49460 Federal Register / Vol. 62, No. 183 / Monday, September 22, 1997 / Proposed Rules

Regulatory Policies and Procedures (44

FR 11034, February 26, 1979); and (3) if

promulgated, will not have a significant

economic impact, positive or negative,

on a substantial number of small entities

under the criteria of the Regulatory

Flexibility Act. A copy of the draft

regulatory evaluation prepared for this

action is contained in the Rules Docket.

A copy of it may be obtained by

contacting the Rules Docket at the

location provided under the caption

ADDRESSES.

List of Subjects in 14 CFR Part 39

Air transportation, Aircraft, Aviation

safety, Safety.

The Proposed Amendment

Accordingly, pursuant to the

authority delegated to me by the

Administrator, the Federal Aviation

Administration proposes to amend part

39 of the Federal Aviation Regulations

(14 CFR part 39) as follows:

PART 39—AIRWORTHINESS

DIRECTIVES

1. The authority citation for part 39

continues to read as follows:

Authority: 49 U.S.C. 106(g), 40113, 44701.

§ 39.13 [Amended]

2. Section 39.13 is amended by

removing amendment 39–8997 (59 FR

41235, August 11, 1994), and by adding

a new airworthiness directive (AD), to

read as follows:

British Aerospace: Docket : 96–NM–187–AD.

Supersedes AD 94–17–02, Amendment

39–8997.

Applicability: All Model BAC 1–11 200

and 400 series airplanes, certificated in any

category.

Note 1: This AD applies to each airplane

identified in the preceding applicability

provision, regardless of whether it has been

modified, altered, or repaired in the area

subject to the requirements of this AD. For

airplanes that have been modified, altered, or

repaired so that the performance of the

requirements of this AD is affected, the

owner/operator must request approval for an

alternative method of compliance in

accordance with paragraph (c) of this AD.

The request should include an assessment of

the effect of the modification, alteration, or

repair on the unsafe condition addressed by

this AD; and, if the unsafe condition has not

been eliminated, the request should include

specific proposed actions to address it.

Compliance: Required as indicated, unless

accomplished previously.

To prevent failure of the thrust reverser

control cables, which may lead to the

inability of the thrust reverser to deploy and/

or an uncommanded thrust reverser

deployment while the airplane is in flight,

accomplish the following:

(a) Within 100 hours time-in-service or 30

days after the effective date of this AD,

whichever occurs first, perform an inspection

to determine the tension of the control cables

of the thrust reverser, in accordance with

British Aerospace, Alert Service Bulletin 76–

A–PM6031, dated January 18, 1995. If the

tension of any control cable is outside the

limits specified in the alert service bulletin,

prior to further flight, correct the tension of

that cable in accordance with the alert

service bulletin. Thereafter, repeat the

inspection at intervals not to exceed 2,400

hours time-in-service or 12 months,

whichever occurs first.

(b) Within 100 hours time-in-service or 30

days after the effective date of this AD,

whichever occurs first, perform an inspection

to detect breakage, damage, wear, or signs of

corrosion (swelling) of the control cable of

the thrust reverser, in accordance with

British Aerospace Alert Service Bulletin 76–

A–PM6031, dated January 18, 1995.

(1) If no discrepancy is found, prior to

further flight, lubricate the cables in

accordance with the alert service bulletin.

Thereafter, repeat the inspection at intervals

not to exceed 2,400 hours time-in-service or

12 months, whichever occurs first.

(2) If any control cable is damaged, is worn

beyond the limits specified in the alert

service bulletin, is corroded, or has a broken

wire, prior to further flight, replace the

discrepant cable with a serviceable cable, and

lubricate the cables in accordance with the

alert service bulletin. Thereafter, repeat the

inspection at intervals not to exceed 2400

hours time-in-service or 12 months after the

effective date of this AD, whichever occurs

first.

(c) An alternative method of compliance or

adjustment of the compliance time that

provides an acceptable level of safety may be

used if approved by the Manager,

Standardization Branch, ANM–113, FAA,

Transport Airplane Directorate. Operators

shall submit their requests through an

appropriate FAA Principal Maintenance

Inspector, who may add comments and then

send it to the Manager, Standardization

Branch, ANM–113.

Note 2: Information concerning the

existence of approved alternative methods of

compliance with this AD, if any, may be

obtained from the Standardization Branch,

ANM–113.

(d) Special flight permits may be issued in

accordance with sections 21.197 and 21.199

of the Federal Aviation Regulations (14 CFR

21.197 and 21.199) to operate the airplane to

a location where the requirements of this AD

can be accomplished.

Issued in Renton, Washington, on

September 15, 1997.

James V. Devany,

Acting Manager, Transport Airplane

Directorate, Aircraft Certification Service.

[FR Doc. 97–25041 Filed 9–19–97; 8:45 am]

BILLING CODE 4910–13–P

DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR Part 206

RIN 1010–AC09

Establishing Oil Value for Royalty Due

on Federal Leases

AGENCY: Minerals Management Service,

Interior.

ACTION: Notice of reopening the public

comment period.

SUMMARY: The Minerals Management

Service (MMS) is reopening the public

comment period under a proposed rule

published in the Federal Register on

January 24, 1997 (62 FR 3742),

amending the regulations governing the

valuation for royalty purposes of crude

oil produced from Federal leases. In the

July 3, 1997, Federal Register (62 FR

36030), we published a supplementary

notice of proposed rulemaking. Based

on the diversity of comments received

under the proposed rule and the

supplementary proposed rule, we are in

this notice: publishing a summary of

those comments, outlining alternatives

for proceeding with further rulemaking,

and requesting public comment on

those alternatives. MMS intends to hold

workshops with State and industry

representatives to discuss these and

other alternatives. We will announce the

dates and locations of those workshops

at a later date. MMS intends to issue a

further notice of proposed rulemaking

following the comment period on this

notice.

DATES: We must receive comments on or

before October 22, 1997.

ADDRESSES: You must send comments

to: David S. Guzy, Chief, Rules and

Publications Staff, Royalty Management

Program, Minerals Management Service,

P.O. Box 25165, MS 3101, Denver,

Colorado 80225–0165; telephone (303)

231–3432; fax (303) 231–3194; e-Mail

DavidlGuzy@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)

231–3194, e-Mail

DavidlGuzy@mms.gov.

SUPPLEMENTARY INFORMATION: The

principal author of this notice is

Deborah Gibbs Tschudy of the Royalty

Management Program.

I. Background

MMS published a notice of proposed

rulemaking on January 24, 1997 (62 FR

3741), to amend its current Federal
Federal Register / Vol. 62, No. 183 / Monday, September 22, 1997 / Proposed Rules 49461

crude oil valuation regulations in 30

CFR part 206. The initial comment

period expired March 25, 1997, and was

twice extended to April 28, 1997 (62 FR

7189), and to May 28, 1997 (62 FR

19966). As part of the public comment

process, we held public meetings in

Lakewood, Colorado on April 15, 1997,

and Houston, Texas on April 17, 1997,

to hear comments on the proposal. On

July 3, 1997, we published a

supplementary proposed rulemaking (62

FR 36030). The comment period on the

supplementary proposed rule closed on

August 4, 1997.

II. Summary of Public Comments

We received written comments on the

January 24, 1997, proposed rule from 76

entities, including independent oil and

gas producers, major oil and gas

companies, trade associations, States,

economic consultants and analysts,

petroleum marketers, a royalty owner, a

Native American interest, and

individuals. Forty-two speakers

provided verbal comments on the

proposed rule at the public hearings. We

received written comments on the

supplementary proposed rule from 32

entities. Below is a summary of the

comments on the proposed and

supplementary proposed rules. If you

are interested in reviewing either the

written comments in full or the

transcripts of the public meetings, you

may contact David S. Guzy, Chief, Rules

and Publications Staff, Royalty

Management Program, Minerals

Management Service, telephone (303)

231–3432, fax (303) 231–3194, e-Mail

DavidlGuzy@mms.gov. A complete set

of the public comments is also available

on the Internet at www.rmp.mms.gov.

States

State commenters generally support

the proposed rule, though each has

specific suggestions for improvement.

Some States supported allowing more

payors to pay royalties based on gross

proceeds received under arm’s-length

contracts. One State suggested that

MMS could simplify the process

without sacrificing value by using

published spot prices instead of

NYMEX. Another State suggested that

MMS take and market its oil in kind.

States generally support the proposal

to eliminate the provision in the

existing regulations that allows the use

of a FERC-approved tariff in lieu of

computing actual costs. One State

commented that the proposed Form

MMS–4415 is too burdensome on

lessees and recommended instead using

the lowest published tariff rate in

calculating differentials. Another State

argued that the proposed method for

determining differentials allows for

double-dipping of transportation costs.

Many States supported the changes

proposed in the supplementary rule

regarding valuation of crude oil calls,

but suggested that gross proceeds be

allowed only when the so-called ‘‘most

favored nations’’ clause is enforced. One

State objected to the changes proposed

in the supplementary proposed rule and

stated that many States believe that

gross proceeds should be abandoned

altogether. Another State commented

that they were not convinced that

NYMEX is the proper basis for valuing

crude oil produced in the Rocky

Mountain Region and suggested that

MMS could establish value based on

geographic indexing using its own

system data. That State commented that

MMS would have to insure that posted

prices are not included when using

system data to determine market prices

and that a range of data could be

established within a geographic area for

comparison purposes.

Industry

The oil and gas industry, both major

and independent producers, oppose the

proposed rule as well as the

supplementary proposed rule. Many

industry commenters argued that MMS

does not have the legal authority to

value production away from the lease

and that the NYMEX valuation method

is flawed. They believe that value is

added by transporting and marketing

the oil away from the lease and that this

added value exceeds the cost of

transportation alone. Many industry

commenters stated that futures prices

don’t provide a dependable measure of

current value and that an active lease

market does exist for valuing crude oil.

Others argue that Rocky Mountain

Region prices don’t track with NYMEX

prices due to the isolated nature of that

market.

At least two consultants engaged by

industry claim to have evidence that

disputes our belief that companies

maintain overall balances is totally

implausible. Some industry commenters

argued that unequal treatment of

integrated refiners and independent

producers will create market

inefficiencies that may discourage

investments in downstream operations

(pipelines, gathering systems, storage

facilities). Nearly all industry

commenters suggested that MMS take

its royalty in kind to assure that it

receives fair market value for its

production.

With respect to MMS’s proposal for

calculating and publishing differentials

from aggregations points to market

centers, industry commenters stated that

(1) Proposed Form MMS–4415 will

impose a huge administrative burden,

(2) much of the information is not

available to many of the lessees, (3)

seasonal effects on prices and other

dynamic influences on local crude value

will not be captured by the differentials,

and (4) the differentials don’t include all

of the costs that should be allowed as a

deduction. Industry comments also

opposed the proposal to eliminate the

provision in the existing regulations that

allows the use of a FERC-approved tariff

in lieu of computing actual costs.

While some independent producers

indicated that they supported the

changes made in the supplementary

proposed rule, they stated that the

continued proposal regarding a lessee’s

duty to market at no cost to the Federal

Government undermines the changes

made in the supplementary proposed

rule. Some independent producers

supported the idea of requiring lessees

to certify that they are not maintaining

an overall balance with their purchaser.

Others recommended that MMS meet

with State and industry representatives

before adopting any kind of radical

changes to crude oil valuation.

III. Alternatives for Proceeding

The intent of the January 24, 1997,

proposed rule and the July 3, 1997,

supplementary proposed rule was to

decrease reliance on oil posted prices,

add more certainty to valuation of oil

produced from Federal lands, and

develop valuation rules that better

reflect market value. Because of the

frequency of oil exchange agreements,

reciprocal deals between crude oil

buyers and sellers, and other factors

where the real consideration for the

transaction could be hidden, MMS

proposed using index prices to value

production not sold arm’s-length.

However, because the comments on the

proposed rule were substantial, we are

considering alternatives for proceeding

with a rulemaking on the valuation of

oil from Federal leases in addition to the

January 24, 1997, proposed rule and the

July 3, 1997, supplementary proposed

rule. We request comments from all

interested parties on each of the

following alternatives. Those

alternatives fall into three categories: (1)

Benchmarks, (2) differentials, and (3)

index pricing.

While many of the comments,

particularly from industry, suggested

that MMS take its royalty in kind as an

alternative to the proposed NYMEX

method (or ANS in California and

Alaska), MMS is not requesting

comments on that alternative in this

notice. MMS has recently completed a

feasibility study concerning a royalty-in-
49462 Federal Register / Vol. 62, No. 183 / Monday, September 22, 1997 / Proposed Rules

kind program and will continue to

pursue input on that program through

other avenues.

Benchmarks

Alternative 1—Several industry

commenters suggested that a lessee be

permitted to value its production not

sold arm’s-length based on prices it

receives for outright sales of crude oil in

a particular market area or region. Such

a program (called a bid-out or tendering

program) was described in the

comments of two major producers.

MMS requests comments on this

alternative and specifically whether a

certain minimum amount of production

should be required to be tendered in a

given area before such a price would be

acceptable for valuing the remainder of

a lessee’s production not sold arm’slength.

Alternative 2—In its comments on the

supplementary proposed rule, one

industry trade association representing

independent producers suggested a

series of benchmarks for valuing

production not sold under arm’s-length

contracts.

Benchmarks

(1) Outright sales of like-quality crude

in the field or area as described in

Alternative 1,

(2) The lessee’s or its affiliate’s arm’slength purchases from producers at the

lease in the field or area,

(3) Outright arm’s-length sales by

third parties,

(4) Prices published by MMS based on

its RIK sales,

(5) Netback employing price

information from the nearest market

center or aggregation point.

MMS requests comments on this

alternative. Should the benchmarks be

considered in any particular order?

Should MMS retain the gross proceeds

minimum requirement of the existing

regulations, so that value would be the

higher of the benchmark value or gross

proceeds? With regard to the second and

third benchmarks, should a certain

minimum amount of production be

required to be purchased by a lessee or

its affiliate or by third parties before

such a price would be acceptable for

valuing the remainder of a lessee’s

production not sold arm’s-length? How

can MMS verify that those contracts are

indeed arm’s-length sales and that they

reflect the total consideration for the

value of production other than through

audit? With regard to the fifth

benchmark, how should a netback be

determined?

Alternative 3—One of the State

commenters suggested that MMS

establish value based on geographic

indexing using its own system data.

That State commented that MMS would

have to insure that posted prices are not

included when using system data to

determine market prices and that a

range of data could be established

within a geographic area for comparison

purposes. MMS requests comments on

this alternative. Specifically, how can

MMS verify, in a timely manner, that

the values reported to its data base are

correct prior to our publishing this

information? On what value do nonarm’s-length producers pay until MMS

publishes the values contained in its

data base?

With regard to Alternatives 1 through

3, we request comments on whether

MMS should apply any one of these

alternatives only to the Rocky Mountain

region while maintaining NYMEX

prices as the basis for mid-continent and

OCS leases and ANS prices for

California and Alaska leases.

Differentials

Alternative 4—Several industry and

State commenters commented that the

proposed Form MMS–4415 is too

burdensome on lessees. One State

commented that the proposed method

for determining differentials allows for

double-dipping of transportation costs.

Recently, two major oil producers

reached settlement with State and

private royalty litigants using fixed rate

(cents per barrel) differentials deducted

from a NYMEX-based value. MMS

requests comments on alternatives for

determining the appropriate location

and quality differentials to be deducted

from the NYMEX method (ANS in

California and Alaska) in the January 24,

1997, proposed rule. Specifically, MMS

requests comments on the following

methods for MMS to calculate and

publish location differentials from the

lease to the market center:

(1) Differential in cents per barrel by

zone or area,

(2) Differential in cents per mile by

zone or area,

(3) Differential based on a percentage

of the NYMEX (ANS in California and

Alaska) value.

MMS also requests comments on

alternatives for determining quality

differentials from the lease to the market

center.

Index

Alternative 5—One State commenter

suggested that MMS could simplify the

process without sacrificing value by

using published spot prices instead of

NYMEX. MMS requests comments on

this alternative and whether MMS

should then allow actual costs of

transportation when production actually

flows to the market center where the

spot price is published.

IV. Request for Public Comments

We are not requesting comments on

the summary of comments outlined in

this notice nor on the original proposed

rule or supplementary proposed rule.

We seek comments only on the

alternatives described above or other

alternatives suggested for valuing oil

from Federal leases. The alternatives

listed are not exhaustive. We welcome

any new alternatives or any

modifications to the proposed

alternatives for consideration.

The policy of the Department is,

whenever practicable, to give the public

an opportunity to participate in the

rulemaking process. Accordingly, you

should submit written comments,

suggestions, or objections regarding this

notice to the location identified in the

ADDRESSES section of this notice. You

should submit comments on or before

the date identified in the DATES section

of this notice.

Dated: September 16, 1997.

Lucy Querques Denett,

Associate Director for Royalty Management.

[FR Doc. 97–25101 Filed 9–19–97; 8:45 am]

BILLING CODE 4310–MR–P

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Part 52

[OH108–1b; FRL–5894–2]

Approval and Promulgation of

Implementation Plans; Ohio

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Proposed rule.

SUMMARY: The EPA is proposing to

approve a State Implementation Plan

(SIP) revision submitted by the State of

Ohio on January 3, 1997, which would

provide greater flexibility for Proctor

and Gamble Company, Hamilton

County, in operating four boilers,

refered to in Ohio Administrative Code

3745–18–37(GG), during periods of

change over from the main boilers to the

back-up units. In the Final Rules section

of this Federal Register, EPA is

approving this SIP revision as a direct

final rule without prior proposal

because the agency anticipates no

adverse comments. If no adverse written

comments are received in response to

this proposed rule, no further activity is

contemplated in relation to this rule.

However, if the EPA receives significant

adverse comments which have not been