Source: https://www.federalregister.gov/documents/2008/04/09/E8-7448/agency-information-collection-activities-proposed-collection-comment-request
Timestamp: 2017-09-24 12:48:02
Document Index: 753491236

Matched Legal Cases: ['art 208', 'art 208', 'art 208', 'art 208', 'art 208', '§\u2009208', '§\u2009208', '§\u2009208', '§\u2009208', '§\u2009208', '§\u2009208', '§\u2009208', '§\u2009208', '§\u2009208', '§\u2009208', '§\u2009208', '§\u2009208', '§\u2009208', '§\u2009208']

A Notice by the Minerals Management Service on 04/09/2008
Submit written comments on or before June 9, 2008.
19241-19246 (6 pages)
Eligible Refiner Information—Determination of Need
https://www.federalregister.gov/d/E8-7448 https://www.federalregister.gov/d/E8-7448
To comply with the Paperwork Reduction Act of 1995 (PRA), we are inviting comments on a collection of information that we will submit to the Office of Management and Budget (OMB) for review and approval. The previous title of this information collection request (ICR) was “30 CFR Part 208—Sale of Federal Royalty Oil; Sale of Federal Royalty Gas; and Commercial Contracts (Forms MMS-4070, Application for the Purchase of Royalty Oil; MMS-4071, Letter of Credit; and MMS-4072, Royalty-in-Kind Contract Surety Bond).” The new title of this ICR is “30 CFR Part 208, RIK Oil and Gas.”
Electronically go to http://www.regulations.gov. In the “Comment or Submission” column, enter “MMS-2008-MRM-0010” to view supporting and related materials for this ICR. Click on “Send a comment or submission” link to submit public comments. Information on using Regulations.gov, including instructions for accessing documents, submitting comments, and viewing the docket after the close of the comment period, is available through the site's “User Tips” link. All comments submitted will be posted to the docket.
Hand-carry comments or use an overnight courier service. Our courier address is Building 85, Room A-614, Denver Federal Center, West 6th Ave. and Kipling Blvd., Denver, Colorado 80225. Please reference ICR 1010-0119 in your comments.
Abstract: The Secretary of the U.S. Department of the Interior is responsible for matters relevant to mineral resource development on Federal and Indian lands and the Outer Continental Shelf (OCS). The Secretary, under the Mineral Leasing Act of 1920 (30 U.S.C. 1923), the Indian Mineral Development Act of 1982 (25 U.S.C. 2103), and the Outer Continental Shelf Lands Act (43 U.S.C. 1353), is responsible for managing the production of minerals from Federal and Indian lands and the OCS, collecting royalties and other mineral revenues from lessees who produce minerals, and distributing the funds collected in accordance with applicable laws. The MMS performs the mineral revenue management functions for the Secretary.
Public laws pertaining to mineral revenues are on our Web site at http://www.mrm.mms.gov/​Laws_​R_​D/​PublicLawsAMR.htm. These public laws and 30 CFR part 208, as well as specific language in the actual lease documents, authorize the Secretary to sell royalty oil and gas accruing to the United States. The standard lease terms state that royalties are due in amount or in value. In addition, these citations authorize the Secretary to prescribe proper rules and regulations and to do any and all things necessary to accomplish the purpose of applicable laws. The MMS directs communications between MMS operators and RIK purchasers through commercial contracts, situation-specific “Dear Operator” letters, or, in the case of eligible refiners, through regulations at 30 CFR part 208.
The MMS is responsible for ensuring that all revenues from Federal and Indian mineral leases are accurately collected and accounted for and appropriately disbursed to recipients. Start Printed Page 19242Historically, most of these revenues have been received in the form of cash royalty payments, i.e., royalty in-value payments. These payments are paid by mineral development interests. Beginning in the late nineties, MMS conducted pilots to test the approach of taking RIK.
The Federal Government's MMS RIK pilot program became a permanent operational program after several years of pilot project testing. The MMS RIK operational program takes payment from mineral lessees “in kind” in the form of produced crude oil and natural gas volumes, rather than in cash payments. The lessee transfers the title of the crude oil or natural gas to the Federal Government, and MMS sells the received product (crude oil or natural gas) to agents in the marketplace and disburses revenues as prescribed by law. The MMS sells some product competitively in the unrestricted marketplace, and the other RIK product MMS sells competitively to eligible refiners (a small and independent refiner, as defined in 30 CFR 208.2). Additionally, when directed, MMS delivers the RIK product to other Federal agencies, as has been the case during the fill of the Strategic Petroleum Reserve (SPR), directed by the President in 2007, with scheduled completion upon reaching a capacity of 727 million barrels. Specifically, within the MMS RIK operational program, MMS conducts the eligible small refiner, SPR, offshore, and Wyoming natural gas programs.
As stated earlier, royalties may be paid “in value” or “in kind.” The regulations at 30 CFR part 208, Sale of Federal Royalty Oil, govern the RIK program of Federal oil for eligible refiners. Under § 208.4(a) and (b), MMS, on behalf of the Secretary, performs a Determination of Need prior to issuing a Notice of Availability of Royalty Oil for sale. The MMS uses the feedback from the Determination of Need respondents (eligible refiners or other interested parties, i.e., lessees, operators) to assess current marketplace conditions. If MMS determines the program should continue, MMS may dispose of any royalty oil taken in kind by conducting a sale of such oil, through an allocation process, to eligible refiners. The most recent Determination of Need assessment, requesting specific information from interested parties, was published in the Federal Register on January 16, 2008.
In order to qualify for RIK sales, eligible refiners must prequalify by (1) signing the MMS base contract, “RIK Crude Oil General Terms and Conditions,” which is located at http://www.mrm.mms.gov/​rikweb/​PDFDocs/​gtcexh.pdf, and (2) providing detailed financial information. Upon prequalification, MMS will issue an amount of unsecured credit, based on the creditability of the offeror.
Under § 208.5, if MMS finds from the Determination of Need process that the program should continue, MMS would then publish a Notice of Availability of Royalty Oil for sale in the Federal Register and other printed media, when appropriate. This notice advises industry of a forthcoming RIK crude oil sale for eligible refiners and includes administrative details concerning the application, the allocation process, and the contract award process for the royalty oil. It also details specific information about the crude oil types offered for sale and the location of delivery points.
Under § 208.6, eligible refiners interested in purchasing royalty oil must submit Form MMS-4070, which is located at http://www.mrm.mms.gov/​ReportingServices/​PDFDocs/​4070.pdf. This form serves as certification that the company qualifies under the Small Refiner Program as defined under § 208.2. On Form MMS-4070, MMS requests specific information, i.e., the location of their refinery; number of persons employed by the refinery; type of crude desired (e.g., Light Louisiana Sweet); the specific area in which the applicant is interested and documentation supporting an established history in the requested area; and the percentage of total refining capacity attributable to Federal oil versus other sources.
(1) Report information about the projected volumes and qualities of RIK crude oil or natural gas production the operator expects to make available for delivery in the following month, and report corrections to those projected volumes and qualities for previous months, submitted monthly no later than 10 days before the first day of following month;
In marketing the product, information received through MMS's directed communication is essential for MMS to ensure the delivery and acceptance of verifiable quantities and qualities of crude oil and natural gas. In cases when Start Printed Page 19243MMS is directed to deliver the product to other Federal agencies, these types of directed communication are necessary so that exchange contractors can arrange to timely accept accurate amounts and qualities of royalty oil that will be delivered by MMS's exchange partner and for MMS to verify timely fulfillment of operators' and lessees' royalty obligations to the Federal Government.
Section 208.9 requires that eligible refiners who purchase royalty oil must submit to MMS two copies of any written third-party agreements, or two copies of a complete written explanation of any oral third-party agreements, relating to the method and costs of delivery of royalty oil, or crude oil exchanged for the royalty oil, from the point of delivery under the contract to the purchaser's refinery. Also, this section requires that the purchaser must submit copies of agreements pertaining to quality differentials that may occur between the lease(s) and the delivery point(s). However, in practice MMS does not currently require eligible refiners to submit these written third-party and quality differential agreements. The MMS reserves the right upon request to require the agreement from the eligible refiners.
Offers. The Secretary is obligated to hold competition when selling to the public; to protect actual RIK production before, during, and after any sale; and to obtain a fair return on royalty production sold. The MMS must fulfill those obligations for the Secretary. The reporting requirements are (1) Actual pricing offers that potential purchasers will submit when MMS offers production for competitive sale; (2) offerors' statements of financial qualification (audited financial statements or 10K report/statement); and (3) surety instruments, such as a Letter of Credit (LOC), bond, prepayment, or parent guaranty when financial qualification is not sufficient. All LOCs are irrevocable.
Financial Statements. The MMS may request that a bidder submit its publicly available statements of its financial condition (brought briefly up to date, if needed) or other related qualification information. The MMS evaluates the qualification information to determine whether bidders are reliable to follow through on payment of the dollar amount (or delivery of exchange production) offered, as they bid, and to determine their ability to timely perform activities attendant to the taking of crude oil and/or natural gas. The MMS performs this step to reduce the risk to the Federal Government in these transactions.
Surety Instruments. Under MMS current practice, eligible refiners are subject to the same requirements as other RIK purchasers regarding MMS-acceptable surety instruments and qualification information. Reporting requirements in § 208.11 discuss surety instruments for eligible refiners. Surety instruments include the broad field of financial instruments that may be collected, i.e., bonds, prepayments, and parent guaranties. When required, eligible refiners and other RIK purchasers must provide surety documents, i.e., Form MMS-4071, LOC; Form MMS-4072, Royalty-In-Kind Contract Surety Bond; other acceptable commercial surety, within 5 business days prior to the first delivery under the contract to protect the Federal Government's interest. For bonds, MMS requires a specific MMS-approved format. All parent guaranties must specify a dollar amount of the guaranty and the effective term.
The surety instruments provide the Federal Government with a means to collect money if refiners do not report and pay for the Federal oil they have received.
The MMS will request OMB's approval to continue to collect this information. Not collecting this information would limit the Secretary's ability to discharge his/her duties and may also result in loss of royalty payments. Proprietary information submitted to MMS under this collection is protected, and there are no questions of a sensitive nature included in this information collection.
Estimated Number and Description of Respond ents: 227 Federal lessees and/or operators; and 80 commercial oil and gas purchasers and/or refiners.
We have not included in our estimates certain requirements performed in the normal course of business, which are considered usual and customary. The following chart shows the estimated annual burden hours by CFR section and paragraph: Start Printed Page 19244
§ 208.4 Royalty oil sales to eligible refiners
208.4(b) (b) Sale to eligible refiners. (1) * * * The Secretary may authorize MMS to offer royalty oil for sale to eligible refiners only for use in their refineries. * * * Hour burden covered under § 208.4(a).
§ 208.6 General application procedures
§ 208.7 Determination of eligibility
208.7(a) (a) The MMS will examine each application and may request additional information if the information in the application is inadequate. * * * 0.25 1 *1
§ 208.8 Transportation and delivery
208.8(a) (a) * * * The purchaser must have physical access to the oil at the alternate delivery point and such point must be approved by MMS. 1 1 1
§ 208.9 Agreements
208.9(a) (a) A purchaser must submit to MMS two copies of any written third-party agreements, or two copies of a full written explanation of any oral third-party agreements, relating to the method and costs of delivery of royalty oil, or crude oil exchanged for the royalty oil, from the point of delivery under the contract to the purchaser's refinery. In addition, the purchaser must submit copies of agreements pertaining to quality differentials which may occur between leases and delivery points. 1 1 1
§ 208.10 Notices
§ 208.11 Surety requirements [for eligible refiners]
208.11 (a), (b), (d), and (e) (a) The eligible purchaser, prior to execution of the contract, shall furnish an “MMS-specified surety instrument,” in an amount equal to the estimated value of royalty oil that could be taken by the purchaser in a 99-day period, plus related administrative charges. * * * (b) * * * The purchaser or its surety company may elect not to renew the letter of credit at any monthly anniversary date, but must notify MMS of its intent not to renew at least 30 days prior to the anniversary date. * * * (d) The “MMS-specified surety instrument” shall be in the form specified by MMS instructions or approved by MMS. * * * (e) All surety instruments must be in a form acceptable to MMS and must include such other specific requirements as MMS may require adequately to protect the Government's interests. Hour burden covered under “Offers, Financial Statements, and Surety Instruments for Sales of Royalty Oil and Gas” section. (Forms MMS-4071, Letter of Credit, and MMS-4072, Royalty-In-Kind Contract Surety Bond)
§ 208.15 Audits
SPR Fill Initiative In January 2008, 70,000 barrels of oil per day were directed toward the SPR. This initiative will continue through the Fall of 2008; at which point, these oil volumes will be redirected back to commercial GOM RIK oil sales. Thus, information collection responses will continue at the same level during and after the SPR initiative, the only difference will be under which program the collection falls.) 3 17 51
The PRA also requires agencies to estimate the total annual reporting “non-hour cost” burden to respondents or recordkeepers resulting from the collection of information. If you have costs to generate, maintain, and disclose this information, you should comment and provide your total capital and startup cost components or annual operation, maintenance, and purchase of service components. You should describe the methods you use to estimate major cost factors, including system and technology acquisition, expected useful life of capital equipment, discount rate(s), and the period over which you incur costs. Capital and startup costs include, among other items, computers and software you purchase to prepare for collecting information; monitoring, sampling, and testing equipment; and record storage facilities. Generally, your estimates should not include equipment or services purchased: (i) Before October 1, 1995; (ii) to comply with requirements not associated with the information collection; (iii) for reasons other than to provide information or keep records for the Federal Government; or (iv) as part of customary and usual business or private practices.
Public Comment Policy: We will post all comments in response to this notice on our website at http://www.mrm.mms.gov/​Laws_​R_​D/​InfoColl/​InfoColCom.htm. We will also make copies of the comments available for public review, including names and addresses of respondents, during regular business hours at our offices in Lakewood, Colorado. Before including your address, phone number, e-mail address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public view, we cannot guarantee that we will be able to do so.
MMS Information Collection Clearance Of ficer: Arlene Bajusz (202) 208 7744.
[FR Doc. E8-7448 Filed 4-8-08; 8:45 am]