Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 58467 

Signed at Washington, DC, this 29th day of 

September 2008. 

Bradford P. Campbell, 

Assistant Secretary, Employee Benefits 

Security Administration, Department of 

Labor. 

[FR Doc. E8–23424 Filed 10–6–08; 8:45 am] 

BILLING CODE 4510–29–C 

DEPARTMENT OF THE INTERIOR 

Minerals Management Service 

30 CFR Parts 203 and 260 

[Docket ID: MMS–2007–OMM–0074] 

RIN 1010–AD29 

Royalty Relief for Deepwater Outer 

Continental Shelf Oil and Gas 

Leases—Conforming Regulations to 

Court Decision 

AGENCY: Minerals Management Service 

(MMS), Interior. 

ACTION: Final rule. 

SUMMARY: This rule amends 30 CFR 

parts 203 and 260 to conform the 

regulations to the decision of the United 

States Court of Appeals for the Fifth 

Circuit in Santa Fe Snyder Corp., et al. 

v. Norton. That decision found that 

certain provisions of the MMS 

regulations interpreting section 304 of 

the Deep Water Royalty Relief Act are 

contrary to the requirements of the 

statute. MMS will determine lessees’ 

royalty under leases subject to Deep 

Water Royalty Relief Act section 304, for 

both past and future periods, in a 

manner consistent with the Fifth 

Circuit’s decision in the Santa Fe 

Snyder case and this rule. 


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58468 Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 

DATES: Effective Date: This rule is 

effective November 6, 2008 

FOR FURTHER INFORMATION CONTACT: 

Marshall Rose, Chief, Economics 

Division, at (703) 787–1536. 

SUPPLEMENTARY INFORMATION: The MMS 

published a proposed rule (PR) in the 

Federal Register on December 21, 2007 

(72 FR 72652), to inform the public of 

our intent to revise 30 CFR part 203, 

which pertains to royalty relief and 30 

CFR part 260, which pertains to Outer 

Continental Shelf (OCS) leasing, in a 

manner consistent with the Santa Fe 

Snyder ruling. The PR invited 

comments, recommendations, and 

specific remarks on our regulatory 

changes consistent with the Santa Fe 

Snyder decision. The regulatory changes 

in this final rule are exactly the same as 

those published in the PR with three 

clarifying exceptions. In § 203.71(a)(3) 

we add the expression of ‘‘newly 

constituted’’ field to distinguish 

between the field which was the subject 

of the original application and the new 

field which becomes the subject of the 

revised application. In § 203.71(a)(5) we 

label as field A the field to which the 

well was originally assigned and from 

which it is removed by re-assigning the 

well to a second field, which we label 

as field B. That step avoids an ambiguity 

in the old wording. Also, we re-word 

the new language in the last cell of the 

table to distinguish between the kind of 

lease referred to in § 260.114 and the 

kind of lease referred to in § 260.124. In 

§ 260.114 we add language that each 

Final Notice of Sale Package, which 

contains the official information on a 

lease’s water depth category, is 

announced in the Federal Register. 

Furthermore, in the Regulatory 

Planning and Review (Executive Order 

12866) section, we have properly 

determined this final rule to be 

‘‘significant’’ as determined by the 

Office of Management and Budget and 

subject to review under Executive Order 

12866. 

Background 

On November 28, 1995, President 

Clinton signed Public Law 104–58, 

which included the Deep Water Royalty 

Relief Act (Act). The Act was designed 

to encourage development of new 

supplies of energy. It included 

incentives to promote investment in a 

particularly high-cost, high-risk area, 

the deep waters of the Gulf of Mexico. 

These deep Gulf of Mexico waters were 

viewed as having potential for large oil 

and gas discoveries, but technological 

advances and multi-billion dollar 

investments would be needed to realize 

that potential. Since the enactment of 

the incentive, the deep waters of the 

Gulf of Mexico have become one of the 

most important sources of domestic oil 

and gas production. 

The Secretary of the Interior was 

required to suspend royalties for certain 

volumes of production on new leases in 

more than 200 meters of water in the 

central and western Gulf of Mexico 

issued in the first 5 years following 

enactment of the Act. These royalty 

suspension volumes (RSVs) (i.e., 

specified volumes of royalty-free 

production) ranged from 17.5 million to 

87.5 million barrels of oil equivalent 

(BOE), depending on water depth. The 

royalty suspension incentive was 

intended to provide companies that 

undertook these investments specific 

volumes of royalty-free production to 

help recover a portion of their capital 

costs before starting to pay royalties. 

Once the specified volume has been 

produced, royalties become due on all 

additional production. This was not a 

matter of agency discretion. 

We published an advance notice of 

proposed rulemaking (ANPR) in the 

Federal Register on February 23, 1996 

(61 FR 6958), to inform the public of our 

intent to develop comprehensive 

regulations implementing the Act. The 

ANPR sought comments and 

recommendations to assist us in that 

process. We continued to collect 

comments and conducted a public 

meeting in New Orleans on March 12 

and 13, 1996, about the matters the 

ANPR addressed. We published an 

interim rule on March 25, 1996 

(effective 30 days later). We invited 

comments on the interim rule and stated 

that we would consider them as part of 

our review of responses to the ANPR 

mentioned above. We further stated that 

based on comments received and 

experience gained, we may include 

changes to the matters the interim rule 

addresses in a comprehensive 

rulemaking implementing the Act. 

Section 304 of the Act specifies RSVs 

for offshore oil and gas leases in 3 

defined water depth ranges deeper than 

200 meters of water issued in lease sales 

held in the first 5 years after the Act’s 

enactment on November 28, 1995. We 

stated in our March 25, 1996, interim 

rule entitled Deepwater Royalty Relief 

for New Leases that ‘‘[s]ection 304 of the 

Act does not provide specific guidance 

on how to apply the royalty suspension 

volumes to leases issued during sales 

after November 28, 1995’’ and that 

‘‘[t]he primary question is how to apply 

the minimum royalty suspension 

volumes laid out in the statute’’ (61 FR 

12023). We published a final rule 

implementing section 304 of the Act in 

the Federal Register, with no 

substantive change in the regulatory 

language, on January 16, 1998 (63 FR 

2626), that became effective on February 

17, 1998. 

On October 4, 2004, the U.S. Court of 

Appeals for the Fifth Circuit in Santa Fe 

Snyder Corp., et al. v. Norton, 385 F.3d 

884, agreed with the conclusion of the 

U.S. District Court for the Western 

District of Louisiana that the regulations 

implementing royalty relief under 

section 304 are inconsistent with the 

statute. The regulations provided that 

leases issued under section 304 that are 

assigned to a field with a current lease 

that produced before November 28, 

1995, are not eligible for royalty relief. 

The regulations further provided that 

where there is more than one section 

304 lease in a field, leases share in the 

statutory RSV. These requirements were 

promulgated in the interim rule 

effective April 24, 1996 (61 FR 12022). 

The effect of the court’s ruling in 

Santa Fe Snyder was that: (1) The MMS 

could not condition royalty relief under 

section 304 on the lease being part of a 

field that was not producing before 

November 28, 1995; and (2) the RSVs 

prescribed in section 304 apply to each 

lease, not jointly to all leases in a 

particular field. An Information to 

Lessees (ITL) dated August 8, 2005, 

alerted affected lessees that we would 

abide by the decision and revise the 

regulations to conform to this decision, 

resulting in the proposed and now final 

rule. 

Comments on the Proposed Rule 

We received six comment letters on 

the PR. Two of the commenters were 

from industry trade associations 

(National Ocean Industries Association 

(NOIA) and American Petroleum 

Institute (API)). We also received 

comments from one operator and three 

individuals from the general public. 

Two of the individual comment letters 

were not germane to the PR and were 

not considered. 

All comments received are available 

for review at http:// 

www.regulations.gov. To view 

comments on this PR, under the tab 

‘‘More Search Options,’’ click 

‘‘Advanced Docket Search’’, then select 

‘‘Minerals Management Service’’ from 

the agency drop-down menu, then click 

‘‘submit.’’ In the Docket ID column, 

‘‘select MMS–2007–OMM–0074’’ to 

view comments and supporting 

materials for this rulemaking. 

Information on using Regulations.gov 

and viewing the docket after the close 

of the comment period is available 

through the site’s ‘‘user tips’’ link. 

All four commenters submitting 

germane comments on the PR were 


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Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 58469 

supportive of amending the regulations 

at 30 CFR parts 203 and 260 to conform 

to the Santa Fe Snyder Corp., et al. v. 

Norton decision. The respondents were 

appreciative of the regulatory change 

that would bring clarity and avoid 

confusion to readers of the regulations. 

No suggestions or proposals were 

received to change or clarify our 

proposed regulatory changes to 

implement the court’s decision and its 

interpretation of section 304 of the 

DWRRA. 

Summary of Changes to Proposed Rule 

The regulatory changes in this final 

rule are exactly the same as those 

published in the PR with three 

clarifying exceptions. In § 203.71(a)(3), 

we add the expression of ‘‘newly 

constituted’’ field to distinguish 

between the field which was the subject 

of the original application and the new 

field which becomes the subject of the 

revised application. In § 203.71(a)(5), we 

label as field A the field to which the 

well was originally assigned and from 

which it is removed by re-assigning the 

well to a second field, which we label 

as field B. That step avoids an ambiguity 

in the old wording. Also, we re-word 

the new language in the last cell of the 

table to distinguish between the kind of 

lease referred to in § 260.114 and the 

kind of lease referred to in § 260.124. In 

§ 260.114, we add language that each 

Final Notice of Sale Package, which 

contains the official information on a 

lease’s water depth category, is 

announced in the Federal Register. 

Regulatory Change 

This final rule will revise 30 CFR part 

203, which pertains to royalty relief; 

and 30 CFR part 260, which pertains to 

OCS leasing, to treat leases issued under 

section 304 (referred to in our 

regulations as ‘‘eligible leases’’) in a 

manner consistent with the Santa Fe 

Snyder ruling. The revisions conform 

our regulations to the court ruling and 

are non-discretionary. 

Changes in 30 CFR part 203 delete 

references to ‘‘eligible leases’’ in 

§ 203.69 and change the sharing rule in 

§ 203.71 for purposes of consistency. It 

removes the eligible leases from the 

section that discusses how to allocate 

RSVs on a field. These changes mean 

that regardless of the outcome of an 

application for royalty relief for leases 

issued either before or after the 5-year 

period covered by section 304, which 

may affect the field to which they are 

assigned, both eligible leases and leases 

issued in sales held after November 25, 

2000 (referred to in the regulation as 

‘‘Royalty Suspension’’ (RS) leases), 

receive the full RSVs stated in the lease 

instrument. Further, as with a RS lease, 

production from an eligible lease counts 

against any RSVs available to pre-Act 

leases on a field to which the eligible 

lease or RS lease has been assigned. 

However, unlike RS leases, lessees of 

eligible leases may not initiate an 

application seeking, or requesting a 

share in, an additional RSV granted to 

an RS lease. This is because there would 

now be more than enough financial 

incentive for any single lease. 

The revisions to the regulations in 

part 260 modify § 260.3 relating to 

MMS’s authority to collect information 

and remove references in § 260.113(a) to 

prior production on the field to which 

a lease is assigned. Deletions in 

§ 260.114 remove paragraphs on 

procedures for notification, 

determination of RSVs, and having more 

than one RSV on a lease because they 

are no longer required. Section 

260.114(b) is also revised to change the 

reference from ‘‘fields’’ to ‘‘each eligible 

lease.’’ Section 260.124 is revised to 

remove a reference to eligible leases 

establishing an RSV for a field, which is 

not valid under section 304 of the Act, 

as interpreted in Santa Fe Snyder. Thus, 

royalty-free production from an RS lease 

only counts against the RSV of a field 

if that volume was established as a 

result of an approved application for 

royalty relief for a pre-Act lease under 

part 203. Finally, all of § 260.117 is 

eliminated, because provisions for 

allocation of RSVs among multiple 

leases on a field are no longer needed. 

Retroactive Effect 

As explained above, the need for this 

rule arises from the Fifth Circuit’s 

decision. The effect of the Fifth Circuit’s 

decision was to declare void the 

regulatory provisions that the court 

found to be inconsistent with section 

304. Because section 304 had not 

changed, the necessary implication is 

that the relevant regulations were 

unlawful from their inception. The Fifth 

Circuit’s decision created a regulatory 

void between the date on which the 

interim rule became effective (April 24, 

1996) and the present. The Fifth Circuit 

plainly would apply its interpretation of 

section 304 for all time periods, not just 

the period after the decision. This rule 

does nothing more than conform the 

regulations to the Fifth Circuit’s 

decision, and reflects the legal 

interpretation of section 304 that the 

Fifth Circuit would apply. We thus 

replace the rule that the court struck 

down with this rule for the time period 

that the invalidated provisions covered, 

so as to avoid having a gap and 

consequent ambiguity in the rule 

between April 24, 1996, and the date of 

this rule. See Citizens to Save Spencer 

County v. EPA 600 F.2d 844, 879–880 

(DC Cir. 1979), or Beverly Hospital v. 

Bowen 872 F.2d 483, 485–486 (DC Cir. 

1989). Therefore, this rule is effective 

immediately upon being published with 

retroactive effect to April 24, 1996. 

Procedural Matters 

Regulatory Planning and Review 

(Executive Order (E.O.) 12866) 

This final rule is a significant rule as 

determined by the Office of 

Management and Budget (OMB) and is 

subject to review under E.O. 12866. 

(1) This final rule conform the 

regulations to the Fifth Circuit’s 

decision. It will have an annual effect 

on the economy of $100 million or 

more. The following are the same 

aggregate fiscal estimates presented in 

the December 21, 2007 (72 FR 72652), 

PR. 

The Fifth Circuit’s decision means 

that production on more section 304 

leases will be subject to royalty relief 

than under the previous regulations, 

resulting in larger fiscal costs to the 

Federal Government. The magnitudes of 

these fiscal losses (on past and future 

royalty collections) will vary 

significantly depending upon whether 

the Federal Government ultimately 

prevails (low case) or does not prevail 

(high case) in litigation over the MMS 

authority to condition royalty relief on 

price thresholds (see Kerr McGee Oil 

and Gas Corp. v. Allred, Docket No. 2:06 

CV 0439). In the low case, only 

deepwater leases issued in 1998 and 

1999 likely would be affected, because 

those leases were not issued with price 

thresholds; and for the other DWRRA 

leases, market prices most likely will 

exceed threshold levels, thereby 

eliminating future royalty relief on these 

other deepwater leases. In the high case, 

all deepwater leases issued throughout 

the 1996 to 2000 period would be 

affected, because deepwater leases 

issued in 1996, 1997, and 2000 then 

would be treated similar to deepwater 

leases issued in 1998 and 1999 with 

respect to price thresholds. 

There are two basic categories of 

section 304 leases affected by the Fifth 

Circuit Court’s decision. For section 304 

leases placed on fields by MMS that 

consist of one or more leases which 

produced prior to the DWRRA, we 

projected that from 2000 through 2024, 

production of oil and gas could range 

from 4 million BOE in the low case to 

27 million BOE in the high case. The 

total royalty losses using OMB 

economic assumptions for the 2009 

Budget (oil and gas prices) during this 

25-year period are estimated to range 


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from $16 million in the low case to 

almost $205 million in the high case 

(expressed in current-year dollars). 

Applying discount rates of 3 and 7 

percent to the potential cash flows, the 

present value range of fiscal losses 

becomes $17 to $192 million at 3 

percent and $20 to $189 million at 7 

percent (the lower bound figures 

increase slightly as the discount rate 

rises because all of the losses in this 

case, associated with leases issued in 

1998 and 1999, represent historical 

royalties that must be paid back, with 

interest, to the lessees). Essentially all 

production and royalties from this 

category of section 304 leases, up to the 

prescribed royalty suspension volumes 

for each lease, contribute to the fiscal 

cost to the Federal Government. This is 

because, in previous DWRRA 

regulations, such section 304 leases that 

were placed on fields that produced 

prior to the DWRRA were not 

considered eligible for royalty relief. 

The Fifth Circuit Court’s ruling also 

means that the suspension volumes 

cited in the DWRRA must apply to each 

lease, not shared by all leases on a 

geologic field, as MMS interpreted the 

Act. Thus, the added production from a 

field that could be eligible for royalty 

relief consists of production from all the 

Section 304 leases on the field (up to 

one RSV per lease) that is in excess of 

the single RSV (cited in the Act for the 

applicable water depth) for the entire 

field as interpreted by MMS in the prior 

DWRRA regulations. In fact, the vast 

majority of the royalty losses from 

section 304 leases will occur as a result 

of this aspect of the court’s ruling. We 

estimate the additional production that 

will be subject to royalty relief from this 

‘‘lease-based’’ court interpretation will 

be about 400 million BOE in the 20-year 

period from 2007 through 2026 in the 

low case (covering only DWRRA leases 

issued in 1998 and 1999), and 

approximately 1.3 billion BOE in the 28- 

year period from 2007 through 2034 in 

the high case (covering all DWRRA 

leases). The royalty costs using OMB 

economic assumptions for the 2009 

Budget (oil and gas prices) associated 

with these production levels during the 

time periods of production are 

estimated to be $3 billion in the low 

case and $10 billion in the high case 

(expressed in current-year dollars). 

Discounting these cash flows yields 

ranges of present value royalty losses of 

$2.5 to $7.5 billion at 3 percent, and 

$1.9 to $5.2 billion at 7 percent. 

It is important to recognize that the 

prior DWRRA regulations granted relief 

in the amount of one RSV per geologic 

field to all fields containing at least one 

section 304 lease as long as that field 

had not produced prior to the DWRRA. 

The Fifth Circuit Court’s ruling on this 

category of Section 304 leases has 

changed the relief to apply to each 

section 304 lease regardless of which 

other leases are on the field. The 

differences in royalty free production 

and royalty relief dollars from the 

Court’s ‘‘lease’’ interpretation and the 

MMS ‘‘field’’ interpretation represent 

measures of the cost to the Federal 

Government for this category of section 

304 leases associated with this 

regulation. 

In estimating these measures, one 

needs to recognize that a loss to the 

Federal Government occurs only on 

fields containing multiple Section 304 

leases on which their total combined 

production exceeds a single RSV for the 

field. For such section 304 leases, the 

dollar cost loss measure is represented 

by royalty value from each section 304 

lease (up to one RSV per lease) on a 

field less the royalty value of the one 

RSV of relief that the field would have 

gotten under the previous DWRRA 

regulation. It follows that no Federal 

Government cost is incurred in terms of 

royalty losses on fields containing only 

a single section 304 lease or from fields 

with multiple section 304 leases whose 

combined reserves are less than a single 

RSV. 

Following the above logic, in our low 

case scenario we estimate the 

incremental royalty free production 

from all 1998–1999 section 304 leases of 

up to one RSV per lease beyond one 

RSV per field to be 400 million BOE, 

representing 49.3 percent of the total 

production (limited to no more than one 

RSV per lease) from all 1998–1999 

section 304 leases. The royalty value of 

this 400 million BOE increment is 

estimated to be $3 billion, or 52.1 

percent of the total royalty value from 

all 1998–1999 section 304 leases 

(limited to no more than one RSV per 

lease). 

In our high case estimate, we estimate 

the incremental royalty free production 

from all 1996–2000 section 304 leases of 

up to one RSV per lease beyond one 

RSV per field to be 1.3 billion BOE, 

representing 54 percent of the total 

production (limited to no more than one 

RSV per lease) from all section 304 

leases. The royalty value of this 1.3 

billion BOE increment is estimated to be 

$10 billion, or 56.7 percent of the total 

royalty value from all section 304 leases 

(limited to no more than one RSV per 

lease). 

Thus, almost all of the fiscal costs of 

the Fifth Circuit Court’s ruling in Santa 

Fe Snyder can be attributed to the 

changes to the designated amounts of 

royalty relief from geologic fields to 

individual leases. The total royalty costs 

of the court’s ruling, spanning the 35- 

year period from 2000 through 2034 for 

both categories of section 304 leases, are 

estimated to be between $3.1 and $10.3 

billion (expressed in current-year 

dollars). These are the same figures that 

we estimated in the PR. 

(2) This final rule will not create a 

serious inconsistency or otherwise 

interfere with an action taken or 

planned by another agency because 

royalty relief is confined to leasing in 

Federal offshore waters that lie outside 

the coastal jurisdiction of state and 

other local agencies. Careful review of 

the lease sale notices, along with 

stringent leasing policies now in force, 

ensure that the Federal OCS leasing 

program, of which royalty relief is only 

a component, does not conflict with the 

work of other Federal agencies. 

(3) This final rule will not alter the 

budgetary effects of entitlements, grants, 

user fees, or loan programs or the rights 

or obligations of their recipients. 

(4) This final rule will not raise novel 

legal or policy issues. 

Regulatory Flexibility Act 

The Department of the Interior 

certifies that this final rule will not have 

a significant economic effect on a 

substantial number of small entities 

under the Regulatory Flexibility Act (5 

U.S.C. 601 et seq.). 

This final rule conforms the 

regulations to the Fifth Circuit’s 

decision, and reflects the legal 

interpretation of section 304 that the 

Fifth Circuit would apply. We are 

modifying or deleting relevant sections 

of the regulations that the court struck 

down so as to avoid having a gap and 

consequent ambiguity in the regulations 

between April 24, 1996, and the date of 

this rule. 

A Regulatory Flexibility Analysis is 

not required because there are no legal 

alternatives to the court’s decision that 

deemed our current regulations to be 

inconsistent with the statute, as cited in 

the preamble, other than to publish this 

rule. We have determined that this rule 

will not have a significant economic 

effect on a substantial number of small 

entities. A Small Entity Compliance 

Guide is not required. 

This change affects lessees and 

operators of deepwater leases in the 

OCS. This includes about 40 different 

companies. These companies are 

generally classified under the North 

American Industry Classification 

System (NAICS) Code 211111, which 

includes companies that extract crude 

petroleum and natural gas. For this 

NAICS code classification, a small 

company is one with fewer than 500 


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employees. Based on these criteria, only 

10 of these companies are considered 

small. This final rule, therefore, will not 

affect a substantial number of small 

entities. 

Your comments are important. The 

Small Business and Agriculture 

Regulatory Enforcement Ombudsman 

and 10 Regional Fairness Boards were 

established to receive comments from 

small businesses about Federal agency 

enforcement actions. The Ombudsman 

will annually evaluate the enforcement 

activities and rate each agency’s 

responsiveness to small business. If you 

wish to comment on the actions of 

MMS, call 1–888–734–3247. You may 

comment to the Small Business 

Administration without fear of 

retaliation. Disciplinary action for 

retaliation by an MMS employee may 

include suspension or termination from 

employment with the DOI. 

Small Business Regulatory Enforcement 

Fairness Act 

This final rule is a major rule under 

5 U.S.C. 804(2) of the Small Business 

Regulatory Enforcement Fairness Act. 

This final rule: 

a. Will have an annual effect on the 

economy of $100 million or more, based 

on the analysis presented in the 

previous section. Current MMS 

estimates indicate the royalty costs of 

the rule, occasioned by the court ruling, 

will be from $3.1 billion to $10.3 

billion, based on applicable production 

amounts during the 35-year period from 

2000 through 2034. This low case dollar 

amount represents the added royalty 

losses to the Federal Government only 

on deepwater leases issued without 

price thresholds, i.e., in 1998 and 1999. 

The high case estimate represents 

royalty collection losses on all DWRRA 

leases, and assumes MMS cannot 

condition royalty relief on market prices 

for oil and gas. It is likely that virtually 

all of the future production associated 

with this forgone royalty cost would 

have occurred even without the royalty 

relief offered in the DWRRA. The 

decisions to develop at least some of the 

fields responsible for this production 

occurred under incentive terms in effect 

before the Santa Fe Snyder judgment. 

Moreover, higher oil and gas market 

prices alone likely would have provided 

ample incentive for Gulf of Mexico 

deepwater exploration and 

development. 

b. Will not cause a major increase in 

costs or prices for consumers, 

individual industries, Federal, State, or 

local government agencies, or 

geographic regions. 

c. Will not have significant adverse 

effects on competition, employment, 

investment, productivity, innovation, or 

the ability of U.S.-based enterprises to 

compete with foreign-based enterprises. 

Unfunded Mandates Reform Act 

This final rule will not impose an 

unfunded mandate on State, local, or 

tribal governments or the private sector 

of more than $100 million per year. The 

rule will not have a significant or 

unique effect on State, local, or tribal 

governments or the private sector. A 

statement containing the information 

required by the Unfunded Mandates 

Reform Act (2 U.S.C. 1531 et seq.) is not 

required. 

Takings Implication Assessment (E.O. 

12630) 

Under the criteria in E.O. 12630, this 

final rule does not have significant 

takings implications. The rule is not a 

governmental action capable of 

interference with constitutionally 

protected property rights. A Takings 

Implication Assessment is not required. 

Federalism (E.O. 13132) 

Under the criteria in E.O. 13132, this 

final rule does not have sufficient 

federalism implications to warrant the 

preparation of a Federalism Assessment. 

This rule will not substantially and 

directly affect the relationship between 

the Federal and State governments. To 

the extent that State and local 

governments have a role in OCS 

activities, this rule will not affect that 

role. A Federalism Assessment is not 

required. 

Civil Justice Reform (E.O. 12988) 

This final rule complies with the 

requirements of E.O. 12988. 

Specifically, this rule: 

(a) Meets the criteria of section 3(a) 

requiring that all regulations be 

reviewed to eliminate errors and 

ambiguity and be written to minimize 

litigation; and 

(b) Meets the criteria of section 3(b)(2) 

requiring that all regulations be written 

in clear language and contain clear legal 

standards. 

Consultation With Indian Tribes (E.O. 

13175) 

Under the criteria in E.O. 13175, we 

have evaluated this final rule and 

determined that it has no potential 

effects on federally recognized Indian 

tribes. There are no Indian or tribal 

lands in the OCS. 

Paperwork Reduction Act 

The revisions do not contain any 

information collection subject to the 

Paperwork Reduction Act (PRA) and do 

not require a submission to OMB for 

review and approval under section 

3507(d) of the PRA. The one remaining 

requirement in Part 260 (§ 260.124(a)(l)) 

is exempt from the PRA under 5 CFR 

1320.4(a)(2), (c). 

An information letter was sent to all 

lessees of deep water leases on August 

8, 2005, and DOI informed the lessees 

that it would apply the court’s decision. 

It was neither necessary nor appropriate 

for the Department to collect 

information used only for purposes of 

applying the regulatory provisions that 

the court held invalid. 

The rule also refers to but does not 

change information collection 

requirements for 30 CFR 203 that are 

already approved under OMB Control 

Number 1010–0071 (expiration 12/31/ 

09). 

National Environmental Policy Act 

This rule does not constitute a major 

Federal action significantly affecting the 

quality of the human environment. The 

MMS has analyzed this rule under the 

criteria of the National Environmental 

Policy Act and 516 Departmental 

Manual 15. This rule meets the criteria 

set forth in 516 Departmental Manual 2 

(Appendix 1.10) for a Departmental 

‘‘Categorical Exclusion’’ in that this rule 

is ‘‘* * * of an administrative, 

financial, legal, technical, or procedural 

nature and whose environmental effects 

are too broad, speculative, or conjectural 

to lend themselves to meaningful 

analysis * * *.’’ This rule also meets 

the criteria set forth in 516 

Departmental Manual 15.4(C)(1) for a 

MMS ‘‘Categorical Exclusion’’ in that its 

impacts are limited to administration, 

economic or technological effects. 

Further, the MMS has analyzed this rule 

to determine if it meets any of the 

extraordinary circumstances that would 

require an environmental assessment or 

an environmental impact statement as 

set forth in 516 Departmental Manual 

2.3, and Appendix 2. The MMS 

concluded that this rule does not meet 

any of the criteria for extraordinary 

circumstances as set forth in 516 

Departmental Manual 2 (Appendix 2). 

Data Quality Act 

In developing this rule we did not 

conduct or use a study, experiment, or 

survey requiring peer review under the 

Data Quality Act (Pub. L. 106–554, app. 

C § 515, 114 Stat. 2763, 2763A–153– 

154). 

Effects on the Energy Supply (E.O. 

13211) 

This rule is not a significant energy 

action under the definition in E.O. 

13211. A Statement of Energy Effects is 

not required. 


jlentini on PROD1PC65 with RULES
58472 Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 

List of Subjects 

30 CFR Part 203 

Continental shelf, Government 

contracts, Indians—lands, Mineral 

royalties, Oil and gas exploration, 

Public lands—mineral resources. 

30 CFR Part 260 

Continental shelf, Government 

contracts, Mineral royalties, Oil and gas 

exploration, Public lands—mineral 

resources, Reporting and recordkeeping 

requirements. 

Dated: July 18, 2008. 

C. Stephen Allred, 

Assistant Secretary, Land and Minerals 

Management. 

■ For the reasons stated in the preamble, 

the Minerals Management Service 

(MMS) amends 30 CFR parts 203 and 

260 as follows: 

PART 203—RELIEF OR REDUCTION IN 

ROYALTY RATES 

■ 1. The authority citation for part 203 

continues to read as follows: 

Authority: 25 U.S.C. 396; 25 U.S.C. 2107; 

30 U.S.C. 189, 241; 30 U.S.C. 359; 30 U.S.C. 

1023; 30 U.S.C. 175; 31 U.S.C. 9701; 43 

U.S.C. 1334. 

■ 2. Revise § 203.69(c) to read as 

follows: 

§ 203.69 If my application is approved, 

what royalty relief will I receive? 

* * * * * 

(c) If your application includes preAct leases in different categories of 

water depth, we apply the minimum 

royalty suspension volume for the 

deepest such lease then assigned to the 

field. We base the water depth and 

makeup of a field on the water-depth 

delineations in the ‘‘Lease Terms and 

Economic Conditions’’ map and the 

‘‘Fields Directory’’ documents and 

updates in effect at the time your 

application is deemed complete. These 

publications are available from the 

MMS Gulf of Mexico Regional Office. 

* * * * * 

■ 3. Amend § 203.71 as set forth below: 

■ A. Revise paragraphs (a)(1), (3), and 

(5). 

■ B. Remove paragraph (b). 

■ C. Redesignate paragraphs (c) and (d) 

as paragraphs (b) and (c). 

§ 203.71 How does MMS allocate a field’s 

suspension volume between my lease and 

other leases on my field? 

* * * * * 

(a) * * * 

If . . . Then . . . And . . . 

(1) We assign an eligible lease to 

your authorized field after we approve relief.

We will not change your authorized field’s royalty 

suspension volume determined under § 203.69.

Production from the assigned eligible lease(s) 

counts toward the royalty suspension volume for 

the authorized field, but the eligible lease will not 

share any remaining royalty suspension volume 

for the authorized field after the eligible lease has 

produced the volume applicable under § 260.114 

of this chapter. 

* * * * * * * 

(3) We assign another lease that 

you operate to your field while 

we are evaluating your application.

In our evaluation of your authorized field, we will 

take into account the value of any royalty relief 

the added lease already has under § 260.114 or 

its lease document. If we find your authorized field 

still needs additional royalty suspension volume, 

that volume will be at least the combined royalty 

suspension volume to which all added leases on 

the field are entitled, or the minimum suspension 

volume of the authorized field, whichever is greater.

(i) You toll the time period for evaluation until you 

modify your application to be consistent with the 

newly constituted field; 

(ii) We have an additional 60 days to review the 

new information; and 

(iii) The assigned pre-Act lease or royalty suspension lease shares the royalty suspension we grant 

to the newly constituted field. An eligible lease 

does not share the royalty suspension we grant to 

the new field. If you do not agree to toll, we will 

have to reject your application due to incomplete 

information. Production from an assigned eligible 

lease counts toward the royalty suspension volume that we grant under § 203.69 for your authorized field, but you will not owe royalty on production from the eligible lease until it has produced 

the volume applicable under § 260.114 of this 

chapter. 

* * * * * * * 

(5) We reassign a well on a preAct, eligible, or royalty suspension lease from field A to field B.The past production from the well counts toward the 

royalty suspension volume that we grant under 

§ 203.69 to field B.

For any field based relief, the past production for 

that well will not count toward any royalty suspension volume that we grant under § 203.69 to field 

A. Moreover, past production from that well will 

count toward the royalty suspension volume applicable for the lease under § 260.114 if the well is 

on an eligible lease or under § 260.124 if the well 

is on a royalty suspension lease. 

* * * * * 

PART 260—OUTER CONTINENTAL 

SHELF OIL AND GAS LEASING 

■ 4. The authority citation for part 260 

continues to read as follows: 

Authority: 43 U.S.C. 1331 et seq. 

■ 5. Revise § 260.3 to read as follows: 

§ 260.3 What is MMS’s authority to collect 

information? 

(a) The Paperwork Reduction Act of 

1995 (PRA) requires us to inform you 

that we may not conduct or sponsor, 

and you are not required to respond to, 

a collection of information unless it 


jlentini on PROD1PC65 with RULES
Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 58473 

displays a currently valid OMB control 

number. The information collection 

under 30 CFR part 260 is either exempt 

from the PRA (5 CFR 1320.4(a)(2), (c)) 

or refers to requirements covered under 

30 CFR parts 203 and 256. 

(b) You may send comments regarding 

any aspect of the collection of 

information under this part to the 

Information Collection Clearance 

Officer, Minerals Management Service, 

Mail Stop 5438, 1849 C Street, NW., 

Washington, DC 20240. 

■ 6. Revise § 260.113 to read as follows: 

§ 260.113 When does an eligible lease 

qualify for a royalty suspension volume? 

(a) Your eligible lease will receive a 

royalty suspension volume as specified 

in the Act. The bidding system in 

§ 260.110(g) applies. 

(b) Your eligible lease may receive a 

royalty suspension volume only if your 

entire lease is west of 87 degrees, 30 

minutes West longitude. 

■ 7. Revise § 260.114 to read as follows: 

§ 260.114 How does MMS assign and 

monitor royalty suspension volumes for 

eligible leases? 

(a) We have specified the water depth 

category for each eligible lease in the 

final Notice of OCS Lease Sale Package. 

The Final Notice of Sale is published in 

the Federal Register and the complete 

Final Notice of OCS Lease Sale Package 

is available on the MMS Web site. Our 

determination of water depth for each 

lease became final when we issued the 

lease. 

(b) We have specified in the Notice of 

OCS Lease Sale the royalty suspension 

volume applicable to each water depth. 

The following table shows the royalty 

suspension volumes for each eligible 

lease in million barrels of oil equivalent 

(MMBOE): 

Water depth 

Minimum 

royalty 

suspension 

volume 

(1) 200 to less than 400 meters.17.5 MMBOE. 

(2) 400 to less than 800 meters.52.5 MMBOE. 

(3) 800 meters or more ........ 87.5 MMBOE. 

■ 8. Remove § 260.117. 

■ 9. Revise the heading of § 260.124 and 

the introductory text of paragraph (b) to 

read as follows: 

§ 260.124 How will royalty suspension 

apply if MMS assigns a lease issued in a 

sale held after November 2000 to a field that 

has a pre-Act lease? 

* * * * * 

(b) If we establish a royalty 

suspension volume for a field as a result 

of an approved application for royalty 

relief submitted for a pre-Act lease 

under part 203 of this chapter, then: 

* * * * * 

[FR Doc. E8–23290 Filed 10–6–08; 8:45 am] 

BILLING CODE 4310–MR–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 117 

[Docket No. USCG–2008–0822] 

RIN 1625–AA09 

Drawbridge Operation Regulation; 

Okeechobee Waterway, Mile 126.3, 

Olga, FL 

AGENCY: Coast Guard, DHS. 

ACTION: Temporary rule. 

SUMMARY: The Coast Guard is changing 

the operating regulations governing the 

Wilson Pigott Bridge, Okeechobee 

Waterway mile 126.3, Olga, Lee County, 

Florida. This action is necessary for 

worker safety and will assist in 

expediting the repairs to this bridge. 

During the period of this rule, the bridge 

will open a single-leaf on signal; a 

double-leaf opening is available with a 

three-hour advance notice to the bridge 

tender. 

DATES: This rule is effective from 6 a.m. 

on October 7, 2008, to 6 p.m. on 

February 28, 2009. 

ADDRESSES: Comments and material 

received from the public, as well as 

documents mentioned in this preamble 

as being available in the docket, are part 

of docket USCG–2008–0822 and are 

available online at http:// 

www.regulations.gov. This material is 

also available for inspection or copying 

at two locations: The Docket 

Management Facility (M–30), U.S. 

Department of Transportation, West 

Building Ground Floor, Room W12–140, 

1200 New Jersey Avenue, SE., 

Washington, DC 20590, between 9 a.m. 

and 5 p.m., Monday through Friday, 

except Federal holidays and the 

Commander (dpb), Seventh Coast Guard 

District, 909 S.E. 1st Avenue, Room 432, 

Miami, Florida 33131–3028 between 8 

a.m. and 4:30 p.m., Monday through 

Friday, except Federal holidays. 

FOR FURTHER INFORMATION CONTACT: If 

you have questions on this rule, call Mr. 

Michael Lieberum, Seventh Coast Guard 

District, Bridge Administration Branch, 

telephone number 305–415–6744. If you 

have questions on viewing the docket, 

call Renee V. Wright, Program Manager, 

Docket Operations, telephone 202–366– 

9826. 

SUPPLEMENTARY INFORMATION: The Coast 

Guard is issuing this temporary final 

rule without prior notice and 

opportunity to comment pursuant to 

authority under section 4(a) of the 

Administrative Procedure Act (APA) (5 

U.S.C. 553(b)). This provision 

authorizes an agency to issue a rule 

without prior notice and opportunity to 

comment when the agency for good 

cause finds that those procedures are 

‘‘impracticable, unnecessary, or contrary 

to the public interest.’’ Under 5 U.S.C. 

553(b)(B), the Coast Guard finds that 

good cause exists for not publishing a 

notice of proposed rulemaking (NPRM) 

with respect to this rule because 

publishing an NPRM was impracticable 

and contrary to the public interest as the 

rule was needed to provide for worker 

safety and will assist in expediting the 

repairs of the bridge. 

Under 5 U.S.C. 553(d)(3), the Coast 

Guard finds that good cause exists for 

making this rule effective in less than 30 

days after publication in the Federal 

Register. Publishing an NPRM was 

impracticable and contrary to the public 

interest, because the rule was needed to 

provide for worker safety and will assist 

in expediting the repairs of the bridge. 

Background and Purpose 

33 CFR 117.317 requires that the 

Wilson Pigott Bridge, mile 126.3 at Olga, 

shall open on signal; except that, from 

10 p.m. to 6 a.m. the draw shall open 

on signal if at least three hours notice 

is given. 

Due to the repairs of the Wilson Pigott 

Bridge, Okeechobee Waterway mile 

126.3 at Olga, Lee County, Florida, 

Coastal Marine Construction, Inc. 

representing the owner of the bridge, 

has requested that the Coast Guard 

change the current operation of the 

Wilson Pigott Bridge. This resulting 

regulation is necessary for workers 

safety and will assist in expediting 

repairs to the Wilson Pigott Bridge. 

During the duration of this temporary 

rule, the bridge will be required to open 

only a single-leaf on signal, rather than 

a double-leaf. A double-leaf opening 

will be available, however, with a threehour notice to the bridge tender. In 

addition, sometime between September 

5, 2008, and February 29, 2009, the 

bridge will be closed to navigation for 

an eight-hour period; the exact times 

and date of the bridge closure will be 

published in the Local Notice to 

Mariners and Broadcast Notice to 

Mariners. In cases of emergency, the 


jlentini on PROD1PC65 with RULES