Federal Register / Vol. 63, No. 136 /Thursday, July 16, 1998 / Proposed Rules 38355

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

adding the following new airworthiness

directive:

SAAB Aircraft AB: Docket 98–NM–176–AD.

Applicability: Model SAAB 340B series

airplanes, manufacturer serial numbers 380

through 499 inclusive; 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 (b) 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 a short circuit caused by fluid

leakage, which could result in inability to

extend or retract the landing gear,

accomplish the following:

(a) Within 400 flight hours after the

effective date of this AD, accomplish the

actions required by paragraphs (a)(1), (a)(2),

(a)(3), and (a)(4) of this AD, in accordance

with Saab Service Bulletin 340–32–115,

dated April 7, 1998.

(1) Perform a detailed visual inspection to

detect moisture or other contamination of the

electrical wiring harness above relay consoles

305VU and 306VU. If any moisture or other

contamination is found, prior to further

flight, clean the wiring harness.

(2) Perform a detailed visual inspection to

detect moisture or other contamination of

electrical relay 15GA and its socket. If any

moisture or other contamination is found,

prior to further flight, accomplish corrective

actions.

(3) Perform a detailed visual inspection for

electrical damage of electrical relay 15GA

and its socket. If any sign of electrical

damage (arcing, discoloration, or charring) is

detected, prior to further flight, replace the

existing relay and socket with new parts.

(4) Replace the existing nut plates on the

floor of the cockpit with new, improved nut

plates, on the left and right sides of the

airplane.

(b) 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,

International Branch, ANM–116, 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, International Branch,

ANM–116.

Note 2: Information concerning the

existence of approved alternative methods of

compliance with this AD, if any, may be

obtained from the International Branch,

ANM–116.

(c) 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.

Note 3: The subject of this AD is addressed

in Swedish airworthiness directive SAD 1–

125, dated April 7, 1998.

Issued in Renton, Washington, on July 8,

1998.

S.R. Miller,

Acting Manager, Transport Airplane

Directorate, Aircraft Certification Service.

[FR Doc. 98–18949 Filed 7–15–98; 8:45 am]

BILLING CODE 4910–13–U

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: Further supplementary

proposed rule.

SUMMARY: The Minerals Management

Service (MMS) is proposing additional

changes to its second supplementary

proposed rulemaking regarding the

valuation of crude oil produced from

Federal leases.

DATES: Comments must be submitted on

or before July 24, 1998.

ADDRESSES: Mail comments,

suggestions, or objections regarding the

proposed rule to: Minerals Management

Service, Royalty Management Program,

Rules and Publications Staff, P.O. Box

25165, MS 3021, Denver, Colorado

80225–0165, e-mail address is

RMP.comments@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

RMP.comments@mms.gov.

SUPPLEMENTARY INFORMATION:

I. Background

MMS published an advance notice of

its intent to amend the current Federal

oil valuation regulations in 30 CFR parts

202 and 206 on December 20, 1995 (60

FR 65610). The purpose of this notice

was to solicit comments on new

methodologies to establish the royalty

value of Federal (and Indian) crude oil

production in view of the changes in the

domestic petroleum market and

particularly the market’s move away

from posted prices as an indicator of

market value.

Based on comments received on the

advance notice, together with

information gained from a number of

presentations by experts in the oil

marketing business, MMS published its

initial notice of proposed rulemaking on

January 24, 1997 (62 FR 3742),

applicable to Federal leases only. MMS

held public meetings in Lakewood,

Colorado, and Houston, Texas, to hear

comments on the proposal.

In response to the variety of

comments received on the initial

proposal, MMS published a

supplementary proposed rule on July 3,

1997 (62 FR 36030). This proposal

expanded the eligibility requirements

for valuing oil disposed of under arm’slength transactions.

Because of the substantial comments

received on both proposals, MMS

reopened the rulemaking to public

comment on September 22, 1997 (62 FR

49460). MMS specifically requested

comments on five valuation alternatives

arising from the public comments. MMS

held seven public workshops to discuss

valuation alternatives.

As a result of comments received on

the proposed alternatives and comments

made at the public workshops, MMS

published a second supplementary

proposed rule on February 6, 1998 (63

FR 6113). The comment period for this

second supplementary proposed rule

was to close on March 23, 1998, but was

extended to April 7, 1998 (63 FR 14057).

MMS held five public workshops (63 FR

6887) on this second supplementary
38356 Federal Register / Vol. 63, No. 136 /Thursday, July 16, 1998 / Proposed Rules

proposed rule: in Houston, Texas, on

February 18, 1998; Washington, D.C., on

February 25, 1998; Lakewood, Colorado,

on March 2, 1998; Bakersfield,

California, on March 11, 1998; and

Casper, Wyoming, on March 12, 1998.

By Federal Register notice dated July

8, 1998, (63 FR 36868) MMS reopened

the comment period for the February 6,

1998, second supplementary proposed

rule from July 9, 1998, until July 24,

1998, to receive further comment on the

proposed rule. A meeting involving

MMS, several industry representatives,

and members of Congress was held in

Washington, D.C., on July 9, 1998.

II. Revisions to Supplementary

Proposed Rule

In response to comments received so

far, MMS is proposing some changes to

the February 6, 1998, second

supplementary proposed rule. MMS is

requesting public comments on these

further proposed provisions.

Definition of ‘‘Affiliate’’

Several commenters to the February 6,

1998, second supplementary proposed

rule objected to the proposed definition

of ‘‘affiliate’’ in § 206.101. Under this

proposed definition, 10 percent

ownership was the threshold for

defining control, requiring non-arm’slength valuation for transactions

between persons with such a degree of

affiliation. Commenters argued that 10

percent was too low because affiliates

with this small amount of ownership

actually have no control over the

affiliated entity. Accordingly, they

believed that too many lessees would be

excluded from using their gross

proceeds as value in bona fide arm’slength transactions. They suggested

retaining the current definition of

affiliate, as defined by the term ‘‘arm’slength contract,’’ where ownership of 10

percent through 50 percent creates a

presumption of control. One commenter

suggested 20 percent to 50 percent

ownership as the criteria for creating a

presumption of control, consistent with

the definition used by the Bureau of

Land Management. One commenter

suggested deleting reference to

partnerships and joint ventures because

lessees might not have access to records

of these entities and these terms could

create confusion as to whether the

affiliate test applies to the property,

field, or corporate level.

MMS understands the concern raised

in the industry comments regarding

presumption of control. Therefore, MMS

now is proposing to retain the current

meaning of affiliate embodied in the

current rules at proposed § 206.101.

Less than 10 percent ownership would

create a presumption of non-control.

Ownership of between 10 and 50

percent would create a presumption of

control that the lessee could rebut.

Ownership in excess of 50 percent

would establish control.

However, in the current rule,

affiliation is defined within the

definition of the term ‘‘arm’s length.’’ In

this proposed rule, although we have

retained the current meaning of

affiliation, we have made ‘‘affiliate’’ a

separate definition from ‘‘arm’s length.’’

We believe this clarifies and simplifies

the definitions and should promote

better understanding of both ‘‘arm’s

length’’ and ‘‘affiliate.’’

Breach of Duty to Market

Some commenters were concerned

about the provision in proposed

§ 206.102(c)(2)(ii) which allows MMS to

disallow arm’s-length gross proceeds as

royalty value if the lessee breaches its

duty to market its oil for the mutual

benefit of the lessee and lessor. The

concern expressed was that MMS would

use this provision to ‘‘second-guess’’ a

lessee’s marketing decision and thereby

force the lessee to use index-based

valuation.

The provision which is the subject of

the commenters’ concerns is identical to

the provision in the existing rules (see

30 CFR § 206.102(b)(1)(iii)) and has been

in the rules for more than 10 years. This

provision has never been used to

‘‘second-guess’’ a lessee’s marketing

decisions to try to impose benchmarks

of § 206.102(c) on arm’s-length

transactions. Nevertheless, MMS is also

proposing to modify the proposed

§ 206.102(c)(2) to clarify that the lessee’s

duty to market does not mean that MMS

will second-guess a company’s

marketing decisions. Lessees generally

may structure their business

arrangements however they wish, and

absent misconduct, MMS will look to

the ultimate arm’s-length disposition in

the open market as the best measure of

value. The provision’s purpose is to

protect royalty value if, for example, a

lessee were to inappropriately enter into

a substantially below-market transaction

for the purpose of reducing royalty.

Exchanges

The July 3, 1997, supplementary

proposed rule extended the use of gross

proceeds valuation to oil exchanged and

then sold at arm’s length. In those cases

where a lessee disposed of the produced

oil under an exchange agreement with a

non-affiliated person, and after the

exchange the lessee sold at arm’s length

the oil acquired in the exchange, the

lessee would have had the option of

using either its gross proceeds under the

arm’s-length sale or the index pricing

method to value the lease production

(proposed paragraph 206.102(a)(6)(i)).

This option would have applied only

when there was a single exchange. If the

lessee chose gross proceeds under this

option, the lessee would have valued all

oil production disposed of under all

other arm’s-length exchange agreements

in the same manner (proposed

paragraph 206.102(a)(6)(iii)). For any oil

exchanged or transferred to affiliates, or

subject to multiple exchanges, the lessee

would have used the index pricing

method to value the lease production

(proposed paragraph 206.102(a)(6)(ii)).

Participants in MMS’s workshops

held in October 1997 indicated that they

often use several exchanges to transport

their production from offshore leases to

onshore market centers. They believed

that MMS should give the lessee an

option of valuing exchanged oil either

by using so-called ‘‘lease-market’’

benchmarks (rather than index prices)

or by using the lessee’s resale price less

an exchange differential, regardless of

the number of exchanges needed to

reposition the crude oil for sale.

In response to those comments, in the

February 6, 1998, proposal, MMS

expanded gross proceeds valuation to

include situations where the oil

received in exchange is ultimately sold

arm’s-length, regardless of the number

of arm’s-length exchanges involved.

However, because of the numerous

industry and State comments now

claiming that tracing multiple

exchanges would be overly burdensome,

if not impossible, MMS is proposing to

return to the July 3, 1997, proposal’s

‘‘first-exchange’’ rule, where value will

be determined based on the arm’s-length

sale after a single arm’s-length

exchange. MMS is proposing to modify

§ 206.102 (c)(3) so that if two or more

exchanges are involved, even if they are

all at arm’s length, the lessee must use

index pricing.

Gathering vs. Transportation

MMS received comments on the

definition of ‘‘gathering’’ as contained in

the existing regulations in 30 CFR

206.101, which is the same as in

proposed § 206.101. The commenters

noted that development, especially of

deepwater leases, often involves a subsea completion with no platform. Bulk,

unseparated production is moved

sometimes in excess of 50 miles to a

platform where it first surfaces and is

treated. The commenters asserted that in

these situations the movement of

production from sub-sea production

over long distances should be

deductible as a transportation

allowance. MMS specifically requests
Federal Register / Vol. 63, No. 136 /Thursday, July 16, 1998 / Proposed Rules 38357

comment on whether the definition of

gathering should be modified to address

this situation.

MMS requests comments on the

revisions to the second supplementary

proposed rule (63 FR 6113) including

this notice or any other comments you

may want to submit on this proposed

rule. If you have commented already on

other portions of the rule, you do not

need to resubmit those comments since

they are already part of the rulemaking

record. MMS will respond to comments

in the final rule.

List of Subjects in 30 CFR Part 206

Coal, Continental Shelf, Geothermal

energy, Government contracts,

Indians—lands, Mineral royalties,

Natural gas, Petroleum, Public lands—

mineral resources, Reporting and

recordkeeping requirements.

Dated: July 14, 1998.

Sylvia V. Baca,

Acting Assistant Secretary, Land and

Minerals Management.

For the reasons set forth in the

preamble, the second supplementary

proposed rule published at 63 FR 6113

on February 6, 1998, amending 30 CFR

Part 206, is further amended as follows:

PART 206—PRODUCT VALUATION

1. The Authority citation for Part 206

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. 9701, 43 U.S.C. 1301

et seq. 1331 et seq., and 1801 et seq.

Subpart C—Federal Oil

2. Section 206.101 as proposed to be

revised at 63 FR 6113 is further

amended by revising the following

definition to read as follows:

§ 206.101 Definitions

Affiliate means a person who

controls, is controlled by, or is under

common control with another person.

(1) For this subpart, based on

ownership of an entity’s voting

securities, interest in a partnership or

joint venture, or other forms of

ownership:

(i) Ownership greater than 50 percent

constitutes control;

(ii) Ownership of 10 through 50

percent creates a presumption of

control; and

(iii) Ownership of less than 10 percent

creates a presumption of noncontrol that

MMS may rebut if it demonstrates

actual or legal control, including but not

limited to interlocking directorates.

(2) MMS may require the lessee to

certify the percentage of ownership.

Aside from the percentage ownership

criteria, relatives, either by blood or

marriage, are affiliates.

3. Section 206.102 as proposed to be

revised at 63 FR 6113 is further

amended by revising paragraphs (c)(2)

and (c)(3) to read as follows:

§ 206.102 How do I calculate royalty value

for oil that I or my affiliate sell under an

arm’s-length contract?

* * * * *

(c) * * *

(2) You must value the oil under

§ 206.103 if MMS determines that the

value under paragraph (a) of this section

does not reflect the reasonable value of

the production due to either:

(i) Misconduct by or between the

parties to the arm’s-length contract; or

(ii) Breach of your duty to market the

oil for the mutual benefit of yourself and

the lessor. MMS will not use this

provision to dispute lessees’ marketing

decisions made reasonably and in good

faith. It will apply only when a lessee

or its affiliate inappropriately sells its

oil at a price substantially below market

value.

(3) You must use § 206.103 to value

oil disposed of under an exchange

agreement. However, if you enter into a

single arm’s-length exchange agreement,

and following that exchange you

dispose of the oil received in the

exchange in a transaction to which

paragraph (a) of this section applies,

then you must value the oil under

paragraph (a) of this section. Adjust that

value for any location or quality

differential or other adjustments you

received or paid under the arm’s-length

exchange agreement(s). But if MMS

determines that any arm’s-length

exchange agreement does not reflect

reasonable location or quality

differentials, MMS may require you to

value the oil under § 206.103. If you

enter into more than one sequential

exchange agreement to dispose of your

production, you must use § 206.103 to

value that production.

* * * * *

[FR Doc. 98–19135 Filed 7–15–98; 8:45 am]

BILLING CODE 4310–MR–P

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR PARTS 73 and 74

[MM Docket No. 98–98; FCC 98–130]

Call Sign Assignments for Broadcast

Stations

AGENCY: Federal Communications

Commission.

ACTION: Notice of proposed rulemaking.

SUMMARY: In this Notice of Proposed

Rulemaking (NPRM), the Federal

Communications Commission proposes

to modify its practices and procedures

regarding the assignment of call signs

for radio and television broadcast

stations. Pursuant to these proposals,

the Commission’s existing manual

procedures will be replaced by an online system for the electronic

preparation and submission of requests

for the reservation and authorization of

new and modified call signs.

DATES: Comments are due on or before

August 17, 1998, and reply comments

are due on or before August 31, 1998.

Written comments by the public on the

proposed information collections are

due August 17, 1998.

ADDRESSES: Comments and reply

comments should be sent to the Office

of the Secretary, Federal

Communications Commission, 1919 M

Street, N.W., Washington, DC 20554. In

addition to filing comments with the

Secretary, a copy of any comments on

the information collections contained

herein should be submitted to Judy

Boley, Federal Communications

Commission, Room 234, 1919 M Street,

N.W., Washington, DC 20554, or via the

Internet to jboley@fcc.gov, and to

Timothy Fain, OMB Desk Officer, 10236

NEOB, 725–17th Street, N.W.,

Washington DC 20503, or via the

Internet to fainlt@al.eop.gov.

FOR FURTHER INFORMATION CONTACT:

James J. Brown or Jerianne Timmerman

at (202) 418–1600. For additional

information concerning the information

collections contained in this NPRM

contact Judy Boley at (202) 418–0214, or

via the Internet at jboley@fcc.gov.

SUPPLEMENTARY INFORMATION:

Synopsis of Notice of Proposed

Rulemaking

In this Notice of Proposed

Rulemaking (NPRM), the Federal

Communications Commission is

proposing to modify its practices and

procedures regarding the assignment of

call signs to radio and television

broadcast stations. Pursuant to this

proposal, the Commission’s existing

manual procedures will be replaced by

an on-line system for the electronic

preparation and submission of requests

for the reservation and authorization of

new and modified call signs. Because

the Commission believes that the new

electronic call sign reservation and

authorization system will significantly

improve service to all radio and

television broadcast station licensees

and permittees, the NPRM requests