[Federal Register Volume 60, Number 76 (Thursday, April 20, 1995)]
[Notices]
[Pages 19767-19771]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-9704]



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DEPARTMENT OF THE INTERIOR

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.

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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 deep-water 
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 [[Page 19768]] 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 sulphur-producing 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 break-even 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., one-twenty 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 ``behind-the-pipe,'' tend to 
be left in the ground when the producing reserves are abandoned. 
``Behind-the-pipe'' reserves [[Page 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-by-case 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 12\1/2\ 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 deep-water 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 
12\1/2\ 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 
[[Page 19770]] 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 post-sale 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 well-reworking 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 area-wide 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 [[Page 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