[Federal Register Volume 61, Number 77 (Friday, April 19, 1996)]
[Proposed Rules]
[Pages 17266-17269]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-9525]



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DEPARTMENT OF THE INTERIOR
30 CFR Part 218

RIN 1010-AC01


Amendments to Regulations Governing Collection of Royalties, 
Rentals, Bonuses, and Other Monies Due the Federal Government

AGENCY: Minerals Management Service (MMS), Interior.

ACTION: Proposed rulemaking.

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SUMMARY: MMS proposes to amend its regulations that specify how 
payments are made for mineral lease royalties, rentals, and bonuses. 
The changes are needed to incorporate revised U.S. Treasury 
requirements. Also, MMS proposes clearer language for other parts of 
this regulation.

DATES: Comments must be submitted on or before June 18, 1996.

ADDRESSES: Written comments, suggestions, or objections regarding this 
proposed amendment should be sent to the following addresses.
    For comments sent via the U.S. Postal Service use: Minerals 
Management Service, Royalty Management Program, Rules and Procedures 
Staff, P.O. Box 25165 MS 3101, Denver, Colorado 80225-0165.
    For comments via courier or overnight delivery service use: 
Minerals Management Service, Royalty Management Program, Rules and 
Procedures Staff, MS 3101, Building 85, Denver Federal Center, Room A-
212, Denver, Colorado 80225-0165.

FOR FURTHER INFORMATION CONTACT: David S. Guzy, Chief, Rules and 
Procedures Staff, phone (303) 231-3432, FAX (303) 231-3194, e-Mail 
David____G[email protected].

SUPPLEMENTARY INFORMATION: The principal authors of this rule are David 
J. Menard of the Royalty Accounting Division, General Ledger Branch, 
Jim McNamee of the Office of Policy and Management Improvement, and 
David

[[Page 17267]]

S. Guzy of the Rules and Procedures Staff, Lakewood, Colorado.

I. Background

    Section 218.51 of Title 30 of the Code of Federal Regulations, 
``Method of payment,'' regulates the types of payments MMS accepts for 
royalty and other payments due on Federal and Indian mineral leases. 
The current regulation was published on September 21, 1984 (49 FR 
37336). The regulation was amended on June 25, 1987 (52 FR 23812). The 
amendment lowered the payment threshold from $50,000 to $10,000 for 
royalty payments that must be made by Electronic Funds Transfer (EFT), 
extended the EFT requirements to include deferred bonus payments from 
successful bidders in competitive lease sales, and revised the 
references on payment method in Part 218 to be consistent with the 
amendment. An amendment published on October 26, 1988, changed the 
reference to the U.S. Treasury's electronic communications system used 
to process electronic funds transfers from ``Treasury Financial 
Communication System'' to ``Financial Management Service Fedwire 
Deposit System'' (53 FR 43200).
    On January 31, 1994, the U.S. Treasury published a final rule 
amending 31 CFR Part 206, Management of Federal Agency Receipts, 
Disbursements, and Operation of the Cash Management Improvements Fund 
(59 FR 4536). The rule requires executive agencies to use effective, 
efficient disbursement mechanisms, principally EFT, in making their 
payments. The rule also requires executive agencies to use EFT for 
collecting funds.
    The new U.S. Treasury requirement will have a minimal effect on 
MMS' Royalty Management Program collection and disbursement system 
because MMS has been using EFT since September 1984. Also, MMS has 
increased EFT usage throughout the past several years. Although the 
U.S. Treasury rule requires using EFT as the principal collection and 
disbursement system whenever it is cost effective, practicable, and 
consistent with current statutory authority, the U.S. Treasury will 
allow other methods to be used. MMS will work with and encourage all 
companies to use EFT to the extent it is cost effective and 
practicable. However, some of MMS' collections and disbursements may 
not lend themselves to using EFT.

II. Discussion of Proposed Rule

    Because of the new U.S. Treasury requirement, MMS proposes to 
revise the entire section at Sec. 218.51 to incorporate the new 
requirement. To clarify the section, MMS proposes rewriting it in plain 
English as Executive Order No. 12866, Regulatory Planning and Review, 
requires. MMS intends for the rewritten rule to be easy to understand 
and specifically requests comments on its format and clarity. This rule 
affects only the Royalty Management Program.
    The proposed regulation changes the title of Sec. 218.51 from 
``Method of Payment'' to ``How To Make Payments.'' This change makes it 
easier to understand what information this section covers and assists 
the reader in locating payment instructions for Federal and Indian 
mineral lease royalties and other payments.
    Section 218.51(a) of the proposed regulation defines relevant terms 
used in the succeeding paragraphs of payment instructions. We added 
definitions to avoid confusion about the meaning of significant terms 
used in the payment instructions. Unclear language can cause delays in 
receiving and depositing mineral lease payments sent to MMS.
    Section 218.51(b) of the proposed regulation contains general 
instructions that apply to all persons who pay money to MMS or to an 
Indian Tribe or allottee. This revision presents the requirements for 
all payments in one place rather than in the many paragraphs under the 
existing regulation. This consolidation should assist persons in 
locating the general payment requirements. MMS urges everyone to use 
EFT for payments. When you want to begin using EFT and MMS has not 
contacted you, contact MMS and we will provide the appropriate 
instructions.
    Section 218.51(c) contains specific instructions for persons making 
non-EFT payments for each different category of payment. This format 
will help people find the instructions that apply to the payment they 
are concerned about.
    Proposed Secs. 218.51(d) and 218.51(e) provide the addresses for 
sending payments to MMS using the U.S. Postal Service, courier, or 
overnight delivery service. This is a consolidation of information now 
dispersed throughout the existing regulation and will make it easier to 
find the correct address for sending payments to MMS.
    Proposed Sec. 218.51(f) specifies what a person making a payment 
must include on a payment. The information required varies by the 
reason for the payment. This revised format would make it easier to 
determine what is required for each category of payment.
    Paragraph (g) of Sec. 218.51 explains when a payment to MMS is due. 
It covers payments sent by EFT, the U.S. Postal Service, courier, and 
overnight mail. It states that all payments are due to MMS at the time 
required by law, regulation or lease terms, unless MMS approves a 
change. It also states that if the requirement to submit payment is 
suspended pending an appeal under 30 CFR 243.2, the original due date 
for that payment does not change for purposes such as calculating late 
payment interest. This rule would not effect any change in the existing 
rules governing suspension of MMS orders pending appeal.
    Paragraph (h) of Sec. 218.51 explains what happens if payments are 
received late. MMS will impose late-payment interest charges and may 
assess civil penalties.
    Section 218.155(b) is proposed to be amended by changing the word 
``cannot'' to ``may'' in the last sentence.

III. Procedural Matters

The Regulatory Flexibility Act

    The Department certifies that this proposed 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.).
    The proposed rule is needed to comply with U.S. Treasury 
requirements.

Executive Order 12630

    The Department certifies that the proposed rule is not a 
governmental action capable of interference with constitutionally 
protected property rights. Thus, a Takings Implication Assessment need 
not be prepared under Executive Order 12630, ``Governmental 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.

Paperwork Reduction Act

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

[[Page 17268]]

National Environmental Policy Act of 1969

    We have determined that this proposed rulemaking is not a major 
Federal action significantly affecting the quality of the human 
environment, and a detailed statement under section 102(2)(C) of the 
National Environmental Policy Act of 1969 [42 U.S.C. 4332 (2)(C)] is 
not required.

List of Subjects in 30 CFR Part 218

    Coal, Continental shelf, Electronic funds transfers, Geothermal 
energy, Government contracts, Indian lands, Mineral royalties, Oil and 
gas exploration, Public lands-mineral resources.

    Dated: March 13, 1996.
Bob Armstrong,
Assistant Secretary--Land and Minerals Management.

    For the reasons set out in the preamble, 30 CFR Part 218 is 
proposed to be amended as follows:

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: 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. 3335; 43 U.S.C. 1301 et seq., 1331 et seq., 1801 et seq.

    2. Section 218.51 is revised to read as follows:


Sec. 218.51  How to make payments.

    (a) Definitions.
    ACH. Automated Clearing House. A type of EFT using the ACH network.
    Courtesy notice. An MMS-issued notice of rental or bonus due.
    Deferred bonus payment. Lease bonus paid in equal annual 
installments over a specified number of years.
    EFT. Electronic Funds Transfer. Any paperless transfer of funds a 
bank initiates through an electronic terminal. For MMS purposes, EFT is 
limited to FEDWIRE and ACH transfers.
    FEDWIRE. A type of EFT using the Federal Reserve Wire network.
    Invoice document identification. The MMS-assigned invoice document 
identification (four alpha and eight numeric characters).
    Payment. Any monies for royalty, bonus, rental, late payment 
charge, assessment, penalty, or other money sent to MMS.
    Person. Any individual, firm, corporation, association, 
partnership, consortium, or joint venture (when established as a 
separate entity). The term does not include Federal agencies.
    Report. Form MMS-2014, Report of Sales and Royalty Remittance.
    RIK. Royalty in kind.
    (b) Gneral instructions. You must make all payments to MMS 
electronically to the extent it is cost effective and practicable. If 
you pay money to MMS or to an Indian Tribe or allottee, you must follow 
these procedures:
    (1) If MMS instructs you to use EFT, you must use EFT for all 
payments.
    (2) Contact MMS before using EFT. MMS will provide you with EFT 
payment instructions.
    (3) Separate any payments on a Federal lease from any payments on 
an Indian lease.
    (4) If you are not required to use EFT, use one of the following 
types of payment documents. MMS prefers you to use these payment 
documents in the order presented:
    (i) Commercial check drawn on a solvent bank;
    (ii) Certified check;
    (iii) Cashier's check;
    (iv) Money order;
    (v) Bank draft drawn on a solvent bank; or
    (vi) Federal Reserve check.
    (5) You must include your payor code on all payments.
    (6) You must pay in U.S. dollars.
    (c) How to complete a non-EFT payment. This paragraph explains to 
whom you must make your payment payable when you do not use EFT.
    (1) Make any payment on a Federal lease payable to: ``Department of 
the Interior-Minerals Management Service'' or ``DOI-MMS.''
    (2) For an Indian allottee payment, send a separate payment for 
each Bureau of Indian Affairs (BIA) agency or area office represented 
by the leases on your report or invoice document. You must include the 
name of the applicable Bureau of Indian Affairs agency or area office 
on your payment. Make it payable to: ``Department of the Interior-
Minerals Management Service for BIA [Name] Agency (allotted)'' or 
``DOI-MMS for BIA [Name] Agency (allotted).''
    (3) For an Indian tribal payment other than a lockbox payment, send 
a separate payment for each tribe represented by the leases on your 
report or invoice document. You must include the name of the Indian 
tribe on your payment. Make it payable to: ``Department of the 
Interior-Minerals Management Service for BIA [Name of Tribe]'' or 
``DOI-MMS for BIA [Name of Tribe]''.
    (4) For an Indian tribal lockbox payment, follow the instructions 
MMS provides you on how to report and make the lockbox payment. These 
instructions are specific to each tribe's lockbox written agreement 
with the bank authorized to receive payments on the tribe's mineral 
leases. You will receive these instructions from MMS when you are 
required to use a tribal lockbox for reports and payments.
    (d) Where to send a non-EFT payment when you use the U.S. Postal 
Service. This paragraph explains how to send a payment document using 
the U.S. Postal Service.
    (1) for a payment to an Indian tribal lockbox, send it to the 
lockbox address the tribe provides.
    (2) For a Federal non-producing lease rental or deferred bonus 
payment, send it to: Minerals Management Service, Royalty Management 
Program, PO Box 5640, Denver, CO 80217-5640.
    (3) For all other Federal and Indian lease payments other than 
those going to an Indian tribal lockbox, send them to: Minerals 
Management Service, Royalty Management Program, PO Box 5810, Denver, CO 
80217-5810.
    (e) Where to send a non-EFT payment when you use a courier or 
overnight delivery service. This paragraph explains how to send a 
payment document using a courier or overnight delivery service for all 
Federal and Indian payments. You should send this type of payment to: 
Minerals Management Service, Royalty Management Program, Building 85, 
Denver Federal Center, Room A-212, Denver, CO 80225-0165.
    (f) What to include on your payment. (1) If you are making a 
payment for a Form MMS-2014, you must include both your payor code and 
your payor-assigned document (3a) number.
    (2) If you are paying an invoice, including RIK invoices, you must 
include both your payor code and invoice document identification (four-
letter prefix and eight-digit number).
    (3) If you are paying a bonus you must:
    (i) See the Notice of Lease Offering for instructions on how to pay 
the one-fifth bonus bid deposit for offshore oil, gas, and sulphur 
lease bids;
    (ii) See Sec. 218.155(c) for instructions on how to pay the four-
fifths bonus for an offshore lease. Use EFT and follow MMS 
instructions;
    (iii) See the sale terms of the Notice of Competitive Lease Sale 
for instructions on how to pay the successful bidder's bonus in the 
competitive sale of a coal, geothermal, or offshore mineral (other than 
oil, gas or sulfur) lease; and
    (iv) Use EFT for installment payments of deferred bonuses.

[[Page 17269]]

    (4) If you are paying a lease rental you must:
    (i) See Sec. 218.155(c) for instructions on how to pay first-year 
rentals of an offshore oil, gas, or sulfur lease;
    (ii) See the Notice of Lease Offering for instructions on how to 
pay first-year rentals other than those covered in paragraph (f)(4)(i) 
of this section; and
    (iii) Include the MMS Courtesy Notice, when provided, or write your 
payor code and government-assigned lease number on the payment document 
when paying a rental that is not reported on Form MMS-2014 and not paid 
by EFT.
    (g) When is a payment to MMS due? (1) All payments are due to MMS 
at the time law, regulation, or lease terms require unless MMS approves 
a change according to 30 CFR 243.2 ``Suspensions of orders or decisions 
pending appeal.'' If you file an appeal, and the requirement to submit 
payment is suspended, the original payment due date for purposes such 
as calculating late payment interest is not changed.
    (2) If you use the U.S. Postal Service, courier, or overnight mail 
to send your payment, it is due at the MMS addresses in paragraphs (d) 
and (e) of this section before 4 p.m. Mountain Time on the due date, 
regardless of when you sent it.
    (3) If you use EFT to send your payment, it is due in the MMS 
account by the payment due date. You are responsible for your actions 
or your bank's actions that cause a late or incorrect payment. You will 
not be held responsible for mechanical or system failures of EFT 
payments.
    (h) What happens if payments are late or overdue? (1) If MMS 
receives your payment late, MMS will impose a late-payment interest 
charge under Sec. 218.54.
    (2) If you do not pay an amount you owe, MMS may assess civil 
penalties under 30 CFR 241.20 and 241.51 or other applicable 
regulations.
    3. Paragraph (b)(1) of Sec. 218.155 is amended by revising the last 
sentence to read as follows:


Sec. 218.155  Method of payment.

* * * * *
    (b) * * * (1) * * * EFT may be used as a method of payment for the 
one-fifth bonus bid amount.
* * * * *
[FR Doc. 96-9525 Filed 4-18-96; 8:45 am]
BILLING CODE 4310-MR-M