Source: https://www.ecfr.gov/cgi-bin/text-idx?mc=true&node=pt30.3.1204&rgn=div5
Timestamp: 2020-01-29 19:00:33
Document Index: 766337376

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Title 30 → Chapter XII → Subchapter A → Part 1204
§1204.1 What is the purpose of this part?
§1204.2 What definitions apply to this part?
§1204.3 What alternatives are available for marginal properties?
§1204.4 What is a marginal property under this part?
§1204.5 What statutory requirements must I meet to obtain royalty prepayment or accounting and auditing relief?
§1204.6 May I appeal if ONRR denies my request for prepayment or other relief?
§1204.200 What is the purpose of this subpart?
§1204.201 Who may obtain accounting and auditing relief?
§1204.202 What is the cumulative royalty reports and payments relief option?
§1204.203 What is the other relief option?
§1204.204 What accounting and auditing relief will ONRR not allow?
§1204.205 How do I obtain accounting and auditing relief?
§1204.206 What will ONRR do when it receives my request for other relief?
§1204.207 Who will approve, deny, or modify my request for accounting and auditing relief?
§1204.208 May a State decide that it will or will not allow one or both of the relief options under this subpart?
§1204.209 What if a property ceases to qualify for relief obtained under this subpart?
§1204.210 What if a property is approved as part of a nonqualifying agreement?
§1204.211 When may ONRR rescind relief for a property?
§1204.212 What if I took relief for which I was ineligible?
§1204.213 May I obtain relief for a property that benefits from other Federal or State incentive programs?
§1204.214 Is minimum royalty due on a property for which I took relief?
§1204.215 Are the information collection requirements in this subpart approved by the Office of Management and Budget (OMB)?
Source: 69 FR 55088, Sept. 13, 2004, unless otherwise noted. Redesignated at 75 FR 61067, Oct. 4, 2010.
Designee means the person designated by a lessee under §1218.52 to make all or part of the royalty or other payments due on a lease on the lessee's behalf.
Producing wells means only those producing oil or gas wells that contribute to the sum of BOE used in the calculation under §1204.4(c). Producing wells do not include injection or water wells. Wells with multiple zones commingled downhole are considered as a single well.
Property means a lease, a portion of a lease, or an agreement that may be a marginal property if it meets the qualification requirements of §1204.4.
If you have production from a marginal property, ONRR and the State may allow you the following options:
(a) Prepay royalty. ONRR and the State may allow you to make a lump-sum advance payment of royalties instead of monthly royalty payments for the remainder of the lease term. See subpart B for prepayment of royalty requirements.
(b) Take accounting and auditing relief. ONRR and the State may allow various accounting and auditing relief options to encourage you to continue to produce and develop your marginal property. See subpart C for accounting and auditing relief requirements.
(a) ONRR and the State may allow royalty prepayment or accounting and auditing relief for your marginal property production if ONRR and the State jointly determine that the prepayment or accounting and auditing relief is in the best interests of the Federal Government and the State to:
(2) Reduce the administrative costs of ONRR and the State; and
(b) At any time, if ONRR and the State determine that either prepayment or accounting and auditing relief no longer meets the criteria in paragraph (a) of this section, ONRR, with the State's concurrence, may discontinue any prepayment or accounting and auditing relief options granted for production from any marginal property.
(1) ONRR will provide you written notice of the decision to discontinue relief.
(i) If you took the cumulative reports and payments relief option under §1204.202, your relief will terminate at the end of the calendar year in which you received the notice.
(ii) If you were approved for prepayment relief under subpart B of this part or other relief under §1204.203, ONRR's notice will tell you when your relief terminates.
(2) ONRR's decision to discontinue relief is not subject to administrative appeal.
If ONRR denies your request for prepayment relief under subpart B of this part or other relief under §1204.203, you may appeal under 30 CFR part 1290.
This subpart explains how you as a lessee or designee may obtain accounting and auditing relief for your Federal onshore or OCS lease production from a marginal property. The two types of accounting and auditing relief that you can receive under this subpart are cumulative reports and payment relief (explained in §1204.202) and other accounting and auditing relief appropriate for your property (explained in §1204.203).
(1) If you are a lessee or a designee for a Federal lease with production from a property that qualifies as a marginal property under §1204.4;
(2) One of the States determines under §1204.208 that it will not allow the relief option you seek.
(1) Notify ONRR in writing by January 31 of the calendar year for which you begin taking your relief. See §1204.205(a) for what your notification must contain;
(2) Submit your royalty report and payment in accordance with 30 CFR 1218.51(g) by the end of February of the year following the calendar year for which you reported annually, unless you have an estimated payment on file. If you have an estimated payment on file, you must submit your royalty report and payment by the end of March of the year following the calendar year for which you reported annually;
(3) Use the sales month prior to the month that you submit your annual report and payment under paragraph (b)(2) of this section on your Report of Sales and Royalty Remittance, Form ONRR-2014, for the entire previous calendar year's production for which you are paying annually. (For example, for a report in February use January as your sales month, and for a report in March use February as your sales month, to report production for the entire previous calendar year for which you are paying annually);
(4) Report one line of cumulative royalty information on Form ONRR-2014 for the calendar year, the same as if it were a monthly report; and
(5) Report allowances on Form ONRR-2014 on the same annual basis as the royalties for your marginal property production.
(c) If you do not pay your royalty by the date due in paragraph (b) of this section, you will owe late payment interest determined under 30 CFR 1218.54 from the date your payment was due under this section until the date ONRR receives it.
(1) Pay ONRR late payment interest determined under §1218.54 from the date your payment was due until the date ONRR receives it; and
(2) Amend your Form ONRR-2014 to reflect the required monthly reporting.
(2) Make the report and payment by the end of the month after you dispose of the ownership interest in the marginal property. If you do not report and pay timely, you will owe interest determined under §1218.54 from the date the payment was due under this section.
[69 FR 55088, Sept. 13, 2004, as amended at 78 FR 30200, May 22, 2013]
(a) Under this relief option, you may request any type of accounting and auditing relief that is appropriate for production from your marginal property, provided it is not prohibited under §1204.204 and meets the statutory requirements of §1204.5. Examples of relief options you could request are:
(1) To report and pay royalties using a valuation method other than that required under 30 CFR part 1206 that approximates royalties payable under that part 1206; and
(2) To reduce your royalty audit burden. However, ONRR will not consider any request that eliminates ONRR's or the States' right to audit.
(b) You must request approval from ONRR under §1204.205(b), and receive approval under §1204.206 before taking relief under this option.
ONRR will not approve your request for accounting and auditing relief under this subpart if your request:
(a) Prohibits ONRR or the State from conducting any form of audit;
(e) Impairs ONRR's ability to properly or efficiently account for or distribute royalties;
(j) Requests relief for production from a marginal property located in whole or in part in a State that has determined that it will not allow such relief under §1204.208.
(a) To take cumulative reports and payments relief under §1204.202, you must notify ONRR in writing by January 31 of the calendar year for which you begin taking your relief.
(i) Your company name, ONRR-assigned payor code, address, phone number, and contact name; and
(ii) The specific ONRR lease number and agreement number, if applicable.
(b) To obtain other relief under §1204.203, you must file a written request for relief with ONRR.
(i) Your company name, ONRR-assigned payor code, address, phone number, and contact name;
(ii) The ONRR lease number and agreement number, if applicable; and
When ONRR receives your request for other relief under §1204.205(b), it will notify you in writing as follows:
(a) If your request for relief is complete, ONRR may either approve, deny, or modify your request in writing after consultation with any State required under §1204.207(b).
(1) If ONRR approves your request for relief, ONRR will notify you of the effective date of your accounting or auditing relief and other specifics of the relief approved.
(2) If ONRR denies your relief request, ONRR will notify you of the reasons for denial and your appeal rights under §1204.6.
(3) If ONRR modifies your relief request, ONRR will notify you of the modifications.
(i) You have 60 days from your receipt of ONRR's notice to either accept or reject any modification(s) in writing.
(ii) If you reject the modification(s) or fail to respond to ONRR's notice, ONRR will deny your relief request. ONRR will notify you in writing of the reasons for denial and your appeal rights under §1204.6.
(b) If your request for relief is not complete, ONRR will notify you in writing that your request is incomplete and identify any missing information.
(2) After you submit all required information, ONRR may approve, deny, or modify your request for relief under paragraph (a) of this section.
(3) If you do not submit all required information within 60 days of your receipt of ONRR's notice that your request is incomplete, ONRR will deny your relief request. ONRR will notify you in writing of the reasons for denial and your appeal rights under §1204.6.
(4) You may submit a new request for relief under this subpart at any time after ONRR returns your incomplete request.
(a) If there is not a State concerned for your marginal property, only ONRR will decide whether to approve, deny, or modify your relief request.
(b) If there is a State concerned for your marginal property that has determined in advance under §1204.208 that it will allow either or both of the relief options under this subpart, ONRR will decide whether to approve, deny, or modify your relief request after consulting with the State concerned.
[69 FR 55088, Sept. 13, 2004, as amended at 76 FR 38561, July 1, 2011]
(a) A State may decide in advance that it will or will not allow one or both of the relief options specified in this subpart for a particular calendar year. If a State decides that it will not consent to one or both of the relief options, ONRR will not grant that type of marginal property relief.
(b) To help States decide whether to allow one or both of the relief options specified in this subpart, for each calendar year ONRR will send States a Report of Marginal Properties by October 1 preceding the calendar year.
(1) Notify the Director for Office of Natural Resources Revenue, in writing, of its intent to allow or not allow one or both of the relief options under this subpart; and
(2) Specify in its notice of intent to ONRR which relief option(s) it will allow or not allow.
(1) Notify the Director for Office of Natural Resources Revenue, in writing, of its intent to allow one or both of the relief options allowed under this subpart during the next calendar year; and
(2) Specify in its notice of intent to ONRR which relief option(s) it will allow.
(e) If a State does not notify ONRR under paragraph (c) or (d) of this section, the State will be deemed to have decided not to allow either of the relief options under this subpart for the next calendar year.
(f) ONRR will publish a notice of the State s intent to allow or not allow certain relief options under this section in the Federal Register no later than 30 days before the beginning of the applicable calendar year.
(a) A marginal property must qualify for relief under this subpart for each calendar year based on production during the base period for that calendar year. The notice or request you provided to ONRR under §1204.205 for the first calendar year that the property qualified for relief remains effective for successive calendar years if the property continues to qualify.
(b) If a property is no longer eligible for relief for any reason during a calendar year other than the reason under §1204.210 or paragraph (c) of this section, the relief for the property terminates as of December 31 of that calendar year. You must notify ONRR in writing by December 31 that the relief for the property has terminated.
(c) If you dispose of your interest in a marginal property during the calendar year, your relief terminates as of the end of the sales month in which you disposed of the property. Report and pay royalties for your production using the procedures in §1204.202(e).
If the Bureau of Land Management (BLM) or BOEM retroactively approves a marginal property that qualified for relief for inclusion as part of an agreement that does not qualify for relief under this subpart, the property no longer qualifies for relief under this subpart then:
(a) ONRR will not retroactively rescind the marginal property relief for production from your property under §1204.211;
(b) Your marginal property relief terminates as of December 31 of the calendar year that you receive the BLM or BOEM approval of your marginal property as part of a nonqualifying agreement; and
(c) For the calendar year in which you receive the BLM or BOEMRE approval, and for any previous period affected by the approval, the volumes on which you report and pay royalty for your lease must be amended to reflect all volumes produced on or allocated to your lease under the nonqualifying agreement as modified by BLM or BOEM. Report and pay royalties for your production using the procedures in §1204.202(b).
(d) If you owe additional royalties based on the retroactive agreement approval and do not pay your royalty by the date due in §1204.202(b), you will owe late payment interest determined under §1218.54 from the date your payment was due under §1204.202 (b)(2) until the date ONRR receives it.
(a) ONRR may retroactively rescind the relief for your property if ONRR determines that your property was not eligible for the relief obtained under this subpart because:
(1) You did not submit a notice or request for relief under §1204.205;
(2) You submitted erroneous information in the notice or request for relief you provided to ONRR under §1204.205 or in your royalty or production reports; or
(3) Your property is no longer eligible for relief because production increased, but you failed to provide the notice required under §1204.209(b).
(b) ONRR may rescind relief for your property if ONRR decides to take royalty in kind.
(a) May owe additional royalties and late payment interest determined under §1218.54 from the date your additional payments were due until the date ONRR receives them; and
[78 FR 30200, May 22, 2013]