Federal Register / Vol. 60, No. 76 / Thursday, April 20, 1995 / Notices 19767

appropriateness, and scientific value of

the MMS’ OCS Environmental Studies

Program (ESP).

Below is a schedule of meetings that

will occur.

The SC will meet in plenary session

on Wednesday, June 7, from 8:30 a.m.

to 5:30 p.m.

The Committee will also meet in

plenary session on Thursday, June 8,

from 8:30 a.m. to 5 p.m. Discussion will

focus on continued review of Fiscal

Years 1996 and 1997 proposed ESP and

OCS activities off Alaska, and MMS

future study plans for OCS areas with

ongoing operations and planned

activities.

The meetings are open to the public.

Approximately 30 visitors can be

accommodated on a first-come-firstserved basis at the plenary session.

A copy of the agenda may be

requested from the MMS by writing Ms.

Phyllis Clark at the address below.

Other inquiries concerning the OCS

SC meeting should be addressed to Dr.

Ken Turgeon, Executive Secretary to the

OCS Scientific Committee, Minerals

Management Service, 381 Elden Street,

Mail Stop 4310, Herndon, Virginia

22070. He may be reached by telephone

at (703) 787–1717.

Dated: April 13, 1995.

Thomas M. Gernhofer,

Associate Director for Offshore Minerals

Management.

[FR Doc. 95–9784 Filed 4–19–95; 8:45 am]

BILLING CODE 4310–MR–M

Call for Comment on Proposed Policy

Options and Announcement of Related

Workshop for Outer Continental Shelf

(OCS) Natural Gas and Oil Resource

Management

AGENCY: Minerals Management Service

(MMS), Department of the Interior.

ACTION: Call for Comment on proposed

policy options and announcement of

workshop.

SUMMARY: On December 7, 1993, the

MMS published a Call for Public

Comment on General Leasing Policies in

the Central and Western Gulf of Mexico

Planning Areas. The MMS has reviewed

the comments it received and conducted

additional analyses. In this Call for

Comment, the MMS describes specific

policy options being considered.

The primary objectives to be met are

to slow expected declines in

infrastructure and production in

producing areas, to promote

development of infrastructure in certain

non-producing areas, and to assure

continued receipt of fair market value

for OCS leases. Implementation of one

new policy, expanding the tract-specific

data made available to all prospective

bidders prior to a sale, has just begun.

Other options under consideration are

to publish specific guidelines for the

treatment of applications for royalty

relief, to offer more flexible royalty

terms on some new leases, to increase

flexibility to respond to requests for

extensions in lease terms, to modify

rental and minimum bid policies, to

revise bid adequacy procedures, and to

propose coastal impact assistance.

A 2-day workshop to discuss current

policy options will be held in the Gulf

of Mexico region in mid-June 1995. The

first day will be devoted to an overall

discussion of the various options. The

second day will be spent on the

guidelines being developed by the MMS

for royalty relief on active leases. Details

will be published in a second Federal

Register Notice later this month.

DATES: Written responses should be

received by July 19, 1995. Comments

also may be presented in person at the

workshop announced in this notice.

ADDRESSES: Written responses should be

mailed to the Acting Deputy Associate

Director, Resources and Environmental

Management, Minerals Management

Service (MS–4430), 381 Elden Street,

Herndon, VA 22070. Hand deliveries

may be made at 381 Elden Street, Room

3408, Herndon, Virginia (dial 1178 from

lobby telephone). Envelopes or packages

should be marked ‘‘Comments on

Proposed Policy Options for the Gulf of

Mexico.’’ If any privileged or

proprietary information is submitted

that the respondent wishes to be treated

as confidential, both the envelope and

the contents should be marked

‘‘Confidential Information.’’

FOR FURTHER INFORMATION CONTACT: For

information pertaining to this Call for

Comment on Proposed Policy Options

and Announcement of Workshop,

telephone Marshall Rose or Mary

Vavrina, Economic Evaluation Branch,

at (703) 787–1536.

SUPPLEMENTARY INFORMATION: In the

December 7, 1993, Call for Public

Comment on General Leasing Policies in

the Central and Western Gulf of Mexico

Planning Areas, suggestions and

comments were requested from States,

local governments, Federal agencies, the

oil and gas industry, environmental

groups, and other interested individuals

and groups to assist the MMS and the

Department of the Interior in planning

for the Central and Western GOM sales

remaining under the Comprehensive

OCS Natural Gas and Oil Resource

Management Program for 1992–1997.

After considering the comments

received and conducting additional

internal analyses, the MMS and the

Department decided that, overall, the

regulations and policies already in place

were appropriate. However, the MMS

did identify several areas where

improvement was possible and has

developed a number of options for

further consideration.

The MMS has decided that the

current approach of offering annual,

area-wide sales in the Central and

Western GOM is the most appropriate

leasing system for those planning areas

at this time. In other planning areas, the

MMS may hold narrowly targeted sales,

more typical tract selection sales, or

tract nomination sales (where all tracts

specifically nominated are offered,

absent environmental or other

concerns).

The MMS also has decided that an

extension of the period used to evaluate

bids from a lease sale is no longer

needed. Its Resource Evaluation staff

now has sufficient training in the use of

new computer systems and

interpretation of technical data to

complete the evaluation of bids within

the existing 90-day requirement.

Several commenters supported impact

assistance. The Administration

recognizes that coastal states and

localities can incur impacts

disproportionate to their share of the

national benefits. The Administration

supports impact assistance as a means

to more equitably share the benefits and

burdens of OCS production, protect

coastal and marine resources, and

strengthen the Federal-State

partnership. The critical issue in

designing an impact assistance program,

however, is the budget offsets required

so that there is no net impact on the

Federal Treasury. The Administration is

currently reviewing impact assistance

but does not have a proposal at this

time.

Primary Objectives

In considering the main purpose of

the OCS oil and gas program (to

contribute to the Nation’s energy

supply) and the range of opportunities

currently available to make beneficial

changes within its existing authority,

the MMS decided to focus on three

objectives:

—Slow expected declines in

infrastructure and production in the

producing portions of the Central and

Western GOM

—Promote development of

infrastructure in promising deepwater portions of the Central and

Western GOM (and possibly in

frontier planning areas) to encourage

the domestic market to replenish

reserves and to increase its ability to
19768 Federal Register / Vol. 60, No. 76 / Thursday, April 20, 1995 / Notices

respond to sudden decreases in the

availability of moderately priced

supplies of oil and gas from foreign

sources

—Assure receipt of fair market value for

OCS leases.

Policy Options for Comment

I. New Policy: Information on Tracts

with Indicated Hydrocarbons

The MMS believes that early

identification of available tracts with

low geologic risk (those with indicated

hydrocarbons) would be a service to

potential bidders and would result in

greater competition for some tracts.

Scarce resources may make it difficult

for some potential bidders to identify

the tracts on their own. Fifty percent of

the tracts with high bids rejected

between 1990–92 had well bores with

confirmed resources. In subsequent

sales, both the number of bids per tract

and high bids, on average, increased

significantly. These findings suggest

that wider dissemination of relevant

geologic data on discovered resources

would increase the bidding competition

and high bid amounts in future sales.

An initial Indicated Hydrocarbon List

has been prepared and distributed that

identifies relevant unleased tracts by

class in the Central GOM. The three

classes are those that were fields or

portions of fields that produced; those

with well bores that qualified under 30

CFR 250.11 but did not produce; and

those with well bores that the MMS

believes would qualify under 30 CFR

250.11 but were never classified and

never produced. Basic information

relating to production, well bores, and

pay range for every tract in each class

also is included in the list. The data are

available in hard copy and digital

format. An updated list will be available

to the public approximately 3 months

before each GOM sale.

Specific Information Requested

The MMS would like two kinds of

information on this new policy:

evaluations of the usefulness of the

information provided for the May 1995

Central GOM sale and suggestions for

improvement or expansion. If the

information has not been useful, why

not? Are there ways to make it more

useful? Are there other kinds of useful,

non-proprietary data that could be

provided by the MMS that are not

readily available on the private market?

II. Royalty Policies for Active Leases

The MMS is authorized by the OCS

Lands Act to reduce or eliminate

royalties on oil-, gas-, and sulphurproducing leases in order to increase

production from those leases. The MMS

is considering guidelines for such

royalty relief that would distinguish

between two categories of requests. One

is relief for expense type projects, which

is designed to promote continued

production from a lease by lowering

lease royalty rates for a relatively short

duration. The other is relief for capital

investment projects, which focuses on

encouraging incremental production

from specific projects on the lease by

lowering reservoir or lease royalty rates

for extended periods. Royalty relief

would be granted only for leases already

in production.

For expense type projects, MMS

would try to set royalty rates so that

operators would more than cover their

cost of continuing operations. For

capital investment projects, to the extent

possible through adjusting royalties,

MMS will seek to ensure a targeted rate

of return on the new capital invested

before all but a nominal royalty becomes

due.

Qualification for relief under expense

type projects typically would require

that the lease has a negative operating

cash flow that is expected to persist for

subsequent periods. Depending upon

the anticipated stability of future prices

and costs, MMS may use either a fixed

or variable adjustment in the royalty

rate for qualifying projects.

Under either approach for expense

type projects, the MMS would calculate

the minimal amount of relief needed to

stimulate continuing operations, e.g., a

royalty rate at which the lessee retains

25 percent of the difference between

revenues and operating costs (excluding

royalties). At about the point where the

lease revenues would cover operating

costs with the full royalty (the breakeven operating level), the original lease

royalty rate would apply.

When prices and/or costs are

expected to be highly variable, or the

interval between review periods is

extended, then a variable royalty rate

system would be considered. In this

approach, the royalty rate that applies in

any period could vary as product prices

and production levels change. As with

the case of the fixed royalty

modification, the functional form of the

royalty rate would reflect only that

amount of relief needed to induce

continued production, e.g., the lessee

retains 25 percent of the difference

between revenues and operating costs

(excluding royalties), up to about the

break-even operating level.

Qualification for relief under capital

investment projects would require the

lessee to demonstrate that the eligible

project is not expected to generate an

adequate rate of return to justify the

needed expenditures which would

promote increased production. In those

cases where MMS is convinced that the

additional production directly

attributable to the proposed project is

not economical under existing royalty

terms, it would first determine whether

royalty relief would make the proposed

project worth pursuing.

If this appears to be the case, then the

project may qualify for relief. Following

documented payments for the

development activities, incremental

production would be charged a royalty

at a predetermined lower rate, e.g., onetwenty fourth of the wellhead value of

production. This rate would remain in

effect until the project earned a

specified rate of return, e.g., equal to the

BBB bond rate, allowing for realized

receipts, actual investment and

transportation costs, and predetermined

allowances for operating and overhead

costs.

Production value in excess of the

break-even operating level at the

reduced royalty rate subsequently

would be charged at the original royalty

rate. Further, the lessee incurs a

repayment obligation if the project

proves, in retrospect, not to have needed

the full amount of relief. Over the

production interval between the

investment break-even point at the

reduced royalty rate and the break-even

point at the original royalty rate, the

lessee will incur an obligation to repay

an increasing proportion of the

difference in royalties owing to approval

of the original application for relief. The

required repayment will be the amount

needed to provide the lessee with the

specified return on investment up to

that point. No additional obligation

beyond the original royalty rate is

incurred thereafter.

The repayment obligation would need

to be paid either at the time the project

ceases producing commercial amounts

of production in excess of the

investment break-even operating level at

the modified royalty rate, or at the time

the project generates sufficient revenues

to break even on the original investment

at the original royalty rate, whichever

occurs first. The lessee could further

manage the size and timing of the

repayment obligation by requesting that

the terms of the royalty modification

cease earlier than planned and possibly

forwarding payment at that time for any

incurred or anticipated repayment

obligations.

In addition, studies are underway to

estimate the extent to which a particular

category of reserves known as ‘‘behindthe-pipe,’’ tend to be left in the ground

when the producing reserves are

abandoned. ‘‘Behind-the-pipe’’ reserves
Federal Register / Vol. 60, No. 76 / Thursday, April 20, 1995 / Notices 19769

are those through which an operator has

drilled—but is not producing—to get to

another reservoir that is producing. If it

is not economic to produce these

reservoirs through an existing wellbore,

it is highly unlikely that in the future

they would justify the cost of drilling a

new well, plus the attendant costs of

completion and production. The

following additional options may be

considered for behind-the-pipe reserves:

A. Develop general (across-the-board

or interpretive) guidelines for royalty

relief for this category of reserves.

B. Develop procedures for case-bycase review of royalty rate requests for

‘‘behind-the-pipe’’ and related reserves

that involve reductions in royalties and

periodic reviews.

C. Initiate administrative reviews of

development and conservation issues

that could substitute for or supplement

royalty relief in inducing lessees to

produce socially beneficial reserves.

Specifically, a lessee’s plan to abandon

a well or move to a new horizon would

be reviewed in more depth to ensure

that economically recoverable reserves

are not left behind.

Specific Information Requested

The MMS is seeking comments on

several questions pertaining to the

proposed more specific interpretive

guidelines for granting royalty relief on

active leases.

1. Is the demarcation by the two types

of projects the best approach? Are there

other types of projects not adequately

addressed by the proposed guidelines?

2. Are there particular categories of

tracts that should be considered?

3. Would the establishment of more

specific, interpretive guidelines

encourage more lessees to apply for

such relief? If so, how much additional

production of oil, gas, and sulphur

might result from expense-type projects?

From capital investment projects?

Would this appreciably affect the kind

and level of infrastructure in the GOM?

4. Are there aspects of the proposal

that would be burdensome or that

would otherwise discourage lessees

from applying? For example, would the

documentation or payback requirements

be problems?

5. A fee might be charged to cover the

costs of processing applications. How

high could this fee be without

discouraging applicants?

III. Royalty Policies for New Leases

During the past 10 years, about 240

tracts have been relinquished despite

the discovery of potentially economical

reserves. An estimated 2 billion barrels

of oil equivalent have been discovered

but not produced on 30 deep-water

leases. The Government holds in its

inventory over 700 tracts in water

depths of at least 200 meters each of

which has, at least once, received a

bonus bid of more than one million

dollars. Thus, more flexible royalty

policies might encourage production of

discovered reserves when the price of

the oil and gas exceeds the cost,

excluding royalties, of bringing those

resources to market.

The following options are being

considered:

A. Offer reduced or deferred royalties

on tracts that have a history of prior

discoveries without production.

B. In deep-water areas, offer tracts

with suspensions of royalties on

substantial volumes or market values of

production.

C. Offer suspension of royalties on

tracts that have never received a bid or

have not received a bid for over 10

years.

The MMS intends to seek the

flexibility to offer royalty suspensions or

lower fixed royalty rates for new leases.

The OCS Lands Act requires for

specified bidding systems that leases

stipulate an initial royalty rate of at least

121⁄2 percent. However, alternative

bidding systems can be implemented

under Section 8 of the OCS Lands Act

[43 U.S.C. 1337(a)(1)(H)], as long as they

are consistent with the duty to assure

receipt of fair market value and help

accomplish the purposes and policies of

the Act. The new bidding systems could

provide for leases containing royalty

suspensions or lower fixed royalty rates

for all tracts in deep water or for

selected tracts, such as previously

relinquished tracts with qualifying wells

or marginal tracts in shallow waters.

By offering the same favorable royalty

terms to all bidders, the MMS should be

able to obtain correspondingly higher

bonus bids for such leases. (Bid

adequacy procedures would remain in

effect.) At the same time, those who are

successful in both bidding and

exploration would face lower royalty

costs, allowing them to develop and

produce discoveries that would

otherwise be uneconomic.

The MMS may want to provide

additional or stronger incentives for

exploration and production in some

frontier areas, where the value to the

Nation as a whole—but not the potential

revenues for the lessee—would exceed

the private costs of developing and

producing certain discoveries.

Additional exploration provides

important information about the geology

and prospective nature of the area. Each

discovery that goes into production

provides transportation and other

infrastructure that generates an increase

in the value of blocks in the vicinity of

the development. Getting one or more

leases in frontier areas into production

could reduce the perceived risk of

subsequent exploratory drilling and

significantly improve the economics for

future production on other leases.

Because the incentives are meant to

help compensate for the risks and costs

that must be borne by those undertaking

early investment in exploration and

infrastructure development, they might

be eliminated or offered in reduced

amounts for leases offered after the

initial discoveries and development in a

targeted area.

For high-cost areas (such as the deepwater GOM) or frontier areas, the MMS

also is considering the possibility of

offering tracts that are larger than the

standard size, in addition to favorable

royalty terms or other incentives.

Possible Rulemaking

The MMS is likely to publish a Notice

of Proposed Rulemaking before the end

of the fiscal year that would propose

changing the bidding systems for newly

offered tracts under the OCS Lands Act

to permit the MMS to (1) lower the

prescribed minimum initial royalty rate

below 121⁄2 percent; (2) allow operating

allowances in determining receipts

subject to royalty; (3) suspend or defer

royalty for periods, volumes, or values

of production; and (4) extend the forms

for calculating royalty rates under

variable rate systems to include product

prices, as well as value and amount of

production. Ideally, the MMS would

like to have any regulatory changes in

place in time to accommodate proposed

sale design options for the 1996 Central

and Western GOM sales. However,

given the obstacles inherent in the

current regulatory process, an

implementation target of 1997 sales may

be more realistic.

Specific Information Requested

The MMS would like respondents to

provide comments and suggestions both

on the additional authority it seeks and

on the new policy options it is

considering.

First, which of the policy options

above are most likely to help achieve

the stated objectives or other relevant

objectives? To what extent are they

likely to make a difference? Are there

ways to make them more effective or

more efficient? Are there other policy

options the MMS should be

considering?

Second, if the MMS should be

considering other alternative bidding

systems or related policy options for

which it has general rulemaking
19770 Federal Register / Vol. 60, No. 76 / Thursday, April 20, 1995 / Notices

authority, what regulatory changes

would be most appropriate?

IV. Increased Flexibility in Length of

Lease Terms, With Possible Changes in

Rental Rates and Minimum Bids

Several industry respondents to the

December 1993 Federal Register Call for

Public Comment requested increased

flexibility involving Suspensions of

Operations (SOOs), Suspensions of

Production (SOPs), and similar

provisions, particularly for leases on

deep-water tracts. Some lessees also

have asked for more flexibility where

sub-salt prospects exist. Lessees have

complained that technical data and

information developed for a prospect

cannot always be evaluated in time to

identify optimal drill sites and

commence drilling to better develop

exploratory targets within the primary

lease term. There may be some benefit

to providing industry more time for

analysis or other tasks leading to

exploration or development where

adverse or unusual conditions exist.

However, there is an inventory of

3,000 undrilled tracts in industry hands.

Most leases in the GOM are either

explored early in their primary lease

term or held undrilled until the end of

their term. Less than 1 percent of the

deep-water leases that were issued for

$50 per acre or less since 1982 have

been drilled. The MMS would like to

grant additional flexibility where it is

needed but also, where possible, to

encourage earlier drilling or

relinquishment so that tracts are not

kept off the market by lessees who are

unlikely to undertake exploration

activity. Changes in minimum bid and

rental policies, in combination with

other new policies, may be an effective

way to achieve this.

Currently, leases are issued with 5-

year, 8-year, and 10-year terms for water

depths of 400 meters or less, 400–900

meters, and greater than 900 meters,

respectively. The 8-year leases require

that an exploratory well be drilled

within the first 5 years. With a few

exceptions, the lessee must demonstrate

a qualifying discovery to hold a lease

beyond the primary term. Undrilled

leases will be continued in effect if the

lease is part of a unit agreement with

other leases with a discovery, where

there is continuous drilling, or as long

as the leases in the unit are under a SOO

or an SOP. No regulation specifically

allows suspensions for the purpose of

conducting analysis.

At present, the MMS is considering

several options to increase flexibility

and/or to encourage diligence:

A. Offer 7- or 8-year leases on some

tracts in less than 400 meters of water

based on pre-sale identification or postsale evidence of ‘‘adverse conditions,’’

such as sub-salt prospects. Higher rental

rates (e.g., $25–$50 per acre, per year)

could be charged in years 6–8.

B. Amend 30 CFR 250.13(b), by

deleting the words ‘‘where

environmental conditions warrant,’’ to

authorize MMS Regional Directors to

approve a period of time greater than

180 days between termination of

production, drilling, or well-reworking

operations and the commencement of

production, new drilling, or wellreworking operations in cases that are in

the national interest. Escalating rental

rates could be imposed for the

additional years.

C. Develop general guidelines for

escalating rentals that would apply to

broad categories of tracts (e.g., 5-year

lease term, 8-year lease term, etc.) in

combination with a reduced minimum

bid level (e.g., $10 per acre) so that the

net present value of the reduced

minimum bid and escalating rentals

would be about equal to the present

value of a $25 per acre minimum bid

and $5 per-acre, per-year rental during

the first 2–3 years of the lease. In

addition, the escalating rental provision

could substitute for the rigid

requirement to initiate exploration

drilling by the fifth year of leases with

an 8-year term.

If escalating rental rates are imposed,

another option would be to allow the

additional rental payments to be applied

to future royalty obligations from the

same lease.

Possible Rulemaking

The MMS may issue a Notice of

Proposed Rulemaking to delete the

words ‘‘where environmental conditions

warrant’’ from 30 CFR 250.13(b) and

insert language specifically granting the

Regional Director authority to require

higher rental (or minimum royalty) rates

during the additional time requested by,

and granted to, the lessee under this

regulation. Other appropriate changes to

30 CFR 250.13 and to 30 CFR 250.10

may be considered as well.

Specific Information Requested

Respondents may wish to consider

the following questions.

1. What flexibility not now available

to lessees would help increase

production and develop or maintain

infrastructure? In what cases should the

flexibility be available? In what cases

should it not be available (e.g., where it

merely allows delays that deprive other

companies the opportunity to lease and

expeditiously develop the resources)?

2. Are there cases where this need

might be temporary? For example, will

new technology and additional

experience make it possible to evaluate

sub-salt prospects in less time?

3. What can the MMS do to provide

flexibility where needed without

ignoring its responsibility to enforce

statutory diligence requirements?

Should the MMS be considering other

changes in its regulations?

4. When combined with additional

flexibility, would rentals of $25–$50 per

acre for additional years be appropriate?

Would they provide incentives for

diligence or would they be too low to

influence timing decisions? Would they

defeat the purpose of providing the

flexibility?

5. Would a lower minimum bid,

combined with an increasing rental rate

help increase production without

imposing undesirable timing

constraints? If so, what levels of

minimum bid and rentals would be

effective and appropriate?

V. Bid Adequacy Procedures

The Bid Adequacy decision

procedures have essentially remained

the same since the advent of the areawide leasing program in 1983. In recent

years, it has been shown that rejected

tracts, on average, receive much higher

bids in subsequent sales. (This finding

takes into account the foregone original

bids for those few rejected tracts not

receiving bids in subsequent sales.) Use

of the 3-Bid Rule and the Bid Averaging

Rule occasionally has resulted in the

acceptance of some tracts that were

highly valued by the MMS but received

relatively low bids. The Office of the

Inspector General has expressed

concern that the Bid Averaging Rule

places too much emphasis on losing

bids in determining whether to accept

the high bid on tracts about which the

MMS has relatively good information.

In Phase 1 of the two-phased bid

adequacy procedures, a high bid on a

wildcat or confirmed tract can be

accepted without further MMS

evaluation if the tract receives three or

more bids. The 3-Bid Rule was

originally adopted to place reliance on

the market to ensure receipt of fair

market value when there was a

sufficient number of competitive bids.

Also, the rule was adopted to devote

scarce tract evaluation resources on

those cases where competition was

weakest (i.e., tracts receiving one or two

bids) or where MMS data were

considered most reliable and some

bidders might have an informational

advantage over the rest of the market

(i.e., drainage and development tracts).

Possible changes in Phase 1

procedures that are being considered

include eliminating the 3-Bid Rule and
Federal Register / Vol. 60, No. 76 / Thursday, April 20, 1995 / Notices 19771

applying the 3-Bid Rule to wildcat tracts

only.

In Phase 2 of the two-phased bid

adequacy procedures, the MMS estimate

of tract value is averaged (geometrically)

with the bids submitted. If the high bid

exceeds the ‘‘average’’ bid, it is

accepted. This averaging rule is applied

to wildcat and confirmed tracts

receiving two bids and to drainage and

development tracts receiving three or

more bids.

The three options currently being

considered for Phase 2 procedures

include replacing the geometric average

with the median of the MMS tract value

estimate and a lower percentile

parameter as the number of bids on the

tract increases, replacing the geometric

average with an arithmetic average in

the GOM Region and with the median

elsewhere, and eliminating the

geometric average with no replacement.

Whether or not changes are made in

its bid adequacy procedures, the MMS

is likely to adopt or retain at least one

criterion incorporating market

information provided by bids. In the

past, changes in bid adequacy

procedures have applied uniformly to

all OCS lease sales, regardless of the

planning area.

Should a decision be made to change

the status quo, a notice to prospective

bidders would be published in the

Federal Register, and a discussion of

the changes would be included in the

appropriate Notice of Sale.

Specific Information Requested

The MMS would like any information

that would help it, in the face of

changing conditions, to continue to

fulfill its obligation under the OCS

Lands Act to assure the receipt of fair

market value for oil and gas leases.

Given the high return on rejected bids,

what changes if any might be

appropriate in current bid adequacy

procedures? Are there options not

identified above that MMS should

consider?

Request for Comments

Specific kinds of comments are

requested at the end of each of the five

groups of policy options identified

immediately above. In general, it would

be helpful to the MMS for respondents

to focus on the extent to which the

options would help to achieve the

objectives stated in this Call for

Comment.

The MMS also requests any

information indicating that certain

options may have the potential for

important negative consequences or

would be less effective or less efficient

than other actions under MMS control.

In addition to comments on the

workability and possible effectiveness of

individual options, the MMS would

appreciate any suggestions for

combinations of policies that might be

superior to any individual options in

achieving the stated objectives.

Respondents should not limit

themselves to addressing the questions

in this Call for Comment and should

feel free to respond through the

workshop, through written comments,

or both. None of the policies discussed

in this Call for Comment, with the

exception of publishing the Indicated

Hydrocarbon List, will receive final

approval until after the comment period

has closed and all comments—whether

made at the workshop or submitted in

writing—have been considered fully.

Workshop on Proposed Policy Options

A 2-day workshop to discuss the

options presented in this Call for

Comment will be held in the Gulf of

Mexico region in mid-June 1995. The

most likely site is Houston, with

Metairie, Louisiana, as an alternate, and

the tentative dates are June 14–15. The

dates, exact location, and agenda will be

announced in a Federal Register Notice

later this month.

The first day of the workshop will be

devoted to an overall discussion of the

full set of options in this Call for

Comment. This will include a limited

discussion of the proposed guidelines

for royalty relief on active leases and the

purposes they are designed to achieve.

The second day will be reserved for a

more detailed discussion of how the

proposed guidelines for royalty relief on

active leases would work. All interested

parties are invited to both sessions, but

it would be especially valuable for those

who might write the applications for

royalty relief under the new guidelines

to attend on the second day.

While the workshop is open, free of

charge, to anyone who wishes to attend,

the MMS requests that those wishing to

attend any part of the two-day session

register in advance. Registration

information will be provided in the

upcoming Notice announcing details of

the workshop.

Assuming that a decision is made to

issue specific royalty relief guidelines

after comments have been analyzed, a

training session will be held to explain

the plan for implementation of the final

guidelines.

Timing and Means of Implementation

As mentioned above, the MMS may

issue two Notices of Proposed

Rulemaking to gain more flexibility in

the implementation of existing statutory

authority for royalty rates and the

effective length of lease terms. The

decision to seek additional regulatory

flexibility should not be interpreted as

a decision to implement any particular

policy option.

Most of the other options being

considered could be implemented under

existing authority. If, after considering

the responses to this Call for Comment

and any information gained from the

workshop, a decision is made to change

existing policies, the MMS hopes to

announce in the Federal Register a

package of proposals in time for

implementation in the mid-1996

Western GOM sale (Sale 161) and

subsequent GOM sales. Ideally, any

decisions to change policies toward

active leases would be made at the same

time.

However, the MMS is not committed

to adopting any specific options or to

meeting a specific schedule for

implementation. Regardless of any

preferred timing, the MMS will assure

that it has had adequate opportunity to

hear and consider comments from

industry, States, and other affected

parties prior to any final decisions. In

addition, the MMS will provide affected

parties sufficient time to adjust to the

decisions that eventually come out of

this process.

Cynthia Quarterman,

Director, Minerals Management Service.

[FR Doc. 95–9704 Filed 4–19–95; 8:45 am]

BILLING CODE 4310–MR–P

INTERSTATE COMMERCE

COMMISSION

[Finance Docket No. 32682]

RailTex, Inc.—Corporate Family

Transaction Exemption—Georgia and

Alabama Lines, South Carolina Central

Railroad Co., Inc. and Georgia

Southwestern Railroad, Inc.

RailTex, Inc. (RailTex), South

Carolina Central Railroad Co., Inc.

(SCC), and Georgia Southwestern

Railroad, Inc. (GSWR), have filed a

notice of exemption under 49 CFR

1180.2(d)(3) for a corporate family

transaction.

RailTex, a noncarrier corporation,

controls through stock ownership: (1)

SCC, a class III shortline rail carrier; and

(2) GSWR, a noncarrier company.

SCC currently operates about 56 miles

of railroad in South Carolina. SCC also

owns three railroad lines in Georgia and

Alabama: (1) Georgia Southwestern

Division, extending from Rochelle, GA

to Mahrt, AL, and from Columbus to

Bainbridge, GA; (2) Georgia & Alabama

Division, extending from Smithville, GA