[Federal Register Volume 64, Number 61 (Wednesday, March 31, 1999)]
[Proposed Rules]
[Pages 15320-15322]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-7894]


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DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR Part 256

RIN 1010-AC49


Leasing of Sulphur or Oil and Gas in the Outer Continental 
Shelf--Bonus Payments with Bids

AGENCY: Minerals Management Service (MMS), Interior.

ACTION: Proposed rule.

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SUMMARY: We are revising the current rule to allow us to require a 
specific payment method for 1/5 of the bonus payment due when we hold a 
sale to lease Federal offshore Outer Continental Shelf (OCS) lands. The 
current rule does not give us the authority to require bidders to use 
any single method for submitting 1/5 bonus payments with OCS bids. As 
electronic commerce becomes more efficient, reliable, and economical, 
we need to be able to require bidders to use automated payment methods 
when they are appropriate. This revision will allow us to require a 
specific form of bonus payment on a sale-by-sale basis to reduce the 
administrative burdens for both Government and industry.

DATES: We will consider all comments we receive by April 30, 1999. We 
will begin reviewing comments then and may not fully consider comments 
we receive after April 30, 1999.

ADDRESSES: If you wish to comment, you may submit your comments (three 
copies) by mail or hand-carry to the Department of the Interior; 
Minerals Management Service; Mail Stop 4024; 381 Elden Street; Herndon, 
Virginia 20170-4817; Attention: Rules Processing Team.

FOR FURTHER INFORMATION CONTACT: Jan Arbegast, Program Analyst, at 
(703) 787-1227.

SUPPLEMENTARY INFORMATION: The Federal Government has been receiving 
bonus bid payments to acquire leases offered at OCS lease sales since 
the mid-1950s. Prospective bidders submit the required 1/5 bonus 
payment in the form of a check or bank draft, which accompanies a 
sealed bid on a specific offshore tract of land. Since August 1997, we 
have offered prospective bidders the option of using electronic funds 
transfer (EFT) to submit their 1/5 bonus payment rather than a check or 
bank draft. As technology has progressed and as banking transactions 
become routinely automated, we need to have in place a rule that allows 
us to require automated payment such as EFT or other methods that may 
be more efficient. This revision allows flexibility so that we can 
require the specific method of bonus payment that is most efficient and 
administratively advantageous to the Government and industry.

Procedural Matters

Public Comments Procedure

    Our practice is to make comments, including names and home 
addresses of respondents, available for public review during regular 
business hours. Individual respondents may request that we withhold 
their home address from the rulemaking record, which we will honor to 
the extent allowable by law. There may be circumstances in which we 
would withhold from the rulemaking record a respondent's identity, as 
allowable by the law. If you wish us to withhold your name and/or 
address, you must state this prominently at the beginning of your 
comment. However, we will not consider anonymous comments. We will make 
all submissions from organizations or businesses, and from individuals 
identifying themselves as representatives or officials of organizations 
or businesses, available for public inspection in their entirety.

Federalism (Executive Order (E.O.) 12612)

    In accordance with E.O. 12612, the rule does not have significant 
Federalism implications. A Federalism assessment is not required.

Takings Implications Assessment (E.O. 12630)

    In accordance with E.O. 12630, the rule does not have significant 
Takings Implications. A Takings Implication Assessment is not required.

Regulatory Planning and Review (E.O. 12866)

    This document is not a significant rule and is not subject to 
review by the Office of Management and Budget under E.O. 12866.
    (1) This rule will not have an effect of $100 million or more on 
the economy. It will not adversely affect in a material way the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities.
    Ultimately, this rule is administratively advantageous to 
prospective bidders on the OCS. It will save time and paperwork in 
their bid-preparation process and will also use current technology, 
improving efficiency both for industry and the Government.
    (2) This rule will not create a serious inconsistency or otherwise 
interfere with an action taken or planned by another agency. Using EFT 
is common practice in private industry. Through the use of electronic 
commerce, we reduce the number of transactions required by bidders. 
This does not interfere with other agencies' actions.
    (3) This rule does not alter the budgetary effects or entitlements, 
grants, user fees, or loan programs or the rights or obligations of 
their recipients. This

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rule has no effect on these programs or rights of the programs' 
recipients.
    (4) This rule does not raise novel legal or policy issues. As 
previously stated, the intent of this rule is to give the Government 
flexibility in requiring a specific form of bonus payment, including 
EFT. It is commonplace in private industry and creates no novel policy 
issues.

Civil Justice Reform (E.O. 12988)

    In accordance with E.O. 12988, the Office of the Solicitor has 
determined that this rule does not unduly burden the judicial system 
and meets the requirements of Secs. 3(a) and 3(b)(2) of the Order.

National Environmental Policy Act (NEPA)

    This rule does not constitute a major Federal action significantly 
affecting the quality of the human environment. A detailed statement 
under the NEPA of 1969 is not required.

Paperwork Reduction Act (PRA) of 1995

    This regulation does not require information collection, and a 
submission under the PRA is not required.

Regulatory Flexibility Act (RFA)

    The Department certifies that this document will not have a 
significant economic effect on a substantial number of small entities 
under the RFA. (5 U.S.C. 601 et seq.). This revised rule does not have 
a significant effect on a substantial number of small entities. We are 
revising this rule to allow us the flexibility to select the method for 
a prospective bidder at an OCS lease sale to submit a bonus payment by 
the most efficient method. If we select EFT for the method of 
submitting bonus payments, any small company has access to a commercial 
bank that routinely uses EFT. All current lessees must transmit the 
remaining 80 percent of their bonus payment and their first year rental 
payment via EFT. The regulation has been effective since 1984. This 
should not be a significant burden. The cost for establishing an 
account for a small company should be nominal. The bank will charge a 
fee per wire transfer which may be as high as $30, but if a company has 
a large volume of wire transfers, the bank may only charge about a 
dollar or less per wire transfer. In the worst case scenario, if 30 
small companies (average for recent sales) bid at $30 per EFT wire 
transfer, to total cost for all small companies for a typical sale is 
$900.
    This rule only affects lessees on the OCS. We use Standard Industry 
Code 1381, Drilling Oil and Gas Wells, to characterize this group. 
There are 1,380 firms that drill oil and gas wells onshore and 
offshore. Of these, approximately 130 companies who are offshore 
lessees/operators need to follow our rule. According to Small Business 
Administration (SBA) estimates, 39 companies qualify as large firms and 
91 as small firms. The SBA defines a small business as having either 
(a) annual revenues of $5 million or less for exploration service and 
field service companies, or (b) less than 500 employees for drilling 
companies and for companies that extract oil, gas, or natural gas 
liquids.
    The rule gives us the flexibility to select the most efficient 
method for a bidder at an OCS lease sale to submit a bonus payment. We 
believe this efficiency is realized by both bidders and MMS. When using 
EFT, a bidder will need to advise its commercial bank to submit its 
bonus payment via EFT, which is now commonplace. When using EFT, the 
bidder will contact the MMS Royalty Management Office designated in the 
final sale notice for the proposed lease sale.
    If EFT is used, overall lessee (prospective bidder's) costs will 
decrease as well as bid preparation time. This is not a major rule. The 
cost of implementation should be minimal, regardless of company size. 
Since one EFT transaction can be used per sale, and it costs $30 for 
the wire transfer compared to the administrative costs of preparing a 
cashier's check for each bid, there is little doubt that using EFT is 
more cost effective and more efficient.
    The rule should not affect the price that a company will charge for 
its product or service. It should increase efficiency and decrease 
administrative burden. The rule should not cause any company to go out 
of business. In fact, this rule will give the MMS the ability to 
establish on a sale-by-sale basis, the most efficient and effective 
payment method for both MMS and industry. If EFT is used, hundreds of 
dollars in staff time may be saved by the MMS and industry.
    Some small companies may consider a change in the method by which 
they submit bids at lease sales to be significant (from paper check to 
EFT). Other companies may think the change is trivial. Several small 
companies may experience a short-term effect as they revise current 
business practices. The rule should not have a significant economic 
effect on any company qualified to participate in OCS lease sales.
    Your comments are important. The Small Business and Agriculture 
Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards were 
established to receive comments from small businesses about Federal 
agency enforcement actions. The Ombudsman will annually evaluate the 
enforcement activities and rate each agency's responsiveness to small 
business. If you wish to comment on the enforcement actions of MMS, 
call toll-free (888) 734-3247.

Small Business Regulatory Enforcement Fairness Act (SBREFA)

    This rule is not a major rule under (5 U.S.C. 804(2)) the SBREFA. 
This rule:
    (a) Does not have an annual effect on the economy of $100 million 
or more. This rule will increase the efficiency and reduce the 
administrative burden of both the Government and private industry.
    (b) Will not cause a major increase in costs or prices for 
consumers, individual industries, Federal, State, or local government 
agencies, or geographic regions. This rule will decrease costs and time 
for prospective bidders preparing for bid submission. It will reduce 
the Government's administrative burden as well. If EFT is used, the 
Government and industry will save potentially hundreds of dollars in 
bid preparation time and administrative costs. Since one EFT 
transaction can be used per sale, and it costs $30 for the wire 
transfer compared to the administrative costs of preparing a cashier's 
check for each bid, there is little doubt that using EFT is more cost 
effective and more efficient.
    (c) Does not have significant adverse effects on competition, 
employment, investment, productivity, innovation, or ability of U.S.-
based enterprises to compete with foreign-based enterprises. The rule 
will increase productivity, innovation, and ability of U.S.-based 
enterprises.

Unfunded Mandate Reform Act (UMRA) of 1995

    This rule does not impose an unfunded mandate on State, local, or 
tribal governments or the private sector of more than $100 million per 
year. The rule does not have a significant or unique effect on State, 
local, or tribal governments or the private sector. A statement 
containing the information required by the UMRA. (2 U.S.C. 1531 et 
seq.) is not required.

List of Subjects in 30 CFR Part 256

    Administrative practice and procedure, Continental shelf, 
Environmental protection, Government contracts, Intergovernmental 
relations, Oil and gas exploration, Public lands-

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mineral resources, Public lands-rights-of-way, Reporting and 
recordkeeping requirements, Surety bonds.

    Dated: March 23, 1999.
Sylvia V. Baca,
Acting Assistant Secretary, Land and Minerals Management.
    For the reasons stated in the preamble, Minerals Management Service 
(MMS) proposes to amend 30 CFR part 256 as follows:

PART 256--LEASING OF SULPHUR OR OIL AND GAS IN THE OUTER 
CONTINENTAL SHELF

    1. The authority citation for part 256 continues to read as 
follows:

    Authority: 43 U.S.C. 1331 et seq.

    2. In Sec. 256.46, revise paragraph (b) to read as follows:


Sec. 256.46  Submission of bids.

* * * * *
    (b) MMS requires a deposit for each bid. The notice of sale will 
specify the bid deposit amount and method of payment.
* * * * *
[FR Doc. 99-7894 Filed 3-30-99; 8:45 am]
BILLING CODE 4310-M-P