[Federal Register Volume 59, Number 146 (Monday, August 1, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-18573]


[[Page Unknown]]

[Federal Register: August 1, 1994]


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DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR Parts 216 and 218

RIN 1010-AB82

 

Amendment of Regulations Governing Assessments for Incorrect 
Reports

agency: Minerals Management Service, Interior.

action: Final rule.

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summary: The Minerals Management Service (MMS) is amending its Royalty 
Management Program (RMP) regulations governing assessments for 
incorrect reports submitted by royalty reporters, payors, lease 
operators, lessees, or other parties. The amendment will authorize MMS 
to assess reporters and payors submitting incorrect reports after the 
designated due date, in the same manner currently applied to incorrect 
reports received by the designated due date. Thus, this rule will 
provide consistency in MMS' practice for incorrect reporting 
assessments.

effective date: August 31, 1994.

for further information contact: David S. Guzy, Chief, Rules and 
Procedures Staff, (303) 231-3432, Minerals Management Service, Royalty 
Management Program, Denver Federal Center, Building 85, P.O. Box 25165, 
Mail Stop 3901, Denver, Colorado 80225-0165.

supplementary information: The principal authors of this rule are 
Philip Wilson of the Reports and Payments Division and David Steiber of 
the Compliance Verification Division, RMP, MMS, Lakewood, Colorado.

I. Background

    Paragraphs 216.40(b) and 218.40(b) of title 30 of the Code of 
Federal Regulations (30 CFR) authorize MMS to assess an amount not to 
exceed $10 for each incorrectly completed report received by the 
designated due date. These paragraphs do not authorize assessments for 
incorrectly completed reports received after the designated due date. 
The assessments apply to reports submitted by royalty reporters, 
payors, lease operators, lessees or other parties in accordance with 
statutes, regulations, contracts, orders, or terms of Federal or Indian 
mineral leases. The assessments compensate the Government for the costs 
of researching and resolving reporting errors. Under Sec. 216.40 (c) 
and (d), a report is defined as each line item on a Monthly Report of 
Operations (Form MMS-3160), an Oil and Gas Operations Report (Form MMS-
4054), a Gas Analysis Report (Form MMS-4055), a Gas Plant Operations 
Report (Form MMS-4056), a Production Allocation Schedule Report (Form 
MMS-4058), a Solid Minerals Operations Report (Form MMS-4059), or a 
Solid Minerals Facility Report (Form MMS-4060). Under Sec. 218.40(c), a 
report is defined as each line item on a Report of Sales and Royalty 
Remittance (Form MMS-2014). This amendment authorizes MMS to assess 
reporters and payors submitting incorrect reports after the designated 
due date, in the same manner currently applied to incorrect reports 
received by the designated due date.
    In response to the proposed rulemaking, MMS received comments from 
four parties, representing independent oil and natural gas producers, 
royalty owners, industry consultants, and service/supply companies and 
other interested parties. The comments were considered in preparing 
this final rulemaking and are discussed, in detail, in Section II 
below. The final rule is summarized and discussed at the end of Section 
II.

II. Comments Received on Proposed Rule

    All commenters expressed opposition to the proposed rule. The 
comments received are discussed below:
    (1) Three commenters argued that the proposed rule would increase 
costs and place an even greater financial burden on small, independent 
producers.
    Response: The rule is not intended to place a greater financial 
burden on small, independent producers. Rather, the intent is to 
provide consistency in MMS' assessments of incorrect reports by 
amending 216.40(b) and 218.40(b) to authorize assessments of all 
reports that are submitted incorrectly, regardless of whether the 
report was received timely or late.
    (2) Three commenters suggested that MMS is attempting to raise 
revenue through greater administrative penalties on small entities when 
MMS should be encouraging producers to lease more Federal land and 
drill for and produce more Federal oil and gas.
    Response: The purpose of this rule is not to raise revenue. As 
currently structured, MMS regulations provide for assessments on 
incorrect reports received by the designated due date but authorize no 
assessment for incorrect reports received late. The costs of 
researching and resolving reporting errors are the same whether the 
report is received timely or late. Therefore, MMS is implementing this 
rulemaking to encourage accurate reporting and to begin to assess 
reports consistently whether they are received timely or late. This 
rule applies to reporting accuracy and is not intended to encourage or 
discourage oil and gas exploration and production on Federal land.
    (3) Two commenters stated that if the proposed rule is intended to 
ensure that administrative costs are similarly addressed for similar 
situations, then a single $10 assessment would accomplish this 
objective, whether the report was timely submitted or not. The MMS 
currently assesses for late reporting as authorized under 30 CFR 
paragraphs 216.40(a) and 218.40(a). The commenters suggest that MMS' 
proposal represents ``double-dipping'' on late reports serving as a 
penalty and not as compensation for administrative costs.
    Response: The intent of this rule is to recover the costs of 
resolving reporting errors and to make the regulations consistent for 
incorrect reporting. The MMS is aware that reporters and payors may be 
assessed for both late and incorrect reports. This rulemaking will 
encourage accurate reporting. The MMS will review the late assessment 
issue at a later date.
    (4) All commenters argued that this proposed rule should be dropped 
because:
     Aside from unsubstantiated need to recover administrative 
costs, the proposed rule provides no justification for increasing 
penalties on small businesses; and
     Most of the errors are the result of MMS or Bureau of Land 
Management (BLM) actions or are beyond the control of lessees thus 
making the proposed fines counterproductive.
    Response: The rule is intended to apply to all reporters and payors 
equally. It is designed to recover the costs of resolving reporting 
errors and not impose a sanction on small businesses. The MMS' practice 
is to assess for errors that are caused by reporters and payors when 
completing required MMS reports. Reporters and payors are not assessed 
for errors that are the result of MMS/BLM miscommunications.
    This final rulemaking will be included in MMS regulations at 30 CFR 
216.40(b) and 218.40(b). The final rule is summarized and discussed 
below:
    Current MMS regulations provide for an assessment on incorrect 
reports received on or before the designated due date. However, the 
costs incurred by MMS to research and resolve reporting errors are 
identical whether the report is received timely or late. So that MMS 
may be compensated for all costs incurred due to reporting errors, MMS 
is amending Sec. 216.40(b) and Sec. 218.40(b) to include as assessable 
all reports that are submitted incorrectly, regardless of whether the 
report was received by the designated due date or was received late. 
Therefore, a report that is both late and incorrect may be subject to 
two assessments, one under 216.40(a) or 218.40(a) for being late and 
one under the amended subsection (b) for being incorrect.

III. Procedural Matters

The Regulatory Flexibility Act

    The Department certifies that this 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 rulemaking 
would compensate the Government for costs incurred as the result of 
reporting errors and provide for consistency in MMS' practice for 
incorrect reporting assessments.

Executive Order 12630

    The Department certifies that this rule does not represent a 
governmental action capable of interference with constitutionally 
protected property rights. Thus a Takings Implication Assessment need 
not be prepared pursuant to Executive Order 12630, ``Government Action 
and Interference with Constitutionally Protected Property Rights.''

Executive Order 12778

    The Department has certified to the Office of Management and Budget 
that these proposed regulations meet the applicable standards provided 
in sections 2(a) and 2(b)(2) of Executive Order 12778.

Executive Order 12866

    This document has been reviewed under Executive Order 12866 and is 
not a significant regulatory action requiring review by the Office of 
Management and Budget.

Paperwork Reduction Act of 1980

    This rule does not contain information collection requirements 
which require approval by the Office of Management and Budget under 44 
U.S.C. 3501 et seq.

National Environmental Policy Act of 1969

    It is hereby determined that this rulemaking does not constitute a 
major Federal action significantly affecting the quality of the human 
environment and a detailed statement pursuant to paragraph (2)(C) of 
Sec. 102 of the National Environmental Policy Act of 1969 (42 U.S.C. 
4332(2)(C)) is not required.

List of Subjects

30 CFR Part 216

    Coal, Continental shelf, Geothermal energy, Government contracts, 
Indians--lands, Mineral royalties, Natural gas, Penalties, Petroleum, 
Public lands--mineral resources, Reporting and recordkeeping 
requirements.

30 CFR Part 218

    Coal, Continental shelf, Electronic funds transfers, Geothermal 
energy, Government contracts, Indians--lands, Mineral royalties, 
Natural gas, Penalties, Petroleum, Public lands--mineral resources, 
Reporting and recordkeeping requirements.

    Dated: July 22, 1994.
Bob Armstrong,
Assistant Secretary--Land and Minerals Management.

    For the reasons set out in the preamble, 30 CFR parts 216 and 218 
are amended as set forth below:

PART 216--PRODUCTION ACCOUNTING

    1. The authority citation for part 216 is revised to read as 
follows:

    Authority: 5 U.S.C. 301 et seq.; 25 U.S.C. 396 et seq., 396a et 
seq., 2101 et seq.; 30 U.S.C. 181 et seq., 351 et seq., 1001 et 
seq., 1701 et seq.; 31 U.S.C. 3716, 3720A, 9701; 43 U.S.C. 1301 et 
seq., 1331 et seq., 1801 et seq.

    2. Paragraph (b) of Sec. 216.40 under Subpart A, General 
Provisions, is revised to read as follows:


Sec. 216.40  Assessments for incorrect or late reports and failure to 
report.

* * * * *
    (b) An assessment of an amount not to exceed $10 may be charged for 
each incorrectly completed report.
* * * * *

PART 218--COLLECTION OF ROYALTIES, RENTALS, BONUSES AND OTHER 
MONIES DUE THE FEDERAL GOVERNMENT

    1. The authority citation for part 218 is revised to read as 
follows:

    Authority: 5 U.S.C. 301 et seq.; 25 U.S.C. 396 et seq., 396a et 
seq., 2101 et seq.; 30 U.S.C. 181 et seq., 351 et seq., 1001 et 
seq., 1701 et seq.; 31 U.S.C. 3716, 3720A, 9701; 43 U.S.C. 1301 et 
seq., 1331 et seq., 1801 et seq.

    2. Paragraph (b) of Sec. 218.40 under Subpart A, General 
Provisions, is revised to read as follows:


Sec. 218.40  Assessments for incorrect or late reports and failure to 
report.

* * * * *
    (b) An assessment of an amount not to exceed $10 may be charged for 
each incorrectly completed report.
* * * * *
[FR Doc. 94-18573 Filed 7-29-94; 8:45 am]
BILLING CODE 4310-MR-M