[Federal Register Volume 74, Number 45 (Tuesday, March 10, 2009)]
[Notices]
[Pages 10265-10275]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-5077]


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DEPARTMENT OF THE INTERIOR

Minerals Management Service

[Docket No. MMS-2008-MRM-0031]


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

AGENCY: Minerals Management Service (MMS), Interior.

ACTION: Notice of an extension of a currently approved information 
collection (OMB Control Number 1010-0136).

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SUMMARY: To comply with the Paperwork Reduction Act of 1995 (PRA), we 
are notifying the public that we have submitted to the Office of 
Management and Budget (OMB) an information collection request (ICR) to 
renew approval of the paperwork requirements in the regulations under 
title 30 of the Code of Federal Regulations (CFR) parts 202, 204, and 
206. This notice also provides the public a second opportunity to 
comment on the paperwork burden of these regulatory requirements. We 
changed the title of this ICR to reflect the consolidation of two ICRs 
relating to Federal oil and gas valuation. The new title of this ICR is 
``30 CFR Parts 202, 204, and 206, Federal Oil and Gas Valuation.'' In 
this extension, we are consolidating the following ICRs, which allow 
programwide review of Federal oil and gas leases:
    <bullet> 1010-0136, previously titled ``30 CFR Part 202--Royalties, 
Subpart C--Federal and Indian Oil and Subpart D--Federal Gas; and Part 
206--Product Valuation, Subpart C--Federal Oil and Subpart D--Federal 
Gas;'' and
    <bullet> 1010-0155, previously titled ``30 CFR Part 204--
Alternatives for Marginal Properties, Subpart C--Accounting and 
Auditing Relief.''

DATES: Submit written comments on or before April 9, 2009.

ADDRESSES: Submit written comments by either FAX (202) 395-7245 or e-
mail (<a href="/cdn-cgi/l/email-protection#a3eceaf1e2fce7ccc0c8c6d7e3cccec18dc6ccd38dc4ccd5"><span class="__cf_email__" data-cfemail="a2edebf0e3fde6cdc1c9c7d6e2cdcfc08cc7cdd28cc5cdd4">[email protected]</span></a>) directly to the Office of Information 
and Regulatory Affairs, OMB, Attention: Desk Officer for the Department 
of the Interior (OMB Control Number 1010-0136).
    Please submit copies of your comments to MMS by one of the 
following methods:
    <bullet> Electronically go to http://www.regulations.gov. In the 
``Comment or Submission'' column, enter ``MMS-2008-MRM-0031'' to view 
supporting and related materials for this ICR. Click on ``Send a 
comment or submission'' link to submit public comments. Information on 
using Regulations.gov, including instructions for accessing documents, 
submitting comments, and viewing the docket after the close of the 
comment period, is available through the site's ``User Tips'' link. All 
comments submitted will be posted to the docket.
    <bullet> Mail comments to Armand Southall, Regulatory Specialist, 
Minerals Management Service, Minerals Revenue Management, P.O. Box 
25165, MS 300B2, Denver, Colorado 80225. Please reference ICR 1010-0136 
in your comments.
    <bullet> Hand-carry comments or use an overnight courier service. 
Our courier address is Building 85, Room A-614, Denver Federal Center, 
West 6th Ave. and Kipling St., Denver, Colorado 80225. Please reference 
ICR 1010-0136 in your comments.

FOR FURTHER INFORMATION CONTACT: Armand Southall, telephone (303) 231-
3221, or e-mail <a href="/cdn-cgi/l/email-protection#afceddc2cec1cb81dcc0dadbc7cec3c3efc2c2dc81c8c0d9"><span class="__cf_email__" data-cfemail="a4c5d6c9c5cac08ad7cbd1d0ccc5c8c8e4c9c9d78ac3cbd2">[email protected]</span></a>. You may also contact Armand 
Southall to obtain copies, at no cost, of (1) the ICR, (2) any 
associated forms, and (3) the regulations that require the subject 
collection of information.

SUPPLEMENTARY INFORMATION:
    Title: 30 CFR Parts 202, 204, and 206, Federal Oil and Gas 
Valuation.
    OMB Control Number: 1010-0136.
    Bureau Form Number: Form MMS-4393.
    Abstract: The Secretary of the U.S. Department of the Interior is 
responsible for mineral resource development on Federal and Indian 
lands and the Outer Continental Shelf (OCS). The Secretary is required 
by various laws to manage mineral resource production from Federal and 
Indian lands and the OCS, collect the royalties and other mineral 
revenues due, and distribute the funds

[[Page 10266]]

collected in accordance with applicable laws. Public laws pertaining to 
mineral leases on Federal and Indian lands are posted on our Web site 
at http://www.mrm.mms.gov/Laws_R_D/PublicLawsAMR.htm.
    The Secretary also has a trust responsibility to manage Indian 
lands and seek advice and information from Indian beneficiaries. The 
MMS performs the minerals revenue management functions and assists the 
Secretary in carrying out the Department's trust responsibility for 
Indian lands.

General Information

    When a company or an individual enters into a lease to explore, 
develop, produce, and dispose of minerals from Federal or Indian lands, 
that company or individual agrees to pay the lessor a share in an 
amount or value of production from the leased lands. The lessee is 
required to report various kinds of information to the lessor relative 
to the disposition of the leased minerals. Such information is 
generally available within the records of the lessee or others involved 
in developing, transporting, processing, purchasing, or selling of such 
minerals.
    We use the information collected in this ICR to ensure that royalty 
is accurately valued and appropriately paid on oil and gas produced 
from Federal onshore and offshore leases. Please refer to the chart for 
all reporting requirements and associated burden hours. All data 
submitted is subject to subsequent audit and adjustment.

Federal Oil and Gas Valuation Regulations

    The valuation regulations at 30 CFR part 206, subparts C and D, 
mandate that companies collect and/or submit information used to value 
their Federal oil and gas, including transportation and processing 
regulatory allowance limit information. Companies report certain data 
on Form MMS-2014, Report of Sales and Royalty Remittance (OMB Control 
Number 1010-0140). The information requested is the minimum necessary 
to carry out our mission and places the least possible burden on 
respondents. If MMS does not collect this information, both Federal and 
state governments may suffer a loss of royalties.

Transportation and Processing Regulatory Allowance Limits

    Lessees may deduct the reasonable, actual costs of transportation 
and processing from Federal royalties. Lessees who request approval to 
exceed the regulatory allowance limits are required to supply 
information in order to obtain these benefits.
    Regulatory Allowance Limit for Transportation: Under certain 
circumstances, lessees are authorized to deduct from royalty payments 
the reasonable, actual costs of transporting the royalty portion of 
produced oil and gas from the lease to a processing or sales point not 
in the immediate lease area. For oil and gas, regulations establish the 
allowable limit on transportation allowance deductions at 50 percent of 
the value of the oil or gas.
    Regulatory Allowance Limit for Processing: When gas is processed 
for the recovery of gas plant products, lessees may claim a processing 
allowance. Regulations establish the allowable limit on processing 
allowance deductions at 66\2/3\ percent of the value of each gas plant 
product.

Request To Exceed Regulatory Allowance Limitation, Form MMS-4393

    Lessees may request to exceed regulatory limitations. Upon proper 
application from the lessee, we may approve an oil or gas 
transportation allowance in excess of 50 percent or a gas processing 
allowance in excess of 66\2/3\ percent on Federal leases. To request 
permission to exceed a regulatory allowance limit, lessees must submit 
a letter to MMS explaining why a higher allowance limit is necessary 
and provide supporting documentation, including a completed Form MMS-
4393. On this form, lessees provide the data necessary to identify the 
properties and time periods for which the lessee is requesting to 
exceed the regulatory limits. The MMS verifies that these costs 
actually exceed regulatory allowance limits. Companies report 
allowances on Form MMS-4393 for both Federal and Indian leases. Burden 
hours for completion of Form MMS-4393 for Indian leases are included in 
OMB Control Number 1010-0103.

Accounting and Auditing Relief for Marginal Properties

    In 2004, we amended our regulations to comply with section 7 of the 
Federal Oil and Gas Royalty Simplification and Fairness Act of 1996. 
The new regulations provide guidance for lessees and designees seeking 
accounting and auditing relief for qualifying Federal marginal 
properties. There are two types of relief: (1) Cumulative royalty 
reports and payments relief; and (2) other relief. Under 30 CFR 
204.202, MMS requires notification from lessees who request to take the 
cumulative royalty reporting and payment relief option. Under 30 CFR 
204.203, MMS requires a relief request from lessees who want to obtain 
any other type of accounting and auditing relief.
    A state may decide in advance if it will allow either or both 
relief options for each particular year and must notify the MRM 
Associate Director, in writing of its decision. If a state does not 
notify MMS in writing, then MMS will deem that the state has decided 
not to allow either or both relief options. After consulting with the 
state concerned, we will approve, deny, or modify requests in writing. 
Under the regulations, both MMS and the state concerned must approve 
any accounting and auditing relief granted for a marginal property.

OMB Approval

    We are requesting OMB approval to continue to collect this 
information. Not collecting this information would limit the 
Secretary's ability to discharge his/her duties and may also result in 
loss of royalty payments. Proprietary information submitted to MMS 
under this collection is protected, and no items of a sensitive nature 
are included in this information collection.
    For information collections relating to valuation requirements, 
responses are mandatory. For the remaining information collections in 
this ICR, responses are required to obtain benefits: only those lessees 
who request approval to exceed the regulatory limits on transportation 
and processing allowances or to obtain the benefits of accounting and 
auditing relief for marginal properties must supply this information.
    Frequency: Annually and on occasion.
    Estimated Number and Description of Respondents: 94 Federal 
lessees/designees and 4 states.
    Estimated Annual Reporting and Recordkeeping ``Hour'' Burden: 
21,055 hours.
    We have not included in our estimates certain requirements 
performed in the normal course of business and considered usual and 
customary. The following chart shows the estimated burden hours by CFR 
section and paragraph:

[[Page 10267]]



                                                       Respondents' Estimated Annual Burden Hours
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                                                                                                                          Average number
    Citation 30 CFR 202, 204, and 206                 Reporting and recordkeeping requirement               Hour burden      of annual     Annual burden
                                                                                                                             responses         hours
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                                                                   PART 202--ROYALTIES
                                                            Subpart C--Federal and Indian Oil
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                                              Sec.   202.101 Standards for reporting and paying royalties.
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202.101.................................  202.101 Oil volumes are to be reported in barrels of clean oil  Burden covered under OMB Control Number 1010-
                                           of 42 standard U.S. gallons (231 cubic inches each) at 60      0140.
                                           [deg]F.
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                                                                 Subpart D--Federal Gas
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                                           Sec.   202.152 Standards for reporting and paying royalties on gas.
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202.152(a) and (b)......................  202.152(a)(1) If you are responsible for reporting production   Burden covered under OMB Control Number 1010-
                                           or royalties you must:                                         0140.
                                             (i) Report gas volumes and British thermal unit (Btu)
                                              heating values, if applicable, under the same degree of
                                              water saturation;
                                             (ii) Report gas volumes in units of 1,000 cubic feet (mcf);
                                              and
                                             (iii) Report gas volumes and Btu heating value at a
                                              standard pressure base of 14.73 pounds per square inch
                                              absolute (psia) and a standard temperature base of 60
                                              [deg]F.
                                             (b) Residue gas and gas plant product volumes shall be
                                              reported as specified in this paragraph.
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                                                     PART 204--ALTERNATIVES FOR MARGINAL PROPERTIES
                                                        Subpart C--Accounting and Auditing Relief
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                                    Sec.   204.202 What is the cumulative royalty reports and payments relief option?
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204.202(b)(1)...........................  204.202(b) To use the cumulative royalty reports and payments               40               1              40
                                           relief option, you must do all of the following:
                                             (1) Notify MMS in writing by January 31 of the calendar
                                              year for which you begin taking your relief.
                                                                                                         -----------------------------------------------
204.202(b)(2) and (b)(3)................  204.202(b)(2) Submit your royalty report and payment * * * by   Burden covered under OMB Control Number 1010-
                                           the end of February of the year following the calendar year    0140.
                                           for which you reported annually * * * If you have an
                                           estimated payment on file, you must submit your royalty
                                           report and payment by the end of March of the year following
                                           the calendar year for which you reported annually; (3) Use
                                           the sales month prior to the month that you submit your
                                           annual report and payment * * * for the entire previous
                                           calendar year's production for which you are paying annually.
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204.202(b)(4), (b)(5), (c), (d)(1),       204.202(b) To use the cumulative royalty reports and payments   Burden covered under OMB Control Number 1010-
 (d)(2), (e)(1), and (e)(2).               relief option, you must:                                       0140.
                                          (4) Report one line of cumulative royalty information on Form
                                           MMS-2014 for the calendar year * * * and
                                          (5) Report allowances on Form MMS-2014 on the same annual
                                           basis as the royalties for your marginal property production.
                                          (c) If you do not pay your royalty by the date due in
                                           paragraph (b) of this section, you will owe late payment
                                           interest * * * from the date your payment was due under this
                                           section until the date MMS receives it.
                                          (d) If you take relief you are not qualified for, you may be
                                           liable for civil penalties.
                                          Also you must:
                                          (1) Pay MMS late payment interest determined under 30 CFR
                                           218.54;
                                          (2) Amend your Form MMS-2014.
                                          (e) If you dispose of your ownership interest in a marginal
                                           property for which you have taken relief * * * you must:
                                             (1) Report and pay royalties for the portion of the
                                              calendar year for which you had an ownership interest; and
                                             (2) Make the report and payment by the end of the month
                                              after you dispose of the ownership interest in the
                                              marginal property. If you do not report and pay timely,
                                              you will owe interest * * * from the date the payment was
                                              due.
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[[Page 10268]]

 
                                                     Sec.   204.203 What is the other relief option?
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204.203(b), 204.205(a) and (b), and       204.203(b) You must request approval from MMS * * * before                 200               1             200
 204.206(a)(3)(i) and (b)(1).              taking relief under this option.
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                 Sec.   204.208 May a State decide that it will or will not allow one or both of the relief options under this subpart?
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204.208 (c)(1), (d)(1), and (e)           204.208(c) If a State decides * * * that it will or will not                40               4             160
                                           allow one or both of the relief options * * * within 30 days
                                           * * * the State must:
                                             (1) Notify the Associate Director for Minerals Revenue
                                              Management, MMS, in writing, of its intent to allow or not
                                              allow one or both of the relief options.
                                          (d) If a State decides in advance * * * that it will not allow
                                           one or both of the relief options * * * the State must: (1)
                                           Notify the Associate Director for Minerals Revenue
                                           Management, MMS, in writing, of its intent to allow one or
                                           both of the relief options.
                                             (e) If a State does not notify MMS * * * the State will be
                                              deemed to have decided not to allow either of the relief
                                              options.
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                               Sec.   204.209 What if a property ceases to qualify for relief obtained under this subpart?
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204.209(b)..............................  204.209(b) If a property is no longer eligible for relief * *                6               1               6
                                           * the relief for the property terminates as of December 31 of
                                           that calendar year. You must notify MMS in writing by
                                           December 31 that the relief for the property has terminated.
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                                   Sec.   204.210 What if a property is approved as part of a nonqualifying agreement?
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204.210(c) and (d)......................  204.210(c) * * * the volumes on which you report and pay        Burden covered under OMB Control Number 1010-
                                           royalty * * * must be amended to reflect all volumes produced  0140.
                                           on or allocated to your lease under the nonqualifying
                                           agreement as modified by BLM * * * Report and pay royalties
                                           for your production using the procedures in Sec.
                                           204.202(b).
                                          (d) If you owe additional royalties based on the retroactive
                                           agreement approval and do not pay your royalty by the date
                                           due in Sec.   204.202(b), you will owe late payment interest
                                           determined under 30 CFR 218.54 from the date your payment was
                                           due under Sec.   204.202(b)(2) until the date MMS receives
                                           it.
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                                     Sec.   204.214(b) Is minimum royalty due on a property for which I took relief?
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204.214(b)(1) and (b)(2)                  204.214(b) If you pay minimum royalty on production from a      Burden covered under OMB Control Number 1010-
                                           marginal property during a calendar year for which you are     0140.
                                           taking cumulative royalty reports and payment relief, and:
                                             (1) The annual payment you owe under this subpart is
                                              greater than the minimum royalty you paid, you must pay
                                              the difference between the minimum royalty you paid and
                                              your annual payment due under this subpart; or,
                                             (2) The annual payment you owe under this subpart is less
                                              than the minimum royalty you paid, you are not entitled to
                                              a credit because you must pay at least the minimum royalty
                                              amount on your lease each year.
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                                         Accounting and Auditing Relief Subtotal                                                       7             406
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                                                               PART 206--PRODUCT VALUATION
                                                                 Subpart C--Federal Oil
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                 Sec.   206.102 How do I calculate royalty value for oil that I or my affiliate sell(s) under an arm's-length contract?
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206.102(e)(1)                             206.102(e) If you value oil under paragraph (a) of this         AUDIT PROCESS. See note.
                                           section: (1) MMS may require you to certify that your or your
                                           affiliate's arm's-length contract provisions include all of
                                           the consideration the buyer must pay, either directly or
                                           indirectly, for the oil.
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[[Page 10269]]

 
                                   Sec.   206.103 How do I value oil that is not sold under an arm's-length contract?
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206.103(a)..............................  206.103 This section explains how to value oil that you may                 45               5             225
                                           not value under Sec.   206.102 or that elect under Sec.
                                           206.102(d) to value under this section. First determine
                                           whether paragraph (a), (b), or (c) of this section applies to
                                           production from your lease, or whether you may apply
                                           paragraph (d) or (e) with MMS approval.
                                          (a) Production from leases in California or Alaska. Value is
                                           the average of the daily mean ANS spot prices published in
                                           any MMS-approved publication during the trading month most
                                           concurrent with the production month.
                                          (1) To calculate the daily mean spot price.
                                          (2) Use only the days.
                                          (3) You must adjust the value.
206.103(a)(4)...........................  206.103(a)(4) After you select an MMS-approved publication,                  8               2              16
                                           you may not select a different publication more often than
                                           once every 2 years,
206.103(b)(1)...........................  206.103(b) Production from leases in the Rocky Mountain                    400               2             800
                                           Region. * * * (1) If you have an MMS-approved tendering
                                           program, you must value oil.
206.103(b)(1)(ii).......................  206.103(b)(1)(ii) If you do not have an MMS-approved tendering             400               2             800
                                           program, you may elect to value your oil under either
                                           paragraph (b)(2) or (b)(3) of this section.
206.103(b)(4)...........................  206.103(b)(4) If you demonstrate to MMS's satisfaction that                400               2             800
                                           paragraphs (b)(1) through (b)(3) of this section result in an
                                           unreasonable value for your production as a result of
                                           circumstances regarding that production, the MMS Director may
                                           establish an alternative valuation method.
206.103(c)(1)...........................  206.103(c) Production from leases not located in California,                50              10             500
                                           Alaska or the Rocky Mountain Region. (1) Value is the NYMEX
                                           price, plus the roll, adjusted for applicable location and
                                           quality differentials and transportation costs under Sec.
                                           206.112.
206.103(e)(1) and (e)(2)................  206.103(e) Production delivered to your refinery and the NYMEX             330               2             660
                                           price or ANS spot price is an unreasonable value.
                                          (1) * * * you may apply to the MMS Director to establish a
                                           value representing the market at the refinery if:
                                          (2) You must provide adequate documentation and evidence
                                           demonstrating the market value at the refinery.
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                             Sec.   206.105 What records must I keep to support my calculations of value under this subpart?
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206.105.................................  206.105 If you determine the value of your oil under this       Burden covered under OMB Control Number 1010-
                                           subpart, you must retain all data relevant to the              0140.
                                           determination of royalty value.
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                                                 Sec.   206.107 How do I request a value determination?
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206.107(a)..............................  206.107(a) You may request a value determination from MMS.                 880               3           2,640
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                                     Sec.   206.109 When may I take a transportation allowance in determining value?
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206.109(c)(2)...........................  206.109(c) Limits on transportation allowances. (2) You may                  8               1               8
                                           ask MMS to approve a transportation allowance in excess of
                                           the limitation in paragraph (c)(1) of this section * * * Your
                                           application for exception (using Form MMS-4393, Request to
                                           Exceed Regulatory Allowance Limitation) must contain all
                                           relevant and supporting documentation necessary for MMS to
                                           make a determination.
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                       Sec.   206.110 How do I determine a transportation allowance under an arm's-length transportation contract?
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206.110(a)..............................  206.110(a) * * * You must be able to demonstrate that you or    AUDIT PROCESS. See note.
                                           your affiliate's contract is at arm's length.
                                                                                                         -----------------------------------------------
206.110(d)(3)...........................  206.110(d) If your arm's-length transportation contract                    330               2             660
                                           includes more than one liquid product, and the transportation
                                           costs attributable to each product cannot be determined * * *
                                           (3) You may propose to MMS a cost allocation method.

[[Page 10270]]

 
206.110(e)..............................  206.110(e) If your arm's-length transportation contract                    330               1             330
                                           includes both gaseous and liquid products, and the
                                           transportation costs attributable to each product cannot be
                                           determined from the contract, then you must propose an
                                           allocation procedure to MMS.
                                                                                                         -----------------------------------------------
206.110(e)(1) and (e)(2)................  206.110(e)(1) * * * If MMS rejects your cost allocation, you    Burden covered under OMB Control Number 1010-
                                           must amend your Form MMS-2014.                                 0140.
                                          (2) You must submit your initial proposal, including all
                                           available data, within 3 months after first claiming the
                                           allocated deductions on Form MMS-2014.
                                                                                                         -----------------------------------------------
206.110(g)(2)...........................  206.110(g) If your arm's-length sales contract includes a                  330               1             330
                                           provision reducing the contract price by a transportation
                                           factor, * * *
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                                          (2) You must obtain MMS approval before claiming a
                                           transportation factor in excess of 50 percent of the base
                                           price of the product.
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      Sec.   206.111 How do I determine a transportation allowance if I do not have an arm's-length transportation contract or arm's-length tariff?
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206.111(g)..............................  206.111(g) To compute depreciation, you may elect to use                   330               1             330
                                           either * * * After you make an election, you may not change
                                           methods without MMS approval.
206.111(k)(2)...........................  206.111(k)(2) You may propose to MMS a cost allocation method              330               1             330
                                           on the basis of the values.
206.111(l)(1) and (l)(3)................  206.111(l)(1) Where you transport both gaseous and liquid                  330               1             330
                                           products through the same transportation system, you must
                                           propose a cost allocation procedure to MMS * * * (3) You must
                                           submit your initial proposal, including all available data,
                                           within 3 months after first claiming the allocated deductions
                                           on Form MMS-2014.
                                                                                                         -----------------------------------------------
206.111(l)(2)...........................  206.111(l)(2) * * * If MMS rejects your cost allocation, you    Burden covered under OMB Control Number 1010-
                                           must amend your Form MMS-2104 for the months that you used     0140.
                                           the rejected method and pay any additional royalty and
                                           interest due.
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  Sec.   206.112 What adjustments and transportation allowances apply when I value oil production from my lease using NYMEX prices or ANS spot prices?
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206.112(a)(1)(ii).......................  206.112(a)(1)(ii) * * * under an exchange agreement that is                330               1             330
                                           not at arm's length, you must obtain approval from MMS for a
                                           location and quality differential.
206.112(a)(1)(ii).......................  206.112(a)(1)(ii) * * * If MMS prescribes a different                      330               2             660
                                           differential, you must apply * * * You must pay any
                                           additional royalties owed * * * plus the late payment
                                           interest from the original royalty due date, or you may
                                           report a credit.
206.112(a)(3) and (a)(4)................  206.112(a)(3) If you transport or exchange at arm's length (or             330               4           1,320
                                           both transport and exchange) at least 20 percent, but not
                                           all, of your oil produced from the lease to a market center,
                                           determine the adjustment between the lease and the market
                                           center for the oil that is not transported or exchanged (or
                                           both transported and exchanged) to or through a market center
                                           as follows:
                                          (4) If you transport or exchange (or both transport and
                                           exchange) less than 20 percent of your crude oil produced
                                           from the lease between the lease and a market center, you
                                           must propose to MMS an adjustment between the lease and the
                                           market center for the portion of the oil that you do not
                                           transport or exchange (or both transport and exchange) to a
                                           market center * * * If MMS prescribes a different adjustment.
                                           * * * You must pay any additional royalties owed * * * plus
                                           the late payment interest from the original royalty due date,
                                           or you may report a credit.
206.112(b)(3)...........................  206.112(b)(3) * * * you may propose an alternative                         330               4           1,320
                                           differential to MMS * * * If MMS prescribes a different
                                           differential * * * You must pay any additional royalties owed
                                           * * * plus the late payment interest from the original
                                           royalty due date, or you may report a credit.

[[Page 10271]]

 
206.112(c)(2)...........................  206.112(c)(2) * * * If quality bank adjustments do not                     330               2             660
                                           incorporate or provide for adjustments for sulfur content,
                                           you may make sulfur adjustments, based on the quality of the
                                           representative crude oil at the market center, of 5.0 cents
                                           per one-tenth percent difference in sulfur content, unless
                                           MMS approves a higher adjustment.
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                            Sec.   206.114 What are my reporting requirements under an arm's-length transportation contract?
--------------------------------------------------------------------------------------------------------------------------------------------------------
206.114.................................  206.114 You or your affiliate must use a separate entry on      Burden covered under OMB Control Number 1010-
                                           Form MMS-2014 to notify MMS of an allowance based on           0140.
                                           transportation costs you or your affiliate incur.
                                          MMS may require you or your affiliate to submit arm's-length    AUDIT PROCESS. See note.
                                           transportation contracts, production agreements, operating
                                           agreements, and related documents.
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                         Sec.   206.115 What are my reporting requirements under a non-arm's-length transportation arrangement?
--------------------------------------------------------------------------------------------------------------------------------------------------------
206.115(a)..............................  206.115(a) You or your affiliate must use a separate entry on   Burden covered under OMB Control Number 1010-
                                           Form MMS-2014 to notify MMS of an allowance based on           0140.
                                           transportation costs you or your affiliate incur.
206.115(c)..............................  206.115(c) MMS may require you or your affiliate to submit all  AUDIT PROCESS. See note.
                                           data used to calculate the allowance deduction.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Subpart D--Federal Gas
                                                   Sec.   206.152 Valuation standards-unprocessed gas.
--------------------------------------------------------------------------------------------------------------------------------------------------------
206.152(b)(1)(i) and (b)(1)(iii)........  206.152(b)(1)(i) * * * The lessee shall have the burden of      AUDIT PROCESS. See note.
                                           demonstrating that its contract is arm's-length (iii) * * *
                                           When MMS determines that the value may be unreasonable, MMS
                                           will notify the lessee and give the lessee an opportunity to
                                           provide written information justifying the lessee's value.
                                                                                                         -----------------------------------------------
206.152(b)(2)...........................  206.152(b)(2) * * * The lessee must request a value                        330               1             330
                                           determination in accordance with paragraph (g) of this
                                           section for gas sold pursuant to a warranty contract;
                                                                                                         -----------------------------------------------
206.152(b)(3)...........................  206.152(b)(3) MMS may require a lessee to certify that its      AUDIT PROCESS. See note.
                                           arm's-length contract provisions include all of the
                                           consideration to be paid by the buyer, either directly or
                                           indirectly, for the gas.
206.152(e)(1)...........................  206.152(e)(1) Where the value is determined pursuant to         Burden covered under OMB Control Number 1010-
                                           paragraph (c) of this section, the lessee shall retain all     0140.
                                           data relevant to the determination of royalty value.
206.152(e)(2)...........................  206.152(e)(2) Any Federal lessee will make available upon       AUDIT PROCESS. See note.
                                           request to the authorized MMS or State representatives, to
                                           the Office of the Inspector General of the department of the
                                           Interior, or other person authorized to receive such
                                           information, arm's-length sales and volume data for like-
                                           quality production sold, purchased or otherwise obtained by
                                           the lessee from the field or area or from nearby fields or
                                           areas.
                                                                                                         -----------------------------------------------
206.152(e)(3)...........................  206.152(e)(3) A lessee shall notify MMS if it has determined               330               2             660
                                           value pursuant to paragraph (c)(2) or (c)(3) of this section.
206.152(g)..............................  206.152(g) The lessee may request a value determination from               660               3           1,980
                                           MMS * * * The lessee shall submit all available data relevant
                                           to its proposal.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    Sec.   206.153 Valuation standards-processed gas.
--------------------------------------------------------------------------------------------------------------------------------------------------------
206.153(b)(1)(i) and (b)(1)(iii)........  206.153(b)(1)(i) * * * The lessee shall have the burden of      AUDIT PROCESS. See note.
                                           demonstrating that its contract is arm's-length.
                                                                                                         -----------------------------------------------
                                          (iii) * * * When MMS determines that the value may be
                                           unreasonable, MMS will notify the lessee and give the lessee
                                           an opportunity to provide written information justifying the
                                           lessee's value.
206.153(b)(2)...........................  206.153(b)(2) * * * The lessee must request a value                        330               1             330
                                           determination in accordance with paragraph (g) of this
                                           section for gas sold pursuant to a warranty contract;
                                                                                                         -----------------------------------------------

[[Page 10272]]

 
206.153(b)(3)...........................  206.153(b)(3) MMS may require a lessee to certify that its      AUDIT PROCESS. See note.
                                           arm's-length contract provisions include all of the
                                           consideration to be paid by the buyer, either directly or
                                           indirectly, for the residue gas or gas plant product.
206.153(e)(1)...........................  206.153(e)(1) Where the value is determined pursuant to         Burden covered under OMB Control Number 1010-
                                           paragraph (c) of this section, the lessee shall retain all     0140.
                                           data relevant to the determination of royalty value.
206.153(e)(2)...........................  206.153(e)(2) Any Federal lessee will make available upon       AUDIT PROCESS. See note.
                                           request to the authorized MMS or State representatives, to
                                           the Office of the Inspector General of the Department of the
                                           Interior, or other persons authorized to receive such
                                           information, arm's-length sales and volume data for like-
                                           quality residue gas and gas plant products sold, purchased or
                                           otherwise obtained by the lessee from the same processing
                                           plant or from nearby processing plants.
                                                                                                         -----------------------------------------------
206.153(e)(3)...........................  206.153(e)(2) A lessee shall notify MMS if it has determined               330               2             660
                                           any value pursuant to paragraph (c)(2) or (c)(3) of this
                                           section.
206.153(g)..............................  206.153(g) The lessee may request a value determination from               330               4           1,320
                                           MMS * * * The lessee shall submit all available data relevant
                                           to its proposal.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Sec.   206.154 Determination of quantities and qualities for computing royalties.
--------------------------------------------------------------------------------------------------------------------------------------------------------
206.154(c)(4)...........................  206.154(c)(4) * * * A lessee may request MMS approval of other             330               1             330
                                           methods for determining the quantity of residue gas and gas
                                           plant products allocable to each lease.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   Sec.   206.156 Transportation allowances--general.
--------------------------------------------------------------------------------------------------------------------------------------------------------
206.156(c)(3)...........................  206.156(c)(3) Upon request of a lessee, MMS may approve a                    8               3              24
                                           transportation allowance deduction in excess of the
                                           limitation prescribed by paragraphs (c)(1) and (c)(2) of this
                                           section * * * An application for exception (using Form MMS-
                                           4393, Request to Exceed Regulatory Allowance Limitation)
                                           shall contain all relevant and supporting documentation
                                           necessary for MMS to make a determination.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                               Sec.   206.157 Determination of transportation allowances.
--------------------------------------------------------------------------------------------------------------------------------------------------------
206.157(a)(1)(i)........................  206.157(a) Arm's-length transportation contracts. (1)(i) * * *  AUDIT PROCESS. See note.
                                           The lessee shall have the burden of demonstrating that its
                                           contract is arm's-length.
                                          The lessee must claim a transportation allowance by reporting   Burden covered under OMB Control Number 1010-
                                           it on a separate line entry on the Form MMS-2014.              0140.
206.157(a)(1)(iii)......................  206.157(a)(1)(iii) * * * When MMS determines that the value of  AUDIT PROCESS. See note.
                                           the transportation may be unreasonable, MMS will notify the
                                           lessee and give the lessee an opportunity to provide written
                                           information justifying the lessee's transportation costs
                                                                                                         -----------------------------------------------
206.157(a)(2)(ii).......................  206.157(a)(2)(ii) * * * the lessee may propose to MMS a cost               330               1             330
                                           allocation method on the basis of the values of the products
                                           transported.
206.157(a)(3)...........................  206.157(a)(3) If an arm's-length transportation contract                   330               1             330
                                           includes both gaseous and liquid products and the
                                           transportation costs attributable to each cannot be
                                           determined from the contract, the lessee shall propose an
                                           allocation procedure to MMS * * * The lessee shall submit all
                                           relevant data to support its proposal.
206.157(a)(5)...........................  206.157(a)(5) * * * The transportation factor may not exceed               100               1             100
                                           50 percent of the base price of the product without MMS
                                           approval.
                                                                                                         -----------------------------------------------
206.157(b)(1)...........................  206.157(b) Non-arm's-length or no contract. (1) The lessee      Burden covered under OMB Control Number 1010-
                                           must claim a transportation allowance by reporting it on a     0140.
                                           separate line entry on the Form MMS-2014.
                                                                                                         -----------------------------------------------
206.157(b)(2)(iv) and (b)(2)(iv)(A).....  206.157(b)(2)(iv) After a lessee has elected to use either                 100               1             100
                                           method for a transportation system, the lessee may not later
                                           elect to change to the other alternative without approval of
                                           the MMS. (A) After an election is made, the lessee may not
                                           change methods without MMS approval.

[[Page 10273]]

 
206.157(b)(3)(i)........................  206.157(b)(3)(i) * * * Except as provided in this paragraph,               100               1             100
                                           the lessee may not take an allowance for transporting a
                                           product which is not royalty bearing without MMS approval.
206.157(b)(3)(ii).......................  206.157(b)(3)(ii) * * * the lessee may propose to the MMS a                100               1             100
                                           cost allocation method on the basis of the values of the
                                           products transported.
206.157(b)(4)...........................  206.157(b)(4) Where both gaseous and liquid products are                   100               1             100
                                           transported through the same transportation system, the
                                           lessee shall propose a cost allocation procedure to MMS. * *
                                           * The lessee shall submit all relevant data to support its
                                           proposal.
206.157(b)(5)...........................  206.157(b)(5) You may apply for an exception from the                      100               1             100
                                           requirement to compute actual costs under paragraphs (b)(1)
                                           through (b)(4) of this section.
                                                                                                         -----------------------------------------------
206.157(c)(1)(i)........................  206.157(c) Reporting Requirements. (1) Arm's-length contracts.  Burden covered under OMB Control Number 1010-
                                           (i) You must use a separate entry on Form MMS-2014 to notify   0140.
                                           MMS of a transportation allowance.
206.157(c)(1)(ii).......................  206.157(c)(1)(ii) The MMS may require you to submit arm's-      AUDIT PROCESS. See note.
                                           length transportation contracts, production agreements,
                                           operating agreements, and related documents.
206.157(c)(2)(i)........................  206.157(c)(2) Non-arm's-length or no contract. (i) You must     Burden covered under OMB Control Number 1010-
                                           use a separate entry on Form MMS-2014 to notify MMS of a       0140.
                                           transportation allowance.
206.157(c)(2)(iii)......................  206.157(c)(2)(iii) The MMS may require you to submit all data   AUDIT PROCESS. See note.
                                           used to calculate the allowance deduction.
206.157(e)(2), (e)(3), and (f)(1).......  206.157(e) Adjustments. (2) For lessees transporting            Burden covered under OMB Control Number 1010-
                                           production from onshore Federal leases, the lessee must        0140.
                                           submit a corrected Form MMS-2014 to reflect actual costs,
                                           together with any payment, in accordance with instructions
                                           provided by MMS.
                                                                                                         -----------------------------------------------
                                          (3) For lessees transporting gas production from leases on the
                                           OCS, if the lessee's estimated transportation allowance
                                           exceeds the allowance based on actual costs, the lessee must
                                           submit a corrected Form MMS-2014 to reflect actual costs,
                                           together with its payments, in accordance with instructions
                                           provided by MMS.
                                          (f) Allowable costs in determining transportation allowances.
                                           * * * (1) Firm demand charges paid to pipelines * * * if you
                                           receive a payment or credit from the pipeline for penalty
                                           refunds, rate case refunds, or other reasons, you must reduce
                                           the firm demand charge claimed on the Form MMS-2014 by the
                                           amount of that payment. You must modify Form MMS-2014 by the
                                           amount received or credited for the affected reporting period
                                           and pay any resulting royalty and late payment interest due.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      Sec.   206.158 Processing allowances-general.
--------------------------------------------------------------------------------------------------------------------------------------------------------
206.158(c)(3)...........................  206.158(c)(3) Upon request of a lessee, MMS may approve a                    8              12              96
                                           processing allowance in excess of the limitation prescribed
                                           by paragraph (c)(2) of this section * * * An application for
                                           exception (using Form MMS-4393, Request to Exceed Regulatory
                                           Allowance Limitation) shall contain all relevant and
                                           supporting documentation for MMS to make a determination. * *
                                           *
206.158(d)(2)(i)........................  206.158(d)(2)(i) If the lessee incurs extraordinary costs for               40               2              80
                                           processing gas production from a gas production operation, it
                                           may apply to MMS for an allowance for those costs.
                                                                                                         -----------------------------------------------
206.158(d)(2)(ii).......................  206.158(d)(2)(ii) * * * to retain the authority to deduct the   Burden covered under OMB Control Number 1010-
                                           allowance the lessee must report the deduction to MMS in a     0140.
                                           form and manner prescribed by MMS.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 Sec.   206.159 Determination of processing allowances.
--------------------------------------------------------------------------------------------------------------------------------------------------------
206.159(a)(1)(i)........................  206.159(a) Arm's-length processing contracts.(1)(i) * * * The   AUDIT PROCESS. See note.
                                           lessee shall have the burden of demonstrating that its
                                           contract is arm's-length.
                                          The lessee must claim a processing allowance by reporting it    Burden covered under OMB Control Number 1010-
                                           on a separate line entry on the Form MMS-2014.                 0140.

[[Page 10274]]

 
206.159(a)(1)(iii)......................  206.159(a)(1)(iii) * * * When MMS determines that the value of  AUDIT PROCESS. See note.
                                           the processing may be unreasonable, MMS will notify the
                                           lessee and give the lessee an opportunity to provide written
                                           information justifying the lessee's processing costs.
                                                                                                         -----------------------------------------------
206.159(a)(3)...........................  206.159(a)(3) If an arm's-length processing contract includes              330               1             330
                                           more than one gas plant product and the processing costs
                                           attributable to each product cannot be determined from the
                                           contract, the lessee shall propose an allocation procedure to
                                           MMS. * * * The lessee shall submit all relevant data to
                                           support its proposal.
                                                                                                         -----------------------------------------------
206.159(b)(1)...........................  206.159(b) Non-arm's-length or no contract. (1) * * * The       Burden covered under OMB Control Number 1010-
                                           lessee must claim a processing allowance by reflecting it as   0140.
                                           a separate line entry on the Form MMS-2014.
                                                                                                         -----------------------------------------------
206.159(b)(2)(iv) and (b)(2)(iv)(A).....  206.159(b)(2)(iv) * * * When a lessee has elected to use                   100               1             100
                                           either method for a processing plant, the lessee may not
                                           later elect to change to the alternative without approval of
                                           the MMS.(A) * * * After an election is made, the lessee may
                                           not change methods without MMS approval.
206.159(b)(4)...........................  206.159(b)(4) A lessee may apply to MMS for an exception from              100               1             100
                                           the requirements that it compute actual costs in accordance
                                           with paragraphs (b)(1) through (b)(3) of this section.
                                                                                                         -----------------------------------------------
206.159(c)(1)(i)........................  206.159(c) Reporting requirements-(1) Arm's-length contracts.   Burden covered under OMB Control Number 1010-
                                           (i) The lessee must notify MMS of an allowance based on        0140.
                                           incurred costs by using a separate line entry on the Form MMS-
                                           2014.
206.159(c)(1)(ii).......................  206.159(c)(1)(ii) The MMS may require that a lessee submit      AUDIT PROCESS. See note.
                                           arm's-length processing contracts and related documents.
206.159(c)(2)(i)........................  206.159(c)(2) Non-arm's-length or no contract.(i) The lessee    Burden covered under OMB Control Number 1010-
                                           must notify MMS of an allowance based on incurred costs by     0140.
                                           using a separate line entry on the Form MMS-2014.
206.159(c)(2)(iii)......................  206.159(c)(2)(iii) Upon request by MMS, the lessee shall        AUDIT PROCESS. See note.
                                           submit all data used to prepare the allowance deduction.
206.159(e)(2) and (e)(3)................  206.159(e) Adjustments.                                         Burden covered under OMB Control Number 1010-
                                                                                                          0140.
                                                                                                         -----------------------------------------------
                                          (2) For lessees processing production from onshore Federal
                                           leases, the lessee must submit a corrected Form MMS-2014 to
                                           reflect actual costs, together with any payment, in
                                           accordance with instructions provided by MMS.(3) For lessees
                                           processing gas production from leases on the OCS, if the
                                           lessee's estimated processing allowance exceeds the allowance
                                           based on actual costs, the lessee must submit a corrected
                                           Form MMS-2014 to reflect actual costs, together with its
                                           payment, in accordance with instructions provided by MMS.
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Oil and Gas Valuation Subtotal......................................................................  ..............              91          20,649
                                         ---------------------------------------------------------------------------------------------------------------
        TOTAL...........................................................................................  ..............              98          21,055
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: AUDIT PROCESS--The Office of Regulatory Affairs determined that the audit process is exempt from the Paperwork Reduction Act of 1995 because MMS
  staff asks non-standard questions to resolve exceptions.

    Estimated Annual Reporting and Recordkeeping ``Non-hour'' Cost 
Burden: We have identified no ``non-hour'' cost burden associated with 
the collection of information.
    Public Disclosure Statement: The PRA (44 U.S.C. 3501 et seq.) 
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.
    Comments: Section 3506(c)(2)(A) of the PRA requires each agency to 
``* * * provide 60-day notice in the Federal Register * * * and 
otherwise consult with members of the public and affected agencies 
concerning each proposed collection of information * * *.'' Agencies 
must specifically solicit comments to: (a) Evaluate whether the 
proposed collection of information is necessary for the agency to 
perform its duties, including whether the information is useful; (b) 
evaluate the accuracy of the agency's estimate of the burden of the 
proposed collection of information; (c) enhance the quality, 
usefulness, and clarity of the information to be collected; and (d) 
minimize the burden on the respondents, including the use of automated 
collection techniques or other forms of information technology.
    To comply with the public consultation process, we published a 
notice in the Federal Register on August 15, 2008 (73 FR 47969), 
announcing that we would submit this ICR to OMB for approval. The 
notice provided the required 60-day comment period. We

[[Page 10275]]

received no comments in response to the notice.
    If you wish to comment in response to this notice, you may send 
your comments to the offices listed under the ADDRESSES section of this 
notice. The OMB has up to 60 days to approve or disapprove the 
information collection but may respond after 30 days. Therefore, to 
ensure maximum consideration, OMB should receive public comments by 
April 9, 2009.
    Public Comment Policy: We will post all comments in response to 
this notice at http://www.mrm.mms.gov/Laws_R_D/FRNotices/FRInfColl.htm. We also will post all comments, including names and 
addresses of respondents, at http://www.regulations.gov. Before 
including your address, phone number, e-mail address, or other personal 
identifying information in your comment, be advised that your entire 
comment--including your personal identifying information--may be made 
publicly available at any time. While you can ask us in your comment to 
withhold from public view your personal identifying information, we 
cannot guarantee that we will be able to do so.
    MMS Information Collection Clearance Officer: Arlene Bajusz (202) 
208-7744.

    Dated: March 4, 2009.
Gregory J. Gould,
Associate Director for Minerals Revenue Management.
 [FR Doc. E9-5077 Filed 3-9-09; 8:45 am]
BILLING CODE 4310-MR-P


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