[Federal Register Volume 62, Number 150 (Tuesday, August 5, 1997)]
[Rules and Regulations]
[Pages 42062-42067]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-20592]


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DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR Parts 210 and 218

RIN 1010-AC38


Designation of Payor Recordkeeping

AGENCY: Minerals Management Service, Interior.

ACTION: Interim final rulemaking.

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SUMMARY: The Minerals Management Service (MMS) Royalty Management 
Program (RMP) is amending its regulations to authorize the collection 
of information from lessees and payors concerning designations by 
lessees of other persons to make royalty and other payments on their 
behalf.

DATES: This rule is effective August 5, 1997. Comments regarding this 
interim final rulemaking and the information collection must be 
received on or before October 6, 1997.

ADDRESSES: Comments should be sent to: David S. Guzy, Chief, Rules and 
Publications Staff, Royalty Management

[[Page 42063]]

Program, Minerals Management Service, P.O. Box 25165, MS 3021, Denver, 
Colorado 80225-0165; courier delivery to Building 85, Denver Federal 
Center, Denver, Colorado 80225; or e-Mail David--G[email protected].

FOR FURTHER INFORMATION CONTACT: David S. Guzy, Chief, Rules and 
Publications Staff, Royalty Management Program, Minerals Management 
Service, telephone (303) 231-3432, Fax (303) 231-3385, e-Mail 
David__G[email protected].

SUPPLEMENTARY INFORMATION: The principal authors of this rulemaking are 
Kenneth R. Vogel, of the Minerals Management Service Office of 
Enforcement and Sarah Inderbitzin of the Department of the Interior 
Office of the Solicitor.

I. General

    On August 13, 1996, Congress enacted the Federal Oil and Gas 
Royalty Simplification and Fairness Act of 1996, Pub. L. 104-185, as 
corrected by Pub. L. 104-200 (RSFA). RSFA amends portions of the 
Federal Oil and Gas Royalty Management Act of 1982 (FOGRMA), 30 U.S.C. 
1701 et seq., to provide that an owner of operating rights in a Federal 
oil and gas lease onshore or on the Outer Continental Shelf (OCS) is 
primarily liable for royalty payments owed on its portion of its lease, 
and that the owners of record title for such lease are secondarily 
liable, 30 U.S.C. 1712(a). It also allows lessees, which include both 
operating rights and record title owners, 30 U.S.C. 1701(7), to 
designate another person to pay royalties on their behalf by written 
notice to MMS, 30 U.S.C. 1712(a). Finally, it provides that the persons 
so designated are not liable for any payment obligations under such 
leases. Id. This rule provides a mechanism to make the match between 
lessees and the persons they designate to make royalty and other 
payments on their behalf consistent with RSFA and existing royalty 
collection practices.
    Prior to the enactment of RSFA, MMS would allow any person to 
report and pay royalties and other payments on a Federal oil and gas 
lease onshore or on the OCS simply by declaring itself a ``payor'' for 
the lease and filing a Form MMS-4025, Payor Information Form (PIF) (OMB 
1010-0033). 30 CFR 210.10(c)(3). MMS's Auditing and Financial System 
(AFS) requires that a royalty payor file a PIF for oil and gas or Form 
MMS-4030, Solid Minerals Payor Information Form, and be assigned a 
payor code before the system will accept the monthly Form MMS-2014, 
Report of Sales and Royalty Remittance. See the MMS ``Oil and Gas Payor 
Handbook,'' Volume 1, at Chapter 2; and the MMS ``Solid Minerals Payor 
Handbook'' at Chapter 2.
    A key to this reporting system is the MMS Accounting Identification 
Number (AID). The AID is a 13-digit number in two parts. The first 10 
digits are an MMS assigned lease number, which is converted from the 
Bureau of Land Management (BLM) or MMS Offshore Minerals Management 
(OMM) lease number. It consists of a three-digit prefix, a six-digit 
body, and a one or 2-digit suffix. The last three digits of the AID are 
the MMS assigned revenue source number. A revenue source generally is 
one of the following as specified in MMS's Oil and Gas Payor Handbook:
     Lease production--one or more wells on the lease where the 
lease is not committed to a unit or communitization agreement (CA);
     Unitized production allocation--the participating area 
(PA) of a unit under which a lease receives production allocation, or a 
secondary recovery unit;
     Communitized production allocation--the CA under which a 
lease receives a production allocation; or
     Compensatory royalty--a compensatory royalty assessment or 
agreement.
    These distinctions are not readily discoverable from the legal 
descriptions contained in lease assignments and other legal documents.
    Currently, when MMS determines either through its automated 
compliance procedures or an audit that royalties are underpaid, MMS 
will bill or order payment from the payor for the deficiency. The payor 
is billed because that is the person for whom MMS has information in 
its system regarding that production; RMP does not maintain data on the 
record title owner(s) or operating rights owner(s) for which the payor 
is making payments. Therefore, while other persons may be liable for 
some or all of the royalty deficiency (such as the record title owner 
or an operating rights owner), MMS has historically considered that the 
person who filed the PIF would be liable for underpaid royalties.
    In Mesa Operating Limited Partnership, 125 IBLA 28(1992) (Modified 
on Reconsideration), 128 IBLA 174 (1994), Mesa filed PIFs and paid MMS 
royalties on production it purchased from several Indian oil and gas 
leases. Mesa did not own any interest in those leases. MMS ordered Mesa 
to pay additional royalties found to be owed on those leases. Mesa 
administratively appealed MMS's order and the Interior Board of Land 
Appeals held that a payor does not become liable simply by filing a PIF 
with the MMS, but rather some other evidence of assignment of liability 
must be presented. Although IBLA found Mesa liable for other reasons, 
thereafter MMS published a Federal Register notice of proposed 
rulemaking titled ``Amendments of Regulations to Establish Liability 
for Royalty Due on Federal and Indian Leases, and to Establish 
Responsibility to Pay and Report Royalty and Other Payments (60 FR 
30492, 06/09/97). In that rulemaking, MMS proposed to make payors, 
owners of working interests and lessees of record, among others, all 
potentially liable for unpaid or underpaid royalties and other 
payments.
    RSFA resolved statutorily which parties are liable for royalty and 
other payments on Federal oil and gas leases onshore and on the OCS for 
production after September 1, 1996. Under RSFA, the person owning 
operating rights in a lease is primarily liable for its pro rata share 
of payment obligations under a lease, and the person owning record 
title is secondarily liable for its pro rata share of payment 
obligations under the lease. 30 U.S.C. 1712(a). RSFA also provides that 
the lessee may designate a person (Designee) to make all or part of the 
payments due under a lease on the lessee's behalf. Id. Under RSFA, 
lessees must notify MMS (or a delegated State, if applicable) in 
writing of such designation. Id. The Designee may then make payments, 
file reports, offset and credit monies, make adjustments to reports and 
request and receive refunds, all in its own name on the lessee's 
behalf. However, RSFA mandates that the Designee is not liable for the 
obligations of the lessee for which it is paying and reporting. Id.
    RSFA is applicable to all royalties and other payments due on 
production from Federal oil and gas leases after September 1, 1996. 
Thus, for royalty payments made for September 1996, which were due by 
the end of October 1996, RSFA required all lessees either to pay on 
their own behalf or to designate another person to make payments on 
their behalf.
    As stated above, MMS does not maintain information on the lessee 
for which a payor is paying royalties or other payments. Although BLM 
is responsible for maintaining record title and operating rights 
ownership records for Federal oil and gas leases onshore, and MMS has 
the same responsibility for such leases on the OCS, neither BLM nor MMS 
Offshore have information matching lessees to their payors. 
Accordingly, in an attempt to decide how to best collect payment 
responsibility information to implement

[[Page 42064]]

RSFA, MMS met with the representatives of several oil and gas trade 
associations and several States that share in oil and gas royalties 
under the Mineral Leasing Act of 1920, 30 U.S.C. 191, and the Outer 
Continental Shelf Lands Act of 1953, 43 U.S.C. 1339. In those meetings, 
the participants generally agreed that many lessees would not be able 
to tell MMS how they may have assigned royalty payment responsibility 
for each portion of their lease in terms that are readily translatable 
into the MMS accounting system. Therefore, lessees will require 
assistance from MMS to comply with RSFA's mandate that they designate a 
payor. The participants, many of whom were royalty payors as well as 
lessees, recommended that MMS get an initial listing of supposed 
Designees, by inquiring of the current payors whether they were paying 
on their own behalf (as lessee) or on behalf of someone else. The 
participants generally agreed that MMS should then send a notification 
to all lessees, listing the leases they owned by AID, and the person or 
persons who were paying on each lease on the lessee's behalf, for each 
product on the lease for which the person was paying, when that was 
appropriate. Lessees would then use that list to designate the 
person(s) responsible for making lease payments on the lessee's behalf.
    The term payor includes both Designees, who are reporting and 
paying royalties on behalf of lessees other than themselves, and 
lessees who are reporting and paying their own royalty. In many cases, 
a payor may be both a lessee and a Designee on the same lease. In fact, 
they may (and commonly do) report both their own payment and the 
payments of lessees who (will) designate them on the same royalty line. 
If that line is either underpaid or paid late, MMS will send a demand 
to the payor, and for production subject to RSFA, MMS will send a 
notice to those lessees who have designated the payor to pay for them 
with respect to that line. This rule gives MMS the authority to collect 
the information necessary to match a lessee to that underpaid (or 
untimely paid) royalty line.
    Since enactment of RSFA, MMS designed a database that will allow it 
to match lessees with their Designees. To gather the initial 
information matching payors to lessees, on January 9, 1997, MMS sent a 
letter to approximately 2,500 oil and gas payors. Attached to that 
letter was a listing of all leases for which MMS data showed that the 
payor was reporting and making payments to MMS. The payors were 
requested to voluntarily fill in missing information, listing the 
lessees for which they were reporting, and making payments to MMS by 
AID and product code, if appropriate. The January 9, 1997, letter was 
not in accordance with the Paperwork Reduction Act (PRA), 44 U.S.C. 
3512, because, due to an unintentional oversight, MMS did not properly 
send the Information Collection Request (ICR) to the Office of 
Management and Budget (OMB) for its review, as the PRA mandates. MMS 
apologizes for that oversight.
    The purpose of this rule is to make MMS's requests to payors for 
information missing in its database mandatory, because, as stated 
above, neither MMS, BLM, nor most lessees have the information 
necessary to make the match between lessees and their payors. For this 
reason, MMS will request data from time to time from those parties who 
are payors in MMS's accounting system, and MMS will use that data to 
send reports to lessees for their confirmation of the designation of 
payment responsibility to the payor. Payors who voluntarily responded 
to the January 9, 1997, letter requesting similar information do not 
need to provide the same information under the rule that would 
duplicate information already provided. However, the rule does provide 
MMS with authority to request clarification of information submitted in 
response to the January 9, 1997, letter or the rule. Because the 
information MMS requests is critical to implementation of RSFA, and 
because RSFA's provisions relevant to this information collection 
became effective September 1, 1996, MMS is requesting that OMB 
authorize emergency processing and approval of this ICR. This ICR and 
any requests in the future will be mandatory under the provisions of 
this regulation.
    Respondents may respond to the information requests required under 
this rule electronically or in writing. MMS prefers that respondents 
respond electronically. MMS has created a Comma Separated Value (CSV) 
file structure, which is available as an output type in most 
spreadsheet and data base applications. MMS will offer respondents a 
lease listing in computer readable form (electronically) and also will 
offer the telephone assistance of our computer specialists.

III. Indian Lands and Non-Oil and Gas Leases

    RSFA is not applicable to Indian leases and leases of minerals 
other than oil and gas. MMS does not currently need data in order to 
match lessees and payors for such leases. However, MMS may need the 
information for those leases in the future. Therefore, this rule also 
gives MMS the authority to collect the data necessary to match the 
lessee with the payor for each AID for Indian leases and leases of 
minerals other than oil and gas.

IV. Administrative Procedure Act

    MMS has determined that the notice and comment that the 
Administrative Procedure Act (APA), 5 U.S.C. 553(b), ordinarily 
mandates, are not required in this interim final rulemaking. APA 
authorizes agencies to waive notice and comment procedures when the 
agency ``for good cause finds * * * that notice and public procedure 
thereon are impracticable, unnecessary, or contrary to the public 
interest.'' 5 U.S.C. 553(b)(B). MMS for good cause finds that notice 
and comment procedures for this rulemaking are impracticable and 
contrary to the public interest because they would delay implementation 
of RSFA's liability scheme which became effective for production after 
September 1, 1996. In addition, advance public notice and comment are 
unnecessary and contrary to public interest because the interim rule 
substantially restates the information collection provisions in the 
January 9, 1997, letter sent to all payors, and implements the request 
from lessees at the meetings discussed above that MMS assist them to 
comply with RSFA's mandate that they designate a Designee.
    MMS also has determined that the 30-day delay of effectiveness 
provisions of the APA may be waived in this rulemaking. Section 553(d) 
of the APA permits waiver of the 30-day delayed effective date 
requirement for, inter alia, good cause. MMS finds that good cause 
exists for the same reasons stated above. Accordingly, the interim 
final rule will be immediately effective upon publication in the 
Federal Register. Nevertheless, MMS seeks the benefit of public 
comment. Accordingly, MMS invites interested persons to submit comments 
during the 60-day comment period. MMS may revise the interim final rule 
later in a final rule as appropriate based on those comments.
    While this is an interim final rule, MMS intends to publish a 
notice of proposed rulemaking by the end of 1997 making more permanent 
the process for collecting designations from lessees. To aid public 
participation in that rulemaking, MMS will post comments received on 
this rule on the Internet at http://www.rmp.mms.gov.

[[Page 42065]]

V. Section-by-Section Analysis

30 CFR Part 210

Section 210.55  Special Forms or Reports.
    This section's contents are amended to give MMS the authority to 
require special reports by lessees and other persons who report and pay 
royalties. In particular, MMS may require such persons to submit 
information necessary for MMS to assure that lessees properly designate 
their Designees in a form that MMS can use in its database. The 
information will document the relationship between lessees, their 
lease(s), or portion(s) thereof, and the person(s) they designate to 
make payments to MMS on their behalf. As payors already are familiar 
with the MMS accounting system, MMS may require them to submit the 
information connecting the AID on which they are paying and the lessees 
for whom they are paying.
    In addition to the name of the lessee, MMS may also require payors 
to tell MMS the address of that person and, if they have the 
information, the taxpayer identification number (TIN) of the lessee. 
MMS requires the current address in order to communicate with the 
lessee so that lessees are informed of the requirements of RSFA to 
designate a Designee, if they are not making payments to MMS on their 
own. MMS will also need the lessee's address to send notices to the 
lessee when demands are sent to payors, who are paying on their behalf. 
MMS requires the TIN to inform the Internal Revenue Service when MMS 
pays interest on overpayments under the requirements of RSFA, section 
6. This section would also require persons whom a payor identifies it 
is making payments for to provide information to MMS.

30 CFR Part 218

Section 30 CFR 218.52  How does a lessee designate a Designee?
    This section would be revised to explain how lessees make 
designations under RSFA section 6(g) and what information must be in 
such designations. MMS will need the name and address of each Designee, 
as well as the necessary accounting information to identify the 
payments made on your behalf as lessee. MMS will also need to know the 
start and end dates of the Designee's responsibility and whether the 
designation is limited to certain payments, for instance, just minimum 
royalty, or certain products, for instance, if you choose to designate 
your gas purchaser as the Designee for gas royalty only.

VI. Procedural Matters

The Regulatory Flexibility Act

    MMS has calculated a reporting burden of $840 for a typical small 
entity that reports and pays oil and gas royalties on Federal leases. 
About 2,400 small entities in the oil and gas industry will be affected 
by this rule. Accordingly, this rule will not have a significant 
economic impact on a substantial number of small entities. This rule 
provides for the format in which information needed to comply with the 
requirements of the Federal Oil and Gas Royalty Simplification and 
Fairness Act of 1996, Pub. L. 104-185, August 13, 1996, as corrected by 
Pub. L. 104-200.

Executive Order 12630

    The Department certifies that the rule does not represent a 
governmental action capable of interference with constitutionally 
protected rights. Thus, a Takings Implication Assessment need not be 
prepared under Executive Order 12630, ``Governmental Actions and 
Interference with Constitutionally Protected Property Rights.''

Executive Order 12866

    This rule is a significant rule under executive Order 12866 and has 
been reviewed by the Office of Management and Budget. MMS' analysis 
indicates the rule will have a total reporting cost of $3.1 million. 
Since the rule will have an annual effect on the economy of less than 
$100 million, the rule does not have a significant economic effect as 
defined by Executive Order 12866.

Executive Order 12988

    The Department has certified to OMB that this rule meets the 
applicable reform standards provided in Section 3(a) and 3(b)(2) of 
Executive Order 12988.

Paperwork Reduction Act of 1995

    The MMS submitted the information collection contained in this 
interim final rulemaking to the Office of Management and Budget (OMB) 
with a request for emergency processing. It was approved by OMB and 
assigned OMB Control Number 1010-0107.
    With this notice, we are starting the 60-day comment period. As 
part of our continuing effort to reduce paperwork and respondent 
burdens, we invite the public and other Federal agencies to comment on 
any aspect of the reporting burden imposed by this interim final 
rulemaking. Submit your comments to David, S. Guzy, Chief, Rules and 
Publications Staff, Royalty Management Program, Minerals Management 
Service, P.O. Box 25165; courier delivery to Building 85, Denver 
Federal Center, Denver, Colorado 80225; or e-mail David__G[email protected].
    The Paperwork Reduction Act of 1995 provides that an agency may not 
conduct or sponsor, and a person is not required to respond to, a 
collection of information unless it displays a currently valid OMB 
control number. OMB has up to 60 days to approve or disapprove this 
collection of information but may respond after 30 days from receipt of 
our request. Therefore, your comments are best assured of being 
considered by OMB if they are received by OMB within 30 days of 
publication of this notice. However, MMS will consider all comments 
received during the comment period for this notice of interim final 
rulemaking.
    In compliance with the Paperwork Reduction Act of 1995, Section 
3506 (c)(2)(A), we are notifying you, members of the public and 
affected agencies, of this collection of information, and are inviting 
your comments. Is this information collection necessary for us to 
properly do our job? Have we accurately estimated the industry burden 
for responding to this collection? Can we enhance the quality, utility, 
and clarity of the information we collect? Can we lessen the burden of 
this information collection on the respondents by using automated 
collection techniques or other forms of information technology?
    This information collection is titled Designation of Royalty 
Payment Responsibility. RSFA provides that owners of operating rights 
are primarily liable for royalty payments on their portions of their 
leases, and that owners of record title are secondarily liable. The Act 
allows lessees, operating rights owners and/or record title owners, to 
designate another person to pay royalties on their behalf by a written 
instrument filed with the Secretary. Finally, RSFA provides that the 
designated persons, designees, are not liable. This collection of 
information provides a mechanism for identifying lessees and their 
designees.
    Currently, it is common for a payor rather than a lessee to make 
royalty and related payments on a Federal lease. When a payor pays 
royalties on a Federal lease on behalf of a lessee, RSFA requires that 
the lessee designate the payor as its designee. We are requiring each 
payor to provide us information regarding the lessee on whose behalf 
they are paying because we need to know who all the lessees are in 
order to inform them of their obligation to designate a payor to be

[[Page 42066]]

their lawful designee by a written instrument filed with the Secretary. 
RSFA made this payor designation requirement effective for lease 
production beginning September 1, 1996. We are asking payors and 
lessees to provide data required under RSFA so that we can fully 
implement the Act.
    The hour burden for approximately 2,500 payors to respond to this 
collection of information is estimated at 60,000 hours. Payors have 
told us that to gather, collate, and enter required MMS data, line-by-
line on a report or computer generated file, takes them approximately 
1/2 hour per data line; an average payor will have approximately 48 
original data lines (one original line of data will result in multiple 
lines of data when the payor is the designee and is reporting for 
multiple lessees). We estimate that we will receive 120,000 original 
data lines.

2,500 payors  x  48 original data lines  x  \1/2\ hour per data line = 
60,000 burden hours

    The hour burden to lessees is estimated at 30,000 hours. The MMS 
will develop reports that consolidate the payor-provided data for all 
leases for which the lessees are presumed to have designees. The lessee 
may confirm the information on these reports and/or modify the reports 
by amending and/or correcting the report information. We estimate that 
a lessee will take approximately 3/4 hour per confirmation request.

20,000 lessees  x  2 confirmation requests  x  3/4 hour per request = 
30,000 burden hours

Unfunded Mandate Reform Act of 1995

    The Department has determined and certifies according to the 
Unfunded Mandates Reform Act, 2 U.S.C. 1502 et seq., that this rule 
will not impose a cost of $100 million or more in any given year on 
local, Tribal, State governments or the private sector.

National Environmental Policy Act of 1969

    We have determined that this 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

30 CFR Part 210

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

30 CFR Part 218

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

    Dated: July 10, 1997.
Sylvia V. Baca,
Deputy Assistant Secretary for Land and Minerals Management.

    For the reasons stated in the preamble, MMS amends 30 CFR parts 210 
and 218 as follows:

PART 210--FORMS AND REPORTS

    1. The authority citation for Part 210 continues 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 et seq., 3720A et seq., 9701 et 
seq.; 43 U.S.C. 1301 et seq., 1331 et seq., and 1801 et seq.

    2. Section 210.55 is revised to read as follows:


Sec. 210.55  Special Forms or Reports.

    (a) MMS may require you to submit additional information, forms, or 
reports other than those specifically referred to in this subpart. MMS 
will give you instructions for providing such information or filing 
such reports or forms. MMS will make requests for additional 
information, forms, or reports under this section in conformity with 
the Paperwork Reduction Act of 1995, 44 U.S.C. 3501, and other 
applicable laws.
    (b) If you file a Form MMS-4025, Payor Information Form (PIF) under 
Sec. 210.51, you must provide the following information to MMS upon 
request for each PIF:
    (1) The AID number for the lease;
    (2) The name, address, Taxpayer Identification Number (TIN), and 
phone number of the person for whom you are reporting and paying 
royalties or making other payments under the PIF;
    (3) Whether the person you named in paragraph (b)(2) of this 
section with respect to the lease for which you filed the PIF is a:
    (i) Lessee of record (record title owner);
    (ii) Operating rights owner (working interest owner); or
    (iii) Operator;
    (4) The name, address, and phone number of the individual to 
contact for the person you named in paragraph (b)(2) of this section;
    (5) Your TIN; and
    (6) Whether you are the Designee of the person you named in 
paragraph (b)(2) of this section under 30 U.S.C. 1712(a), and, if so:
    (i) The date your designation became effective; and
    (ii) The date your designation terminates, if applicable; and
    (iii) A copy of the written designation;
    (c) If you have been identified under paragraph (b)(2) of this 
section, you must provide the following information to MMS upon 
request:
    (1) Confirmation that you are the person identified under paragraph 
(b)(2) of this section;
    (2) Confirmation that the person identified in paragraph (b)(6) of 
this section is your designee; and
    (3) A designation under Sec. 218.52 of this title if the person 
identified in paragraph (b)(6) of this section is not your Designee, 
and if you are not reporting and paying royalties and making other 
payments to MMS.

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

    1. The authority citation for Part 218 continues 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 et seq., 3720A et seq., 9701 et 
seq.; 43 U.S.C. 1301 et seq., 1331 et seq., and 1801 et seq.

    2. Section 218.52 is revised to read as follows:


Sec. 218.52  How does a lessee designate a Designee?

    (a) If you are a lessee under 30 U.S.C. 1701(7), and you want to 
designate a person to make all or part of the payments due under a 
lease on your behalf under 30 U.S.C. 1712(a), you must notify MMS or 
the applicable delegated State in writing of such designation. Your 
notification for each lease must include the following:
    (1) The AID number for the lease;
    (2) The type of products you make payments for e.g., oil, gas.
    (3) The type of payments you are responsible for e.g., royalty, 
minimum royalty, rental.
    (4) Whether you are:
    (i) A lessee of record (record title owner) in the lease, and the 
percentage of your record title ownership in the lease; or
    (ii) An operating rights owner (working interest owner) in the 
lease, and the percentage of your operating rights ownership in the 
lease;

[[Page 42067]]

    (5) The name, address, Taxpayer Identification Number (TIN), and 
phone number of your Designee;
    (6) The name, address, and phone number of the individual to 
contact for the person you named in paragraph (a)(5) of this section;
    (7) Your TIN;
    (8) The date the designation is effective;
    (9) The date the designation terminates, if applicable, and
    (10) A copy of the written designation;
    (b) The person you designate under paragraph (a) of this section is 
your Designee under 30 U.S.C. 1701(24) and 30 U.S.C. 1712(a).
    (c) If you want to terminate a designation you made under paragraph 
(a) of this section, you must provide to MMS in writing before the 
termination:
    (1) The date the designation is due to terminate; and
    (2) If you are not reporting and paying royalties and making other 
payments to MMS, a new designation under paragraph (a) of this section.
    (d) MMS may require you to provide notice when there is a change in 
the percentage of your record title or operating rights ownership.

[FR Doc. 97-20592 Filed 8-4-97; 8:45 am]
BILLING CODE 4310-MR-P