20644 Federal Register / Vol. 63, No. 80 / Monday, April 27, 1998 / Notices

administrative procedures in reaching

the decision, or any other factor not

directly related to the suitability of the

land for a cross-country horse track and

associated jumping facilities

Any adverse comments will be

reviewed by the State Director. In the

absence of any adverse comments, the

classification will become effective 60

days from the date of publication of this

notice in the Federal Register.

Comments, including names and

street addresses of respondents will be

available for public review at the

Worland District Office, 101 South 23rd

Street, Worland, Wyoming during

regular business hours (7:30 a.m. to 4:30

p.m.) Monday through Friday, except

holidays. Individual respondents may

request confidentiality. If you wish to

withhold your name or address from

public review or from disclosure under

the Freedom of Information Act, you

must state this prominently at the

beginning of your comments. Such

requests will be honored to the extent

by law. All submissions from

organizations or businesses, and from

individuals identifying themselves as

representatives or officials of

organizations or businesses, will be

made available for public inspection in

their entirety.

Dated: April 20, 1998.

David Atkins,

Bighorn Basin Assistant Area Manager.

[FR Doc. 98–11067 Filed 4–24–98; 8:45 am]

BILLING CODE 4310–22–M

DEPARTMENT OF THE INTERIOR

Minerals Management Service

Discretionary Authority for Royalty

Relief on Nonproducing Leases on the

Outer Continental Shelf

AGENCY: Minerals Management Service

(MMS), Interior.

ACTION: Notice.

SUMMARY: The Deep Water Royalty

Relief Act of 1995 (Act) granted the

Secretary of the Interior (Secretary) the

authority to reduce or eliminate

royalties on producing or nonproducing

leases in the Central and Western Gulf

of Western Gulf of Mexico. On January

24, 1997, MMS published a Notice (62

FR 3714) seeking public input on

whether and how MMS should

implement that authority for

nonproducing leases. This Notice

summarizes comments received and

presents the MMS decision not to

implement the authority at this time.

FOR FURTHER INFORMATION CONTACT:

Larry Maloney, Department of the

Interior, Minerals Management Service;

Mail Stop 4230; 1849 C Street NW;

Washington, DC 20240; telephone

number, (202) 208–5461; E-mail

address, larry.maloney@mms.gov.

SUPPLEMENTARY INFORMATION:

Background

The Act (Pub. L. 104–58) authorized

the Secretary to modify the royalty

terms of certain exiting leases and to

offer new leases subject to royalty

suspension volumes in water depths of

200 meters or more in parts of the Gulf

of Mexico. Most of the Act addresses

mandatory royalty relief programs for

leases in water depths of 200 meters or

more. We implemented these provisions

in rules covering new leases (63 FR

2626, January 16, 1998) and existing

leases (63 FR 2605, January 16, 1998).

The latter rule also established a royalty

relief program for producing leases in

all water depths and in all OCS areas.

The Act also provides for a

discretionary royalty relief program. In

part, section 302 of the Act amends

section 8(a) of the OCS Lands Act by

adding subparagraph (3)(B), which

applies to all leases in the Gulf of

Mexico west of 87 degrees, 30 minutes

West longitude (i.e., the Central and

Western Gulf of Mexico Planning Areas

and the portion of the Eastern Gulf of

Mexico Planning Area lying offshore

Alabama). In this area, the Secretary

may reduce or eliminate any royalty or

net profit share in order to promote

development, increase production, or

encourage production of marginal

resources on producing or

nonproducing leases. This provision

applies to active leases, not to the terms

under which new leases are offered.

On January 24, 1997, MMS published

a Notice seeking public input on

whether and how MMS should

implement that authority for

nonproducing leases. We requested

specific proposals, including

information on the types of situations

warranting royalty relief that cannot be

addressed through existing programs;

what criteria should be used in

evaluating proposals; and, for any relief

program recommended, specific

information on its expected effects,

including levels and costs of

exploration, development, and

production, and the volume of

additional resources that may be

recovered.

Comments Received

The following briefly summarizes the

main points in comments submitted by

the nine respondents to the January 24,

1997 Federal Register Notice.

• Five respondents (one oil and gas

firm, one offshore service firm and three

trade associations) strongly supported a

program of royalty relief for

nonproducing leases in the Central and

Western Gulf, but did not offer

comments on how MMS should

implement such a program.

• One oil and gas firm supported the

concept of royalty relief for OCS

nonproducing leases. They believed that

application of royalty relief should be

based upon such factors as drill depth,

pressure, and subsalt. The firm also

stated that certainty of royalty relief

early in the life of a project, before

investment decisions are made,

decreases the risk associated with

evaluating business alternatives and

increases the likelihood that the intent

of the Deep Water Royalty Relief Act

will be carried out.

• One trade association supported

royalty relief for nonproducing leases.

The association recommended that

tracts not leased after initially being

placed on the indicated hydrocarbon list

be offered with a reduced royalty rate

(i.e., from one-sixth to one-eighth the

next time MMS offered the tracts for

leasing.

• One oil and gas firm indicated that

any royalty relief program established

under this authority should grant relief

only on a case-by-case basis using the

same basic methodology established

under the earlier program of royalty

relief for existing deep water leases.

• Another trade association said that

it might be wiser if MMS developed its

thinking as to how such a program

should be structured but defer

implementation until market conditions

signal a need for stimulative incentives.

The association noted that conditions in

the Gulf of Mexico are very robust and

healthy and that the level of activity is

so high that the infrastructure of tools,

equipment, and trained personnel

cannot meet all the demands placed on

it.

Decision

After carefully considering public

input and other information, we have

decided not to implement, at this time,

the statutory authority to reduce royalty

rates on nonproducing leases in the

Central and Western Gulf of Mexico.

Our decision is based primarily on the

fact that, in spite of lower oil prices, the

oil and gas industry in the Gulf of

Mexico is healthy and in little need of

financial incentives at the present time.

Industry interest in acquiring

relinquished leases is high. More than

50 percent of relinquished leases in the

Gulf are re-leased within 3 years. In

total, more than 80 percent of leases
Federal Register / Vol. 63, No. 80 / Monday, April 27, 1998 / Notices 20645

relinquished have been re-leased. Thus,

leases that may be uneconomic at

today’s oil and gas prices can be released and developed later as economic,

geologic, or technological conditions

changes. In this case, allowing market

conditions and future discoveries to

determine the best time to explore and

develop tracts is preferable to offering

financial incentives for current

development.

In addition, we considered other

issues that would have impacts on

implementing a sound program of

royalty relief for nonproducing leases.

Auction and Tract Evaluation Process

Impacts

Reducing royalties on nonproducing

leases could distort the auction process

because some losing bidders may have

submitted higher bids had they known

that lease royalty rates could be

reduced. Also, the program would

complicate fair market value

determinations because lease stipulated

royalty rates could change before the

start of production.

Workload Impacts

The potential workload associated

with a relief program could become

burdensome and drain MMS resources

from other important jobs. Even a

program of categorical relief (i.e., one

based on predetermined qualifying

criteria such as drill depth or pressure)

could create a significant new workload.

Although certain criteria may have

substantial impact on project costs,

many factors ultimately determine a

project’s economic viability. The effort

to develop comprehensive qualifying

criteria and keep them up to date may

actually create more of a workload for

MMS than accepting applications on a

case-by-case basis.

Revenue Impacts

We considered the proposal to offer

certain relinquished tracts at a lower

royalty rate. However, the

relinquishment of a tract, even if it is on

the indicated hydrocarbons list, and its

failure to be re-leased at the next lease

sale, are not absolute determinants of its

current or future economic viability.

Tracts in the Central and Western Gulf

may be offered time and again. As noted

earlier, tracts that are uneconomic at

one time may be re-leased and

developed with changes in oil and gas

prices or advances in technology that

reduce drilling and production costs or

enhance ultimate resource recovery. In

these cases, the government would

receive royalties at the regular royalty

rate plus any bonus received on releasing.

In summary, the economic climate for

the oil and gas industry in the Gulf of

Mexico does not warrant taking action

at this time. We will continue to

monitor activities in the Central and

Western Gulf and will move to exercise

the authority if changed conditions

require it.

We welcome all comments on issues

related to this Notice and will consider

them in determining the nature and

timing of future actions.

Dated: April 21, 1998.

Walter Cruickshank,

Associate Director for Policy and

Management Improvement.

[FR Doc. 98–11012 Filed 4–24–98; 8:45 am]

BILLING CODE 4310–MR–M

DEPARTMENT OF THE INTERIOR

Minerals Management Service

Outer Continental Shelf, Western Gulf

of Mexico, Oil and Gas Lease Sale 171

AGENCY: Minerals Management Service,

Interior.

ACTION: Availability of the proposed

notice of sale.

Gulf of Mexico Outer Continental

Shelf (OCS); Notice of Availability of

the Proposed Notice of Sale for

Proposed Oil and Gas Lease Sale 171 in

the Western Gulf of Mexico. This Notice

of Availability is published pursuant to

30 CFR 256.29(c), as a matter of

information to the public.

With regard to oil and gas leasing on

the OCS, the Secretary of the Interior,

pursuant to section 19 of the OCS Lands

Act, as amended, provides the affected

States the opportunity to review the

proposed Notice of Sale. The proposed

Notice sets forth the proposed terms and

conditions of the sale, including

minimum bids, royalty rates, and

rentals.

The proposed Notice of Sale for

proposed Sale 171 may be obtained by

written request to the Public

Information Unit, Gulf of Mexico

Region, Minerals Management Service,

1201 Elmwood Park Boulevard, New

Orleans, Louisiana 70123–2394, or by

telephone at (504) 736–2529.

The final Notice of Sale will be

published in the Federal Register at

least 30 days prior to the date of bid

opening. Bid opening is currently

scheduled for August 1998.

Dated: April 20, 1998.

Cynthia Quarterman,

Director, Minerals Management Service.

[FR Doc. 98–11019 Filed 4–24–98; 8:45 am]

BILLING CODE 4310–MR–M

DEPARTMENT OF THE INTERIOR

National Park Service

Buffalo National River, Arkansas;

Concession Contract Negotiations

SUMMARY: Public notice is hereby given

that the National Park Service proposes

to award a concession contract

authorizing the continued overnight

accommodations, food service facilities

and vending machine services for the

public at Buffalo National River for a

period of five (5) years from January 1,

1999, through December 31, 2003.

EFFECTIVE DATE: June 26, 1998.

ADDRESSES: Interested parties should

contact National Park Service, Buffalo

National River, P.O. Box 1173, Harrison,

Arkansas 72602–1173, or phone (870)

741–5443 to obtain a copy of the

prospectus describing the requirements

of the proposed contract.

SUPPLEMENTARY INFORMATION: This

contract renewal has been determined to

be categorically excluded from the

procedural provisions of the National

Environmental Policy Act and no

environmental document will be

prepared.

The existing concessioner has

performed its obligations to the

satisfaction of the Secretary under an

existing contract which will expire by

limitation of time on December 31,

1998, and therefore pursuant to the

provisions of Section 5 of the Act of

October 9, 1965 (79 Stat, 969; 16 U.S.C.

20, et seq.), is entitled to be given

preference in the renewal of the contract

and in the negotiation of a new

proposed contract, providing that the

existing concessioner submits a

responsive offer (a timely offer which

meets the terms and conditions of the

Prospectus). This means that the

contract will be awarded to the party

submitting the best offer, provided that

if the best offer was not submitted by

the existing concessioner, then the

existing concessioner will be afforded

the opportunity to match the best offer.

If the existing concessioner agrees to

match the best offer, then the contract

will be awarded to the existing

concessioner. If the existing

concessioner does not submit a

responsive offer, the right of preference

in renewal shall be considered to have

been waived, and the contract will then

be awarded to the party that has

submitted the best responsive offer.

The Secretary of the Interior will

consider and evaluate all proposals

received as a result of this notice. Any

proposal, including that of the existing

concessioner, must be received by the