee; and

(3) A designation under § 218.52 of

this title if the person identified in

paragraph (b)(6) of this section is not

your Designee, and if you are not

reporting and paying royalties and

making other payments to MMS.

PART 218—COLLECTION OF

ROYALTIES, RENTALS, BONUSES

AND OTHER MONIES DUE THE

FEDERAL GOVERNMENT

1. The authority citation for Part 218

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. 3716 et seq., 3720A

et seq., 9701 et seq.; 43 U.S.C. 1301 et seq.,

1331 et seq., and 1801 et seq.

2. Section 218.52 is revised to read as

follows:

§ 218.52 How does a lessee designate a

Designee?

(a) If you are a lessee under 30 U.S.C.

1701(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. Your notification for each

lease must include the following:

(1) The AID number for the lease;

(2) The type of products you make

payments for e.g., oil, gas.

(3) The type of payments you are

responsible for e.g., royalty, minimum

royalty, rental.

(4) Whether you are:

(i) A lessee of record (record title

owner) in the lease, and the percentage

of your record title ownership in the

lease; or

(ii) An operating rights owner

(working interest owner) in the lease,

and the percentage of your operating

rights ownership in the lease;
Federal Register / Vol. 62, No. 150 / Tuesday, August 5, 1997 / Rules and Regulations 42067

(5) The name, address, Taxpayer

Identification Number (TIN), and phone

number of your Designee;

(6) The name, address, and phone

number of the individual to contact for

the person you named in paragraph

(a)(5) of this section;

(7) Your TIN;

(8) The date the designation is

effective;

(9) The date the designation

terminates, if applicable, and

(10) A copy of the written

designation;

(b) The person you designate under

paragraph (a) of this section is your

Designee under 30 U.S.C. 1701(24) and

30 U.S.C. 1712(a).

(c) If you want to terminate a

designation you made under paragraph

(a) of this section, you must provide to

MMS in writing before the termination:

(1) The date the designation is due to

terminate; and

(2) If you are not reporting and paying

royalties and making other payments to

MMS, a new designation under

paragraph (a) of this section.

(d) MMS may require you to provide

notice when there is a change in the

percentage of your record title or

operating rights ownership.

[FR Doc. 97–20592 Filed 8–4–97; 8:45 am]

BILLING CODE 4310–MR–P

DEPARTMENT OF TRANSPORTATION

Coast Guard

33 CFR Part 100

[CGD 05–97–012]

RIN 2115–AE46

Special Local Regulations for Marine

Events; Assateague Channel,

Chincoteague, Virginia

AGENCY: Coast Guard, DOT.

ACTION: Final rule.

SUMMARY: The Coast Guard is amending

permanent special local regulations

established for an annual marine event

held in the Assateague Channel,

Chincoteague, Virginia by including an

additional event for which the regulated

area will be in effect. This rule updates

the regulation in order to enhance the

safety of life and property during the

events.

EFFECTIVE DATE: This final rule is

effective on September 4, 1997.

FOR FURTHER INFORMATION CONTACT: S.L.

Phillips, Project Manager, Auxiliary

Branch, at (757) 398–6204.

SUPPLEMENTARY INFORMATION:

Regulatory History

On April 21, 1997, the Coast Guard

published a notice of proposed

rulemaking entitled special Local

Regulations for Marine Events;

Assateague Channel, Chincoteague,

Virginia, in the Federal Register (62 FR

19239). The Coast Guard received no

comments on the proposed rulemaking.

No public hearing was requested, and

none was held.

Background and Purpose

Title 33 of the Code of Federal

Regulations, section 100.519 established

special local regulations for the Pony

Penning Swim, a marine event held

annually in the Assateague Channel,

Chincoteague, Virginia. Since the

promulgation of 33 CFR § 100.519, an

additional marine event, the

Chincoteague Power Boat Regatta, has

been approved and scheduled on an

annual basis in the regulated area. This

rule adds the Chincoteague Power Boat

Regatta to the list of events for which

the regulations will be in effect, thereby

eliminating the need for issuance of

temporary rules for this event. This rule

is necessary to control vessel traffic

during the event to enhance the safety

of participants, spectators, and

transiting vessels.

Discussion of Comments and Changes

The Coast Guard received no

comments on the proposed rulemaking.

Therefore, the proposed rule is being

implemented without change.

Regulatory Evaluation

This rule is not a significant

regulatory action under section 3(f) of

Executive Order 12866 and does not

require an assessment of potential costs

and benefits under section 6(a)(3) of that

order. It has been exempted from review

by the Office of Management and

Budget under that order. It is not

significant under the regulatory policies

and procedures of the Department of

Transportation (DOT) (44 FR 11040;

February 26, 1979). The Coast Guard

expects the economic impact of this

final rule to be so minimal that a full

Regulatory Evaluation under paragraph

10e of the regulatory policies and

procedures of DOT is unnecessary.

Small Entities

Under the Regulatory Flexibility Act

(5 U.S.C. 601–612), the Coast Guard

must consider whether this rule will

have a significant economic impact on

a substantial number of small entities.

‘‘Small entities’’ include independently

owned and operated small businesses

that are not dominant in their field and

that otherwise qualify as ‘‘small

business concerns’’ under section 3 of

the Small Business Act (15 U.S.C. 632).

This rule does not impose any new

restrictions on vessel traffic. It merely

changes the effective period of the

regulation and adds a Table which

identifies specific events during which

the regulated area will be in effect.

Therefore, the Coast Guard certifies

under Section 605(b) of the Regulatory

Flexibility Act (5 U.S.C. 601–612) that

this final rule will not have a significant

economic impact on a substantial

number of small entities.

Collection of Information

This final rule contains no collection

of information requirement under the

Paperwork Reduction Act of 1995 (44

U.S.C. 3501–3520).

Federalism

The Coast Guard has analyzed this

rule under the principles and criteria

contained in Executive Order 12612 and

has determined that this rule does not

have sufficient federalism implications

to warrant the preparation of a

Federalism Assessment.

Environment

The Coast Guard considered the

environmental impact of this rule and

concluded that, under section

2.b.2.e(34) (h) of Commandant

Instruction M16475.1b (as amended, 61

FR 13564; 27 March 1996), this rule is

categorically excluded from further

environmental documentation.

List of Subjects in 33 CFR Part 100

Marine Safety, Navigation (water),

Reporting and recordkeeping

requirements, Waterways

For the reasons set out in the

preamble, the Coast Guard proposes to

amend 33 CFR Part 100 as follows:

PART 100—[AMENDED]

1. The authority citation for Part 100

continues to read as follows:

Authority: 33 U.S.C. 1233; 49 CFR 1.46 and

33 CFR 100.35.

2. Section 100.510 is amended by

revising paragraphs (b)(1) and (c) and

adding Table 1 to read as follows:

§ 100.519 Assateague Channel,

Chincoteague, Virginia.

* * * * *

(b) Special local regulations.

(1) Except for participants registered

with the event sponsor and vessels

authorized by the Coast Guard Patrol

Commander, no person or vessel may

enter or remain in the regulated area