[Federal Register: June 14, 2005 (Volume 70, Number 113)]
[Notices]
[Page 34494-34505]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14jn05-84]
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DEPARTMENT OF THE INTERIOR
Minerals Management Service
Agency Information Collection Activities: Proposed Collection,
Comment Request
AGENCY: Minerals Management Service (MMS), Interior.
ACTION: Notice of a revision of a currently approved information
collection (OMB Control Number 1010-0103).
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SUMMARY: To comply with the Paperwork Reduction Act (PRA) of 1995, 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 information collection request (ICR) is titled ``30 CFR
Part 202--ROYALTIES, Subpart J--Gas Production From Indian Leases, and
Part 206--PRODUCT VALUATION, Subpart B--
[[Page 34495]]
Indian Oil, and Subpart E--Indian Gas (Forms MMS-4109, Gas Processing
Allowance Summary Report; MMS-4110, Oil Transportation Allowance
Report; MMS-4295, Gas Transportation Allowance Report; MMS-4410,
Accounting for Comparison [Dual Accounting]; and MMS-4411, Safety Net
Report).'' The title of this ICR clarifies the regulatory language we
are covering under 30 CFR parts 202 and 206, for Indian oil and gas
leases, and incorporates relevant portions of six previous ICRs. The
six ICRs now consolidated into this ICR were previously titled:
1010-0061: 30 CFR Part 206, Subpart B--Indian Oil, Sec.
206.55--Determination of Transportation Allowances (Form MMS-4110, Oil
Transportation Allowance Report);
1010-0075: 30 CFR Part 206, Subpart E--Indian Gas, Sec.
206.178--How do I determine a transportation allowance? (Form MMS-4295,
Gas Transportation Allowance Report), and Sec. 206.180--How do I
determine an actual processing allowance? (Form MMS-4109, Gas
Processing Allowance Summary Report);
1010-0095: 30 CFR Part 206--Product Valuation, Subpart B--
Indian Oil, Sec. 206.54; Subpart C--Federal Oil, Sec. 206.109;
Subpart D--Federal Gas, Sec. Sec. 206.156 and 206.158; and Subpart E--
Indian Gas, Sec. 206.177 (Form MMS-4393, Request to Exceed Regulatory
Allowance Limitation). Only Indian oil and gas citations and burden
hours are covered in this ICR. Form MMS-4393 is also used for Federal
oil and gas citations and is retained with ICR 1010-0136 (expires May
31, 2006), where most of the burden hours are incurred;
1010-0103: 30 CFR Part 206, Subpart E--Indian Gas (Form
MMS-4411, Safety Net Report);
1010-0104: 30 CFR Part 206, Subpart E--Indian Gas,
Sec. Sec. 206.172, 206.173, and 206.176 (Form MMS-4410, Accounting for
Comparison [Dual Accounting]); and
1010-0138: 30 CFR Part 206, Subpart B, Establishing Oil
Value on Royalty Due on Indian Leases.
DATES: Submit written comments on or before August 15, 2005.
ADDRESSES: Submit written comments to Sharron L. Gebhardt, Lead
Regulatory Specialist, Minerals Management Service, Minerals Revenue
Management, P.O. Box 25165, MS 302B2, Denver, Colorado 80225. If you
use an overnight courier service, our courier address is Building 85,
Room A-614, Denver Federal Center, Denver, Colorado 80225. You may also
e-mail your comments to us at mrm.comments@mms.gov. Include the title
of the information collection and the OMB control number in the
``Attention'' line of your comment. Also include your name and return
address. Submit electronic comments as an ASCII file, avoiding the use
of special characters and any form of encryption. If you do not receive
a confirmation that we have received your e-mail, contact Ms. Gebhardt
at (303) 231-3211.
FOR FURTHER INFORMATION CONTACT: Sharron L. Gebhardt, telephone (303)
231-3211, FAX (303) 231-3781, or e-mail sharron.gebhardt@mms.gov.
SUPPLEMENTARY INFORMATION:
Title: ``30 CFR Part 202--ROYALTIES, Subpart J--Gas Production From
Indian Leases, and Part 206--PRODUCT VALUATION, Subpart B--Indian Oil,
and Subpart E--Indian Gas (Forms MMS-4109, Gas Processing Allowance
Summary Report; MMS-4110, Oil Transportation Allowance Report; MMS-
4295, Gas Transportation Allowance Report; MMS-4410, Accounting for
Comparison [Dual Accounting]; and MMS-4411, Safety Net Report).''
OMB Control Number: 1010-0103.
Bureau Form Number: Forms MMS-4109, MMS-4110, MMS-4295, MMS-4410,
and MMS-4411.
Abstract: The Secretary of the U.S. Department of the Interior is
responsible for collecting royalties from lessees who produce minerals
from leased Federal and Indian lands. The Secretary is required by
various laws to manage mineral resources production on Federal and
Indian lands, collect the royalties due, and distribute the funds in
accordance with those laws.
The Secretary also has a trust responsibility to manage Indian
lands and seek advice and information from Indian beneficiaries. The
MMS performs the royalty management functions and assists the Secretary
in carrying out the Department's trust responsibility for Indian lands.
Applicable Citations
Applicable citations of the laws pertaining to mineral leases on
Indian lands include 25 U.S.C. 396d (Chapter 12--Lease, Sale or
Surrender of Allotted or Unallotted Lands); 25 U.S.C. 2103 (Indian
Mineral Development Act of 1982); and Public Law 97-451--Jan. 12, 1983
(Federal Oil and Gas Royalty Management Act of 1982 [FOGRMA]). The CFR
citations we are covering in this ICR are 30 CFR part 202, subpart J;
and part 206, subparts B and E.
Background
When a company or an individual enters into a lease to explore,
develop, produce, and dispose of minerals from Federal or Indian lands,
that company or individual agrees to pay the lessor a share (royalty)
of the value received from production from the leased lands. The lease
creates a business relationship between the lessor and the lessee. The
lessee is required to report various kinds of information to the lessor
relative to the disposition of the leased minerals. Such information is
similar to data reported to private and public mineral interest owners
and is generally available within the records of the lessee or others
involved in developing, transporting, processing, purchasing, or
selling of such minerals. The information MMS collects includes data
necessary to ensure that the royalties are paid appropriately.
Regulations at 30 CFR part 202, subpart J, govern royalties on gas
production from Indian leases. Regulations at 30 CFR part 206, subparts
B and E, govern the valuation of oil and gas produced from leases on
Indian lands. Indian tribes and individual Indian mineral owners
receive all royalties generated from their lands. Determining product
valuation is essential to ensure that Indian tribes and individual
Indian mineral owners receive payment on the full value of the minerals
removed from their lands. Tribal representatives have expressed their
concern that the Secretary continue to fulfill all trust and fiduciary
duties and ensure that the correct royalty is received from Indian
lands. Failure to collect the data described in this information
collection could result in the undervaluation of leased minerals on
Indian lands.
Indian Oil
Regulations at 30 CFR part 206, subpart B, govern the valuation for
royalty purposes of oil produced from Indian oil and gas leases (tribal
and allotted) and must be consistent with mineral leasing laws, other
applicable laws, and lease terms.
Regulations at 30 CFR 206.52 explain how lessees must determine the
value of oil produced from Indian oil and gas leases. Generally, the
regulations provide that lessees determine the value of oil, based upon
the gross proceeds under an arm's-length contract, a series of
benchmarks under a non-arm's-length contract, and major portion
analysis. These oil valuation methods are eligible for applicable
transportation allowances.
Transportation Allowances
Under certain circumstances, the regulations authorize lessees to
deduct from royalty payments the reasonable
[[Page 34496]]
actual costs of transporting the royalty portion of produced minerals
from the lease to a sales point not in the immediate lease area. The
MMS verifies transportation allowances during the product valuation
verification to determine if the lessee reported and paid the proper
royalty amount.
The MMS and tribal personnel use the information collected on Form
MMS-4110, Oil Transportation Allowance Report, to evaluate whether the
transportation allowances reported and claimed by lessees are within
regulatory allowance limitations. The regulations establish a limit on
transportation allowance deductions for oil at 50 percent of the value
of the oil at the point of sale. To receive a transportation deduction,
lessees must submit Form MMS-4110 before or in the same month that they
report the transportation allowance on Form MMS-2014, Report of Sales
and Royalty Remittance (OMB Control Number 1010-0140, expiration date
October 31, 2006). After the initial reporting period and for
succeeding reporting periods, lessees must submit page one of Form MMS-
4110 (and Schedule 1) within 3 months after the end of the calendar
year, or after the applicable contract or rate terminates or is
modified or amended, whichever is earlier, unless MMS approves a longer
period.
Request To Exceed Regulatory Allowance Limitations for Oil
Transportation
The MMS may approve an oil transportation allowance in excess of 50
percent upon proper application from the lessee. To request permission
to exceed a regulatory allowance limit, lessees must submit a letter to
MMS explaining why a higher allowance limit is necessary and provide
supporting documentation, including a completed Form MMS-4393, Request
to Exceed Regulatory Allowance Limitation. This form provides MMS with
the data necessary to make a decision whether to approve or deny the
request and track deductions on royalty reports. Data reported on the
form is also subject to subsequent audit and adjustment.
Indian Gas
Regulations at 30 CFR part 206, subpart E, govern the valuation for
royalty purposes of natural gas produced from Indian oil and gas
leases. The regulations apply to all gas production from Indian oil and
gas leases (tribal and allotted), except leases on the Osage Indian
Reservation.
Safety Net Reporting
The safety net calculation establishes the minimum value, for
royalty purposes, of natural gas production from Indian oil and gas
leases. This reporting requirement ensures that Indian lessors receive
all royalties due and aids MMS compliance efforts.
The regulations require lessees to submit Form MMS-4411, Safety Net
Report, when gas production from an Indian oil or gas lease is sold
beyond the first index pricing point. The lessee submits safety net
prices, for the previous calendar year, to MMS annually (by June 30)
using this form.
Dual Accounting
Most Indian leases contain the requirement to perform accounting
for comparison (dual accounting) for gas produced from the lease.
Lessees must elect to perform actual dual accounting as defined in 30
CFR 206.176 or alternative dual accounting as defined in 30 CFR
206.173.
According to 30 CFR 206.176, dual accounting is defined as the
greater of the following two values:
(1) The value of gas prior to processing, less any applicable
allowances, or
(2) The combined value of residue gas and gas plant products
resulting from processing the gas, less any applicable allowances, plus
any drip condensate associated with the processed gas recovered
downstream of the point of royalty settlement, without resorting to
processing, less applicable allowances.
Lessees use Form MMS-4410, Accounting for Comparison [Dual
Accounting], to certify that dual accounting is not required on an
Indian lease or to make an election for actual or alternative dual
accounting for Indian leases.
Form MMS-4410 (Part A), Certification for Not Performing Dual
Accounting, requires lessees to identify the MMS-designated areas where
the leases are located and provide specific justification for not
performing dual accounting. Part A is a one-time notification, until
any changes occur in gas disposition. Part A lists the following
acceptable reasons for not performing dual accounting: (1) The lease
terms do not require dual accounting; (2) none of the gas from the
lease is ever processed; (3) gas has a Btu content of 1000 Btu's per
cubic foot or less at lease's facility measurement point(s); (4) none
of the gas from the lease is processed until after gas flows into a
pipeline with an index located in an index zone; and (5) none of the
gas from the lease is processed until after gas flows into a mainline
pipeline not located in an index zone.
Form MMS-4410 (Part B), Election to Perform Actual Dual Accounting
or Alternative Dual Accounting, allows MMS to collect the lessee's
elections to perform actual dual accounting or alternative dual
accounting. A lessee makes an election by checking either the actual or
alternative dual accounting box for each MMS-designated area where its
leases are located. Part B also includes the lessee's lease prefixes
within each MMS-designated area to assist lessees in making the
appropriate election. The election to perform actual or alternative
dual accounting applies to all of a lessee's Indian leases in each MMS-
designated area. The first election to use the alternative dual
accounting is effective from the time of election through the end of
the following calendar year. Thereafter, each election to use the
alternative dual accounting methodology must remain in effect for 2
calendar years. However, lessees may return to the actual dual
accounting methodology only at the beginning of the next election
period or with written approval from MMS and the tribal lessors for
tribal leases, and from MMS for Indian allotted leases in the MMS-
designated area (30 CFR 206.173(a)).
Transportation Allowances
Under certain circumstances, lessees are authorized to deduct from
royalty payments the reasonable actual costs of transporting the
royalty portion of produced minerals from the lease to a processing or
sales point not in the immediate lease area. Transportation allowances
are part of the product valuation process MMS uses to determine if the
lessee is reporting and paying the proper royalty amount.
The MMS and tribal personnel use the information collected on Form
MMS-4295, Gas Transportation Allowance Report, to evaluate whether the
non-arm's-length or no contract transportation allowances reported and
claimed by lessees are reasonable, actual costs and are within
regulatory allowance limitations. To take a non-arm's-length
transportation deduction, a lessee must submit Form MMS-4295 within 3
months after the end of the 12-month period to which the allowance
applies. The regulations establish a limit on transportation allowance
deductions for gas at 50 percent of the value of the gas at the point
of sale.
Request To Exceed Regulatory Allowance Limitation for Gas
Transportation
The MMS may approve a gas transportation allowance in excess of 50
[[Page 34497]]
percent upon proper application from the lessee. To request permission
to exceed a regulatory allowance limit, lessees must submit a letter to
MMS explaining why a higher allowance limit is necessary and provide
supporting documentation, including a completed Form MMS-4393, Request
to Exceed Regulatory Allowance Limitation. This form provides MMS with
the data necessary to make a decision whether to approve or deny the
request and track deductions on royalty reports. Data reported on the
form is also subject to subsequent audit and adjustment.
Processing Allowances
When gas is processed for the recovery of gas plant products,
lessees may claim a processing allowance. The MMS normally accepts the
cost as stated in the lessee's arm's-length processing contract as
being representative of the cost of the processing allowance. In those
instances where gas is being processed through a lessee-owned plant,
the lessee must base processing costs on the actual plant operating and
maintenance expenses, depreciation, and a reasonable return on
investment. The allowance is expressed as a cost per unit of individual
gas plant products. Lessees may take processing allowances as a
deduction from royalty payments.
The MMS and tribal personnel use the information collected on Form
MMS-4109, Gas Processing Allowance Summary Report, to evaluate whether
the non-arm's-length or no contract processing allowances reported and
claimed by lessees are reasonable, actual costs and are within
regulatory allowance limitations. To take a non-arm's-length processing
deduction, lessees must submit Form MMS-4109 within 3 months after the
end of the 12-month period to which the allowance applies. The
regulations establish a limit of 66 \2/3\ percent of the value of each
gas plant product as an allowable gas processing deduction.
Summary
The MMS is requesting 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 to Indian tribes and individual Indian mineral
owners.
Proprietary information submitted to MMS under this collection is
protected, and no items of a sensitive nature are collected.
In some cases the requirement to respond is mandatory, such as
reporting royalty values or declaring the type of dual accounting
election the lessee chooses to perform. In other cases, it is
voluntary, such as asking permission to exceed a transportation
allowance limit. For example, a lessee can request, but is not required
to apply for, a transportation allowance deduction in excess of the
regulatory limits. However, if no request is made, the transportation
limitation is set by regulation.
Frequency of Response: Annually, monthly, and on occasion.
Estimated Number and Description of Respondents: 125 Indian
lessees/lessors.
Estimated Annual Reporting and Recordkeeping ``Hour'' Burden: 1,285
hours.
We have not included in our estimates certain requirements
performed in the normal course of business and considered usual and
customary. The following chart shows the estimated burden hours by CFR
section and paragraph:
Respondents' Estimated Annual Burden Hours
----------------------------------------------------------------------------------------------------------------
Average number
30 CFR Reporting and recordkeeping Hour burden of annual Annual burden
requirements\1\ responses hours
----------------------------------------------------------------------------------------------------------------
202--ROYALTIES
Subpart J.--Gas Production From Indian Leases
----------------------------------------------------------------------------------------------------------------
202.551(c).................... How do I determine the volume of 1 1 1
production for which I must pay
royalty if my lease is not in
an approved Federal unit or
communitization agreement
(AFA)? * * *
-------------------------------
(c) You and all other persons
paying royalties on the lease
may ask MMS for permission * *
*
-------------------------------
206--PRODUCT VALUATION
Subpart B--Indian Oil
----------------------------------------------------------------------------------------------------------------
206.52(b)(1)(i) and (iii), Valuation standards............. PRODUCE RECORDS
(b)(2), and (d). (b)(1)(i) * * * The lessee shall The Office of Regulatory Affairs (ORA)
have the burden of determined that the audit process is not
demonstrating that its contract covered by the PRA because MMS staff asks non-
is arm's-length. * * *. standard questions to resolve exceptions.
(iii) * * * When MMS determines
that the value may be
unreasonable, MMS will notify
the lessee and give the lessee
an opportunity to provide
written information justifying
the lessee's value. * * *.
(b)(2) MMS may require a lessee
to certify that its arm's-
length contract provisions
include all of the
consideration to be paid by the
buyer, either directly or
indirectly, for the oil..
(d) Any Indian lessee will make
available, upon request to the
authorized MMS or Indian
representatives, to the Office
of the Inspector General of the
Department of the Interior, or
other persons authorized to
receive such information, arm's-
length sales and volume data
for like-quality production
sold, purchased, or otherwise
obtained by the lessee from the
field or area or from nearby
fields or areas.
206.52(e)(2).................. Valuation standards............. 20 1 20
[[Page 34498]]
(e)(2) A lessee shall notify MMS
if it has determined value
under paragraph (c)(4) or
(c)(5) of this section.* * *
The letter shall identify the
valuation method to be used and
contain a brief description of
the procedure to be followed. *
* *
206.52(g)..................... Valuation standards............. 40 1 40
(g) The lessee may request a
value determination from MMS. *
* * The lessee shall submit all
available data relevant to its
proposal. * * *
206.54(b)(2).................. Transportation allowances-- 4.25 1 4.25
general.
(b)(2) Upon request of a lessee,
MMS may approve a
transportation allowance
deduction in excess of the
limitation prescribed by
paragraph (b)(1) of this
section. * * * An application
for exception (using Form MMS-
4393, Request to Exceed
Regulatory Allowance
Limitation) shall contain all
relevant and supporting
documentation necessary for MMS
to make a determination. * * *
206.55(a)(1)(i)............... Determination of transportation Burden covered under Sec. 206.55(c)(1)(i)
allowances. and (iii).
(a) Arm's-length transportation
contracts.
(1)(i) * * * Before any
deduction may be taken, the
lessee must submit a completed
page one of Form MMS-4110 (and
Schedule 1), Oil Transportation
Allowance Report * * *
206.55(a)(2)(i)............... Determination of transportation Burden covered under Sec. 206.55(a)(3).
allowances.
(a) Arm's-length transportation
contracts.
(2)(i) * * * Except as provided
in this paragraph, no allowance
may be taken for the costs of
transporting lease production
which is not royalty-bearing
without MMS approval.
206.55(a)(2)(ii).............. Determination of transportation 20 1 20
allowances.
(a) Arm's-length transportation
contracts.
(2)(ii) Notwithstanding the
requirements of paragraph (i),
the lessee may propose to MMS a
cost allocation method on the
basis of the values of the
products transported. * * *
206.55(a)(3).................. Determination of transportation 40 1 40
allowances.
(a) Arm's-length transportation
contracts.
(3) If an arm's-length
transportation contract
includes both gaseous and
liquid products, and the
transportation costs
attributable to each product
cannot be determined from the
contract, the lessee shall
propose an allocation procedure
to MMS. * * * The lessee shall
submit all available data to
support its proposal. * * *
206.55(b)(1).................. Determination of transportation Burden covered under Sec. 206.55(c)(2)(i),
allowances. and (c)(2)(iii).
(b) Non-arm's-length or no
contract.
(1) * * * A transportation
allowance may be claimed
retroactively for a period of
not more than 3 months prior to
the first day of the month that
Form MMS-4110 is filed with
MMS, unless MMS approves a
longer period upon a showing of
good cause by the lessee. * * *
206.55(b)(1).................. Determination of transportation Burden covered under OMB Control Number 1010-
allowances. 0140 (expires 10/31/2006). Burden covered
(b) Non-arm's-length or no under Sec. 210.52.
contract.
(1) * * * When necessary or
appropriate, MMS may direct a
lessee to modify its actual
transportation allowance
deduction.
206.55(b)(2)(iv).............. Determination of transportation 20 1 20
allowances.
(b) Non-arm's-length or no
contract.
(2)(iv) * * * After a lessee has
elected to use either method
for a transportation system,
the lessee may not later elect
to change to the other
alternative without approval of
MMS.
206.55(b)(2)(iv)(A)........... Determination of transportation 20 1 20
allowances.
(b) Non-arm's-length or no
contract.
(2)(iv)(A) * * * After an
election is made, the lessee
may not change methods without
MMS approval. * * *
206.55(b)(3)(i)............... Determination of transportation 40 1 40
allowances.
(b) Non-arm's-length or no
contract.
(3)(i) * * * Except as provided
in this paragraph, the lessee
may not take an allowance for
transporting lease production
which is not royalty bearing
without MMS approval.
206.55(b)(3)(ii).............. Determination of transportation 20 1 20
allowances.
(b) Non-arm's-length or no
contract.
(3)(ii) Notwithstanding the
requirements of paragraph (i),
the lessee may propose to MMS a
cost allocation method on the
basis of the values of the
products transported. * * *
206.55(b)(4).................. Determination of transportation 20 1 20
allowances.
[[Page 34499]]
(b) Non-arm's-length or no
contract.
(4) Where both gaseous and
liquid products are transported
through the same transportation
system, the lessee shall
propose a cost allocation
procedure to MMS. * * * The
lessee shall submit all
available data to support its
proposal. * * *
206.55(b)(5).................. Determination of transportation 20 1 20
allowances.
(b) Non-arm's-length or no
contract.
(5) A lessee may apply to MMS
for an exception from the
requirement that it compute
actual costs in accordance with
paragraphs (b)(1) through
(b)(4) of this section. * * *
206.55(c)(1)(i)............... Determination of transportation 4 3 12
allowances.
(c) Reporting requirements......
(1) Arm's-length contracts. (i)
With the exception of those
transportation allowances
specified in paragraphs
(c)(1)(v) and (c)(1)(vi) of
this section, the lessee shall
submit page one of the initial
Form MMS-4110 (and Schedule 1),
Oil Transportation Allowance
Report, prior to, or at the
same time as, the
transportation allowance
determined under an arm's-
length contract, is reported on
Form MMS-2014, Report of Sales
and Royalty Remittance. * * *
206.558(c)(1)(iii)............ Determination of transportation. 4 3 12
(c) Reporting requirements...... .............. .............. ..............
(1) Arm's-length contracts.
(iii) After the initial
reporting period and for
succeeding reporting periods,
lessees must submit page one of
Form MMS-4110 (and Schedule 1)
within 3 months after the end
of the calendar year, or after
the applicable contract or rate
terminates or is modified or
amended, whichever is earlier,
unless MMS approves a longer
period (during which period the
lessee shall continue to use
the allowance from the previous
reporting period).
206.55(c)(1)(iv).............. Determination of transportation PRODUCE RECORDS
allowances. The ORA determined that the audit process is
(c) Reporting requirements...... not covered by the PRA because MMS staff asks
(1) Arm's-length contracts. (iv) non-standard questions to resolve exceptions.
MMS may require that a lessee
submit arm's-length
transportation contracts,
production agreements,
operating agreements, and
related documents. Documents
shall be submitted within a
reasonable time, as determined
by MMS..
206.55(c)(2)(i)............... Determination of transportation 6 3 18
allowances.
(c) Reporting requirements......
(2) Non-arm's-length or no
contract. (i) With the
exception of those
transportation allowances
specified in paragraphs
(c)(2)(v), (c)(2)(vii) and
(c)(2)(viii) of this section,
the lessee shall submit an
initial FormMMS-4100 prior to,
or at the same time as, the
transportation allowance
determined under a non-arm's-
length contract or no-contract
situationis reported on Form
MMS-2014, * * * The initial
report may be based upon
estimated costs.
206.55(c)(2)(iii)............. Determination of transportation 6 3 18
allowances.
(c) Reporting requirements......
(2) Non-arm's-length or no
contract. (iii) For calendar-
year reporting periods
succeeding the initial
reporting period, the lessee
shall submit a completed Form
MMS-4110 containing the actual
costs for the previous
reporting period. If oil
transportation is continuing,
the lessee shall include on
Form MMS-4410 its estimated
costs for the next calendar
year. * * * MMS must receive
the Form MMS-4110 within 3
months after the end of the
previous reporting period,
unless MMS approves a longer
period (during which period the
lessee shall continue to use
the allowance from the previous
reporting period).
206.55(c)(2)(iv).............. Determination of transportation Burden covered under Sec. 206.55(c)(2)(i).
allowances.
(c) Reporting requirements......
(2) Non-arm's-length or no
contract. (iv) For new
transportation facilities or
arrangements, the lessee's
initial Form MMS-4100 shall
include estimates of the
allowable oil transportation
costs for the applicable
period. * * *
206.55(c)(2)(v)............... Determination of transportation Burden covered under Sec. 206.55(c)(2)(i).
allowances.
(c) Reporting requirements......
(2) Non-arm's-length or no
contract. (v) * * * only those
allowances that have been
approved by MMS in writing * *
*
[[Page 34500]]
206.55(c)(2)(vi).............. Determination of transportation PRODUCE RECORDS
allowances. The ORA determined that the audit process is
(c) Reporting requirements...... not covered by the PRA because MMS staff asks
(2) Non-arm's-length or no non-standard questions to resolve exceptions.
contract. (vi) Upon request by
MMS, the lessee shall submit
all data used to prepare its
Form MMS-4410. The data shall
be provided within a reasonable
period of time, as determined
by MMS.
206.55(c)(4)(v) and (e)(2).... Determination of transportation Burden covered under OMB Control Number 1010-
allowances. 0140 (expires 10/31/2006). Burden covered
(c) Reporting requirements...... under Sec. 210.52.
(4) Transportationallowances
must be reported as a separate
line item on Form MMS-2014 * *
*.
-------------------------------
(e) Adjustments.................
(2) For lessees transporting
production from Indian leases,
the lessee must submit a
corrected Form MMS-2014 to
reflect actual costs * * *
-------------------------------
206-PRODUCT VALUATION
Subpart E--Indian Gas
----------------------------------------------------------------------------------------------------------------
206.172(b)(1)(ii)............. How do I value gas produced from 4 25 100
leases in an index zone?.
(b) Valuing residue gas and gas
before processing.
(1)(ii) Gas production that you
certify on Form MMS-4410, * * *
is not processed before it
flows into a pipeline with an
index but which may be
processed later * * *
(Part A of Form MMS-4410)
206.172(e)(6)(i) and (iii).... How do I value gas produced from 3 20 60
leases in an index zone?.
(e) Determining the minimum
value for royalty purposes of
gas sold beyond the first index
pricing point.
(6)(i) You must report the
safety net price for each index
zone to MMS on Form MMS-4411,
Safety Net Report, no later
than June 30 following each
calendar year; * * * (iii) MMS
may order you to amend your
safety net price within one
year from the date your Form
MMS-4411 is due or is filed,
whichever is later. * * *
206.172(b)(1)(ii)............. How do I value gas produced from Burden covered under OMB Control Number 1010-
leases in an index zone?. 0140 (expires 10/31/2006). Burden covered
(e) Determining the minimum under Sec. 210.52.
value for royalty purposes of
gas sold beyond the first index
pricing point..
(6)(ii) You must pay and report
on Form MMS-2014 additional
royalties due no later than
June 30 following each calendar
year * * *
206.172(f)(1)(ii), (f)(2), and How do I value gas produced from 40 1 40
(f)(3). leases in an index zone?.
(f) Exlcuding some or all tribal
leases from valuation under
this section.
(1) An Indian tribe may ask MMS
to exclude some or all of its
leases from valuation under
this section * * * (ii) If an
Indian tribe requests exclusion
from an index zone for less
than all of its leases, MMS
will approve the request only
if the excluded leases may be
segregated into one or more
groups based on separate fields
within the reservation.
(2) An Indian tribe may ask MMS
to terminate exclusion of its
leases from valuation under
this section. * * *.
(3) The Indian tribe's request
to MMS under either paragraph
(f)(1) or (2) of this section
must be in the form of a tribal
resolution. * * *.
206.173(a)(1) How do I calculate the 2 35 70
alternative methodology for
dual accounting?.
(a) Electing a dual accounting
method.
(1) * * * You may elect to
perform the dual accounting
calculation according to either
Sec. 206.176(a) (called
actual dual accounting), or
paragraph (b) of this section
(called the alternative
methodology for dual
accounting).
(Part B of Form MMS-4410)
206.173(a)(1) How do I calculate the Burden covered under Sec. 206.173(a)(1).
alternative methodology for
dual accounting?.
(a) electing a dual accounting
method.
(2) You must make a separate
election to use the alternative
methodology for dual accounting
for your Indian leases in each
MMS-designated area. * * *
[[Page 34501]]
(Part B of Form MMS-4410)
206.174(a)(4)(ii) How do I value gas production Burden covered under OMB Control Number 1010-
when an index-based method 0140 (expires 10/31/2006). Burden covered
cannot be used?. under Sec. 210.52.
(a) Situations in which on index-
based method cannot be used..
(4)(ii) If the major portion
value is higher, you must
submit an amended Form MMS-2014
to MMS by the due date
specified in the written notice
from MMS of the major portion
value. * * *
206.174(b)(1)(i) and (iii); How do I value gas production PRODUCE RECORDS
(b)(2); (d)(2) when an index-based methods The ORA determined that the audit process is
cannot be used?. not covered by the PRA because MMS staff asks
(b) Arm's-length contracts...... non-standard questions to resolve exceptions.
(1)(i) You have the burden of
demonstrating that your
contract is arm's-length. * * *
(iii) * * * In these
circumstances, MMS will notify
you and give you an opportunity
to provide written information
justifying your value. * * *.
(b)(2) MMS may require you to
certify that your arm's-length
contract provisions include all
of the consideration the buyer
pays, either directly or
indirectly, for the gas,
residue gas, or gas plant
produce.
(d) Supporting data............. .............. .............. ..............
(2) You must make all such data .............. .............. ..............
available upon request to the
authorized MMS or Indian
representatives, to the Office
of the Inspector General of the
Department, or other authorized
persons. * * *
206.174(f) How do I value gas production 40 1 40
when an index-based method
cannot be used?.
(f) Value guidance. You may ask .............. .............. ..............
MMS for guidance in determining
value. You may propose a
valuation methods to MMS.
Submit all available data
related to your proposal and
any additional information MMS
deems necessary. * * *
206.175(d)(4) How do I determine quantities 20 1 20
and qualities of production for
computing royalties?.
(d)(4) You may request MMS
approval of other methods for
determining the quality of
residue gas and gas plant
products allocable to each
lease. * * *
206.176(b).................... How do I perform accounting for Burden covered under Sec. 206.173.(a)(1).
comparison?.
(b) If you are required to
account for comparison, you may
elect to use the alternative
dual accounting methodology
provided for in Sec. 206.173
instead of the provision in
paragraph (a) of this section..
(Part B of Form MMS-4410)
206.176(c).................... How do I perform accounting for Burden covered under Sec. 206.172(b)(1)(ii).
comparison?.
(c) * * * If you do not perform
dual accounting, you must
certify to MMS that gas follows
into such a pipeline before it
is processed..
(Part A of Form MMS--4410)
-------------------------------
Transportation Allowances
----------------------------------------------------------------------------------------------------------------
206.177(c)(2) and (c)(3)...... What general requirements 4.25 1 4.25
regarding transportation
allowances apply to me?
(c)(2) If you ask MMS, MMS may
approve a transportation
allowance deduction in excess
of the limitation in paragraph
(c)(1) of this section. * * *
(3) Your application for 4.25 1 4.25
exception (using Form MMS-4393,
Request to Exceed Regulatory
Allowance Limitation) must
contain all relevant and
supporting documentation
necessary for MMS to make a
determination.
206.178(a)(1)(i).............. How do I determine a 1 50 50
transportation allowance?.
(a) Determining a transportation
allowance under an arm's-length
contract.
(1)(i) * * * You are required to
submit to MMS a coy of your
arm's-length transportation
contract(s) and all subsequent
amendments to the contract(s)
within 2 months of the date MMS
receives your report which
claims the allowance on Form
MMS-2014.
[[Page 34502]]
206.178(a)(1)(iii)............ How do I determine a PRODUCE RECORDS
transportation allowance?. The ORA determined that the audit process is
(a) Determining a transportation not covered by the PRA because MMS staff asks
allowance under an arm's-length non-standard questions to resolve exceptions.
contract.
(1)(iii) If MMS determines that
the consideration paid under an
arm's-length transportation
contract does not reflect the
value of the transportation
because of misconduct by or
between the contracting parties
* * *. In these circumstances,
MMS will notify you and give
you an opportunity to provide
written information justifying
your transportation costs..
206.178(a)(2)(i) and (ii)..... How do I determine a 20 1 20
transportation allowance?.
(a) Determining a transportation
allowance under an arm's-length
contract.
(2)(i) * * * you cannot take an
allowance for the costs of
transporting lease production
that is not royalty bearing
without MMS approval, or
without lessor approval on
tribal leases.
(ii) As an alternative to
paragraph (a)(2)(i), you may
propose to MMS a cost
allocation method based on the
values of the products
transported.* * *
206.178(a)(3)(i) and (ii)..... How do I determine a 40 1 40
transportation allowance?.
(a) Determining a transportation
allowance under an arm's-length
contract.
(3)(i) If your arm's-length
transportation contract
includes both gaseous and
liquid products and the
transportation costs
attributable to each cannot be
determined from the contract,
you must propose an allocation
procedure to MMS. * * *
(ii) You are required to submit
all relevant data to support
your allocation proposal. * * *
206.178(b)(1)(ii)............. How do I determine a 15 7 105
transportation allowance?.
(b) Determining a transportation
allowance under a non-arm's-
length contract or no contract.
(1)(ii) * * * You must submit
the actual cost information to
support the allowance to MMS on
Form MMS-4295, Gas
Transportation Allowance
Report, within 3 months after
the end of the 12-month period
to which the allowance
applies.* * *
206.178(b)(2)(iv)............. How do I determine a 20 1 20
transportation allowance?.
(b) Determining a transportation
allowance under a non-arm's-
length contract or no contract.
(2)(iv) You may use either
depreciation with a return on
undepreciated capital
investment or a return on
depreciable capital investment.
* * * you may not later elect
to change to the other
alternative without MMS
approval.
206.178(b)(2)(iv)(A).......... How do I determine a 20 1 20
transportation allowance?.
(b) Determining a transportation
allowance under a non-arm's-
length contract or no contract.
(2)(iv)(A) * * * Once you make
an election, you may not change
methods without MMS approval. *
* *
206.178(b)(3)(i).............. How do I determine a 40 1 40
transportation allowance?.
(b) Determining a transportation
allowance under a non-arm's-
length contract or no contract.
(3)(i) * * * Except as provided
in this paragraph, you may not
take an allowance for
transporting a product that is
not royalty bearing without MMS
approval.
206.178(b)(3)(ii)............. How do I determine a 20 1 20
transportation allowance?.
(b) Determining a transportation
allowance under a non-arm's-
length contract or no contract.
(3)(ii) As an alternative to the
requirements of paragraph
(b)(3)(i) of this section, you
may propose to MMS a cost
allocation method based on the
values of the products
transported. * * *
206.178 (b)(5)................ How do I determine a 40 1 40
transportation allowance?.
(b) Determining a transportation
allowance under a non-arm's-
length contract or no contract.
(5) If you transport both
gaseous and liquid products
through the same transportation
system, you must propose a cost
allocation procedure to MMS. *
* * You are required to submit
all relevant data to support
your proposal. * * *
[[Page 34503]]
206.178 (d)(1)................ How do I determine a PRODUCE RECORDS
transportation allowance?. The ORA determined that the audit process is
(d) Reporting your not covered by the PRA because MMS staff asks
transportation allowance.. nonstandard questions to resolve exceptions.
(1) If MMS requests, you must
submit all data used to
determine your transportation
allowance. * * *.
206.178 (d)(2), (e), and How do I determine a Burden covered under OMB Control Number 1010-
(f)(1). transportation allowance?. 0140 (expires 10/31/2006). Burden covered
(d) Reporting your allowance.... under Sec. 210.52.
(2) You must report
transportation allowances as a
separate line item on Form MMS-
2014. * * *.
-------------------------------
(e) Adjusting incorrect
allowances. If for any month
the transportation allowance
you are entitled to is less
than the amount you took on
Form MMS-2014, you are required
to report and pay additional
royalties due, plus interest
computed under 30 CFR 218.54
from the first day of the first
month you deducted the improper
transportation allowance until
the date you pay the royalties
due. * * *
(f) Determining allowable costs
for transportation allowances.
* * *
(1) Firm demand charges paid to
pipelines. * * * You must
modify the Form MMS-2014 by the
amount received or credited for
the affected reporting period.
-------------------------------
Processing Allowances
----------------------------------------------------------------------------------------------------------------
206.180 (a)(1)(i)............. How do I determine an actual 1 30 30
processing allowance?.
(a) Determining a processing
allowance if you have an arm's-
length processing contract.
(1)(i) * * * You have the burden
of demonstrating that your
contract is arm's-length. You
are required to submit to MMS a
copy of your arm's-length
contract(s) and all subsequent
amendments to the contract(s)
within 2 months of the date MMS
receives your first report that
deducts the allowance on the
Form MMS-2014.
206.180 (a)(1)(iii)........... How do I determine an actual PRODUCE RECORDS
processing allowance?. The ORA determined that the audit process is
(a) Determining a processing not covered by the PRA because MMS staff asks
allowance if you have an arm's- non-standard questions to resolve exceptions.
length processing contract..
(1)(iii) If MMS exceptions.
determines that the
consideration paid under an
arm's-length processing
contract does not reflect the
value of the processing because
of misconduct by or between the
contracting parties * * *. In
these circumstances, MMS will
notify you and give you an
opportunity to provide written
information justifying your
processing costs..
206.180 (a)(3)................ How do I determine an actual 40 1 40
processing allowance?.
(a) Determining a processing
allowance if you have an arm's-
length processing contract.
(3) If your arm's-length
processing contract includes
more than one gas plant product
and the processing costs
attributable to each product
cannot be determined from the
contract, you must propose an
allocation procedure to MMS. *
* * You are required to submit
all relevant data to support
your proposal. * * *
206.180 (b)(1)(ii)............ How do I determine an actual 20 5 100
processing allowance?.
(b) Determining a processing
allowance if you have a non-
arm's-length contract or no
contract.
(1)(ii) * * * You must submit
the actual cost information to
support the allowance to MMS on
Form MMS-4109, Gas Processing
Allowance Summary Report,
within 3 months after the end
of the 12-month period for
which the allowance applies. *
* *
206.180 (b)(2)(iv)............ How do I determine an actual 20 1 20
processing allowance?.
(b) Determining a processing
allowance if you have a non-
arm's-length contract or no
contract.
(2)(iv) You may use either
depreciation with a return on
undepreciable capital
investment or a return on
depreciable capital investment.
* * * you may not later elect
to change to the other
alternative without MMS
approval.
206.180 (b)(2)(iv)(A)......... How do I determine an actual 20 1 20
processing allowance?.
(b) Determining a processing
allowance if you have a non-
arm's-length contract or no
contract.
[[Page 34504]]
(2)(iv)(A) * * * Once you make
an election, you may not change
methods without MMS approval. *
* *
206.180 (b)(3)................ How do I determine an actual 20 1 20
processing allowance?.
(b) Determining a processing
allowance if you have a non-
arm's-length contract or no
contract.
(3) Your processing allowance
under this paragraph (b) must
be determined based upon a
calendar year or other period
if you and MMS agree to an
alternative.
206.180 (c)(1)................ How do I determine an actual PRODUCE RECORDS
processing allowance?. The ORA determined that the audit process is
(c) Reporting your processing not covered by the PRA because MMS staff asks
allowance.. nonstandard questions to resolve exceptions.
(1) If MMS requests, you must
submit all data used to
determine your processing
allowance. * * *.
206.180 (c)(2) and (d)........ How do I determine an actual Burden covered under OMB Control Number 1010-
processing allowance?. 0140 (expires 10/31/2006). Burden covered
(c) Reporting your processing under Sec. 210.52.
allowance..
(2) You must report gas
processing allowances as a
separate line item on the Form
MMS-2014. * * *.
(d) Adjusting incorrect
processing allowances. If for
any month the gas processing
allowance you are entitled to
is less than the amount you
took on Form MMS-2014, you are
required to pay additional
royalties, plus interest
computed under 30 CFR 218.54
from the first day of the first
month you deducted a processing
allowance until the date you
pay the royalties due. * * *
206.181(c) How do I establish processing 40 1 40
costs for dual accounting
purposes when I do not process
the gas?.
(c) A proposed comparable
processing fee submitted to
either the tribe and MMS (for
tribal leases) or MMS (for
allotted leases) with your
supporting documentation
submitted to MMS. If MMS does
not take action on your
proposal within 120 days, the
proposal will be deemed to be
denied and subject to appeal to
the MMS Director under 30 CFR
part 290.
-----------------
Total Burden.............. ................................ .............. 212 \2\ 1,285
----------------------------------------------------------------------------------------------------------------
\1\ Recordkeeping burden hours for Sec. Sec. 206.52(e)(1) and 206.174(d) will be covered under ICR 1010-0140
(expires October 31, 2006) because they apply to Form MMS-2014, Report of Sales and Royalty Remittance.
\2\ Total estimated annual burden hours = 1,284.50, which we rounded up to 1,285.
Estimated Annual Reporting and Recordkeeping ``Non-hour Cost''
Burden: We have identified no ``non-hour'' cost burdens.
Public Disclosure Statement: The PRA (44 U.S.C. 3501 et seq.)
provides that an agency may not conduct or sponsor, and a person is not
required to respond to, a collection of information unless it displays
a currently valid OMB control number.
Comments: Before submitting an ICR to OMB, PRA Section
3506(c)(2)(A) requires each agency ``* * * to provide notice * * * and
otherwise consult with members of the public and affected agencies
concerning each proposed collection of information * * *.'' Agencies
must specifically solicit comments to: (a) Evaluate whether the
proposed collection of information is necessary for the agency to
perform its duties, including whether the information is useful; (b)
evaluate the accuracy of the agency's estimate of the burden of the
proposed collection of information; (c) enhance the quality,
usefulness, and clarity of the information to be collected; and (d)
minimize the burden on the respondents, including the use of automated
collection techniques or other forms of information technology.
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. We have not identified
non-hour cost burdens for this information collection. 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 Government; or (iv) as part of customary and usual
business or private practices.
We will summarize written responses to this notice and address them
in our ICR submission for OMB approval, including appropriate
adjustments to the estimated burden. We will provide a copy of the ICR
to you without charge upon request. The ICR also will be posted on our
Web site at http://www.mrm.mms.gov/Laws_R_D/FRNotices/FRInfColl.htm.
Public Comment Policy: We will post all comments in response to
this notice on our Web site at http://www.mrm.mms.gov/Laws_R_D/FRNotices/FRInfColl.htm.
We also will make copies of the comments
available for public review, including names and
[[Page 34505]]
addresses of respondents, during regular business hours at our offices
in Lakewood, Colorado. Upon request, we will withhold an individual
respondent's home address from the public record, as allowable by law.
There also may be circumstances in which we would withhold from the
rulemaking record a respondent's identity, as allowable by law. If you
request that we withhold your name and/or address, state your request
prominently at the beginning of your comment. However, we will not
consider anonymous comments. We will make all submissions from
organizations or businesses, and from individuals identifying
themselves as representatives or officials of organizations or
businesses, available for public inspection in their entirety.
MMS Information Collection Clearance Officer: Arlene Bajusz (202)
208-7744.
Dated: May 9, 2005.
Lucy Querques Denett,
Associate Director for Minerals Revenue Management.
[FR Doc. 05-11682 Filed 6-13-05; 8:45 am]