[Federal Register Volume 62, Number 79 (Thursday, April 24, 1997)]
[Proposed Rules]
[Pages 19961-19966]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-10667]


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DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR Chapter II


Review of Existing Regulations

AGENCY: Minerals Management Service (MMS), Interior.

ACTION: Review of regulations; request for comment.

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SUMMARY: Since 1994, MMS has been performing annual reviews of its 
significant regulations and asking the public to participate in these 
reviews. The purpose of the reviews is to identify and eliminate 
regulations that are obsolete, ineffective or burdensome. In addition, 
the reviews are meant to identify essential regulations that should be 
revised because they are either unclear, inefficient or interfere with 
normal market conditions.
    The purpose of this document is to: Provide the public an 
opportunity to comment on MMS regulations that should be eliminated or 
revised, and provide a status update of the actions MMS has taken on 
comments previously received from the public in response to documents 
published March 1, 1994 (59 FR 9718), March 28, 1995 (60 FR 15888), and 
May 20, 1996 (61 FR 25160).

DATES: Written comments must be received by June 23, 1997.


[[Page 19962]]


ADDRESSES: Mail written comments to Department of the Interior; 
Minerals Management Service; Mail Stop 4230; 1849 C Street NW., 
Washington, DC 20240; Attention: Bettine Montgomery, MMS Regulatory 
Coordinator, Policy and Management Improvement.

FOR FURTHER INFORMATION CONTACT: Bettine Montgomery, Policy and 
Management Improvement, telephone (202) 208-3976; Fax (202) 208-4891.

SUPPLEMENTARY INFORMATION: MMS began a review of its regulations in 
early 1994 under the directives contained in the President's Executive 
Order 12866. The Executive Order calls for periodic regulatory reviews 
to ensure that all significant regulations are efficient and effective, 
impose the least possible burden upon the public, and are tailored no 
broader than necessary to meet the agency's objectives and Presidential 
priorities.
    We invited the public to participate in the regulatory review. The 
invitation was sent out via different media, namely a Federal Register 
document dated March 1, 1994 (59 FR 9718), MMS and independent 
publications, and public speeches by MMS officials during that time.
    MMS received approximately 40 public comments which were almost 
equally divided between its Royalty Management and Offshore Minerals 
Management Programs. We acknowledged the comments in a July 15, 1994, 
document (59 FR 36108) and set forth our planned actions to address the 
comments, along with an estimated timetable for these actions.
    In the March 28, 1995, document (60 FR 15888) and May 20, 1996, 
document (61 FR 25160), MMS: (a) asked for further public comments on 
its regulations, and (b) provided a status update of actions it had 
taken on the major public comments received to date. We received 10 
responses from the March 28, 1995, document and 5 responses from the 
May 20, 1996, document. A number of the commentators expressed 
appreciation for our streamlining efforts and responsiveness to 
suggestions from our regulated customers.
    This document updates the MMS planned actions and related 
timetables on the major comments received to date. It also solicits 
additional comments from the public concerning regulations that should 
be either eliminated or revised. Since some of the public responses 
received in response to prior documents contained comments on very 
specific and detailed parts of the regulations, this document does not 
address every one received. For information on any comment submitted 
which is not addressed in this document, please contact Mrs. Montgomery 
at the number and location stated in the forward sections of this 
document.
    MMS regulations are found at Title 30 in the Code of Federal 
Regulations. Parts 201 through 243 contain regulations applicable to 
MMS' Royalty Management Program; Parts 250 through 282 are applicable 
to MMS' Offshore Minerals Management; and Part 290 is applicable to 
Administrative Appeals.

Status Report

    The following is a status report by program area on the comments 
MMS has received, to date, on its regulations.

A. Offshore Minerals Management (OMM) Program

    OMM is currently reviewing the following 15 sections of OMM 
regulations, and also revising a lease document.
1. Regulations Applicable to Production in Deepwater (30 CFR Part 250, 
Subpart H, Production)
    Comments Received--(a) ``Revise current regulations to provide for 
approval of extended flaring periods under certain situations (e.g., 
deepwater prospects, well tests, etc.) and clarify criteria for flaring 
or venting small amounts of gas,''
    (b) ``Revise requirements associated with subsea installations * * 
*,'' etc.
    Action Taken or Planned--MMS' workgroup on deepwater development 
issued a final report which was approved by management in May 1995. The 
report recommended that MMS evaluate and regulate deepwater production 
activities through a ``total systems'' approach. Under this 
recommendation, MMS issued a Notice to Lessees on August 9, 1996, 
requiring lessees to submit a Deepwater Operations Plan for all 
deepwater development projects, and projects using subsea production 
technology. This plan will provide information demonstrating that the 
lessee will develop a deepwater project in an acceptable manner. The 
guidelines for these plans were developed by MMS in conjunction with 
industry. This requirement was effective August 19, 1996.
    As a followup issue, MMS and industry also worked together on a 
Notice to Lessees on resource conservation. This notice provided 
guidance on the information that the lessee must submit regarding 
resource conservation for deepwater or subsea development projects. The 
effective date of the notice was October 1, 1996.
    Timetable--Completed.
2. Regulations Applicable to Blowout Preventer (BOP) Testing and 
Maintenance Requirements (30 CFR 250.56 and 57)
    Comments Received--``Revise BOP testing regulations to allow for 
less frequent and shorter tests. Allow 14 day BOP test interval vs. 
current 7 day * * *.''
    Action Taken or Planned--On January 31, 1997, MMS issued a Notice 
to Lessees allowing lessees to begin testing BOP equipment on intervals 
up to 14 days. This action revised the longstanding requirement for 
weekly testing of BOP's. MMS made the decision to allow the extended 
testing timeframe based on a recently completed study of BOP 
performance by an engineering consulting firm. The study concluded that 
no statistical difference in failure rates existed between BOP's tested 
every 7 days and those tested between the 8- to 14-day interval. The 
new testing timeframe applies to drilling, sidetrack, and completion 
activities, but not to workover activities since they were not examined 
in the performance study.
    Timetable--MMS has already begun the rulemaking process to 
promulgate the testing timeframe requirements into the regulations and 
plans to publish a proposed rule by mid-1997.
3. Regulations Governing Safety and Pollution Prevention Equipment 
(SPPE) (30 CFR Subpart H)
    Comments Received--(a) ``Reduce associated administrative burden on 
lessees and operators by eliminating unnecessary recordkeeping 
requirements (i.e., inventory lists, paperwork notifications, etc.).'' 
(b) ``Revise regulations governing Safety Valves to increase time 
between test and allowable leakage rates.''
    Action Taken or Planned--(a) On December 18, 1996 (61 FR 66639), we 
published a proposed rule to revise the regulations governing SPPE. 
This proposed rule addressed the concerns raised regarding 
recordkeeping. The rule establishes the requirement for all lessees to 
install quality assurance certified SPPE in wells after April 1, 1998. 
For wells that have noncertified SPPE, the lessee must replace it with 
certified SPPE when the equipment: (1) Fails during normal operations 
or testing; or (2) is removed from service for any other reason.
    (b) We are planning a research study in cooperation with industry 
on the surface safety valves and subsurface

[[Page 19963]]

safety valves. This study will address the comment regarding safety 
valves.
    Timetable--(a) MMS will publish the final rule in the Federal 
Register by December 1997. (b) The research study on the safety valves 
will begin in the summer of 1997.
4. Regulations Governing Conservation of Resources and Diligence (30 
CFR 250 Subpart A, General, and Subpart K, Oil and Gas Production 
Rates)
    Comments Received--(a) ``Revise Suspension of Production approval/
lease holding criteria * * *,'' (b) ``Revise Determination of Well 
Producibility to make wireline testing and/or mud logging analysis 
optional * * *,'' (c) ``revise current regulations to provide for 
approval of extended flaring periods * * *,'' (d) ``Relax restrictions 
on commingling reservoirs in a common wellbore * * *,'' (e) ``Allow 
flexibility in the methods of testing subsea wells. * * *,'' (f) ``MMS 
[should] determine and specify allowable volumes of liquid hydrocarbons 
that lessees could burn without requesting approval.'' (g) ``consider 
comments from the 11/30/95 MMS sponsored workshop to formulate policy 
for granting SOP (suspension of production) approvals based on host 
capacity delays, non-contiguous unitization, and market conditions/
economic viability.'' (h) ``Expand definition of lease holding activity 
to include 3D seismic work.''
    Action Taken or Planned--For (a) above, MMS published a final rule 
on October 30, 1996 (61 FR 55885), to extend the period for holding a 
lease beyond its primary term from 90 to 180 days. For (b), and (g) 
above, MMS is currently rewriting Subpart A and Subpart K in plain 
English. This effort will also include any changes needed to the 
regulations. We will take into consideration industry's ideas on 
changes, including the comments from the 11/30/95 workshop. For (d) 
above, we issued a Notice to Lessees on April 24, 1995, that allowed 
greater flexibility in dealing with commingling issues. For (e) above, 
MMS will not change the regulations. Current regulations allow 
operators to request that different testing methods be allowed when 
conventional testing is impractical. For (c) and (f) above, MMS 
addressed the flaring of gas and burning of liquid hydrocarbons in a 
final rule that was published on May 20, 1996 (61 FR 25147). For (h) 
above, MMS sent a Letter to Lessees on July 25, 1996, which addressed 
this comment.
    Timetable--Proposed rules rewriting Subparts A and K will be 
published by December 1997.
5. Regulations Regarding Construction and Removal of Platforms and 
Structures (30 CFR 250 Subpart I, Platforms and Structures)
    Comments Received--(a) ``Modify platform design wave return period 
calculation by placing a cap of 100 years on the field life calculation 
* * *,'' (b) ``Adopt API RP2A (20th edition) Section 14, Surveys, in 
its entirety * * *,'' (c) ``Revise site clearance requirements * * *,'' 
(d) ``Revise requirements for placing protective domes over well stubs 
* * *,'' etc.
    Action Taken or Planned--For (a), (c), and (d) above, MMS is 
reviewing the draft proceedings for the International Workshop on 
Offshore Lease Abandonment and Platform Disposal: Technology, 
Regulation, and Environmental Effects, held on April 14-17, 1996. There 
is a varying amount of research in progress at present to be followed 
by rulemaking. For (b) above, we have adopted API RP2A (19th edition) 
and are working with industry and the American Petroleum Institute 
(API) on changes to the 20th edition. After the document is revised, we 
will decide whether to incorporate it into our rules.
    Timetable--For (a), (c), and (d) above, the Proceedings will be 
published by summer 1997. For (b) above, Ongoing.
6. Regulations Applicable to Directional Surveys (30 CFR 250.51)
    Comments Received--``Revise directional survey requirements to 
allow a composite measurement-while-drilling directional survey to be 
acceptable * * *.''
    Action Taken or Planned--MMS is rewriting the regulations governing 
Oil and Gas Drilling Operations, found in Subpart D, in plain English. 
The rule is also being rewritten to keep pace with current technology.
    Timetable--We plan to publish a proposed rule by December 1997.
7. Regulations Applicable to Daily Pollution Inspection Requirements 
(30 CFR 250.41)
    Comments Received--``Revise current requirements for daily 
pollution inspection of unmanned production facilities * * *.''
    Action Taken or Planned--On February 15, 1996, MMS issued a Notice 
to Lessees regarding the pollution inspection frequency for unmanned 
facilities. The current regulations allow operators to request a waiver 
from the daily inspection of unmanned facilities. The Notice to Lessees 
reviewed the criteria MMS uses in determining whether or not to grant 
the waiver.
    Timetable--MMS has no plans to change the regulations in this area.
8. Regulations Applicable to Production Safety System Training (30 CFR 
250.214)
    Comments Received --(a) ``Revise training regulations to reduce the 
associated burden on operators by modifying requirements (e.g., 
frequency, refresher requirements, structure, etc.) and allow expanded 
training delivery modes.'' (b) ``* * * training regulations (well-
control) are not clearly stated and often not relevant * * *.''
    Action Taken or Planned--MMS rewrote the entire section (subpart O) 
of training regulations in a plain English format and published a final 
rule in the Federal Register on February 5, 1997 (62 FR 5320). This 
revised rule addresses the concerns in comments (a) and (b) above. In 
addition, we are considering developing a performance based training 
program which would rely on industry to design its training needs. We 
would monitor the program through tests and audits.
    Timetable--Completed. Performance based training program still in 
discussion stage.
9. Regulations Applicable to Pipelines and Pipeline Rights-of-Way (30 
CFR 250 Subpart J)
    Comments Received--Revise regulations to avoid duplication of 
requirements between the Department of the Interior and the Department 
of Transportation.
    Action Taken or Planned--MMS has worked with the Department of 
Transportation and other interested parties to develop a new memorandum 
of understanding between the Department of the Interior and Department 
of Transportation. The memorandum of understanding became effective on 
December 10, 1996, and was published on February 14, 1997 (62 FR 7037). 
MMS will clarify rules and remove redundant requirements.
    Timetable--The agencies will begin new rulemaking to devise 
compatible regulations during 1997.
10. Safety System Design and Installation (30 CFR 250.122)
    Comments Received--``Revise approval process associated with 
production safety system installations and routine modifications to 
allow periodic updates recognizing compliance with API RP 75 (1st 
Edition) * * *.''
    Action Taken or Planned--We believe this comment was made in 
connection with the Safety and Environmental Program (SEMP) initiative. 
On July 18, 1996 (61 FR 37493), MMS published a notice recognizing the 
efforts of many

[[Page 19964]]

offshore operators to adopt the SEMP initiative, as embodied in API RP 
75 (1st Edition). In this notice we noted, however, that a lack of 
strong evidence showing implementation of the SEMP plans prevented us 
from declaring the industry's voluntary efforts to be successful at 
that point. We are continuing to promote widespread adoption of SEMP 
and are cooperating in an industrywide survey on SEMP implementation.
    Timetable--Ongoing. The survey results will be available by summer 
1997.
11. Model Unit Agreement (30 CFR 250.194)
    Comments Received--``In several instances within the Model Unit 
Agreement language, the defined terms are not used when it seems 
appropriate. We recommend that the defined terms be used to avoid 
confusion when reviewing the agreements.''
    Action Taken or Planned--On July 3, 1996 (61 FR 28525), MMS 
published a final rule which removed the Model Unit Agreement from the 
Code of Federal Regulations. We have no plans to revise the Agreement 
at this time. If there are any problems with the Agreement, send 
specific comments for us to consider.
    Timetable--Will consider specific comments when received.
12. Revision of the Process for Incorporating Codes and Standards by 
Reference (30 CFR 250.1)
    Comments Received--``* * * review individual documents when changed 
and recommend adoption or rejection to reduce confusion as to the 
standard that should be used.''
    Action Taken or Planned--We agree with the intent of this 
suggestion. We will investigate it from a legal and administrative 
standpoint to see if it can be done.
    Timetable--Ongoing.
13. Shallow Hazards Requirements (NTL No. 83-3)
    Comments Received--``* * * revise NTL No. 83-3 which relates to 
shallow hazards requirements. Industry has requested that MMS allow use 
of navigational positioning equipment in lieu of buoying pipelines.''
    Action Taken or Planned--We are revising NTL No. 83-3 and are in 
the process of developing guidance for navigational positioning 
equipment technology. MMS realizes the problem that this Navigational 
Positioning equipment is not accurate unless it is calibrated 
frequently.
    Timetable--Ongoing.
14. Allocation Meter Facility Requirements (30 CFR 250.180(e))
    Comments Received--``We suggest that the regulations be revised to 
recognize the use of liquid turbine meters and the inability to 
physically make adjustments to these types of meters, and to clarify 
that samples should be taken proportional to flow to reflect present 
industry practice.''
    Action Taken or Planned--MMS published a proposed rule, ``Oil and 
Gas Production Measurement, Surface Commingling, and Security,'' on 
February 26, 1997 (62 FR 8665), that addresses this comment.
    Timetable--The comment period on this proposed rule closes May 27.
15. Approval and Reporting Processes for Well-Completion Operations (30 
CFR 250.83)
    Comments Received--``* * * a recompletion operation requires that a 
Well Summary report MMS-125 be filed within 30 days. Much of this data 
is repetitious of data previously submitted on the Sundry Notice MMS-
124. The process could be changed to provide only data that has 
changed.''
    Action Taken or Planned--We will study this process to decide 
whether or not to change reporting requirements through rulemaking.
    Timetable--Ongoing.
16. Other MMS/Offshore Minerals Management Actions
    MMS plans to review its Offshore lease document (MMS-2005) which 
has not been revised since 1986. In addition to revising the language 
into ``plain English,'' we will consider changes to the lease 
provisions to reflect current policies and to address any issues that 
may arise during this review. We welcome any comments on specific 
changes that we should consider.

B. Royalty Management Program (RMP)

    RMP is reviewing regulations in the following 11 subject areas.
1. Statute of Limitations and Record Retention
    Comments Received

--``Statute of limitations is unclear.''
--``Establish a reciprocal 5-year statute of limitations from the date 
an obligation becomes due.''
--``Absence of a record retention program creates some confusion. 
Regulations should require record retention to coincide with the 5-year 
statute of limitations.''
    Action Taken or Planned--The Federal Oil and Gas Royalty 
Simplification and Fairness Act (Act) was signed into law on August 13, 
1996. The Act contains language to implement a 7-year statute of 
limitations for MMS processes. We are determining what changes to make 
to current accounting, compliance, and enforcement processes to comply 
with the new requirements. After our review, we will be changing 
processes, developing implementation plans, and making regulatory 
changes.
    Timetable--Ongoing.
2. Interest on Overpayments
    Comment Received--``Interest accrual should be equitable between 
the Agency and industry.''
    Action Taken or Planned--The Act provides for the payment of 
interest on overpayments for oil and gas leases on Federal lands. MMS 
is designing system changes to implement the requirements of the Act 
and preparing regulations to be published as proposed rules.
    Timetable--Ongoing.
3. Gas Valuation
    Comments Received

--(a) ``Define gross proceeds more equitably and clearly in this ever 
changing gas marketing environment.''
--(b) ``It is important that the Federal Gas Valuation Rule final rule 
not discriminate against producers which are affiliated with marketing 
companies and are party to non-arms-length contracts.''
--(c) ``Extend the elimination of processing and transportation 
allowance forms to oil.''
--(d) ``* * * commends the MMS on their use of negotiated rulemaking 
process to address the valuation of gas. Rule should result in 
administrative cost savings for all parties.''
--(e) ``If the Takes vs. Entitlements policy stays in effect, MMS 
should strictly enforce reporting on actual quantities taken for all 
industry participants.''
--(f) ``Eliminate Transportation and Processing Allowance Forms for 
Indians.''
    Action Taken or Planned--For (c) above, Revisions of the Valuation 
Regulations Governing Allowances was published in the Federal Register 
as a final rule on February 12, 1996 (61 FR 5448). This rule eliminated 
most allowance forms filing requirements for oil, gas, and coal 
produced from Federal leases.
    For (a) above, on July 31, 1996 (61 FR 39931), MMS published a 
proposed rule clarifying what deductions may be taken from gross 
proceeds for the costs of transportation under Federal Energy 
Regulatory Commission (FERC) Order

[[Page 19965]]

No. 636. We plan to publish the final rule by fall 1997.
    For (a), (b), (d), and (e) above, the Federal Gas Valuation 
proposed rule was published in the Federal Register on November 6, 1995 
(60 FR 56007), and the comment period closed on February 5, 1996. The 
proposed rule represents the consensus of the Federal Gas Valuation 
Negotiated Rulemaking Committee with representation from MMS, industry, 
and the States. The proposed rule would provide alternatives to using 
gross proceeds as a basis for gas valuation, such as published natural 
gas index prices.
    MMS decided to reopen the public comment period and announced this 
in a document published on May 21, 1996 (61 FR 25421). In this 
document, we requested comments on five options which were developed 
after evaluating the comments received on the proposed rule. MMS is 
presently reviewing the comments on the options and determining how to 
proceed.
    For (f) above, a proposed rule developed by the Indian Gas 
Valuation Negotiated Rulemaking Committee was published on September 
23, 1996 (61 FR 49894). This rule addressed the valuation for royalty 
purposes of natural gas produced from Indian leases. The rule proposes 
to eliminate the transportation and allowance reporting forms for gas 
from Indian leases. The proposed rule would add a methodology to 
calculate the major portion value and an alternative methodology for 
dual accounting as required by Indian lease terms. The proposed 
rulemaking would simplify and add certainty to the valuation of 
production from Indian leases.
    On March 6, 1997 (62 FR 10247), MMS published a document reopening 
the public comment period until April 4, 1997, and reconvening the 
Indian Gas Valuation Negotiated Rulemaking Committee on March 26, 1997.
    Timetable--Ongoing.
4. Reporting Procedures and Threshold
    Comments Received

--``Eliminate or streamline MMS Form 2014 reporting.''
--``Report prior period adjustments on a `net' basis.''
--``Change estimated payment from lease level to payor level.''
--``Assess interest at the payor level--for the Indian leases on the 
basis of each Indian Tribe.''
--``Eliminate Payor Information Form (PIF) Filings. This is an 
unnecessary and costly reporting requirement.''
--``MMS should modify the regulations and system tolerances/thresholds 
so that only those exceptions that are cost beneficial for MMS to 
pursue are generated.''
--``Set thresholds or tolerances for regulations to save costs to both 
MMS and industry. (Example: Invoices are sent for less than $1.00.)''
--``MMS should not implement regulations until its systems are 
programmed to handle the new regulations.''
--``* * * the prompt implementation of the recommendations of the 
Royalty Policy Committee Audit and Royalty Reporting and Production 
Accounting Subcommittees will achieve those simplification and 
streamlining goals * * *.''
    Action Taken or Planned--MMS has revised its billing thresholds and 
assessments policy to reduce administrative costs, and we continue to 
review these issues through the Royalty Policy Committee, an advisory 
group to the Secretary of the Interior, which was formed in September 
1995. The Committee's membership includes representatives from States, 
tribes, allottee associations, industry trade groups, and other 
agencies. At their initial meeting, a Royalty Reporting and Production 
Accounting Subcommittee was established.
    The Subcommittee had its first meeting in November 1995 and agreed 
to review all royalty and production reporting forms and policies. To 
assure all areas were addressed, four workgroups were formed to review 
the Payor Information Form, royalty reporting, oil and gas production 
reporting, and solids production reporting.
    The preliminary recommendations from the workgroups cover 
streamlining of all reporting forms; reducing or eliminating redundant 
data collection; changing estimates; and reviewing thresholds for 
allowance and interest billings.
    Timetable--The Subcommittee recommendations were finalized and 
forwarded to the full committee for their review and approval in June 
1996. The recommendations are under review for possible implementation 
by MMS. In particular, we will pursue recommendations that can be 
implemented in the short term without significant cost.
5. Refunds Due to Industry Which Are Controlled by Section 10 of the 
Outer Continental Shelf Lands Act
    Comments Received--``Section 10 refund requirements should be 
eliminated. The refund process used for onshore properties should be 
established for offshore properties.''

--``* * * we would urge the MMS to facilitate elimination of the 
Section 10 recoupment procedures in its entirety. The current practice 
is administratively burdensome and not cost effective for the industry 
or MMS.''
--``Eliminate documentation requirements for refund requests over $250 
M and/or increase this threshold to $500 M; raise the refund request 
limit to $5 M. Exempt pure accounting adjustments for items such as 
production date adjustments and incorrect AID (Accounting 
Identification) numbers; exempt unit revisions because these revisions 
are often made more than 2 years after the date of production; 
establish a time limit on MMS for review of a refund request to 
expedite the process; and overpayments on OCS properties should be 
allowed to be offset against any OCS underpayment.''

    Action Taken or Planned--The Act repeals the Section 10 refund 
procedures of the Outer Continental Shelf Lands Act. On November 25, 
1996, we mailed a Dear Payor letter with guidelines on refund 
procedures. We are presently developing a proposed rule implementing 
the new refund procedures.
    Timetable--We plan to publish a proposed rule by summer of 1997.
6. Interest Assessments
    Comments Received--``A de minimis provision should be established 
for the assessment of interest.''
--``* * * MMS should enhance their existing interest assessment system 
to allow for the offsetting of prior period adjustments made on the MMS 
Form 2014 before calculating applicable interest.''

    Action Taken or Planned--The Act not only provides for the payment 
of interest on overpayments for oil and gas leases on Federal lands, 
but allows industry to calculate the correct interest assessment. Also, 
the Act allows interest that has accrued on overpayments to be applied 
to reduce underpayments. MMS is designing system changes to implement 
the requirements of the Act and preparing regulations to be published 
as proposed rules.
    Timetable--Ongoing.
7. Electronic Data Exchange
    Comments Received--``* * * MMS (should) continue their ongoing 
effort to exchange data by electronic means rather than hard copy 
thereby enabling the industry to adjust the data elements to integrate 
with each company's systems.''

[[Page 19966]]

    Action Taken or Planned--We continue to encourage the exchange of 
data electronically. Our Reporter and Payor Training sessions stress 
the benefits of electronic reporting and provide reporters and payors 
with options for reporting by electronic data interchange, diskette, or 
magnetic tape. We also publicize electronic reporting on the MMS/
Royalty Management Program internet website.
    Timetable--Reporter and Payor Training sessions are planned for the 
summer of 1997, and Royalty Management Program's redesigned website 
went online in March 1997.
8. Parameters for Identifying Improper MMS Form 2014 Adjustments
    Comments Received--``The MMS currently inquires as to any variances 
between any Form 2014 adjustments and its original Form 2014 entry that 
exceed $1.00, which is an insignificant amount. It is suggested that 
the MMS's review should be relevant to the amount of the adjustment 
such as a given percentage.''
    Action Taken or Planned--At this time, MMS does not plan to make 
changes in this procedure. We need to ensure accuracy and integrity in 
the accounting systems, and retain precise records for the auditors.
9. Publish Final Rules Expeditiously
    Comments Received--``* * * primary recommendation is the 
expeditious completion and publication of pending final rules, for 
example, the proposed rules on administrative offset and limitations on 
credit adjustments, and the proposed rule on payor liability.     * * * 
Certainly, publication of the final federal (and Indian) gas valuation 
rule should be facilitated to the maximum extent possible.''

--``* * * it would be extremely beneficial for MMS to publish its 
proposed rule implementing the Federal Energy Regulatory Commission's 
(FERC) Order 636 as soon as possible because of its impact on and 
relationship to the federal gas valuation rule.''

    Action Taken or Planned--We are in the process of reviewing the 
comments and determining how to proceed on the two valuation rules--Gas 
Valuation of Production from Federal Leases and Gas Valuation of 
Production from Indian Leases.
    We are also in the process of reviewing the comments and preparing 
a final rule to implement FERC Order 636.
    New language in the Act will cause a number of changes in the Payor 
Liability rule and the Administrative Offset and Limitations on Credit 
Adjustments rule. We are in the process of studying the effects of the 
Act on these rules before we publish them as final rules.
    Timetable--We plan to come to a decision on the two valuation rules 
by the end of 1997. The FERC Order 636 rule will be published as a 
final rule by fall of 1997. Work on the other two rules is ongoing.
10. The Appeals Process
    Comments Received--``Current appeals process is too long.''
    Action Taken or Planned--The Act imposed a 33-month time frame for 
the Department of the Interior to decide appeals involving royalties on 
Federal oil and gas leases. This deadline does not apply to appeals on 
royalties involving Indian leases and Federal leases for minerals other 
than oil and gas.
    On October 28, 1996 (61 FR 55607), MMS published a proposed rule 
establishing a 16-month deadline for MMS to decide all appeals to the 
Director, including Indian leases and appeals for royalties on minerals 
other than oil and gas. After MMS' decision, the appellants can further 
appeal to the Interior Board of Land Appeals. The comment period for 
this proposed rule ended on March 27.
    The Royalty Policy Committee established a subcommittee to study 
the appeals process. The report they presented to the Committee on 
March 21 was accepted with only minor changes. This report proposes 
even further changes to the appeals process. The Department and MMS 
will be studying the proposals to determine what areas we will 
incorporate in our final rulemaking.
    Timetable--We plan to finalize the Administrative Appeals Process 
rule by early 1998.
11. Other MMS/Royalty Management Program Regulatory Actions
    The Act expanded the authorities and responsibilities that the 
Secretary of the Interior may delegate to the States. To implement 
this, we are planning to publish a proposed rule in April 1997 on 
Delegation of Royalty Management Functions to the States.
    We invite you to comment on our existing regulations and also the 
actions we have taken in response to comments and recently enacted 
legislation. And, we invite you stay further informed on many of the 
topics discussed in this status report by visiting the MMS Internet 
Website at www.mms.gov.

    Dated: April 17, 1997.
Cynthia Quarterman,
Director.
[FR Doc. 97-10667 Filed 4-23-97; 8:45 am]
BILLING CODE 4310-MR-P