The NewsRoom
Release: # 7913
Date: December 21, 2007
MMS Proposes Amendments to
OCS Oil and Gas Royalty Relief Regulations
Amendments Would Conform Regulations to
2004 U.S. Court of Appeals Fifth Circuit Decision
WASHINGTON – The U.S.
Department of the Interior’s Minerals Management Service (MMS) is
proposing changes to its regulations for deepwater royalty relief on
the Outer Continental Shelf (OCS) to conform to the 2004 decision of
the U.S. Court of Appeals for the Fifth Circuit in
Santa Fe Snyder Corp., et al. v. Norton. That court decision
found that certain provisions of the MMS regulations interpreting
section 304 of the Deep Water Royalty Relief Act (DWRRA) of 1995 are
contrary to the requirements of the statute.
The court found that MMS could not
exclude a lease issued under section 304 from receiving royalty relief
if it was part of a field that was already producing before the DWRRA
became law; the court also found the Royalty Suspension Volumes (RSVs)
prescribed in section 304 apply to each lease, not jointly to all
leases in a particular field. MMS issued an Information to Lessees (ITL)
on August 8, 2005, alerting affected lessees that MMS would respect
the court decision and would revise its regulations accordingly.
This proposed rule would revise 30
CFR part 260, and 30 CFR part 203, to treat eligible leases issued
under section 304 of the DWRRA in a manner consistent with the
Santa Fe Snyder ruling.
The DWRRA was designed to
encourage development of new supplies of energy. It included
incentives to promote investment in oil and gas production in
high-cost, high-risk deep waters of the Gulf of Mexico. Under the
DWRRA, the Secretary of the Interior was required to suspend royalties
for certain volumes of production on all leases in more than 656 feet
(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, depending on water depth.
Detailed and specific revisions
are contained in the proposed rule. MMS will accept comments on the
proposed rule for 60 days through one of the following methods:
- Federal
eRulemaking Portal:
http://www.regulations.gov. Follow the instructions on the
website for submitting comments.
- Email MMS
at
rules.comments@mms.gov. Use RIN 1010–AD29
in the subject line.
- Fax:
703-787-1546. Identify with the RIN, 1010–AD29.
- Mail or
hand-carry comments to:
The Minerals Management Service
Attention: Regulations and Standards Branch (RSB)
381 Elden Street, MS-4024
Herndon, Virginia 20170-4817
Please reference “Royalty Relief
for Deepwater OCS Oil and Gas Leases–Conforming Regulations to Court
Decision, 1010–AD29” in your comments.
Comments will be accepted through
February 19, 2008.
Relevant Web Site: MMS Main Website
Federal eRulemaking Portal
Media Contact:
Nicolette Nye
703-787-1011
MMS: Securing Ocean Energy & Economic Value for America
U.S. Department of the Interior
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