[Federal Register Volume 62, Number 68 (Wednesday, April 9, 1997)]
[Proposed Rules]
[Pages 17138-17141]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-9100]


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DEPARTMENT OF THE INTERIOR

Bureau of Land Management

43 CFR Part 3190

[WO-300-07-1310-00]
RIN 1004-AD09


Delegation of Authority, Cooperative Agreements and Contracts for 
Oil and Gas Inspections; Cooperative Agreements

AGENCY: Bureau of Land Management, Interior.

ACTION: Proposed rule.

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SUMMARY: The Bureau of Land Management (BLM) proposes to streamline and 
amend its cooperative agreement regulations. The purpose of this 
amendment is to implement section 8(a) of the Federal Oil and Gas 
Royalty Simplification and Fairness Act that eliminates State 
cooperative agreements on Federal lands and to implement a policy 
change for funding of cooperative inspection agreements. In response to 
the overall effort to reform regulations and convert them to a more 
user friendly and understandable format, this rule is written in plain 
English.

DATES: Comments: Any comments must be received by BLM at the address 
below on or before May 9, 1997. Comments received after the above date 
will not necessarily be considered in the decision making process on 
the proposed rule.

ADDRESSES: Comments: If you wish to comment, you may submit your 
comments by any one of several methods. You may mail comments to 
Director (630), Bureau of Land Management, Administrative Record, Room 
401 LS, 1849 C Street, NW, Washington, D.C. 20240. You may also comment 
via the Internet to WOC[email protected]. Please submit comments as an 
ASCII file avoiding the use of special characters and any form of 
encryption. Please also include ``attn: 1004-AD09'' and your name and 
return address in your Internet message. If you do not receive a 
confirmation from the system that we have received your Internet 
message, contact us directly at (202) 452-5030. Finally, you may hand-
deliver comments to BLM at 1620 L Street, NW, Room 401, Washington, 
D.C. Comments, including names and street addresses of respondents, 
will be available for public review at this address during regular 
business hours (7:45 a.m. to 4:15 p.m.), Monday through Friday, except 
holidays. Individual respondents may request that their name and/or 
home address be kept confidential and state the reasons that one 
believes that his or her interest in privacy outweighs the public 
interest in disclosure. BLM will evaluate each request for 
confidentiality on a case-by-case basis. If you wish to withhold your 
name or street address, except for the city or town, from public review 
or from disclosure under the Freedom of Information Act, you must state 
this prominently at the beginning of your comment. Anonymous comments 
will not be considered. All submissions from organizations or 
businesses, and from individuals identifying themselves as 
representatives or officials of organizations or businesses, will be 
made available for public inspection in their entirety.

FOR FURTHER INFORMATION CONTACT: Ian Senio, 202-452-5049 or Sue 
Stephens, (505) 438-7553.

SUPPLEMENTARY INFORMATION:

I. Public Comment Procedures
II. Background
III. Discussion of Proposed Rule
IV. Procedural Matters

I. Public Comment Procedures

Written Comments

    Your written comments on the proposed rule should--
    (a) Be specific;
    (b) Be confined to issues pertinent to the proposed rule;
    (c) Explain the reason for any recommended change; and
    (d) Where possible, reference the specific section or paragraph of 
the proposal which you are addressing.
    BLM may not necessarily consider or include in the Administrative 
Record for the final rule comments which BLM receives after the close 
of the comment period (see DATES) or comments delivered to an address 
other than those listed above (see ADDRESSES).

II. Background

    In 1987 and 1991, BLM promulgated regulations, found at 43 CFR 3190 
(52 FR 27182) and 3192 (56 FR 2998), respectively, implementing Section 
202 of the Federal Oil and Gas Royalty Management Act of 1982, (30 
U.S.C. 1732) (FOGRMA). Section 202 of FOGRMA provides for cooperative 
agreements with States and Tribes to share oil or gas royalty 
management information, and to carry out inspection, auditing, 
investigation or enforcement activities on Federal and Indian oil and 
gas leases. The Federal Oil and Gas Royalty Simplification and Fairness 
Act of 1996 (P.L. 104-185), which amended FOGRMA, eliminated 
cooperative agreements on Federal lands.
    BLM has cooperative agreements with several tribes for oil and gas 
inspection and enforcement activities on Tribal lands. These agreements 
are funded at 50 percent of allowable costs. The Minerals Management 
Service (MMS) also entered into cooperative agreements with several 
tribes for royalty accounting activities. Initially these MMS 
agreements were funded at 50 percent, but in 1991, MMS increased its 
funding for cooperative agreements to 100 percent.
    This rule would amend Part 3190 by removing references to 
cooperative agreements for States on Federal lands and by increasing 
funding for cooperative agreements with Indian tribes to up to 100 
percent. This would eliminate discrepancies in funding these types of 
agreements between bureaus within the Department of the Interior.

III. Discussion of Proposed Rule

    This rulemaking amends 43 CFR Subpart 3190 as follows: First, this 
rule would amend 43 CFR 3190.2-2(b) to increase funding for cooperative 
agreements with Indian tribes to up to 100 percent. This would 
eliminate discrepancies in funding these types of agreements between 
agencies within the Department of the Interior.
    Second, this rule would amend the regulations to implement Section 
8(a) of the Federal Oil and Gas Royalty Simplification and Fairness Act 
of 1996 (P.L. 104-185), which made Section 202 of FOGRMA (30 U.S.C. 
1732), no longer applicable to Federal lands. The effect of section 
8(a) is to eliminate cooperative agreements with States to conduct oil 
and gas inspections on Federal lands. The proposed regulations would 
implement this requirement by deleting from existing regulations 
references to cooperative agreements on Federal lands. States may still 
enter into a cooperative agreement on Tribal lands with the permission 
of the Tribe or affected allottee.
    Third, on March 4, 1995, President Clinton issued a memorandum to 
all

[[Page 17139]]

Federal Departments and Agencies directing them to simplify their 
regulations. In response to the President's directive, BLM is proposing 
this rule in a user-friendly and understandable, plain English format.
    Organizationally, existing regulations (43 CFR Part 3190) implement 
three related sections of FOGRMA (202, 205 and 301) that provide for 
non-Federal entities (States, Tribes and contractors) to assist in 
carrying out the Secretary's responsibilities under the Act either by 
delegation of authority, cooperative agreement, or contract. 43 CFR 
Subpart 3190 covers common elements of the three programs; Subpart 3191 
addresses delegations of authority; and Subpart 3192 addresses 
cooperative agreements. BLM has not yet promulgated regulations for 
contracts, but should they become necessary they will be published at 
Subpart 3193.

IV. Procedural Matters

National Environmental Policy Act

    BLM has determined that this proposed rule to increase funding for 
cooperative agreements with Tribes; eliminate cooperative agreements on 
Federal lands; and convert existing regulations to plain English is 
administrative, financial, and legal in nature. Increasing funding for 
cooperative agreements with tribes is purely financial in nature, and 
eliminating cooperative agreements on Federal lands is a legal and 
administrative change from existing regulations. Therefore, it is 
categorically excluded from environmental review under section 
102(2)(C) of the National Environmental Policy Act, pursuant to 516 
Departmental Manual (DM), Chapter 2, Appendix 1, Item 1.10. In 
addition, the proposed rule does not meet any of the 10 criteria for 
exceptions to categorical exclusions listed in 516 DM, Chapter 2, 
Appendix 2. Pursuant to Council on Environmental Quality regulations 
(40 CFR 1508.4) and the environmental policies and procedures of the 
Department of the Interior, the term ``categorical exclusions'' means a 
category of actions which do not individually or cumulatively have a 
significant effect on the human environment and that have been found to 
have no such effect in procedures adopted by a Federal agency and for 
which neither an environmental assessment nor an environmental impact 
statement is required.

Paperwork Reduction Act

    This rule does not contain information collection requirements that 
the Office of Management and Budget must approve under the Paperwork 
Reduction Act, 44 U.S.C. 3501 et seq.

Regulatory Flexibility Act

    Congress enacted The Regulatory Flexibility Act, (RFA), 5 U.S.C. 
601 et seq., to ensure that Government regulations do not unnecessarily 
or disproportionately burden small entities. The RFA requires a 
regulatory flexibility analysis if a rule would have a significant 
economic impact, either detrimental or beneficial, on a substantial 
number of small entities. Based on the discussion contained in this 
preamble above, the economic impact of the proposed amendment 
increasing funding for Indian cooperative agreements will be less than 
$250,000. The other proposed changes, deleting cooperative agreements 
on Federal lands and converting the regulations to plain English, will 
have no economic impact. BLM anticipates that this proposed rule will 
have no significant impact on the public at large. Therefore, BLM has 
determined under the RFA that this proposed rule would not have a 
significant economic impact on a substantial number of small entities.

Unfunded Mandates Reform Act

    Amendment of 43 CFR Part 3190 will not result in any unfunded 
mandate to State, local, or tribal governments in the aggregate, or to 
the private sector, of $100 million or more in any one year.

Executive Order 12612

    The proposed rule will not have a substantial direct effect on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government.
    The elimination of cooperative agreements with States for 
inspection and enforcement of oil and gas leases on Federal lands is a 
requirement of Section 8(a) Federal Oil and Gas Royalty Simplification 
and Fairness Act of 1996.
    States that are interested in conducting inspections on Federal oil 
and gas leases may still do so under a Delegation of Authority as 
provided in Section 205 of FOGRMA (30 U.S.C. 1735).
    Therefore, in accordance with Executive Order 12612, BLM has 
determined that this proposed rule does not have sufficient federalism 
implications to warrant preparation of a Federalism Assessment.

Executive Order 12630

    The primary effect of the proposed rule is to increase Federal 
funding to Tribes that conduct inspections of Tribal oil and gas leases 
under a cooperative agreement with BLM. Since the rule has no impact on 
lands or other properties, there will be no private property rights 
impaired as a result. Therefore, the Department of the Interior has 
determined that the rule would not cause a taking of private property 
or require further discussion of takings implications under this 
Executive Order.

Executive Order 12866

    According to the criteria listed in section 3(f) of Executive Order 
12866, BLM has determined that the proposed rule is not a significant 
regulatory action. As such, the proposed rule is not subject to Office 
of Management and Budget review under section 6(a)(3) of the order.

Executive Order 12988

    The Department of the Interior has determined that this rule meets 
the applicable standards provided in sections 3(a) and 3(b)(2) of 
Executive Order 12988.

Author

    The principal author of this rule is Sue Stephens of BLM's New 
Mexico State Office, assisted by Ian Senio of BLM's Regulatory 
Management Group.

List of Subjects in 43 CFR Part 3190

    Administrative practice and procedure, Authority delegations 
(Government agencies), Government contracts, Indians-lands, 
Intergovernmental relations, Mineral royalties, Reporting and 
recordkeeping requirements.

    Accordingly, BLM proposes to amend 43 CFR Part 3190 as follows:

PART 3190--DELEGATION OF AUTHORITY, COOPERATIVE AGREEMENTS AND 
CONTRACTS FOR OIL AND GAS INSPECTIONS

    1. Revise the authority citation to read as follows:

    Authority: 30 U.S.C. 1735 and 1751.

    2. In Sec. 3190.2-2 revise paragraph (b)(2) to read as follows:


Sec. 3190.2-2  Funding.

* * * * *
    (b) * * *
    (2) Up to 100 percent for a cooperative agreement.
* * * * *
    3. Revise Subpart 3192 of part 3190 to read as follows:

[[Page 17140]]

Subpart 3192--Cooperative Agreements

Sec.
3192.1  What is a cooperative agreement?
3192.2  Who may apply for a cooperative agreement with BLM to 
conduct oil and gas inspections?
3192.3  What must a Tribe or State include in its application for a 
cooperative agreement?
3192.4  What is the term of a cooperative agreement?
3192.5  How do I modify a cooperative agreement?
3192.6  How will BLM evaluate my request for proprietary data?
3192.7  What must I do with Federal assistance I receive?
3192.8  May I subcontract activities in the agreement?
3192.9  What terms must a cooperative agreement contain?
3192.10  What costs will BLM pay?
3192.11  How are civil penalties shared?
3192.12  What activities may Tribes or States perform under 
cooperative agreements?
3192.13  What activities must BLM keep?
3192.14  What are the requirements for Tribal or State inspectors?
3192.15  May cooperative agreements be terminated?
3192.16  How will I know if BLM intends to terminate my agreement?
3192.17  Can BLM reinstate cooperative agreements that have been 
terminated?
3192.18  Can I appeal a BLM decision?

Subpart 3192--Cooperative Agreements


Sec. 3192.1  What is a cooperative agreement?

    (a) A cooperative agreement is a contract that BLM enters into with 
a Tribe or State to conduct inspection, investigation, or enforcement 
activities on producing Indian oil and gas leases.
    (b) BLM will enter into a cooperative agreement with a State to 
inspect oil and gas leases on Indian lands only with the permission of 
the Tribe with jurisdiction over the lands.


Sec. 3192.2  Who may apply for a cooperative agreement with BLM to 
conduct oil and gas inspections?

    (a) The Tribal chairman, or other authorized official, of any Tribe 
with producing oil or gas leases, or agreements under the Indian 
Mineral Development Act of 1982 (25 U.S.C. 2101 et seq.), for Indian 
lands under the Tribe's jurisdiction.
    (b) Tribes may join together to apply for a multi-tribe cooperative 
agreement.
    (c) The Governor of a State having a tribal resolution from the 
tribe with jurisdiction over the land, permitting the Governor to enter 
into cooperative agreements.


Sec. 3192.3  What must a Tribe or State include in its application for 
a cooperative agreement?

    (a) You must complete--
    (1) Standard Form 424, Application for Federal Assistance;
    (2) Standard Form 424A, Budget Information--Non-Construction 
Programs; and
    (3) Standard Form 424B, Assurances--Non-Construction Programs.
    (b) You must describe the type and extent of oil and gas 
inspection, enforcement, and investigative activities proposed under 
the agreement and the period of time the proposed agreement will be in 
effect.
    (c) You may include allotted lands under an agreement with the 
allottee's written consent.


Sec. 3192.4  What is the term of a cooperative agreement?

    Cooperative agreements can be in effect for a period from 1 to 5 
years from the effective date of the agreement, as set out in the 
agreement.


Sec. 3192.5  How do I modify a cooperative agreement?

    You may modify a cooperative agreement by having both parties to 
the agreement consent to the change in writing. If the agreement is 
with a State, and the modification would effect the duration or scope 
of the agreement, then you must obtain the Tribe's written consent.


Sec. 3192.6  How will BLM evaluate my request for proprietary data?

    BLM will evaluate Tribal or State requests for proprietary data on 
a case-by-case basis according to the requirements of Sec. 3190.1 of 
this part.


Sec. 3192.7  What must I do with Federal assistance I receive?

    You must use Federal assistance that you receive only for costs 
incurred which are directly related to the activities carried out under 
the cooperative agreement.


Sec. 3192.8  May I subcontract activities in the agreement?

    Yes. You must obtain BLM's written approval before you subcontract 
any activities in the agreement with the exception of financial audits 
of program funds, that are required by the Single Audit Act of 1984 (31 
U.S.C. 7501 et seq.).


Sec. 3192.9  What terms must a cooperative agreement contain?

    The cooperative agreement must--
    (a) State its purpose, objective, and authority;
    (b) Define terms used in the agreement;
    (c) Describe the lands covered;
    (d) Describe the roles and responsibilities of BLM and the Tribe or 
State;
    (e) Describe the activities the Tribe or State will carry out;
    (f) Define the minimum performance standards to evaluate Tribal or 
State performance;
    (g) Include provisions to--
    (1) Protect proprietary data, as provided in Sec. 3190.1 of this 
part;
    (2) Prevent conflict of interest, as provided in Sec. 3192.13(d);
    (3) Share civil penalties, as provided in Sec. 3192.10; and
    (4) Terminate the agreement;
    (h) List BLM and Tribal or State contacts;
    (i) Provide for the avoidance of duplication of effort between BLM 
and the Tribe or State when conducting inspections;
    (j) List schedules for--
    (1) Inspection activities;
    (2) Training of Tribal or State inspectors;
    (3) Periodic reviews and meetings;
    (k) Specify the limit on the dollar amount of Federal funding;
    (l) Describe procedures for Tribes or States to request payment 
reimbursement;
    (m) Describe allowable costs subject to reimbursement; and
    (n) Describe plans for BLM oversight of the cooperative agreement.


Sec. 3192.10  What costs will BLM pay?

    (a) BLM will pay expenses allowed under part 12, subpart A, 
Administrative and Audit Requirements and Cost Principles for 
Assistance Programs, of this title.
    (b) BLM will fund the agreements up to 100 percent of allowable 
costs.
    (c) Funding is subject to the availability of BLM funds.
    (d) Funding for cooperative agreements is subject to the shared 
civil penalties requirement of Sec. 3192.11.


Sec. 3192.11  How are civil penalties shared?

    When a Tribe or State conducts an inspection that results in the 
collection of a civil penalty, that Tribe or State and the Federal 
government share the civil penalty equally. The law requires BLM to 
recover its cost for the cooperative agreement. As a result, BLM will 
pay you your share of civil penalties only after civil penalties for 
the year exceed the amount of your Federal funding for the year.

[[Page 17141]]

Sec. 3192.12  What activities may Tribes or States perform under 
cooperative agreements?

    Activities carried out under the cooperative agreement must be in 
accordance with the policies of the appropriate BLM State or field 
office and as specified in the agreement, and may include--
    (a) Inspecting tribal oil and gas leases for compliance with BLM 
regulations;
    (b) Issuing initial Notices of Incidents of Non-Compliance, Form 
3160-9, and Notices to Shut Down Operation, Form 3160-12;
    (c) Conducting investigations; or
    (d) Conducting oil transporter inspections.


Sec. 3192.13  What activities must BLM keep?

    (a) Under cooperative agreements, BLM continues to--
    (1) Issue Notices of Incidents of Noncompliance that impose 
monetary assessments and penalties;
    (2) Collect assessments and penalties;
    (3) Calculate and distribute shared civil penalties;
    (4) Train and certify Tribal or State inspectors;
    (5) Issue and control inspector identification cards; and
    (6) Identify leases to be inspected, taking into account the 
priorities of the Tribe.
    (b) Entering into a cooperative agreement does not affect the right 
of BLM to enter lease sites to conduct inspections, enforcement, 
investigations or other activities necessary to supervise lease 
operations.


Sec. 3192.14  What are the requirements for Tribal or State inspectors?

    (a) BLM must certify Tribal or State inspectors before they conduct 
independent inspections on Indian oil and gas leases.
    (b) The standards for certifying Tribal or State inspectors must be 
the same as the standards used for certifying BLM inspectors.
    (c) Tribal and State inspectors must satisfactorily complete on-
the-job and classroom training in order to qualify for certification.
    (d) Tribal or State inspectors must not--
    (1) Inspect the operations of companies in which they, a member of 
their immediate family, or their immediate supervisor, have a direct 
financial interest; or
    (2) Use for personal gain, or gain by another person, information 
he or she acquires as a result of his or her participating in the 
cooperative agreement.


Sec. 3192.15  May cooperative agreements be terminated?

    (a) Cooperative agreements may be terminated at any time if all 
parties agree to the termination in writing.
    (b) BLM may terminate an agreement without Tribal or State 
agreement if the--
    (1) Tribe or State fails to carry out the terms of the agreement; 
or
    (2) Agreement is no longer needed.


Sec. 3192.16  How will I know if BLM intends to terminate my agreement?

    (a) If BLM plans to terminate your agreement because you did not 
carry out the terms of the agreement, BLM must send a notice to you 
that lists the reasons BLM plans to terminate the agreement.
    (b) You must send BLM a plan to correct the problems BLM listed in 
the notice.
    (c) If you submit a plan for correction and BLM approves the plan, 
you have 30 days to correct the problem(s).
    (d) If you have not corrected the problem within 30 days, BLM will 
send you a second termination notice.
    (e) If you do not respond to the second notice within 30 days, BLM 
will terminate the agreement.


Sec. 3192.17  Can BLM reinstate cooperative agreements that have been 
terminated?

    (a) If your cooperative agreement was terminated by consent, you 
may request that BLM reinstate the agreement.
    (b) If BLM terminated an agreement because you did not carry out 
the terms of the agreement, you must prove that you have corrected the 
problem(s) and are able to carry out the terms of the agreement.
    (c) BLM will then decide whether or not your cooperative agreement 
may be reinstated and, if so, whether you must make any changes to the 
agreement before it can be reinstated.


Sec. 3192.18   Can I appeal a BLM decision?

    Yes, you may appeal a BLM decision under the provisions of 43 CFR 
part 4.

    Dated: March 31, 1997.
Bob Armstrong,
Assistant Secretary, Land and Minerals Management.
[FR Doc. 97-9100 Filed 4-8-97; 8:45 am]
BILLING CODE 4310-84-P