[Federal Register Volume 64, Number 92 (Thursday, May 13, 1999)]
[Rules and Regulations]
[Pages 26240-26262]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-11816]



[[Page 26239]]

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Part X

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Department of the Interior





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Office of Hearings and Appeals



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Minerals Management Service



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30 CFR Parts 208, 241, 242, 243, 250, and 290 and 43 CFR Part 4



Appeals of MMS Orders; Final Rule

  Federal Register / Vol. 64, No. 92 / Thursday, May 13, 1999 / Rules 
and Regulations  

[[Page 26240]]



DEPARTMENT OF THE INTERIOR

Office of Hearings and Appeals
Minerals Management Service

30 CFR Parts 208, 241, 242, 243, 250, and 290

43 CFR Part 4

RIN 1010-AC21


Appeals of MMS Orders

AGENCIES: Office of Hearings and Appeals (OHA) and Minerals Management 
Service (MMS), Interior.

ACTION: Final rulemaking.

-----------------------------------------------------------------------

SUMMARY: OHA and MMS are amending their rules governing the appeal of 
orders from MMS's Royalty Management Program and MMS's Offshore 
Minerals Management. This rule makes final parts of the proposed rule 
published on January 12, 1999. The rule also: implements certain 
provisions of the Federal Oil and Gas Royalty Simplification and 
Fairness Act of 1996 governing how appellants in royalty appeals may 
demonstrate financial solvency instead of posting a surety, and 
provides for new regulations to collect processing fees in appeals from 
Offshore Minerals Management orders.

EFFECTIVE DATES: Effective on May 13, 1999, except that the amended 
provisions of 30 CFR parts 208, 241, and 243 will be effective June 14, 
1999.

FOR FURTHER INFORMATION CONTACT: David S. Guzy, Chief, Rules and 
Publications Staff, telephone (303) 231-3432, FAX (303) 231-3385, e-
Mail David.G[email protected].

SUPPLEMENTARY INFORMATION: The rule provides that 30 CFR parts 250 and 
290 and 43 CFR subpart J will be effective immediately upon 
publication. Under the Administrative Procedure Act at 5 U.S.C. 553(d), 
an agency must find good cause to make a substantive rule effective 
sooner than 30 days after the date of publication. There are certain 
administrative appeals pending before the Department in which, under 30 
U.S.C. 1724(h)(1), the Secretary must issue a final decision before May 
13, 1999, which is less than 30 days after publication of this rule. 
(May 13, 1999, is 33 months after the date of enactment of the Federal 
Oil and Gas Royalty Simplification and Fairness Act of 1996, which 
enacted 30 U.S.C. 1724(h).) If there is no final departmental decision 
by that date, 30 U.S.C. 1724(h)(2) imposes a statutory rule of decision 
in those cases. Title 43 CFR part 4 subpart J resolves various issues 
involved in implementing the requirements of 30 U.S.C. 1724(h)(1) and 
(2). Its provisions apply to those cases in which the Secretary must 
issue a final decision by May 13, 1999, and the effect of the statutory 
rule of decision if the Department does not issue a final decision by 
that deadline. Title 30 CFR parts 250 and 290 contain provisions 
regarding appeals of orders that are part of the integrated changes to 
the orders and appeals scheme that includes the new 43 CFR part 4 
subpart J. The Department therefore finds that good cause exists to 
make these provisions effective immediately upon publication. The 
remainder of this rule will be effective 30 days after publication.

I. Background

    In May 1994, MMS began a comprehensive review of its administrative 
appeals process. As part of that review, MMS held several informal 
meetings with State, tribal, and industry representatives to discuss 
the problems and possible solutions regarding the appeals process. The 
principal problems identified included the length of the appeals 
process--sometimes taking several years to resolve a case--and the 
excessive costs of the process to both MMS and appellants.
    In 1995, the Department of the Interior (DOI) established a Royalty 
Policy Committee (RPC) under the Minerals Management Advisory Board. At 
its first meeting in September 1995, the RPC established the Appeals 
and Alternative Dispute Resolution (ADR) Subcommittee. The Appeals and 
ADR Subcommittee was created to make recommendations to the RPC to 
improve the appeals and ADR processes. Membership in the Appeals and 
ADR Subcommittee included 11 representatives from industry, 5 
representatives from States, and 2 representatives from Indian tribes. 
The Subcommittee agreed that the principal purpose of the MMS 
administrative appeals process should be the expeditious and 
independent review of appeals. The RPC made a recommendation (RPC 
Report) and submitted that recommendation to the Secretary of the 
Interior. The primary recommendation was to change the current two-step 
appeals process into a one-stage Interior Board of Land Appeals (IBLA) 
administrative appeal process. On September 22, 1997, the Secretary 
accepted the RPC report for consideration and proposal with some 
changes and clarifications.
    On August 13, 1996, the President signed into law 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 amended portions of 
the Federal Oil and Gas Royalty Management Act of 1982 (FOGRMA), 30 
U.S.C. 1701 et seq. Before enactment of RSFA, there was no time limit 
on when DOI must issue decisions in appeals of orders involving royalty 
and other payments for Federal oil and gas leases. RSFA added a new 
FOGRMA section 115(h), 30 U.S.C. 1724(h), governing the time frame for 
DOI to process appeals of MMS orders or decisions involving royalties 
and other payments due on Federal oil and gas leases. For appeals 
involving Federal oil and gas leases covered by this new provision, DOI 
has 33 months from the date a proceeding is commenced to complete all 
levels of administrative review. If DOI does not decide the appeal 
within 33 months, the appeal is deemed decided either for or against 
DOI, depending on the type of order and the monetary amount at issue in 
the appeal. The 33-month deadline does not apply to appeals involving 
Indian leases or Federal leases for minerals other than oil and gas.
    As a result of the MMS review of the appeals process and RSFA, MMS 
announced a proposed rule in the Federal Register on October 28, 1996 
(61 FR 55607). The proposed regulation provided for amendments to the 
MMS appeals process at 30 CFR part 290. On December 31, 1997, MMS 
announced that it intended to withdraw the October 28, 1996, proposed 
rule when it published a revised notice of proposed rule (62 FR 68244). 
Accordingly the October 28, 1996, proposed rule was withdrawn when MMS 
proposed a revised appeals process on January 12, 1999 (64 FR 1930) 
that included most of the RPC Report recommendations.
    Two portions of the proposed rule would have implemented the RPC 
recommendations. First, the new proposed 43 CFR part 4, subpart J, 
would have established a new procedure for appeals of royalty orders. 
That section would have replaced the current regulations at 30 CFR part 
290 and 43 CFR part 4, subpart E, as they relate to appeals of royalty 
orders initially to the MMS Director and then to the IBLA. Second, the 
new proposed 30 CFR part 242, subpart B, would have established 
procedures for orders issued by MMS and delegated States. That subpart 
would have incorporated certain RSFA provisions regarding orders and 
orders to perform restructured accounting and for service of orders on 
lessees when orders are sent to their designees. In addition, subpart C 
of proposed part 242 would have established procedures for Indian 
lessors to formally request that MMS

[[Page 26241]]

take actions. Finally, subpart D of part 242 would have included the 
service requirements that currently are found at 30 CFR part 243.
    We have decided not to go forward at this time with the entire 
appeals process that we proposed on January 12, 1999, for two major 
reasons. One, we received numerous negative written and oral comments 
regarding the proposed process. Two, the necessity to publish before 
May 13, 1999, a final rule implementing the RSFA appeals adjudication 
time requirements and the associated rule of decision under 30 U.S.C. 
1724(h) for cases in which there is no final Departmental decision 
prevents us from conducting a thorough and reasoned review of all the 
comments we received on the appeals process. One commenter suggested 
that we withdraw the proposed rule, leave the current process in place, 
and only publish the portions of the proposed rule necessary to 
implement RSFA. Rather than withdrawing the proposed rule, we are 
making final only those portions of the proposed rulemaking necessary 
to implement RSFA, and the portions of the proposed rule which received 
few, if any, comments. Those portions of the rule that are part of this 
final rulemaking are as follows:
    (1) The sections of proposed 43 CFR part 4, subpart J, necessary to 
implement the 33-month time period at 30 U.S.C. 1724(h), and allow 
joinder for lessees who receive notice of an order issued to their 
designee as required under 30 U.S.C. 1712(a);
    (2) Proposed 30 CFR part 243, regarding stays pending appeal and 
bonding, and implementing 30 U.S.C. 1724(l) which allows lessees to 
demonstrate financial solvency in lieu of posting a bond or other 
surety instrument pending an administrative or judicial proceeding;
    (3) Proposed 30 CFR part 290 regarding appeals of MMS Offshore 
Minerals Management Program (OMM) orders and related changes to 30 CFR 
part 250;
    (4) Proposed 30 CFR part 241 regarding civil penalties authorized 
by FOGRMA; and
    (5) Proposed changes to definitions in 30 CFR 208.2 and to 30 CFR 
208.16 regarding appeals of contracting officers' decisions by 
purchasers of Federal royalty oil.
    Because we are not finalizing the entire proposed rule, we will 
continue to require appellants to use the appeals procedures for 
royalty orders found at 30 CFR part 290 and 43 CFR part 4, subpart E, 
until we can publish a final rule on the appeals process. However, for 
royalty-related appeals to the MMS Director, the rules are now located 
at 30 CFR part 290, subpart B. That subpart is revised to contain 
appropriate headings and provisions of the proposed rule necessary to 
implement RSFA. Subpart A contains the procedures in the proposed rule 
for OMM appeals.

II. Comments on Proposed Rule

    The proposed rulemaking provided a 60-day public comment period 
which ended March 15, 1999. On February 16, 1999, DOI held a public 
hearing in Houston, Texas, to receive oral comments on the proposed 
rule. That public hearing was announced in the Federal Register (64 FR 
3262, January 21, 1999). Those attending included representatives of 
natural gas, oil, and coal producers, including representatives both of 
large integrated producers and of smaller independent producers. 
Participants in the public hearing had the opportunity to ask specific 
questions about the proposed rule and to provide comments on the 
proposed rule.
    MMS received written comments from 13 commenters during the comment 
period. Two additional commenters submitted late comments, which we 
also accepted and considered. Thus, a total of 15 comments were 
accepted for review. One of the comments was from the State of 
California, 1 was from a mining association, 3 were from oil and gas 
trade associations, 8 were from industry, 1 was from an Administrative 
Law Judge and Attorney-Advisor, from the DOI Salt Lake City Office of 
the Hearings Division, Office of Hearings and Appeals, and 1 was from a 
law firm.
    We reviewed and analyzed all of the comments pertaining to the 
sections that are part of this final rulemaking and, in some instances, 
revised the language of the final rule based on these comments. The 
following is a discussion of the specific comments we received and our 
response by section number.

III. Section-by-Section Analysis, 30 CFR Part 208

    Comment--We received no comments on the proposed amendments to part 
208.
    Response--Although we received no comments regarding this part, we 
made some minor changes necessary to reflect that we are not making the 
entire proposed rule final at this time.

IV. Section-by-Section Analysis, 30 CFR Part 241 Civil Penalties

    While the focus of the comments to this proposed rulemaking 
concerned the provisions of 43 CFR part 4, subpart J, several comments 
were received with reference to this part. Most of the comments concern 
sections of the rule in which no substantive change is proposed--where 
MMS has simply attempted to restate in plain language the rule under 
which MMS has operated for approximately 15 years. All comments 
received concerning this part were received from an association of oil 
and gas producers. Where we received more than one comment, the 
additional comments came from an individual oil and gas producer.

Section 241.50  What Definitions Apply to This Subpart?

    Comments--We received two comments, which noted that the proposed 
rule has not defined ``violation.'' Specifically they inquired whether, 
for example, when a company fails to report, is each line that should 
have been reported a violation or is it one violation for the entire 
report?
    Response--MMS has operated under the current regulations for 15 
years without a regulatory definition of violation. Any attempt to 
define the term to meet all possible circumstances would require an 
impractically exhaustive list. Violations could be any failure to 
comply with statutes, rules, lease terms or orders.
    In response to the specific question asking whether each line would 
be a separate violation, MMS has always considered that each failure to 
report, or wrongly reporting a line that is required to be reported, is 
a violation. For example, if a company fails to report its production 
of natural gas, each line for which natural gas should have been 
reported on the production report is a violation, and each month and 
each lease for which it should have been reported constitutes an 
additional violation.

Section 241.51  What May MMS Do if I Violate a Statute, Regulation, 
Order, or Lease Term Relating to a Federal or Indian Oil and Gas Lease?

    Comment--One commenter noted that this section does not provide for 
the appointment of an agent to receive service. It also believes that 
the Department is obligated to allow this designation under 30 U.S.C. 
1719(h). In addition, the commenter also believes that the statute only 
allows notice by personal service or registered mail. However, it 
believes that although express mail and certified mail are not 
permitted, they should be.
    Response--We agree that this section, as proposed, does not allow 
specifically for the appointment of an agent to receive service. 
However, it proposed to use the proposed provisions of 30 CFR

[[Page 26242]]

242.304 and 242.305, which provide for service to designated persons. 
For violations concerning a royalty report (Form MMS-2014), MMS will 
send the notice to the individual named by the lessee, designee, 
reporter or payor as the person to whom to direct correspondence. A 
similar provision was included for violations concerning production 
reports and audits. The proposed rule did not provide for designations 
of persons to be served with notices of violations committed by payors 
or designees of which the lessee receives notice. MMS has not 
traditionally sent notices of noncompliance to lessees that are not 
acting as reporters, designees or payors. For this reason, we did not 
consider this possibility when proposing these rules. We have now added 
provisions to section 241.51 clearly allowing the designation of an 
agent for the receipt of notices of noncompliance and civil penalty 
notices.
    We also agree that we are limited in how we may serve notices under 
30 U.S.C. 1719(h). While we also agree that we should be able to use 
other forms of service, we have clarified that service must be by 
registered mail or personal service, both in this section and in 
section 241.61.

Section 241.52  What If I Correct the Violation?

    Comment--One comment was received, to the effect that this section 
conflicts with section 241.54, by implying that no review was possible 
in the case of a company that has complied with a notice of 
noncompliance within the statutory 20-day period to correct the 
violation.
    Response--We believe that the language in proposed section 241.54 
that allowed review ``regardless of whether you correct the 
violations,'' clearly means that a party may seek a hearing on the 
record even if it complied with requirements stated in a notice of 
noncompliance. However, we have no record of any past case in which a 
violator corrected a violation and then requested a hearing.

Section 241.53  What If I Do Not Correct the Violation?

Section 241.54  How May I Request a Hearing on the Record on a Notice 
of Noncompliance?

Section 241.55  Does My Request for a Hearing on the Record Affect the 
Penalties?

    Comments--We received two comments concerning these sections. These 
commenters believed that the rule should provide for: (1) a longer than 
20-day period for the recipient of a notice to file its request for a 
hearing (preferably 40 days); (2) a separate opportunity for a hearing, 
even if no request for a hearing is made from the notice of 
noncompliance; (3) a mechanism for expedited review when there is a 
request for a stay to allow substantive review without the risk of 
incurring penalties; and (4) more specific regulatory criteria for 
determining the amount of penalties. The commenters reasoned that the 
purposes of 30 U.S.C. 1719, as well as all of FOGRMA, are to encourage 
voluntary compliance, and imply that the rule, as proposed, violates 
due process.
    Response--Starting with how we determine the amount of penalties, 
we do not believe that it is necessary to provide the detailed 
standards for setting penalty amounts in regulatory form. MMS has 
written guidelines which set out, in ranges, appropriate penalties for 
a variety of circumstances. We do not believe it is possible to set out 
all the standards in advance in a permanent fashion by rule. FOGRMA 
requires only that ``In determining the amount of such penalty, or 
whether it should be remitted or reduced, and in what amount, the 
Secretary shall state on the record the reasons for his 
determinations.'' 30 U.S.C. 1719(i). This subsection neither requires, 
nor implies, that the determination be made through regulation, which 
would limit the flexibility of DOI in setting penalty amounts 
appropriate to the wide variety of possible circumstances that should 
be considered. However, to assist potential recipients of notices of 
noncompliance, the following table shows the current non-binding 
guidelines MMS uses:

------------------------------------------------------------------------
                                                     Company size
                 Violation                  ----------------------------
                                              Minor   Moderate    Major
------------------------------------------------------------------------
Failure to report..........................    $0-10     $0-25    $5-500
Failure to pay.............................     0-20      2-50    10-500
Failure to provide information.............    0-100     2-200    20-500
Failure to comply with order to perform         0-15      2-35   10-500
 restructured accounting...................
------------------------------------------------------------------------
Note: Amounts in Dollars per violation per month.


    We also believe that the current regulations of the Hearings 
Division of the Office of Hearings and Appeals at 43 CFR 4.21 have 
proven more than adequate when an appellant petitions for a stay. We 
have used these procedures for 15 years without any complaints about an 
appellant's inability to have its petition timely and fairly reviewed 
by the Hearings Division. We therefore will not change the procedures 
to mandate a faster review of requests for stays of accrual of 
penalties.
    As to the commenter's first two requests, FOGRMA grants the 
Secretary the discretion to set the time limits for an appellant to 
request a hearing. MMS has operated under rules requiring hearings to 
be requested within 20 days of the date of receipt of the notice of 
noncompliance for more than 15 years without complaint. In spite of 
this history, in the interests of increasing a violator's ability to 
request hearings, we have changed the proposed rule to allow 30 days 
from the date of receipt of the notice of noncompliance for an 
appellant to request a hearing on the record. MMS has a long history of 
using a 30-day period in other contexts (specifically for appeals from 
MMS orders), which allows ample time for appellants to decide whether 
to seek review in those cases.
    We agree with the comment that the violator may still have need for 
redress concerning the amount of a civil penalty even though that 
violator did not contest the notice of noncompliance. We therefore have 
added new sections 241.56 and 241.64 that allow a violator, who did not 
request a hearing on the record on a notice on noncompliance, 10 days 
from the receipt of the Notice of Civil Penalty to request a hearing on 
the record limited to the issue of the amount of the penalty only. By 
not requesting a hearing on the record on the notice of noncompliance, 
the recipient waived the right to contest the underlying liability for 
penalties.

Section 241.60  May I Be Subject to Penalties Without Prior Notice and 
an Opportunity to Correct?

Section 241.61  How Will MMS Inform Me of Violations Without a Period 
To Correct?

Section 241.62  How May I Request a Hearing on the Record on a Notice 
of Noncompliance Regarding Violations Without a Period To Correct?

Section 241.63  Does My Request for a Hearing on the Record Affect the 
Penalties?

    Comments--We received one set of comments that addressed these 
sections concerning penalties that may begin without a period to 
correct. The first issue involves the definition of violation. The 
commenter referred to FOGRMA, which provides for an

[[Page 26243]]

assessment of $25,000 per day for each day such violation continues. 
The commenter believes that MMS has been inconsistent by specifying a 
penalty calculated at $25,000 per day for each violation. The second 
issue is similar to the comments on sections 241.52 through 241.54 in 
that no separate right of review is granted as to the amount of the 
penalty and that the time to seek review is too short.
    We also received one comment that addressed a statement in the 
preamble that MMS believes that the statutory provision for assessing 
penalties for ``failure to permit entry, inspection or audit'' applies 
to failure to provide MMS with documents that MMS has requested under 
authority of FOGRMA, the regulations or the leases. The commenter noted 
that MMS has argued in court that audit requests are voluntary and, for 
that reason, that they are not appealable agency actions. The commenter 
continued by saying that argument is inconsistent with making lessees 
subject to FOGRMA penalties without opportunity to correct for not 
complying with audit requests.
    Response--As we explained in the response to comments on section 
241.50, we believe MMS has been very clear over the past decade and 
one-half that each failure to comply with the mandates of law is a 
separate violation. We believe that while FOGRMA uses the word ``such'' 
rather than ``each,'' their meaning is identical in the context of this 
regulation. ``Such is a demonstrative word used to indicate the quality 
or quantity of a thing * * *.'' The definition of ``each'' is ``Every 
(individual of a number) regarded or treated separately.'' The Compact 
Edition of the Oxford English Dictionary 823 Vol I and 3136, Vol. II 
(1971). In both cases the word signifies a quantity. In the context of 
FOGRMA, there is a separate violation, and thus a separate penalizable 
act with a separately accruing penalty, for each such violation. The 
regulation's meaning is identical to the statute's meaning.
    As to the potential problem with a person wanting to appeal only 
the amount of the penalty, we have added a provision at section 241.64 
allowing a hearing on that issue alone, paralleling the new section 
241.56.
    We continue to believe there are circumstances where a refusal to 
provide MMS, or a delegated State, or a Tribe operating under a 
cooperative agreement (or under a self-determination contract or 
compact), with documents during an audit would amount to a failure to 
permit lawful audit. The exact circumstances under which MMS may use 
this provision will be addressed in future proceedings when MMS 
believes an appropriate case has arisen.

Section 241.70 How Does MMS Decide What the Amount of the Penalty 
Should Be?

    Comment--One comment was received that complained that the criteria 
articulated for determining the quantum of civil penalty are 
inadequate. The commenter demanded that more specific criteria be 
articulated to provide a reviewing officer and a court more objective 
criteria for determining the exercise of the agency's authority.
    Response--MMS has operated under provisions similar to these for 15 
years without complaint. Neither Administrative Law Judges, the 
Interior Board of Land Appeals, nor the Federal courts found any need 
for guidance in the form of a regulation. Indeed, FOGRMA only requires 
``In determining the amount of such penalty, or whether it should be 
remitted or reduced, and in what amount, the Secretary shall state on 
the record the reasons for his determinations.'' 30 U.S.C. 1719(i). As 
mentioned in the response to sections 241.53, 241.54 and 241.55, we 
intend to continue to articulate our reasons as part of the 
administrative record rather than attempting to do so in a rule.

Section 241.74  May I Seek Judicial Review of the Decision of the 
Interior Board of Land Appeals?

    Comment--One comment was received to the effect that the regulation 
should include the 30 U.S.C. 1719(j) requirement that judicial review 
must be taken in the United States District Court for the judicial 
district in which the violation allegedly took place.
    Response--We do not have the ability to determine jurisdiction or 
venue, or other rules concerning review by Federal courts. We have 
therefore simplified the regulation by making it a mere pointer to the 
proper section of the United States Code. We have retained the sentence 
informing the reader of the time limit to make it easier for readers of 
these regulations to comply within the statutory time limit.

Section 241.75  When Must I Pay the Penalty?

    Comment--One comment was received repeating the request for 
separate review of the amount of the penalty.
    Response--As mentioned above, we have added provisions allowing for 
hearings on the record limited to the amount of penalty assessed. 
Therefore, the paragraph within this section as proposed that 
prohibited such reviews has been removed.

Section 241.77  How May MMS Collect the Penalty?

    Comment--One comment was received that complained that MMS has no 
statutory authority under FOGRMA for execution against a lease surety 
or to offset amounts the United States owes to the violator.
    Response--FOGRMA specifically provides for offset: ``The amount of 
any penalty under this section, as finally determined may be deducted 
from any sums owing by the United States to the person charged.'' 30 
U.S.C. 1719(f). There is no specific statutory authority regarding 
collecting against lease sureties. They fall under the plenary 
regulatory authority of the Secretary under the mineral leasing laws. 
This regulation is sufficient authority under those provisions.

V. Section-by-Section Analysis, 30 CFR Part 242

    We have decided not to finalize part 242 as proposed on January 12, 
1999, at this time. However, we have reserved this part for future 
publication.

VI. Section-by-Section Analysis for 30 CFR Part 243 Suspensions 
Pending Appeal and Bonding--Royalty Management

    General comments--We received two sets of comments that addressed 
this rule, one from an oil and gas producer and one from an association 
of oil and gas companies. The producer's comments were favorable to the 
proposed rule and referred to the association's comments for specific 
suggestions.
    The association also welcomed the proposed rule and MMS's proposal 
to apply the rules even to situations where they are not mandated by 
RSFA, such as production from periods prior to September 1996 and to 
leases for minerals other than oil and gas. The commenter also 
responded to the question about whether the rules should apply to 
Indian leases as well as to Federal leases. That commenter stated that 
it believed that the rules should apply to all appeals, because Indian 
lessors as well as the Federal Government would be protected by the 
financial solvency provisions.
    Response--We appreciate the favorable comments on the proposal. 
Upon considering the comment that the financial solvency provisions of 
the proposed rule should apply to Indian as well as Federal leases, we 
have decided that there are important reasons for having different sets 
of rules for Indian

[[Page 26244]]

and Federal leases. First, Indian lessors are not in a comparable 
position to the United States in their ability to absorb the risk of 
default by a person believed to be financially solvent but who later 
defaults on an appealed obligation. Indian lessors are much smaller, 
less diversified in their portfolio of risks than the United States, 
and are in a significantly less advantageous position than the United 
States. Second, the standards that we apply, and must apply, to Indian 
leases are different from those applied to Federal leases. We have a 
trust responsibility to Indian lessors and believe that requiring the 
protection of sureties for appeals of obligations on Indian leases is 
appropriate. Finally, Congress declined to extend the benefit of self-
bonding by demonstration of financial solvency to lessees on Indian 
lands. For these reasons, we will keep the separation between Indian 
and Federal leases as it was in the proposed rule.

Section 243.3  What Definitions Apply to This Part?

Section 243.4  How Do I Suspend Compliance With an Order?

    Comment--One commenter requested that definitions follow the RSFA 
definitions. In particular, ``order'' does not appear to include 
anything other than orders to pay monetary obligations. Therefore the 
rules seem only to permit the suspension of these orders.
    Response--The purpose of the use of the word ``order'' in this part 
is to refer to the proper parts under which an appeal may be taken for 
which compliance may be suspended under this part. To avoid confusion 
we have deleted the reference to monetary obligation. We have clarified 
section 243.4 to provide that appeals of orders that do not require the 
making of a payment may be suspended without posting a surety or 
demonstrating financial solvency.

Section 243.5  May Another Person Post a Bond or Other Surety 
Instrument or Demonstrate Financial Solvency on My Behalf?

    Comment--One commenter responded to our request for comments on 
whether any limitations are needed on who may post surety or 
demonstrate financial solvency on behalf of an appellant. That 
commenter does not believe any limitations are appropriate.
    Response--We appreciate the comment, and we believe that the phrase 
``any other person'' clearly places no limitation on who may post 
surety or demonstrate financial solvency on a lessee's behalf. 
Therefore, we have decided to leave the rule as proposed.

Section 243.6  When Must I or Another Person Meet the Bonding or 
Financial Solvency Requirements Under This Part?

    Comment--One commenter believes this section should be amended to 
make it clear that only one bond or demonstration of financial solvency 
is required for any particular liability. The commenter does not 
believe MMS should require sureties from a lessee and its designee for 
the same liability. While the commenter believes, from our explanation 
in the preamble to the proposed rule, that only one guarantee is 
intended, it believes the rule itself should make clear that either the 
lessee or the designee, but not both, is required to post surety or 
demonstrate financial solvency.
    Response--We have inserted the word either in this section to 
clarify that only one surety is required, regardless of the identity of 
the person or persons posting the surety or sureties.

Section 243.8  When Will MMS Suspend My Obligation To Comply With an 
Order?

    Comment--One commenter applauded MMS's proposal to increase the 
minimum amount under appeal for which no bond or demonstration of 
financial solvency is required. It urged that the same rules apply to 
appeals with respect to Federal and Indian lands.
    Response--As explained above, we believe it is appropriate to have 
different standards with respect to Federal and Indian lands, and we 
decline to change the standards here.

Section 243.10  When Will MMS Initiate Collection Actions Against a 
Bond or Other Surety Instrument or a Person Demonstrating Financial 
Solvency?

    Comment--One commenter noted that the time period for MMS to 
initiate collection actions against the bond or other surety is 
inconsistent with the Mineral Leasing Act, 30 U.S.C. 226-2, which 
allows 90 days for an appellant to seek judicial review of an adverse 
decision by the Department. The proposed rule, by contrast, allowed MMS 
to call on the surety within 30 days of such an adverse decision.
    Response--We agree that the proposed rule should track the time 
period in the Mineral Leasing Act with respect to oil and gas leases 
for cases in which there is a decision of the IBLA or an Assistant 
Secretary that is subject to judicial review. We therefore have 
increased the time to 90 days in the final rule for those cases.

Section 243.11  May I Appeal the MMS Bond-Approving Officer's 
Determination of My Surety Amount or Financial Solvency?

    Comment--One commenter noted that it did not object to the proposal 
that there would be no administrative review of determinations of the 
Bond-Approving Officer, but requested that we clarify that the 
determinations are judicially reviewable.
    Response--Whether a court would have jurisdiction to review these 
determinations is a matter of statute rather than regulation. 
Therefore, we are not amending the rule to specifically provide for 
judicial review.

Section 243.12  May I Substitute a Demonstration of Financial Solvency 
for a Bond Posted Before the Effective Date of this Rule?

    Comment--One commenter urged that this section be amended to allow 
an appellant to replace a surety with a self-bond at any time, not just 
``when the surety instrument is due for renewal.'' The commenter's 
reason was that an appellant may have many bonds due for renewal at 
different times. ``Depending on the circumstances, it may be more 
administratively convenient * * * to replace all of its bonds with a 
demonstration of financial solvency at the same time.''
    Response--It was not our intent to prevent an appellant from 
choosing between replacing its sureties individually as they expire, or 
replacing all sureties at once. To avoid confusion, we have amended 
this section to allow replacement of sureties at administratively 
convenient times.

Section 243.200  How Do I Demonstrate Financial Solvency?

    Comment--One commenter noted that the proposed rule appears 
inconsistent with the preamble. The preamble noted that MMS could 
require updated financial statements to monitor demonstrations of 
financial solvency if the demonstrator files for bankruptcy. The 
regulatory language allows MMS to require updated financial statements 
upon request. The commenter urged MMS to specify the circumstances, 
other than bankruptcy filings, that might justify an appellant to 
redemonstrate financial solvency.
    Response--We did not intend to narrow the rule by the preamble. The 
broader requirements of the rule will remain unchanged. We expect MMS 
to very rarely request an updated financial statement, but we believe 
the flexibility

[[Page 26245]]

is needed for circumstances that we cannot currently foresee.

VII. Section-by-Section Analysis 30 CFR Part 250

    Comment--No comments were received on the proposed amendments to 
part 250.

VIII. Section-by-Section Analysis 30 CFR Part 290

Subpart A--Offshore Minerals Management Appeals Procedures

Section 290.2  Who May Appeal?

    Comment--One commenter asked if an appeal from an order issued by 
an MMS Offshore Minerals Management (OMM) official would be appealable 
under the new 43 CFR part 4 subpart J, which is designed for appeals 
from orders issued by MMS Royalty Management Program (RMP) officials. 
Another commenter asked if we could do away with the exclusions listed 
in section 290.2.
    Response--An order issued by an MMS OMM official is not appealable 
under the new 43 CFR part 4 subpart J. To clarify this matter, section 
290.2 will specify that your appeal to IBLA is under 43 CFR part 4 
subpart E. Adding the reference to subpart E is consistent with section 
290.8(a) and should clarify the fact that appeals from orders issued by 
MMS OMM officials are appealed to IBLA under 43 CFR part 4 subpart E. 
The RSFA rule of decision provisions made final in 43 CFR part 4 
subpart J do not apply to appeals of OMM orders.
    Also, because we are not publishing a final rule on a new royalty 
appeals process at this time, we are dividing part 290 into two 
subparts to distinguish between appeals from orders issued from MMS's 
RMP and orders issued from MMS's OMM Program. Appeals of OMM orders 
will be under the rule at 30 CFR part 290 subpart A. Appeals of RMP 
orders will be under 30 CFR part 290 subpart B.
    As for doing away with the exclusions listed in section 290.2, the 
exceptions listed for decisions concerning lease bids and deep water 
field determinations are based on current requirements in other 
sections of our rules (the sections were referenced in the proposed 
rule). The changes proposed to the current OMM appeals process were 
aimed at streamlining and simplifying the appeals process and do not 
affect any other MMS rules or requirements.

Section 290.5  How do I Pay My Processing Fee?

Section 290.6  How Will MMS Notify Me of Its Action on my Request?

Section 290.7  What is the Filing Date for My Appeal?

    Comment--We received numerous comments criticizing the complexity 
of the proposed appeals rule.
    Response--We believe it would be desirable to simplify this OMM 
appeals rule by removing the provisions in sections 290.5, 290.6 and 
290.7 of the proposed rule.
    We are deleting the requirement to pay the processing fee by 
electronic funds transfer, based upon conversations with officials in 
the Treasury Department. Therefore, you may pay by following the 
procedures in place at 30 CFR 218.51. We are also removing the parts 
dealing with a waiver of the $150 processing fee imposed on each 
appeal. The operators on the Outer Continental Shelf (OCS) are large 
enough that they would not be able to justify the need for a waiver of 
a $150 processing fee for their appeal. Also, because the amount of the 
fee is nominal, the waiver provision in the proposed rule is not needed 
to meet the requirements of the Small Business Regulatory Enforcement 
and Fairness Act or the Regulatory Flexibility Act.
    The date the appeal is filed will continue to be, as in the past, 
the date the Notice of Appeal is received in the OMM office. The 
processing fee will be paid by check with the Notice of Appeal.

Subpart B--Appeals of Royalty Management Program and Delegated State 
Orders

    Comments--We received no comments on this subpart because it was 
not separately proposed. The revisions made in this subpart incorporate 
portions of the proposed appeals rule that are necessary to implement 
certain provisions of RSFA, and to separate appeals of royalty-related 
orders from appeals of Offshore Minerals Management Program orders. The 
OMM-related appeals are few in number and under the new subpart A will 
go directly to the IBLA. We did receive comments on some of the 
definitions in the proposed appeals rule that are contained in this 
part. The revisions made in this subpart also rewrite the headings in 
former part 290 in ``plain language,'' and clarify portions of former 
part 290.
    In addition, we deleted former section 290.4 titled ``Oral 
Argument'' because they were rarely requested and rarely granted. This 
is also consistent with the proposed rule which did not provide for 
appellants to request oral argument before the IBLA.

Section 290.100  What is the Purpose of This Subpart?

    Comments--We did not receive any comments on this section.
    Response--The purpose of this subpart is to provide the procedures 
to appeal MMS or delegated State orders concerning reporting to the 
MMS's RMP and the payment of royalties and other payments due under 
leases subject to this subpart. Subpart A of this part applies to 
appeals of MMS's OMM program actions.

Section 290.101  What Leases Are Subject to This Subpart?

    Comments--We received no comments on this subpart.
    Response--This section is the same as proposed 43 CFR 4.902. We 
specifically note that the scope of this subpart is not limited to 
those orders that are subject to RSFA time of decision requirements in 
30 U.S.C. 1724(h). This subpart covers all appeals of RMP or delegated 
State orders, including orders concerning Federal leases for minerals 
other than oil and gas, all Indian leases, orders to provide 
information, produce documents, etc., and is not limited to Federal oil 
and gas leases. Included in this subpart are some provisions specific 
to orders that RSFA covers.

Section 290.102  What Definitions Apply to This Subpart?

    Comments--This section contains definitions that are similar to 
those found in proposed 43 CFR 4.903, for which we received comments to 
which we respond in our preamble discussion of 43 CFR part 4 subpart J 
in this final rulemaking. Please refer to the comments and responses to 
definitions in that subpart in this preamble. There are some 
differences in definitions because 43 CFR part 4 subpart J applies only 
to orders that are subject to RSFA time of decision and rule of 
decision requirements. The coverage of this subpart, in contrast, is 
broader. Those differences are apparent from the text of the 
definitions. For definitions included in this part that are not in 43 
CFR part 4 subpart J there were no comments.

Section 290.103  Who May File an Appeal?

    Comments--We received no comments on this section.
    Response--We retained the requirement formerly found at 30 CFR 
290.2 that you may appeal an order you receive if it adversely affects 
you or your lessee. We also added the provision

[[Page 26246]]

proposed as 43 CFR 4.904(b) allowing lessees that receive a Notice of 
Order to either appeal the order or join in their designee's appeal 
under Sec. 290.106.

Section 290.104  What May I Not Appeal Under This Subpart?

    Comments--We received no comments on this section.
    Response--This addition to this subpart was proposed as 43 CFR 
4.905(a) and (c).

Section 290.105  How Do I Appeal an Order?

    Comments--We received no comments on this section.
    Response--We combined the requirements found in former 30 CFR 
290.3, 290.5 and 290.6, and rewrote them in plain language. We also 
eliminated 30 CFR 290.3(b) which required a field report. This is 
consistent with the agency's and industry's desire to accelerate the 
appeals process.

Section 290.106  How Do Lessees Join a Designee's Appeal and What is 
the Effect of Joinder?

    Comments--We received no comments on this section.
    Response--This section was proposed as 43 CFR 4.908. We made minor 
changes necessary to reflect that the appeal is to the MMS Director 
under this part, not the Office of Hearings and Appeals.

Section 290.107  Where are the Rules Concerning the Effect of the 
Department Not Issuing a Decision in My Appeal Within the Statutory 
Time Frame?

    Comments--We received no comments on this section.
    Response--This section was necessary to direct appellants to the 
rules concerning the effect of DOI not issuing a decision in your 
appeal within the 33-month period prescribed under 30 U.S.C. 1724(h). 
Those rules are located in 43 CFR part 4 subpart J.

Section 290.108  How Do I Appeal to the IBLA?

    Comments--We received no comments on this section.
    Response--This section was the former 30 CFR 290.7. We added a 
provision that directs appellants to 43 CFR part 4 subpart E.

Section 290.109  How Do I Request an Extension of Time?

    Comments--See preamble discussion of 43 CFR 4.909.
    Response--See preamble discussion of 43 CFR 4.909. This section was 
proposed as 43 CFR 4.958. We made minor changes necessary to reflect 
that the appeal is to the MMS Director under this part, not OHA, and to 
differentiate those appeals that involve extensions of the RSFA time of 
decision requirements from those that do not.

Department Hearings and Appeals Procedures

IX. Section-by-Section Analysis, 43 CFR Part 4--

Subpart J--Special Rules Applicable to Appeals Concerning Federal 
Oil and Gas Royalties and Related Matters

Section 4.901  What Is the Purpose of This Subpart?

    Comments--We did not receive any comments on this section.
    Response--Even though we did not receive any comments on this 
section, we must amend the text because we are not finalizing the 
entire proposed rule at this time. The purpose of this subpart is 
revised to explain how the time limits of 30 U.S.C. 1724(h) apply to 
appeals subject to this subpart.

Section 4.902  What Appeals are Subject to This Subpart?

    Comments--In the proposed rule, this section heading read, ``What 
leases are subject to this subpart?'' We received no comments on that 
section.
    Response--Even though we did not receive any comments on this 
section, we must amend the text because we are not finalizing the 
entire proposed rule at this time. The section heading is changed to 
read, ``What appeals are subject to this subpart?'' We had to change 
the heading and content of this section to make clear what appeals this 
subpart applies to because the sole purpose of this subpart is to 
implement the time limits and rule of decision of 30 U.S.C. 1724(h). 
Because section 1724(h) only applies to appeals of orders involving 
Federal oil and gas leases, this section will state that the subpart 
applies only to appeals of orders or portions of orders involving the 
payment of royalties and other payments due, and the taking or delivery 
of royalty in kind, under Federal oil and gas leases. Moreover, it 
would make clear that its provisions apply to appeals to the MMS 
Director under 30 CFR part 290 before this rule became effective, 
appeals to the MMS Director under new 30 CFR part 290 subpart B after 
this rule became effective, and appeals to the IBLA under 43 CFR part 4 
subpart E, both before and after the effective date of this rule. This 
section further specifies that this subpart does not apply to appeals 
of orders (or portions of orders) that involve Indian leases or Federal 
leases for minerals other than oil and gas, or that relate to Federal 
oil and gas leases but do not involve a monetary or nonmonetary 
obligation.

Section 4.903  What Definitions Apply to This Subpart?

    Comments--We received several comments that the definition of 
``lessee'' in the proposed rule should quote the definition in RSFA. 
The commenters believed that it was inconsistent with RSFA to define 
lessees to include persons to whom a lease interest is assigned.
    Response--In the proposed rule, we decided not to quote the exact 
definition of ``lessee'' found in RSFA because the proposed rule 
applied to more than oil and gas leases subject to RSFA. Moreover, we 
do not believe that the additional language in the proposed rule is 
inconsistent with RSFA. The RSFA definition states that ``lessee'' 
includes ``any person to whom operating rights have been assigned.'' 
The proposed rule defines ``lessee'' to include ``any person to whom 
all or part of the lessee's interest or operating rights in a lease 
subject to this subpart has been assigned.'' We do not believe that it 
is inconsistent with RSFA, or any law, to define a ``lessee'' as a 
person to whom all or part of the lessee's interest has been 
``assigned,'' or, in other words, to whom all or part of the lessee's 
interest has been sold. To the contrary, it would be inconsistent with 
RSFA and prevailing law and regulations to state that assignees of 
leases are not lessees. Therefore, we are not changing the definition 
of ``lessee'' in the proposed rule.
    Comments--We received several comments on the definition of 
``monetary obligation'' in the proposed rule. Commenters for the State 
of California Controller's Office felt that the proposed definition 
``invited dispute'' over what an ``issue'' is, because ``a particular 
underpayment may be attributable to overlapping regulatory 
violations.'' Thus, the California Controller's Office suggested that 
it would be more administratively efficient if a monetary obligation 
was defined as the total amount stated or estimated in the order. 
Another commenter stated that the plain meaning of monetary is 
``payable in money,'' and by including orders to recalculate royalties, 
DOI is ``attempting to circumvent'' the default decision provisions of 
30 U.S.C. 1724(h). Finally, two commenters believe that RSFA requires 
us to define monetary obligation as ``the principal amount due on each 
lease for each month'' because

[[Page 26247]]

that is what is required under the RSFA definition of an ``order to 
pay.''
    Response--With respect to the California Controller's Office's 
comment that ``monetary obligation'' should be defined as the total 
amount of underpayments in an order, we do not believe that the 
definition was confusing. We believe that because orders identify the 
specific regulatory violation and the associated underpayment, there 
should be no confusion. For example, if an order stated an underpayment 
amount attributable to a lessee's failure to include tax reimbursements 
in its gross proceeds, and stated another underpayment amount 
attributable to an improper deduction from the lessee's gross proceeds, 
we believe it is clear that although both violations involve the gross 
proceeds rule, they stem from different issues and involve separate 
underpayments, and thus it is reasonable to consider them to be 
separate obligations.
    We disagree with the inference drawn by the commenter who asserted 
that the only interpretation of ``monetary'' is ``payable in money.'' 
We are not attempting to circumvent the default decision provisions of 
section 1724(h) by including orders to recalculate and pay in the 
definition of monetary obligation. First, as we stated in the preamble 
to the proposed rule, Congress did not define ``monetary.'' However, 
both Webster's Dictionary and Black's Law Dictionary define monetary as 
``related to'' money. We believe that orders to recalculate and pay are 
clearly related to money, and include a requirement to pay money, and 
as such are ``monetary'' in nature. Second, the only ``obligation'' of 
a lessee under RSFA that is nonmonetary, and not ``related to money'' 
is a lessee's duty to deliver royalty in kind. Therefore, we are not 
amending this definition to state that monetary obligations do not 
include orders to recalculate and pay.
    We also disagree with the comments that because RSFA defines an 
``order to pay'' as a written order that ``specifically identifies the 
obligation by lease, production month and monetary amount of such 
obligation'' we must define monetary obligation the same way. As stated 
above, Congress did not define monetary obligation. Congress did, 
however, define ``obligation.'' Under RSFA, an ``obligation'' is a 
specified lessee duty ``which arises from or relates to any lease * * * 
or any mineral leasing law * * * *'' 30 U.S.C. 1702(25)(B). Therefore, 
we disagree with the commenters that an obligation must be limited to 
one lease. We also do not agree that an obligation must be limited to 
one month. Rather, RSFA implies that an ``obligation'' may be issue-
specific (``related to any mineral leasing law,'' which includes 
regulations). Accordingly, we are not changing the proposed definition 
of monetary obligation in the manner the commenter requests.
    We are revising the definition of monetary obligation as proposed 
to clarify that monetary obligation also includes the Secretary's duty 
to pay, refund, offset, or credit the amount of any obligation that a 
lessee, designee, or payor has asserted in a request for payment, 
refund, offset, or credit that MMS or a delegated State has denied. 
This follows from the definitions of ``demand'' and ``obligation'' in 
the new 30 U.S.C. 1702(23)(B) and (25)(A)(ii) as added to FOGRMA by 
RSFA section 2, 110 Stat. 1701. Administrative appeals of denials of 
requests by lessees, designees, or payors for refund, offset, credit, 
etc., are subject to the RSFA time of decision and rule of decision 
requirements of 30 U.S.C. 1724(h), which covers both ``demands'' and 
``orders issued by the Secretary or a delegated State'' that are 
``subject to administrative appeal in accordance with the regulations 
of the Secretary.''
    Comments--Several commenters objected to our decision to include 
subsection (2)(i) in the definition of ``order'' which states that 
orders do not include nonmandatory valuation determinations. Some 
commenters felt that defining a valuation determination that does not 
have mandatory or ordering language to not be an appealable ``order'' 
conflicts with other sections of MMS valuation regulations that allow 
lessees to request valuation determinations, such as 30 CFR 206.257(f). 
The commenters felt that under the current regulations, all valuation 
determinations must be mandatory. One commenter stated that the 
definition creates ``two types of valuation determinations, those that 
contain mandatory or ordering language and those that do not. Only 
those that contain mandatory or ordering language would be 
appealable.'' We received similar comments regarding our proposal to 
make nonmandatory policy determinations non-appealable. One commenter 
stated that subpoenas that do not meet the requirements of 30 U.S.C. 
1724(d)(2) should be appealable.
    Response--We have provided that an order is appealable only when 
the document ``contains mandatory or ordering language''--in other 
words, when the disputed legal issues and the facts involved are 
sufficiently definite to allow for meaningful adjudication. As we 
stated in the proposed rule, we do not consider advice or guidance 
contained in a nonmandatory valuation determination to be an ``order'' 
because it does not compel anyone to take particular action. Likewise, 
general policy guidance contained in a letter to payors does not 
contain mandatory language requiring lessees to do anything. If the 
advice or guidance does not require the lessee to do anything, there is 
nothing to appeal.
    For example, it is possible for a lessee to first receive a ``Dear 
Payor'' letter or valuation determination with general advice, next a 
request or subpoena for documents that would enable the Government to 
evaluate whether the lessee has followed that advice, and, finally, an 
order applying the Government's understanding of the law and facts that 
could be tested in an administrative appeal. Lastly, we do not believe 
that making nonmandatory valuation determinations non-appealable 
conflicts with other valuation regulations. Those regulations allow 
lessees to request a valuation determination. If MMS issues a binding 
determination under those rules in response to the request, then such a 
determination is appealable. Therefore, for the reasons explained 
above, we are not changing the definition of order to make nonmandatory 
advice and guidance appealable.
    We disagree with the comment that we should define subpoenas as 
being appealable orders. As we stated in the preamble, subpoenas are 
enforceable directly by the United States Government in Federal 
district court under 30 U.S.C. 1717(b), and are not subject to 
administrative appeal. Nothing in section 1724(d)(2) changes that fact. 
Therefore, they also are not appealable ``orders,'' and we are not 
changing the rule as the commenter suggested.
    Because the purpose of this subpart is to implement the RSFA 
decision deadlines and rules of decision in 30 U.S.C. 1724(h)(1) and 
(2), and is not part of a general appeals provision as proposed, we 
have narrowed the definition of ``order'' for purposes of this subpart 
only. That definition makes clear that orders under this subpart are 
only those orders that involve either monetary obligations or 
nonmonetary obligations under Federal oil and gas leases and therefore 
subject to 30 U.S.C. 1724(h)(1) and (2) as enacted by RSFA.
    We also have revised the proposed definition of order to clarify 
that order does not include a Notice of Noncompliance or Notice of 
Civil Penalty issued under the provisions of FOGRMA section 109, 30 
U.S.C. 1719, and implementing regulations at 30 CFR

[[Page 26248]]

part 241. Nor does order include a decision of an administrative law 
judge following a hearing on the record on a Notice of Noncompliance or 
Notice of Civil Penalty under FOGRMA section 109(e), 30 U.S.C. 1719(e), 
and associated regulations. Likewise, order does not include a decision 
of the IBLA on appeal from a decision of an administrative law judge 
following a hearing on the record. This follows from the first sentence 
of 30 U.S.C. 1724(h)(1), which establishes that the RSFA time of 
decision and rule of decision requirements cover ``demands or orders 
issued by the Secretary or a delegated State'' that are ``subject to 
administrative appeal in accordance with the regulations of the 
Secretary.'' FOGRMA civil penalty assessments result from an entirely 
different process that is prescribed separately by statute.
    Civil penalty assessments do not result from administratively 
appealable MMS or delegated State orders. Instead, FOGRMA section 
109(e) prescribes that no civil penalty may be assessed until a person 
has been given an opportunity for a ``hearing on the record''--i.e., a 
formal trial-type hearing before an administrative law judge, which 
must be conducted under Administrative Procedure Act provisions at 5 
U.S.C. 554, 556, and 557. The rules at 30 CFR part 241 implement the 
statutory requirements of those sections regarding adjudication and 
agency review.
    It appears plain that Congress did not intend for the RSFA time of 
decision and rule of decision requirements to cover FOGRMA civil 
penalty proceedings. RSFA itself is primarily an amendment to FOGRMA 
with respect to Federal leases. Had Congress intended to change the 
statutory civil penalty procedures, it knew how to do so and could have 
done so. There is no mention of any intent to include civil penalty 
proceedings within the 30 U.S.C. 1724(h) requirements. Moreover, the 
purpose of section 1724(h) was to address perceived problems with MMS's 
administrative appeal process that are unrelated to civil penalty 
proceedings.
    Comment--We did not receive any comments on the definition of 
``party.''
    Response--Even though we did not receive any comments, we revised 
the definition of ``party'' to delete the reference to persons who file 
intervention briefs and to make other changes necessary to reflect that 
we are not finalizing the entire proposed rule at this time.
    Comments--We did not receive any comments on the definition of 
``notice of an order.''
    Response--Even though we did not receive any comments, we revised 
the definition of ``notice of an order'' to delete the reference to 30 
CFR part 242 because we are not finalizing that part of the proposed 
rule at this time.
    Comments--We received comments stating that we should include the 
RSFA definition of ``demand'' in our final rule.
    Response--We disagree. The portions of the proposed rule that we 
are making final do not use the term ``demand.'' The substance of what 
RSFA defines as a ``demand'' is encompassed within orders that are 
subject to this subpart. Therefore, it is not necessary to define 
``demand'' separately in this rule.

Section 4.904  When Does My Appeal Commence and End?

    Comments--Several commenters suggested that an appeal should 
commence, for purposes of calculating the beginning of the 33-month 
period under section 1724(h)(1), on the date an MMS order is received 
by the recipient. Some commenters stated that they believe that under 
administrative law principles, an agency order that directs a person to 
take action starts the person's appellate rights. Thus, they argue that 
our definition of ``commence'' discourages an appellant from exercising 
those rights and compromises administrative due process in order to 
delay commencement of an appeal until we receive all of the items 
required in the proposed rule. One commenter believes that the 
definition for ``commencement'' under RSFA applies to the appeals 
process.
    Response--Although we are not finalizing the section of the 
proposed rule that these comments were directed to at this time, the 
comments are equally applicable to this section, which was proposed as 
section 4.971. We recognize both that the MMS order is effective when 
it is received and that a recipient may have to wait more than 33 
months from that date for a decision by DOI because an appeal will not 
commence under this rule until MMS receives the notice of appeal and 
statement of reasons under former 30 CFR part 290, before the new 
revised 30 CFR part 290 subpart B, promulgated with this rulemaking, 
became effective. It is the recipient of the order who ``commences'' an 
appeal, not DOI. Until DOI has received a Notice of Appeal, there is no 
dispute to be adjudicated, and until DOI has received a Statement of 
Reasons giving some reasons for the appellant's disagreement with the 
order, it cannot evaluate whether the appellant's disagreement has any 
merit. Because the recipient of the order controls when these items are 
submitted, we believe it is a reasonable interpretation of section 
1724(h)(1) that the 33-month period begins to run when MMS has received 
at least minimally sufficient documentation to begin the process of 
deciding the appeal. We also believe that this interpretation enhances 
the decision-making process.
    We have remedied this problem under the new 30 CFR part 290 subpart 
B in section 290.109(b) and (c). Under the new subpart B, you may 
request an extension of time to file your statement of reasons if you 
agree to extend the RSFA time of decision requirement under 30 U.S.C. 
1724(h)(1). (Under 30 CFR 290.105(b), there is no extension of time to 
file a notice of appeal.) MMS recognizes that different amounts of time 
may be necessary for appellants to prepare their written submissions in 
different cases, depending on the number and complexity of issues, the 
time needed to compile relevant facts and documents, etc. However, MMS 
believes that additional time needed in more complicated cases should 
not operate to the agency's prejudice. At the same time, it is in the 
interest of all parties to know relatively early if a lessee or 
designee plans to contest an order, and to provide a ``bright line'' 
for commencement of the appeal. Hence, after the effective date of the 
new 30 CFR part 290 subpart B and this section, your appeal commences 
for purposes of section 4.906 and 30 U.S.C. 1724(h) when you file your 
notice of appeal. If you then need further time to prepare your 
statement of reasons or briefs, you must agree to extend the 33-month 
period prescribed in 30 U.S.C. 1724(h)(1).
    Before the adoption of this rule, however, MMS received numerous 
appeals in which various extensions of time to file statements of 
reasons were granted, but in which a corresponding agreement by the 
appellant to extend the RSFA 33-month period was not required and was 
not automatic. Hence, for the reasons described above, MMS believes the 
best reading of congressional intent is to regard the appeal as having 
commenced for RSFA purposes at the later of the date the notice of 
appeal was filed or the date the initial statement of reasons was 
received.
    If MMS were to adopt the commenters' suggestion that an appeal 
``commenced'' when the order was received, several weeks, or even 
months, of the 33-month period could be consumed without DOI being able 
to either decide the order was correct or grant relief if it decided 
otherwise. Especially in complicated cases, this

[[Page 26249]]

loss of time could seriously disadvantage DOI's ability to consider the 
merits of the appeal.
    Moreover, we believe the commenter has misconstrued RSFA's 
definition of ``commencement.'' As explained in the preamble to the 
proposed rule, RSFA did not define ``commencement'' for purposes of the 
time of decision requirement in 30 U.S.C. 1724(h)(1) applicable to 
``administrative proceedings.'' RSFA did define ``commence'' ``with 
respect to a judicial proceeding'' and ``with respect to a demand.'' 30 
U.S.C. 1702(20). However, the definition of ``commence'' under 1702(20) 
clearly does not encompass ``administrative proceedings'' under 30 
U.S.C. 1724(h) or 1702(18). Rather, ``commence'' under section 1702(20) 
deals with the ``commencement'' of judicial proceedings or demands for 
purposes of the RSFA 7-year limitations period under section 4(a), 30 
U.S.C. 1724(b). Accordingly, it is necessary for us in this proposed 
rule to define when your appeal ``commenced'' for purposes of section 
1724(h).
    We have therefore decided not to adopt the commenters' position.

Section 4.906  What If the Department Does Not Issue a Decision by the 
Date My Appeal Ends?

    Comments--The only comments received regarding this section as 
proposed (section 4.956) (other than the comments regarding 
``commenced'' and the definition of ``monetary obligation'' discussed 
above) were from the solid minerals industry. The trade association 
commenter and individual companies again requested that DOI make the 
RSFA rule of decision in this section applicable to appeals involving 
solid mineral leases.
    Response--For the reasons set forth in the preamble to the proposed 
rule, we have decided not to make this section applicable to solid 
mineral leases. We do not believe that there is any benefit in imposing 
a mandatory decision where DOI has not been statutorily directed to do 
so.
    We have, however, made changes necessary to reflect the fact that 
we are not publishing the proposed rule in its entirety at this time. 
Those changes would include provisions that refer to appeals to the MMS 
Director under 30 CFR part 290 before 30 CFR part 290 subpart B became 
effective, appeals to the MMS Director under the new 30 CFR part 290 
subpart B (after this subpart became effective) and appeals to the IBLA 
under 43 CFR part 4 subpart E, both before and after the effective date 
of this subpart.

Section 4.908  What Is the Administrative Record for My Appeal If It Is 
Deemed Decided?

    Comments--We received no comments on this section.
    Response--Even though we did not receive any comments, we made 
changes necessary to reflect the fact that we are not finalizing the 
entire proposed rule at this time. Those changes would include 
provisions that refer to the record in appeals to the MMS Director 
under 30 CFR part 290 before 30 CFR part 290 subpart B became 
effective, appeals to the MMS Director under the new 30 CFR part 290 
subpart B and the record in appeals to the IBLA under 43 CFR part 4 
subpart E, both before and after the effective date of this rule.

Section 4.909  How Do I Request an Extension of Time?

    Comments--We received one comment on this section (proposed section 
4.958) from an industry representative and one from a trade 
association. The industry commenter felt that the rule should grant 
requests for extensions of time automatically, rather than leave it to 
the discretion of the official to whom the request is submitted. The 
trade association commenter felt that DOI should ``freely'' grant 
requests. The commenter also felt that we should make clear that 
parties could ask for extensions of time for any reason, including the 
filing of pleadings.
    Response--We agree that parties should be able to request 
extensions of time for any reason, including for submissions of 
pleadings. It was not our intent in the proposed rule to restrict such 
requests. Therefore, to clarify that parties may request extensions for 
any purpose, we modified this section by eliminating the language in 
proposed paragraph (a) that stated parties could request an extension 
``to meet any filing requirement under this subpart, or for DOI to 
issue a final decision in your appeal.'' Section (a) now states:

    If you are a party to an appeal subject to this subpart before 
the IBLA, and you need additional time after an appeal commences for 
any purpose, you may obtain an extension of time under this section.

    With respect to the comment about automatic extensions, although we 
expect that we will grant these requests liberally, we are not going to 
bind future officials to granting automatic extensions by rule. RSFA 
states that the 33-month period may be extended if the Secretary and 
appellant agree in writing. We do not know what circumstances may exist 
in any particular case that would lead us to not agree to a requested 
extension.

IX. Procedural Matters

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 Executive Order 
12866.
    (1) This rule will not have an annual 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. This rule does not require the payment of additional 
revenues. This rule sets out how the Department will review MMS's 
implementation of royalty and OCS operations policy.
    (2) This rule will not create a serious inconsistency or otherwise 
interfere with an action taken or planned by another agency. The 
primary functions of appealable MMS orders are collecting royalties 
from the minerals industry and regulating operations of mineral leases 
on the OCS. Other agency functions do not cover these areas.
    (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. The administrative appeals process has no impact on 
or relation to grants, user fees, loan programs, or the rights and 
obligations of their recipients.
    (4) This rule does not raise novel legal or policy issues arising 
out of legal mandates, the President's priorities, or the principles 
set forth in E.O. 12866. This rule was developed in consultation with 
States, tribes, and industry.

Regulatory Flexibility Act

    The Department of the Interior certifies that this document will 
not have a significant economic effect on a substantial number of small 
entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). 
Accordingly, a Small Entity Compliance Guide is not required.
    This rule will affect three groups of individuals or companies: (1) 
Indian lessors, (2) lessees and operators on offshore leases, and (3) 
lessees, payors, and designees on Federal and Indian leases (onshore 
and offshore). Indian lessors are either tribes or individuals. 
However, Indian tribes are not considered to be small entities for the 
purposes of the Regulatory Flexibility Act, and individuals do not fit 
the definition of small entities. As for the remaining groups, the 
majority of lessees, designees, payors, and operators on Federal and 
Indian onshore leases would be classified as small businesses

[[Page 26250]]

according to the definitions in the Small Business Administration 
Standard Industry Code (SIC). Changes in the rule that could have an 
economic effect on these groups are the establishment of processing 
fees for filing a Notice of Appeal and a Statement of Reasons (to the 
extent that any small businesses are operating on the OCS), posting a 
bond, and an increase in the maximum civil penalty to $25,000.
    Bonding or payment is mandatory for appealed amounts above $10,000 
on Federal leases and $1,000 for Indian leases. Appealed amounts less 
than $10,000 for Federal and $1,000 for Indian leases do not require 
bonding which typically provides relief to small entities. The ability 
to demonstrate financial responsibility provides relief of credit 
charges from surety companies.
    The rule changes the maximum civil penalty to up to $25,000 per day 
for those acts for which FOGRMA allows such a penalty. A larger penalty 
should not have significant economic impacts because MMS assesses 
penalties only when business operations have reached a very poor level 
of conduct. Lessees and other payors may use a variety of remedies 
including ADR before the assessment of a penalty.

Small Business Regulatory Enforcement Fairness Act (SBREFA)

    This rule is not a major rule under 5 U.S.C. 804(2), the Small 
Business Regulatory Enforcement Fairness Act. This rule:
    a. Does not have an annual effect on the economy of $100 million or 
more;
    b. Will not cause a major increase in costs or prices for 
consumers, individual industries, Federal, State, or local government 
agencies, or geographic regions; and
    c. Does not have significant adverse effects on competition, 
employment, investment, productivity, innovation, or the ability of 
U.S.-based enterprises to compete with foreign-based enterprises. This 
is an administrative review process; there is no impact on these 
things. The rule sets a time limit on when an appealed issue must be 
resolved or decided, and gives relief from maintaining bonds in many 
instances.

Unfunded Mandates Reform Act

    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. This rule does not 
change the relationship between MMS, IBLA, and State, local, or tribal 
governments. A statement containing the information required by the 
Unfunded Mandates Reform Act (2 U.S.C. 1531 et seq.) is not required.

Takings (E.O. 12630)

    In accordance with Executive Order 12630, the rule does not have 
significant takings implications. The rule would not take away or 
restrict an entity's right to appeal or bond orders received from MMS 
or a delegated State. A takings implication assessment is not required.

Federalism (E.O. 12612)

    In accordance with Executive Order 12612, the rule does not have 
sufficient federalism implications to warrant the preparation of a 
Federalism Assessment. The rule does not change the role or 
responsibilities among Federal, State, and local governmental entities. 
The rule does not relate to the structure and role of States and will 
not have direct, substantive, or significant effects on States. A 
Federalism Assessment is not required.

Civil Justice Reform (E.O. 12988)

    In accordance with Executive Order 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. The rule has been reviewed and describes in clear language 
what is allowed and what is prohibited. The IBLA and MMS have drafted 
this rule in plain language and have consulted with the Department of 
the Interior's Office of the Solicitor, RPC Subcommittee, States, and 
tribes throughout the rulemaking process.

Paperwork Reduction Act

    The Office of Management and Budget (OMB) approved the information 
collection requirements contained in this rule under 44 U.S.C. 3501 et 
seq., and assigned OMB Control Numbers 1010-0121 and 1010-0122. The 
burden hours for the reporting requirements in 30 CFR part 290 are 
approved under OMB Control Number 1010-0121. Under the Paperwork 
Reduction Act, 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. You may obtain a copy of 
the information collections by contacting the Bureau's Information 
Collection Clearance Officer at (202) 208-7744.

National Environmental Policy Act

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

Clarity of This Regulation

    Executive Order 12866 requires each agency to write regulations 
that are easy to understand. We invite your comments on how to make 
this rule easier to understand, including answers to questions such as 
the following: (1) Are the requirements in the rule clearly stated? (2) 
Does the rule contain technical language or jargon that interferes with 
this clarity? (3) Does the format of the rule (grouping and order of 
sections, use of headings, paragraphing, etc.) aid or reduce its 
clarity? (4) Would the rule be easier to understand if it were divided 
into more (but shorter) sections? (A ``section'' appears in bold type 
and is preceded by the symbol ``Sec. '' and a numbered heading; for 
example Sec. 4.904.) (5) Is the description of the rule in the 
Supplementary Information section of the preamble helpful in 
understanding the rule? What else could we do to make the rule easier 
to understand?
    Send a copy of any comments that concern how we could make this 
rule easier to understand to: Office of Regulatory Affairs, Department 
of the Interior, Room 7229, 1849 C Street NW, Washington, DC 20240. You 
may also e-mail the comments to this address: E[email protected].

List of Subjects

30 CFR Part 208

    Continental shelf, Government contracts, Mineral royalties, 
Petroleum, Public lands--Mineral resources, Reporting and recordkeeping 
requirements, Small businesses, Surety bonds.

30 CFR Part 241

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

30 CFR Part 243

    Coal, Continental shelf, Geothermal energy, Government contracts, 
Indian lands, Mineral royalties, Natural gas, Petroleum, Public lands--
Mineral resources, Surety bonds.

30 CFR Part 250

    Continental shelf, Environmental impact statements, Environmental 
protection, Government contracts, Incorporation by reference, 
Investigations, Mineral royalties, Natural gas, Oil and gas development 
and production, Oil and gas exploration,

[[Page 26251]]

Oil and gas reserves, Penalties, Petroleum, Pipelines, Public lands--
Mineral resources, Public lands--rights-of-way, Reporting and 
recordkeeping requirements, Sulphur development and production, Sulphur 
exploration, Surety bonds.

30 CFR Part 290

    Administrative practice and procedure.

43 CFR Part 4

    Administrative practice and procedures, Continental Shelf, Mineral 
royalties, Natural Gas, Petroleum, Public Lands--mineral resources.
Sylvia V. Baca,
Acting Assistant Secretary--Land and Minerals Management.

John Berry,
Assistant Secretary for Policy, Management and Budget.

Kevin Gover,
Assistant Secretary for Indian Affairs.

    For the reasons set out in the preamble, MMS and OHA are amending 
30 CFR Parts 208, 241, 243, 250, and 290; reserving 30 CFR part 242 and 
adding 43 CFR part 4, subpart J as follows:
TITLE 30--MINERAL RESOURCES

PART 208--SALE OF FEDERAL ROYALTY OIL

    1. The authority citation for part 208 is revised to read as 
follows:

    Authority: 5 U.S.C. 301 et seq.; 30 U.S.C. 181 et seq., 351 et 
seq., 1701 et seq.; 31 U.S.C. 9701; 41 U.S.C. 601 et seq.; 43 U.S.C. 
1301 et seq., 1331 et seq., and 1801 et seq.

    2. In Sec. 208.2, new definitions are added in alphabetical order 
to read as follows:


Sec. 208.2  Definitions.

* * * * *
    Contracting officer means the Director, his or her delegate, or the 
person designated under a royalty oil purchase contract.
* * * * *
    Contracting officer's decision means an MMS order or decision that 
a contracting officer issues under this part to a purchaser of oil 
under a royalty oil purchase contract.
* * * * *
    3. Section 208.16 is revised to read as follows:


Sec. 208.16  How to appeal a contracting officer's decision that you 
receive.

    If you receive a contracting officer's decision, you may:
    (a) Appeal that decision to the Board of Contract Appeals in the 
Office of Hearings and Appeals, Office of the Secretary, in accordance 
with the procedures provided in 43 CFR part 4, subpart C; or
    (b) File an action in the United States Court of Federal Claims.

PART 241--PENALTIES

    4. The authority citation for part 241 continues to read as 
follows:

    Authority: 25 U.S.C 396 et seq.; 25 U.S.C. 396a et seq.; 25 
U.S.C. 2101 et seq.; 30 U.S.C. 181 et seq.; 30 U.S.C. 351 et seq.; 
30 U.S.C. 1001 et seq.; 30 U.S.C. 1701 et seq.; 43 U.S.C. 1301 et 
seq.; 43 U.S.C. 1331 et seq.; and 43 U.S.C. 1801 et seq.;


Sec. 241.20  [Removed]

    5. Section 241.20 is removed and subpart A is reserved.
    6. Subpart B is revised to read as follows:

Subpart B--Penalties for Federal and Indian Oil and Gas Leases

Definitions

241.50  What definitions apply to this subpart?

Penalties after a Period To Correct

241.51  What may MMS do if I violate a statute, regulation, order, 
or lease term relating to a Federal or Indian oil and gas lease?
241.52  What if I correct the violation?
241.53  What if I do not correct the violation?
241.54  How may I request a hearing on the record on a Notice of 
Noncompliance?
241.55  Does my request for a hearing on the record affect the 
penalties?
241.56  May I request a hearing on the record regarding the amount 
of a civil penalty if I did not request a hearing on the Notice of 
Noncompliance?

Penalties Without a Period To Correct

241.60  May I be subject to penalties without prior notice and an 
opportunity to correct?
241.61  How will MMS inform me of violations without a period to 
correct?
241.62  How may I request a hearing on the record on a Notice of 
Noncompliance regarding violations without a period to correct?
241.63  Does my request for a hearing on the record affect the 
penalties?
241.64  May I request a hearing on the record regarding the amount 
of a civil penalty if I did not request a hearing on the Notice of 
Noncompliance?

General Provisions

241.70  How does MMS decide what the amount of the penalty should 
be?
241.71  Does the penalty affect whether I owe interest?
241.72  How will the Office of Hearings and Appeals conduct the 
hearing on the record?
241.73  How may I appeal the Administrative Law Judge's decision?
241.74  May I seek judicial review of the decision of the Interior 
Board of Land Appeals?
241.75  When must I pay the penalty?
241.76  Can MMS reduce my penalty once it is assessed?
241.77  How may MMS collect the penalty?

Criminal Penalties

241.80  May the United States criminally prosecute me for violations 
under Federal and Indian oil and gas leases?

Subpart B--Penalties for Federal and Indian Oil and Gas Leases

Definitions


Sec. 241.50  What definitions apply to this subpart?

    The terms used in this subpart have the same meaning as in 30 
U.S.C. 1702.

Penalties After a Period To Correct


Sec. 241.51  What may MMS do if I violate a statute, regulation, order, 
or lease term relating to a Federal or Indian oil and gas lease?

    (a) If we believe that you have not followed any requirement of a 
statute, regulation, order, or terms of a lease for any Federal or 
Indian oil or gas lease, we may send you a Notice of Noncompliance 
telling you what the violation is and what you need to do to correct it 
to avoid civil penalties under 30 U.S.C. 1719(a) and (b).
    (b) We will send the Notice to your address of record as shown in 
the following table:

--------------------------------------------------------------------------------------------------------------------------------------------------------
   For notices of noncompliance to--                           The addressee of record is--                                        And--
--------------------------------------------------------------------------------------------------------------------------------------------------------
(1) A refiner or other party involved    The position title, department name and address, or individual name and  The refiner or other party must notify
 in disposition of Federal royalty        address in the executed royalty sale contract; or a different position   MMS in writing of all addressee
 taken in kind.                           title, department name and address, or individual name and address       changes.
                                          that the refiner or other party under the executed royalty sale
                                          contract identifies in writing for billing purposes; or an agent
                                          designated in writing to receive notices of noncompliance.

[[Page 26252]]

 
(2) Any person required to report oil    The most recent position title, department name and address, or          The reporter/payor must notify RMP, in
 or gas removed from Federal or Indian    individual name and address that RMP has in its records for the          writing, of any addressee changes.
 leases to the RMP Production             reporter/payor; or an agent designated in writing to receive notices
 Accounting and Auditing System.          of noncompliance.
(3) A lessee, designee, reporter or      The position title, department name and address, or individual name and  The lessee, designee, reporter or
 payor whose records are subject to       address the lessee, designee, reporter or payor identifies in writing    payor must notify MMS of any
 audit.                                   at the initiation of the audit; or the most recent addressee that the    addressee changes.
                                          lessee, designee, reporter or payor specified in writing; or an agent
                                          designated in writing to receive notices of noncompliance.
(4) A reporter reporting on the          The most recent position title, department name and address, or          The lessee, designee, reporter or
 ``Report of Sales and Royalty            individual name and address that the lessee, designee, reporter or       payor is responsible for notifying
 Remittance'' (Form MMS-2014).            payor identifies in writing; or an agent designated in writing to        RMP in writing of any addressee
                                          receive notices of noncompliance.                                        changes.
(5) A lessee, designee, reporter or      The most recent position title, department name and address, or          The lessee, designee, reporter or
 payor who remits rental and bonuses      individual name and address maintained in RMP records; or an agent       payor is responsible for notifying
 from nonproducing Federal leases.        designated in writing to receive notices of noncompliance.               RMP in writing of any addressee
                                                                                                                   changes.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    (c) We will serve Notices of Noncompliance by using registered mail 
or personal service.


Sec. 241.52  What if I correct the violation?

    The matter will be closed if you correct all of the violations 
identified in the Notice of Noncompliance within 20 days after you 
receive the Notice (or within a longer time period specified in the 
Notice).


Sec. 241.53  What if I do not correct the violation?

    (a) We may send you a Notice of Civil Penalty if you do not correct 
all of the violations identified in the Notice of Noncompliance within 
20 days after you receive the Notice of Noncompliance (or within a 
longer time period specified in that Notice). The Notice of Civil 
Penalty will tell you how much penalty you must pay. The penalty may be 
up to $500 per day, beginning with the date of the Notice of 
Noncompliance, for each violation identified in the Notice of 
Noncompliance for as long as you do not correct the violations.
    (b) If you do not correct all of the violations identified in the 
Notice of Noncompliance within 40 days after you receive the Notice of 
Noncompliance (or 20 days following the expiration of a longer time 
period specified in that Notice), we may increase the penalty to up to 
$5,000 per day, beginning with the date of the Notice of Noncompliance, 
for each violation for as long as you do not correct the violations.


Sec. 241.54  How may I request a hearing on the record on a Notice of 
Noncompliance?

    You may request a hearing on the record on a Notice of 
Noncompliance by filing a request within 30 days of the date you 
received the Notice of Noncompliance with the Hearings Division 
(Departmental), Office of Hearings and Appeals, U.S. Department of the 
Interior, 4015 Wilson Boulevard, Arlington, Virginia 22203. You may do 
this regardless of whether you correct the violations identified in the 
Notice of Noncompliance.


Sec. 241.55  Does my request for a hearing on the record affect the 
penalties?

    (a) If you do not correct the violations identified in the Notice 
of Noncompliance, the penalties will continue to accrue even if you 
request a hearing on the record.
    (b) You may petition the Hearings Division (Departmental) of the 
Office of Hearings and Appeals, to stay the accrual of penalties 
pending the hearing on the record and a decision by the Administrative 
Law Judge under Sec. 241.72.
    (1) You must file your petition within 45 calendar days of 
receiving the Notice of Noncompliance.
    (2) To stay the accrual of penalties, you must post a bond or other 
surety instrument using the same standards and requirements as 
prescribed in 30 CFR part 243, subpart B, or demonstrate financial 
solvency using the same standards and requirements as prescribed in 30 
CFR part 243, subpart C, for the principal amount of any unpaid amounts 
due that are the subject of the Notice of Noncompliance, including 
interest thereon, plus the amount of any penalties accrued before the 
date a stay becomes effective.
    (3) The Hearings Division will grant or deny the petition under 43 
CFR 4.21(b).


Sec. 241.56  May I request a hearing on the record regarding the amount 
of a civil penalty if I did not request a hearing on the Notice of 
Noncompliance?

    (a) You may request a hearing on the record to challenge only the 
amount of a civil penalty when you receive a Notice of Civil Penalty, 
if you did not previously request a hearing on the record under 
Sec. 241.54. If you did not request a hearing on the record on the 
Notice of Noncompliance under Sec. 241.54, you may not contest your 
underlying liability for civil penalties.
    (b) You must file your request within 10 days after you receive the 
Notice of Civil Penalty with the Hearings Division (Departmental), 
Office of Hearings and Appeals, U.S. Department of the Interior, 4015 
Wilson Boulevard, Arlington, Virginia 22203.

Penalties Without a Period To Correct


Sec. 241.60  May I be subject to penalties without prior notice and an 
opportunity to correct?

    The Federal Oil and Gas Royalty Management Act sets out several 
specific violations for which penalties accrue without an opportunity 
to first correct the violation.
    (a) Under 30 U.S.C. 1719(c), you may be subject to penalties of up 
to $10,000 per day per violation for each day the violation continues 
if you:
    (1) Knowingly or willfully fail to make any royalty payment by the 
date specified by statute, regulation, order or terms of the lease;
    (2) Fail or refuse to permit lawful entry, inspection, or audit; or
    (3) Knowingly or willfully fail or refuse to notify the Secretary, 
within 5 business days after any well begins production on a lease site 
or allocated to a lease site, or resumes production in the case of a 
well which has been off

[[Page 26253]]

production for more than 90 days, of the date on which production has 
begun or resumed.
    (b) Under 30 U.S.C. 1719(d), you may be subject to civil penalties 
of up to $25,000 per day for each day each violation continues if you:
    (1) Knowingly or willfully prepare, maintain, or submit false, 
inaccurate, or misleading reports, notices, affidavits, records, data, 
or other written information;
    (2) Knowingly or willfully take or remove, transport, use or divert 
any oil or gas from any lease site without having valid legal authority 
to do so; or
    (3) Purchase, accept, sell, transport, or convey to another person, 
any oil or gas knowing or having reason to know that such oil or gas 
was stolen or unlawfully removed or diverted.


Sec. 241.61  How will MMS inform me of violations without a period to 
correct?

    We will inform you of violations without a period to correct by 
issuing a Notice of Noncompliance explaining what the violation is and 
how to correct it. We also will send you a Notice of Civil Penalty 
stating the amount of the penalty. The Notice of Noncompliance and 
Notice of Civil Penalty may be issued simultaneously. We will send the 
Notice of Noncompliance and the Notice of Civil Penalty to your address 
of record under Sec. 241.51(b) using the means of service specified 
under Sec. 241.51(c).


Sec. 241.62  How may I request a hearing on the record on a Notice of 
Noncompliance regarding violations without a period to correct?

    You may request a hearing on the record of a Notice of 
Noncompliance regarding violations without a period to correct by 
filing a request within 30 days after you receive the Notice of 
Noncompliance with the Hearings Division (Departmental), Office of 
Hearings and Appeals, U.S. Department of the Interior, 4015 Wilson 
Boulevard, Arlington, Virginia 22203. You may do this regardless of 
whether you correct the violations identified in the Notice of 
Noncompliance.


Sec. 241.63  Does my request for a hearing on the record affect the 
penalties?

    (a) If you do not correct the violations identified in the Notice 
of Noncompliance regarding violations without a period to correct, the 
penalties will continue to accrue even if you request a hearing on the 
record.
    (b) You may ask the Hearings Division (Departmental) to stay the 
accrual of penalties pending the hearing on the record and a decision 
by the Administrative Law Judge under Sec. 241.72.
    (1) You must file your petition within 45 calendar days after you 
receive the Notice of Noncompliance.
    (2) To stay the accrual of penalties, you must post a bond or other 
surety instrument using the same standards and requirements as 
prescribed in 30 CFR part 243, subpart B, or demonstrate financial 
solvency using the same standards and requirements as prescribed in 30 
CFR part 243, subpart C, for the principal amount of any unpaid amounts 
due that are the subject of the Notice of Noncompliance, including 
interest thereon, plus the amount of any penalties accrued before the 
date a stay becomes effective.
    (3) The Hearings Division will grant or deny the petition under 43 
CFR 4.21(b).


Sec. 241.64  May I request a hearing on the record regarding the amount 
of a civil penalty if I did not request a hearing on the Notice of 
Noncompliance?

    (a) You may request a hearing on the record to challenge only the 
amount of a civil penalty when you receive a Notice of Civil Penalty 
regarding violations without a period to correct, if you did not 
previously request a hearing on the record under Sec. 241.62. If you 
did not request a hearing on the record on the Notice of Noncompliance 
under Sec. 241.62, you may not contest your underlying liability for 
civil penalties.
    (b) You must file your request within 10 days after you receive 
Notice of Civil Penalty with the Hearings Division (Departmental), 
Office of Hearings and Appeals, U.S. Department of the Interior, 4015 
Wilson Boulevard, Arlington, Virginia 22203.

General Provisions


Sec. 241.70  How does MMS decide what the amount of the penalty should 
be?

    We determine the amount of the penalty by considering the severity 
of the violations, your history of compliance, and if you are a small 
business.


Sec. 241.71  Does the penalty affect whether I owe interest?

    (a) The penalties under this part are in addition to interest you 
may owe on any underlying underpayments or unpaid debt.
    (b) If you do not pay the penalty by the date required under 
Sec. 241.75(d), MMS will assess you late payment interest on the 
penalty amount at the same rate interest is assessed under 30 CFR 
218.54.


Sec. 241.72  How will the Office of Hearings and Appeals conduct the 
hearing on the record?

    If you request a hearing on the record under Secs. 241.54, 241.56, 
241.62 or 241.64, the hearing will be conducted by a Departmental 
Administrative Law Judge from the Office of Hearings and Appeals. After 
the hearing, the Administrative Law Judge will issue a decision in 
accordance with the evidence presented and applicable law.


Sec. 241.73  How may I appeal the Administrative Law Judge's decision?

    If you are adversely affected by the Administrative Law Judge's 
decision, you may appeal that decision to the Interior Board of Land 
Appeals under 43 CFR part 4, subpart E.


Sec. 241.74  May I seek judicial review of the decision of the Interior 
Board of Land Appeals?

    Under 30 U.S.C. 1719(j), you may seek judicial review of the 
decision of the Interior Board of Land Appeals. A suit for judicial 
review in the District Court will be barred unless filed within 90 days 
after the final order.


Sec. 241.75  When must I pay the penalty?

    (a) You must pay the amount of the Notice of Civil Penalty issued 
under Secs. 241.53 or 241.61, if you do not request a hearing on the 
record under Sec. 241.54, Sec. 241.56, Sec. 241.62, or Sec. 241.64.
    (b) If you request a hearing on the record under Sec. 241.54, 
Sec. 241.56, Sec. 241.62, or Sec. 241.64, but you do not appeal the 
determination of the Administrative Law Judge to the Interior Board of 
Land Appeals under Sec. 241.73, you must pay the amount assessed by the 
Administrative Law Judge.
    (c) If you appeal the determination of the Administrative Law Judge 
to the Interior Board of Land Appeals, you must pay the amount assessed 
in the IBLA decision.
    (d) You must pay the penalty assessed within 40 days after:
    (1) You received the Notice of Civil Penalty, if you did not 
request a hearing on the record under either Sec. 241.54, Sec. 241.56, 
Sec. 241.62, or Sec. 241.64;
    (2) You received an Administrative Law Judge's decision under 
Sec. 241.72, if you obtained a stay of the accrual of penalties pending 
the hearing on the record under Sec. 241.55(b) or Sec. 241.63(b) and 
did not appeal the Administrative Law Judge's determination to the IBLA 
under Sec. 241.73;
    (3) You received an IBLA decision under Sec. 241.73 if the IBLA 
continued the stay of accrual of penalties pending its decision and you 
did not seek judicial review of the IBLA's decision; or

[[Page 26254]]

    (4) A final non-appealable judgment of a court of competent 
jurisdiction is entered, if you sought judicial review of the IBLA's 
decision and the Department or the appropriate court suspended 
compliance with the IBLA's decision pending the adjudication of the 
case.
    (e) If you do not pay, that amount is subject to collection under 
the provisions of Sec. 241.77.


Sec. 241.76  Can MMS reduce my penalty once it is assessed?

    Under 30 U.S.C. 1719(g), the Director or his or her delegate may 
compromise or reduce civil penalties assessed under this part.


Sec. 241.77  How may MMS collect the penalty?

    (a) MMS may use all available means to collect the penalty 
including, but not limited to:
    (1) Requiring the lease surety, for amounts owed by lessees, to pay 
the penalty;
    (2) Deducting the amount of the penalty from any sums the United 
States owes to you; and
    (3) Using judicial process to compel your payment under 30 U.S.C. 
1719(k).
    (b) If the Department uses judicial process, or if you seek 
judicial review under Sec. 241.74 and the court upholds assessment of a 
penalty, the court shall have jurisdiction to award the amount assessed 
plus interest assessed from the date of the expiration of the 90-day 
period referred to in Sec. 241.74. The amount of any penalty, as 
finally determined, may be deducted from any sum owing to you by the 
United States.

Criminal Penalties


Sec. 241.80  May the United States criminally prosecute me for 
violations under Federal and Indian oil and gas leases?

    If you commit an act for which a civil penalty is provided at 30 
U.S.C. 1719(d) and Sec. 241.60(b), the United States may pursue 
criminal penalties as provided at 30 U.S.C. 1720, in addition to any 
authority for prosecution under other statutes.
    8. The heading of part 242 is revised to read as follows.

PART 242--ORDERS [RESERVED]

    9. Part 243 is revised to read as follows:

PART 243--SUSPENSIONS PENDING APPEAL AND BONDING--ROYALTY 
MANAGEMENT PROGRAM

Subpart A--General Provisions

Sec.
243.1  What is the purpose of this part?
243.2  What leases are subject to this part?
243.3  What definitions apply to this part?
243.4  How do I suspend compliance with an order?
243.5  May another person post a bond or other surety instrument or 
demonstrate financial solvency on my behalf?
243.6  When must I or another person meet the bonding or financial 
solvency requirements under this part?
243.7  What must a person do when posting a bond or other surety 
instrument or demonstrating financial solvency on behalf of an 
appellant?
243.8  When will MMS suspend my obligation to comply with an order?
243.9  Will MMS continue to suspend my obligation to comply with an 
order if I seek judicial review in a Federal court?
243.10  When will MMS collect against a bond or other surety 
instrument or a person demonstrating financial solvency?
243.11  May I appeal the MMS bond-approving officer's determination 
of my surety amount or financial solvency?
243.12  May I substitute a demonstration of financial solvency for a 
bond posted before the effective date of this rule?

Subpart B--Bonding Requirements

243.100  What standards must my MMS-specified surety instrument 
meet?
243.101  How will MMS determine the amount of my bond or other 
surety instrument?

Subpart C--Financial Solvency Requirements

243.200  How do I demonstrate financial solvency?
243.201  How will MMS determine if I am financially solvent?
243.202  When will MMS monitor my financial solvency?

    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. 9701; 43 U.S.C. 1301 et seq., 1331 et 
seq., and 1801 et seq.

Subpart A--General Provisions


Sec. 243.1  What is the purpose of this part?

    This part applies to you if you are a lessee or recipient of an 
order. This part explains:
    (a) How you may suspend compliance with an order that you (or your 
designee if you are a lessee) have appealed under 30 CFR part 290 in 
effect prior to May 13, 1999 and contained in the 30 CFR, parts 200 to 
699, edition revised as of July 1, 1998, or under 30 CFR part 290, 
subpart b; and
    (b) When you or another person acting on your behalf must submit a 
bond or other surety or demonstrate financial solvency.


Sec. 243.2  What leases are subject to this part?

    This part applies to all Federal mineral leases onshore and on the 
Outer Continental Shelf (OCS), and to all federally-administered 
mineral leases on Indian tribal and individual Indian mineral owners' 
lands.


Sec. 243.3  What definitions apply to this part?

    Assessment means any fee or charge levied or imposed by the 
Secretary or a delegated State other than:
    (1) The principal amount of any royalty, minimum royalty, rental, 
bonus, net profit share or proceed of sale;
    (2) Any interest; or
    (3) Any civil or criminal penalty.
    Designee means the person designated by a lessee under Sec. 218.52 
of this chapter to make all or part of the royalty or other payments 
due on a lease on the lessee's behalf.
    Lessee means any person to whom the United States, or the United 
States on behalf of an Indian tribe or individual Indian mineral owner, 
issues a lease, or any person to whom all or part of the lessee's 
interest or operating rights in a lease has been assigned.
    MMS bond-approving officer means the Associate Director for Royalty 
Management or an official to whom the Associate Director delegates that 
responsibility.
    MMS-specified surety instrument means an MMS-specified 
administrative appeal bond, an MMS-specified irrevocable letter of 
credit, a Treasury book-entry bond or note, or a financial institution 
book-entry certificate of deposit.
    Notice of order means the notice that MMS or a delegated State 
issues to a lessee that informs the lessee that MMS or the delegated 
State has issued an order to the lessee's designee.
    Order means an order appealable under 30 CFR part 290 in effect 
prior to May 13, 1999 and contained in the 30 CFR, parts 200 to 699, 
edition revised as of July 1, 1998, under 30 CFR part 290 subpart B, or 
under 30 CFR part 208.
    Person means any individual, firm, corporation, association, 
partnership, consortium, or joint venture.


Sec. 243.4  How do I suspend compliance with an order?

    (a) If you timely appeal an order, and if that order or portion of 
that order:
    (1) Requires you to make a payment, and you want to suspend 
compliance with that order, you must post a bond or other surety 
instrument or demonstrate financial solvency under this part, except as 
provided in paragraph (b) of this section; or
    (2) Does not require you to make a payment, compliance with that 
order is

[[Page 26255]]

suspended when you meet all requirements to file that appeal.
    (b) You need not meet the requirements of paragraph (a) of this 
section if:
    (1) The order is an assessment; or
    (2) Another person agrees to fulfill these requirements on your 
behalf under Sec. 243.5.


Sec. 243.5  May another person post a bond or other surety instrument 
or demonstrate financial solvency on my behalf?

    Any other person, including a designee, payor, or affiliate, may 
post a bond or other surety instrument or demonstrate financial 
solvency under this part on behalf of an appellant required to post a 
bond or other surety instrument under Sec. 243.4(a)(1).


Sec. 243.6  When must I or another person meet the bonding or financial 
solvency requirements under this part?

    If you must meet the bonding or financial solvency requirements 
under Sec. 243.4(a)(1), or if another person is meeting your bonding or 
financial solvency requirements, then either you or the other person 
must post a bond or other surety instrument or demonstrate financial 
solvency within 60 days after you receive the order or the Notice of 
Order.


Sec. 243.7  What must a person do when posting a bond or other surety 
instrument or demonstrating financial solvency on behalf of an 
appellant?

    If you assume an appellant's responsibility to post a bond or other 
surety instrument or demonstrate financial solvency under Sec. 243.5, 
you:
    (a) Must notify MMS in writing at the address specified in 
Sec. 243.200(a) that you are assuming the appellant's responsibility 
under this part;
    (b) May not assert that you are not otherwise liable for royalties 
or other payments under 30 U.S.C. 1712(a), or any other theory, as a 
defense if MMS calls your bond or requires you to pay based on your 
demonstration of financial solvency; and
    (c) May end your voluntarily-assumed responsibility for posting a 
bond or other surety instrument only after the appellant under this 
part either:
    (1) Pays or posts a bond or other surety instrument; or
    (2) Demonstrates financial solvency.


Sec. 243.8  When will MMS suspend my obligation to comply with an 
order?

    (a) Federal leases. Subject to paragraph (d) of this section, if 
you appeal an order regarding the payment and reporting of royalties 
and other payments due from Federal mineral leases onshore or on the 
Outer Continental Shelf (OCS), and:
    (1) If the amount under appeal is less than $10,000 or does not 
require payment of a specified amount, MMS will suspend your obligation 
to comply with the order. MMS will use the lease surety posted with the 
Bureau of Land Management for onshore leases, and MMS for OCS leases, 
as collateral for the obligation; or
    (2) If the amount under appeal is $10,000 or more, MMS will suspend 
your obligation to comply with that order if you:
    (i) Submit an MMS-specified surety instrument under subpart B of 
this part within a time period MMS prescribes; or
    (ii) Demonstrate financial solvency under subpart C.
    (b) Indian leases. Subject to paragraph (d) of this section, if you 
appeal an order regarding the payment and reporting of royalties and 
other payments due from Indian mineral leases subject to this part, 
and:
    (1) If the amount under appeal is less than $1,000 or does not 
require payment, MMS will suspend your obligation to comply with the 
order. MMS will use the lease surety posted with the Bureau of Indian 
Affairs as collateral for the obligation; or
    (2) If the amount under appeal is $1,000 or more, MMS will suspend 
your obligation to comply with that order if you submit an MMS-
specified surety instrument under subpart B of this part within a time 
period MMS prescribes.
    (c) Nothing in this part prohibits you from paying any demanded 
amount or complying with any other requirement pending appeal. However, 
voluntarily paying any demanded amount or otherwise complying with any 
other requirement when suspension of an order is otherwise available 
under these rules does not create judicially reviewable final agency 
action under 5 U.S.C. 704.
    (d) Regardless of the amount under appeal, MMS may inform you that 
it will not suspend your obligation to comply with the order under 
paragraph (a) or (b) of this section because suspension would harm the 
interests of the United States or the Indian lessor.


Sec. 243.9  Will MMS continue to suspend my obligation to comply with 
an order if I seek judicial review in a Federal court?

    (a) If you seek judicial review of an IBLA decision or other final 
action of the Department of the Interior regarding an order, MMS will 
suspend your obligation to comply with that order pending judicial 
review if you continue to meet the requirements of this part.
    (b) Notwithstanding the provisions of paragraph (a) of this 
section, MMS may decide that it will not suspend your obligation to 
comply with an order. MMS will notify you in writing of that decision 
and the reasons for it.


Sec. 243.10  When will MMS collect against a bond or other surety 
instrument or a person demonstrating financial solvency?

    (a) This section applies to you if, for an appeal of an order under 
this part, you:
    (1) Maintain a bond or an MMS-specified surety instrument on your 
own behalf or for another person; or
    (2) Have demonstrated financial solvency on your own behalf or for 
another person.
    (b) MMS may initiate collection against the bond or other surety 
instrument or the person demonstrating financial solvency:
    (1) If the MMS Director or the Deputy Commissioner of Indian 
Affairs decides your appeal adversely to you and you do not pay the 
amount due or appeal that decision to the IBLA under 43 CFR part 4, 
subpart E;
    (2) If the IBLA, the Director of the Office of Hearings and 
Appeals, an Assistant Secretary, or the Secretary decides your appeal 
adversely to you, and you do not pay the amount due or pursue judicial 
review within 90 days of the decision;
    (3) If a court of competent jurisdiction issues a final non-
appealable decision adverse to you, and you do not pay the amount due 
within 30 days of the decision;
    (4) If you do not increase the amount of your bond or other surety 
instrument as required under Sec. 243.101(b), or otherwise fail to 
maintain an adequate surety instrument in effect, and you do not pay 
the amount due under the order within 30 days of notice from MMS under 
Sec. 243.101(b);
    (5) If the obligation to comply with an order or decision is not 
suspended under Sec. 243.8 or Sec. 243.9 and you do not pay the amount 
required under the order or decision; or
    (6) If the MMS bond-approving officer determines that you are no 
longer financially solvent under Sec. 243.202(c), and you do not pay 
the order amount or post a bond or other MMS-specified surety 
instrument under subpart B within 30 days of that determination.


Sec. 243.11  May I appeal the MMS bond-approving officer's 
determination of my surety amount or financial solvency?

    Any decision on your surety amount under subpart B or your 
financial solvency under subpart C is final and is not subject to 
appeal.

[[Page 26256]]

Sec. 243.12  May I substitute a demonstration of financial solvency for 
a bond posted before the effective date of this rule?

    If you appealed an order before June 14, 1999 and you submitted an 
MMS-specified surety instrument to suspend compliance with that order, 
you may replace the surety with a demonstration of financial solvency 
under this part at an administratively convenient time, such as when 
the surety instrument is due for renewal.

Subpart B--Bonding Requirements


Sec. 243.100  What standards must my MMS-specified surety instrument 
meet?

    (a) An MMS-specified surety instrument must be in a form specified 
in MMS instructions. MMS will give you written information and standard 
forms for MMS-specified surety instrument requirements.
    (b) MMS will use a bank-rating service to determine whether a 
financial institution has an acceptable rating to provide a surety 
instrument adequate to indemnify the lessor from loss or damage.
    (1) Administrative appeal bonds must be issued by a qualified 
surety company which the Department of the Treasury has approved.
    (2) Irrevocable letters of credit or certificates of deposit must 
be from a financial institution acceptable to MMS with a minimum 1-year 
period of coverage subject to automatic renewal up to 5 years.


Sec. 243.101  How will MMS determine the amount of my bond or other 
surety instrument?

    (a) The MMS bond-approving officer may approve your surety if he or 
she determines that the amount is adequate to guarantee payment. The 
amount of your surety may vary depending on the form of the surety and 
how long the surety is effective.
    (1) The amount of the MMS-specified surety instrument must include 
the principal amount owed under the order plus any accrued interest we 
determine is owed plus projected interest for a 1-year period.
    (2) Treasury book-entry bond or note amounts must be equal to at 
least 120 percent of the required surety amount.
    (b) If your appeal is not decided within 1 year from the filing 
date, you must increase the surety amount to cover additional estimated 
interest for another 1-year period. You must continue to do this 
annually on the date your appeal was filed. We will determine the 
additional estimated interest and notify you of the amount so you can 
amend your surety instrument.
    (c) You may submit a single surety instrument that covers multiple 
appeals. You may change the instrument to add new amounts under appeal 
or remove amounts that have been adjudicated in your favor or that you 
have paid if you:
    (1) Amend the single surety instrument annually on the date you 
filed your first appeal; and
    (2) Submit a separate surety instrument for new amounts under 
appeal until you amend the instrument to cover the new appeals.

Subpart C--Financial Solvency Requirements


Sec. 243.200  How do I demonstrate financial solvency?

    (a) To demonstrate financial solvency under this part, you must 
submit an audited consolidated balance sheet, and, if requested by the 
MMS bond-approving officer, up to 3 years of tax returns to the MMS, 
Debt Collection Section using:
    (1) The U.S. Postal Service or private delivery at P.O. Box 5760, 
MS 3031, Denver, CO 80217-5760; or
    (2) Courier or overnight delivery at MS 3031, Denver Federal 
Center, Bldg. 85, Room A-212, Denver, CO 80225-0165.
    (b) You must submit an audited consolidated balance sheet annually, 
and, if requested, additional annual tax returns on the date MMS first 
determined that you demonstrated financial solvency as long as you have 
active appeals, or whenever MMS requests.
    (c) If you demonstrate financial solvency in the current calendar 
year, you are not required to redemonstrate financial solvency for new 
appeals of orders during that calendar year unless you file for 
protection under any provision of the U.S. Bankruptcy Code (Title 11 of 
the United States Code), or MMS notifies you that you must 
redemonstrate financial solvency.


Sec. 243.201  How will MMS determine if I am financially solvent?

    (a) The MMS bond-approving officer will determine your financial 
solvency by examining your total net worth, including, as appropriate, 
the net worth of your affiliated entities.
    (b) If your net worth, minus the amount we would require as surety 
under subpart B for all orders you have appealed is greater than $300 
million, you are presumptively deemed financially solvent, and we will 
not require you to post a bond or other surety instrument.
    (c) If your net worth, minus the amount we would require as surety 
under subpart B for all orders you have appealed is less than $300 
million, you must submit the following to the MMS Debt Collection 
Section by one of the methods in Sec. 243.200(a):
    (1) A written request asking us to consult a business-information, 
or credit-reporting service or program to determine your financial 
solvency; and
    (2) A nonrefundable $50 processing fee:
    (i) You must pay the processing fee to us following the 
requirements for making payments found in 30 CFR 218.51. You are not 
required to use Electronic Funds Transfer (EFT) for these payments;
    (ii) You must submit the fee with your request under paragraph 
(c)(1) of this section, and then annually on the date we first 
determined that you demonstrated financial solvency, as long as you are 
not able to demonstrate financial solvency under paragraph (a) of this 
section and you have active appeals.
    (d) If you request that we consult a business-information or 
credit-reporting service or program under paragraph (c) of this 
section:
    (1) We will use criteria similar to that which a potential creditor 
would use to lend an amount equal to the bond or other surety 
instrument we would require under subpart B;
    (2) For us to consider you financially solvent, the business-
information or credit-reporting service or program must demonstrate 
your degree of risk as low to moderate:
    (i) If our bond-approving officer determines that the business-
information or credit-reporting service or program information 
demonstrates your financial solvency to our satisfaction, our bond-
approving officer will not require you to post a bond or other surety 
instrument under subpart B;
    (ii) If our bond-approving officer determines that the business-
information or credit-reporting service or program information does not 
demonstrate your financial solvency to our satisfaction, our bond-
approving officer will require you to post a bond or other surety 
instrument under subpart B or pay the obligation.


Sec. 243.202  When will MMS monitor my financial solvency?

    (a) If you are presumptively financially solvent under 
Sec. 243.201(b), MMS will determine your net worth as described under 
Secs. 243.201(b) and (c) to evaluate your financial solvency at least 
annually on the date we first determined that you demonstrated 
financial solvency as long as you have

[[Page 26257]]

active appeals and each time you appeal a new order.
    (b) If you ask us to consult a business-information or credit-
reporting service or program under Sec. 243.201(c), we will consult a 
service or program annually as long as you have active appeals and each 
time you appeal a new order.
    (c) If our bond-approving officer determines that you are no longer 
financially solvent, you must post a bond or other MMS-specified surety 
instrument under subpart B.

PART 250--OIL AND GAS AND SULPHUR OPERATIONS IN THE OUTER 
CONTINENTAL SHELF

    10. The authority citation for part 250 continues to read as 
follows:

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

    10a. Section 250.1409 is revised to read as follows:


Sec. 250.1409  What are my appeal rights?

    (a) When you receive the Reviewing Officer's final decision, you 
have 60 days to either pay the penalty or file an appeal in accordance 
with 30 CFR part 290, subpart A.
    (b) If you file an appeal, you must either:
    (1) Submit a surety bond in the amount of the penalty to the 
Regional Adjudication Office in the Region where the penalty was 
assessed, following instructions that the Reviewing Officer will 
include in the final decision; or
    (2) Notify the Regional Adjudication Office, in the Region where 
the penalty was assessed, that you want your lease-specific/area-wide 
bond on file to be used as the bond for the penalty amount.
    (c) If you choose the alternative in paragraph (b)(2) of this 
section, the Regional Director may require additional security (i.e., 
security in excess of your existing bond) to ensure sufficient coverage 
during an appeal. In that event, the Regional Director will require you 
to post the supplemental bond with the regional office in the same 
manner as under Secs. 256.53(d) through (f) of this chapter. If the 
Regional Director determines the appeal should be covered by a lease-
specific abandonment account then you must establish an account that 
meets the requirements of Sec. 256.56.
    (d) If you do not either pay the penalty or file a timely appeal, 
MMS will take one or more of the following actions:
    (1) We will collect the amount you were assessed, plus interest, 
late payment charges, and other fees as provided by law, from the date 
you received the Reviewing Officer's final decision until the date we 
receive payment;
    (2) We may initiate additional enforcement, including, if 
appropriate, cancellation of the lease, right-of-way, license, permit, 
or approval, or the forfeiture of a bond under this part; or
    (3) We may bar you from doing further business with the Federal 
Government according to Executive Orders 12549 and 12689, and section 
2455 of the Federal Acquisition Streamlining Act of 1994, 31 U.S.C. 
6101. The Department of the Interior's regulations implementing these 
authorities are found at 43 CFR part 62, subpart D.
    11. Part 290 of subchapter C is revised to read as follows:

PART 290--APPEAL PROCEDURES

Subpart A--Offshore Minerals Management Appeal Procedures

Sec.
290.1  What is the purpose of this subpart?
290.2  Who may appeal?
290.3  What is the time limit for filing an appeal?
290.4  How do I file an appeal?
290.5  Can I obtain an extension for filing my Notice of Appeal?
290.6  Are informal resolutions permitted?
290.7  Do I have to comply with the decision or order while my 
appeal is pending?
290.8  How do I exhaust my administrative remedies?

Subpart B--Appeals of Royalty Management Program and Delegated State 
Orders

290.100  What is the purpose of this subpart?
290.101  What leases are subject to this subpart?
290.102  What definitions apply to this subpart?
290.103  Who may file an appeal?
290.104  What may I not appeal under this subpart?
290.105  How do I appeal an order?
290.106  How do lessees join a designee's appeal and how does 
joinder affect the appeal?
290.107  Where are the rules concerning the effect of the Department 
not issuing a decision in my appeal within the statutory time frame?
290.108  How do I appeal to the IBLA?
290.109  How do I request an extension of time?

    Authority: 5 U.S.C. 301 et seq.; 43 U.S.C. 1331 et seq.

Subpart A--Offshore Minerals Management Appeal Procedures


Sec. 290.1  What is the purpose of this subpart?

    The purpose of this subpart is to explain the procedures for 
appeals of Minerals Management Service (MMS) Offshore Minerals 
Management (OMM) decisions and orders issued under subchapter B.


Sec. 290.2  Who may appeal?

    If you are adversely affected by an OMM official's final decision 
or order issued under 30 CFR chapter II, subchapter B, you may appeal 
that decision or order to the Interior Board of Land Appeals (IBLA). 
Your appeal must conform with the procedures found in this subpart and 
43 CFR part 4, subpart E. A request for reconsideration of an MMS 
decision concerning a lease bid, authorized in 30 CFR 256.47(e)(3) and 
281.21(a)(1), or a deep water field determination, authorized in 30 CFR 
203.79(a) and 30 CFR 260.110(d)(2), is not subject to the procedures 
found in this part.


Sec. 290.3  What is the time limit for filing an appeal?

    You must file your appeal within 60 days after you receive OMM's 
final decision or order. The 60-day time period applies rather than the 
time period provided in 43 CFR 4.411(a). A decision or order is 
received on the date you sign a receipt confirming delivery or, if 
there is no receipt, the date otherwise documented.


Sec. 290.4  How do I file an appeal?

    For your appeal to be filed, MMS must receive all of the following 
within 60 days after you receive the decision or order:
    (a) A written Notice of Appeal together with a copy of the decision 
or order you are appealing in the office of the OMM officer that issued 
the decision or order. You cannot extend the 60-day period for that 
office to receive your Notice of Appeal; and
    (b) A nonrefundable processing fee of $150 paid with the Notice of 
Appeal.
    (1) Identify the order you are appealing on the check or other form 
of payment you use to pay the processing fee.
    (2) You cannot extend the 60-day period for payment of the 
processing fee.
    (3) You must pay the processing fee to MMS following the 
requirements for making payments found in 30 CFR 218.51. You are not 
required to use Electronic Funds Transfer (EFT) for these payments.


Sec. 290.5  Can I obtain an extension for filing my Notice of Appeal?

    You cannot obtain an extension of time to file the Notice of 
Appeal. See 43 CFR 4.411(c).

[[Page 26258]]

Sec. 290.6  Are informal resolutions permitted?

    (a) You may seek informal resolution with the issuing officer's 
next level supervisor during the 60-day period established in 
Sec. 290.3.
    (b) Nothing in this subpart precludes resolution by settlement of 
any appeal or matter pending in the administrative process after the 
60-day period established in Sec. 290.3.


Sec. 290.7  Do I have to comply with the decision or order while my 
appeal is pending?

    (a) The decision or order is effective during the 60-day period for 
filing an appeal under Sec. 290.3 unless:
    (1) OMM notifies you that the decision or order, or some portion of 
it, is suspended during this period because there is no likelihood of 
immediate and irreparable harm to human life, the environment, any 
mineral deposit, or property; or
    (2) You post a surety bond under 30 CFR 250.1409 pending the appeal 
challenging an order to pay a civil penalty.
    (b) This section applies rather than 43 CFR 4.21(a) for appeals of 
OMM orders.
    (c) After you file your appeal, IBLA may grant a stay of a decision 
or order under 43 CFR 4.21(b); however, a decision or order remains in 
effect until IBLA grants your request for a stay of the decision or 
order under appeal.


Sec. 290.8  How do I exhaust my administrative remedies?

    (a) If you receive a decision or order issued under chapter II, 
subchapter B, you must appeal that decision or order to IBLA under 43 
CFR part 4, subpart E to exhaust administrative remedies.
    (b) This section does not apply if the Assistant Secretary for Land 
and Minerals Management or the IBLA makes a decision or order 
immediately effective notwithstanding an appeal.

Subpart B--Appeals of Royalty Management Program and Delegated 
States Orders


Sec. 290.100  What is the purpose of this subpart?

    This subpart tells you how to appeal Minerals Management Service 
(MMS) or delegated State orders concerning reporting to the MMS Royalty 
Management Program (RMP) and the payment of royalties and other 
payments due under leases subject to this subpart.


Sec. 290.101  What leases are subject to this subpart?

    This subpart applies to:
    (a) All Federal mineral leases onshore and on the Outer Continental 
Shelf (OCS); and
    (b) All federally-administered mineral leases on Indian tribal and 
individual Indian mineral owners' lands, regardless of the statutory 
authority under which the lease was issued or maintained.


Sec. 290.102  What definitions apply to this subpart?

    Assessment means any fee or charge levied or imposed by the 
Secretary or a delegated State other than:
    (1) The principal amount of any royalty, minimum royalty, rental, 
bonus, net profit share or proceed of sale;
    (2) Any interest; or
    (3) Any civil or criminal penalty.
    Delegated State means a State to which MMS has delegated authority 
to perform royalty management functions under an agreement or 
agreements under regulations at 30 CFR part 227.
    Designee means the person designated by a lessee under 30 CFR 
218.52 to make all or part of the royalty or other payments due on a 
lease on the lessee's behalf.
    IBLA means the Interior Board of Land Appeals.
    Indian lessor means an Indian tribe or individual Indian mineral 
owner with a beneficial or restricted interest in a property that is 
subject to a lease issued or administered by the Secretary on behalf of 
the tribe or individual Indian mineral owner.
    Lease means any agreement authorizing exploration for or extraction 
of any mineral, regardless of whether the instrument is expressly 
denominated as a ``lease,'' including any:
    (1) Contract;
    (2) Net profit share arrangement;
    (3) Joint venture; or
    (4) Agreement the Secretary approves under the Indian Mineral 
Development Act, 25 U.S.C. 2101 et seq.
    Lessee means any person to whom the United States, or the United 
States on behalf of an Indian tribe or individual Indian mineral owner, 
issues a lease subject to this subpart, or any person to whom all or 
part of the lessee's interest or operating rights in a lease subject to 
this subpart has been assigned.
    Notice of Order means the notice that MMS or a delegated State 
issues to a lessee that informs the lessee that MMS or the delegated 
State has issued an order to the lessee's designee.
    Obligation means:
    (1) A lessee's, designee's or payor's duty to:
    (i) Deliver oil or gas royalty in kind; or
    (ii) Make a lease-related payment, including royalty, minimum 
royalty, rental, bonus, net profit share, proceeds of sale, interest, 
penalty, civil penalty, or assessment; and
    (2) The Secretary's duty to:
    (i) Take oil or gas royalty-in-kind; or
    (ii) Make a lease-related payment, refund, offset, or credit, 
including royalty, minimum royalty, rental, bonus, net profit share, 
proceeds of sale, or interest.
    (3) The obligations identified in paragraphs (1)(i) and (2)(i) of 
this definition are nonmonetary obligations. The obligations identified 
in paragraphs (1)(ii) and (2)(ii), including the requirement to compute 
the amount of such obligations, are monetary obligations.
    Order for purposes of this subpart only, means any document issued 
by the MMS Director, MMS RMP, or a delegated State that contains 
mandatory or ordering language that requires the recipient to do any of 
the following for any lease subject to this subpart: report, compute, 
or pay royalties or other obligations, report production, or provide 
other information.
    (1) Order includes:
    (i) An order to pay or to compute and pay; and
    (ii) An MMS or delegated State decision to deny a lessee's, 
designee's, or payor's written request that asserts an obligation due 
the lessee, designee or payor.
    (2) Order does not include:
    (i) A non-binding request, information, or guidance, such as:
    (A) Advice or guidance on how to report or pay, including a 
valuation determination, unless it contains mandatory or ordering 
language; and
    (B) A policy determination;
    (ii) A subpoena;
    (iii) An order to pay that MMS issues to a refiner or other person 
involved in disposition of royalty taken in kind; or
    (iv) A Notice of Noncompliance or a Notice of Civil Penalty issued 
under 30 U.S.C. 1719 and 30 CFR part 241, or a decision of an 
administrative law judge or of the IBLA following a hearing on the 
record on a Notice of Noncompliance or Notice of Civil Penalty.
    Party means MMS, any person who files a Notice of Appeal, and any 
person who files a Notice of Joinder in an appeal under this subpart.


Sec. 290.103  Who may file an appeal?

    (a) If you receive an order that adversely affects you or your 
lessee, you may appeal that order except as provided under 
Sec. 290.104.
    (b) If you are a lessee and you receive a Notice of Order, and if 
you contest the order, you may either appeal the order

[[Page 26259]]

or join in your designee's appeal under Sec. 290.106.


Sec. 290.104  What may I not appeal under this subpart?

    You may not appeal:
    (a) An action that is not an order, as defined in this subpart; or
     (b) A determination of the surety amount or financial solvency 
under 30 CFR part 243, subparts B or C.


Sec. 290.105  How do I appeal an order?

    (a) You may appeal an order to the Director, Minerals Management 
Service (MMS Director), by filing a Notice of Appeal in the office of 
the official issuing the order within 30 days from service of the 
order.
    (1) Within the same 30-day period, you must file in the office of 
the official issuing the order a statement of reasons or written 
arguments or briefs that include the arguments on the facts or laws 
that you believe justify reversal or modification of the order.
    (2) If you are a designee, when you file your Notice of Appeal you 
must serve your Notice of Appeal on the lessees for the leases in the 
order you appealed.
    (b) You may not request and will not receive an extension of time 
for filing the Notice of Appeal.
    (c) If the office of the official issuing the order does not 
receive the Notice of Appeal within the time provided in paragraph (a) 
of this section, the Notice of Appeal will be considered timely if the 
office of the official issuing the order receives:
    (1) The Notice of Appeal not later than 10 days after the required 
filing date; and
    (2) The officer with whom the Notice of Appeal must be filed 
determines that the Notice of Appeal was transmitted to the proper 
office before the filing deadline in paragraph (a) of this section.
    (d) If the Notice of Appeal is filed after the grace period 
provided in paragraph (c) of this section and was not transmitted to 
the proper office before the filing deadline in paragraph (a) of this 
section, the MMS Director will not consider the Notice of Appeal and 
the case will be closed.
    (e) The officer with whom the Notice of Appeal is filed will send 
the appeal and accompanying papers to the MMS Director.
    (f) The MMS Director will review the record and render a decision 
in the case.
    (g) If an order involves Indian leases, the Deputy Commissioner of 
Indian Affairs will exercise the functions vested in the MMS Director.


Sec. 290.106  How do lessees join a designee's appeal and how does 
joinder affect the appeal?

    (a) If you are a lessee, and your designee files an appeal under 
Sec. 290.103, you may join in that appeal within 30 days after you 
receive your designee's Notice of Appeal under Sec. 290.105(a)(2) by 
filing a Notice of Joinder with the office or official that issued the 
order.
    (b) If you join in an appeal under paragraph (a) of this section, 
you are deemed to appeal the order jointly with the designee, but the 
designee must fulfill all requirements imposed on appellants under this 
subpart and 43 CFR part 4, subparts E and J. You may not file 
submissions or pleadings separately from the designee.
    (c) If you are a lessee and you neither appeal nor join in your 
designee's appeal under this section, your designee's actions with 
respect to the appeal and any decisions in the appeal bind you.
    (d) If you are a designee and you decide to discontinue 
participation in the appeal, you must serve written notice within 30 
days before the next submission or pleading is due on:
    (1) All lessees who have joined in the appeal under paragraph (a) 
of this section;
    (2) The office or officer with whom any subsequent submissions or 
pleadings must be filed, including the IBLA; and
    (3) All other parties to the appeal.
    (e) If you have joined in the appeal under paragraph (a) of this 
section, and if the designee notifies you under paragraph (d) of this 
section that it declines to further pursue the appeal, you become an 
appellant and must then meet all requirements of this subpart and 43 
CFR part 4, subparts E and J, as the appellant.


Sec. 290.107  Where are the rules concerning the effect of the 
Department not issuing a decision in my appeal within the statutory 
time frame?

    If your appeal involves monetary or nonmonetary obligations under 
Federal oil and gas leases, the rules concerning the effect of the 
Department not issuing a final decision in your appeal within the 33-
month period prescribed under 30 U.S.C. 1724(h) are located in 43 CFR 
part 4, subpart J.


Sec. 290.108  How do I appeal to the IBLA?

    Any party to a case adversely affected by a final decision of the 
MMS Director or the Deputy Commissioner of Indian Affairs under this 
subpart shall have a right of appeal to the IBLA under the procedures 
provided in 43 CFR part 4, subpart E.


Sec. 290.109  How do I request an extension of time?

    (a) If you are a party to an appeal under this subpart, and you 
need additional time after the appeal commences under 43 CFR 4.904 for 
any purpose:
    (1) You may obtain an extension of time under this section; and
    (2) You must submit a written request for an extension of time to:
    (i) The office or official with whom you must file a document 
before the required filing date; or
    (ii) If you are not seeking an extension of time to file a 
document, to the office or official before whom the appeal is pending.
    (b) If you are an appellant, and if your appeal involves monetary 
or nonmonetary obligations under Federal oil and gas leases, you must 
agree in writing in your request to extend the period in which the 
Department must issue a final decision in your appeal under 30 U.S.C. 
1724(h) and 43 CFR 4.906, by the amount of time for which you are 
requesting an extension.
    (c) If you are any other party to an appeal involving monetary or 
nonmonetary obligations under Federal oil and gas leases, the office or 
official with whom you must file the request may require you to submit 
a written agreement signed by the appellant to extend the period in 
which the Department must issue a final decision in the appeal under 43 
CFR 4.906, by the amount of time for which you are requesting an 
extension.
    (d) The office or official with whom you must file your request may 
decline any request for an extension of time.
    (e) You must serve your request on all parties to the appeal.

43 CFR PART 4--DEPARTMENT HEARINGS AND APPEALS PROCEDURES

    13. The authority citation for part 4 continues to read as follows:

    Authority: R.S. 2478, as amended, 43 U.S.C. sec. 1201, unless 
otherwise noted.

    14. In 43 CFR part 4, subpart J is added to read as follows.

Subpart J--Special Rules Applicable to Appeals Concerning Federal Oil 
and Gas Royalties and Related Matters

4.901  What is the purpose of this subpart?
4.902  What appeals are subject to this subpart?
4.903  What definitions apply to this subpart?
4.904  When does my appeal commence and end?
4.905  What if a due date falls on a day the Department or relevant 
office is not open for business?

[[Page 26260]]

4.906  What if the Department does not issue a decision by the date 
my appeal ends?
4.907  What if an IBLA decision requires MMS or a delegated State to 
recalculate royalties or other payments?
4.908  What is the administrative record for my appeal if it is 
deemed decided?
4.909  How do I request an extension of time?

    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 9701; 43 U.S.C. 1301 et seq., 1331 et 
seq., and 1801 et seq.

Subpart J--Special Rules Applicable to Appeals Concerning Federal 
Oil and Gas Royalties and Related Matters


Sec. 4.901  What is the purpose of this subpart?

    This subpart tells you how the time limits of 30 U.S.C. 1724(h) 
apply to appeals subject to this subpart.


Sec. 4.902  What appeals are subject to this subpart?

    (a) This subpart applies to appeals under 30 CFR part 290 in effect 
prior to May 13, 1999 and contained in the 30 CFR, parts 200 to 699, 
edition revised as of July 1, 1998, 30 CFR part 290 subpart B, and 43 
CFR part 4, subpart E, of Minerals Management Service (MMS) or 
delegated State orders or portions of orders concerning payment (or 
computation and payment) of royalties and other payments due, and 
delivery or taking of royalty in kind, under Federal oil and gas 
leases.
    (b) This subpart does not apply to appeals of orders, or portions 
of orders, that
    (1) Involve Indian leases or Federal leases for minerals other than 
oil and gas; or
    (2) Relate to Federal oil and gas leases but do not involve a 
monetary or nonmonetary obligation.


Sec. 4.903  What definitions apply to this subpart?

    For the purposes of this subpart only:
    Assessment means any fee or charge levied or imposed by the 
Secretary or a delegated State other than:
    (1) The principal amount of any royalty, minimum royalty, rental, 
bonus, net profit share or proceed of sale;
    (2) Any interest; or
    (3) Any civil or criminal penalty.
    Delegated State means a State to which MMS has delegated authority 
to perform royalty management functions under an agreement or 
agreements under 30 CFR part 227.
    Designee means the person designated by a lessee under 30 CFR 
218.52 to make all or part of the royalty or other payments due on a 
lease on the lessee's behalf.
    IBLA means the Interior Board of Land Appeals.
    Lease means any agreement authorizing exploration for or extraction 
of any mineral, regardless of whether the instrument is expressly 
denominated as a ``lease,'' including any:
    (1) Contract;
    (2) Net profit share arrangement; or
    (3) Joint venture.
    Lessee means any person to whom the United States issues a Federal 
oil and gas lease, or any person to whom all or part of the lessee's 
interest or operating rights in a Federal oil and gas lease has been 
assigned.
    Monetary obligation means a lessee's, designee's or payor's duty to 
pay, or to compute and pay, any obligation in any order, or the 
Secretary's duty to pay, refund, offset, or credit the amount of any 
obligation that is the subject of a decision by the MMS or a delegated 
State denying a lessee's, designee's, or payor's written request for 
the payment, refund, offset, or credit. To determine the amount of any 
monetary obligation, for purposes of the default rule of decision in 
Sec. 4.906 and 30 U.S.C. 1724(h):
    (1) If an order asserts a monetary obligation arising from one 
issue or type of underpayment that covers multiple leases or production 
months, the total obligation for all leases or production months 
involved constitutes a single monetary obligation;
    (2) If an order asserts monetary obligations arising from different 
issues or types of underpayments for one or more leases, the 
obligations arising from each separate issue, subject to paragraph (1) 
of this definition, constitute separate monetary obligations; and
    (3) If an order asserts a monetary obligation with a stated amount 
of additional royalties due, plus an order to perform a restructured 
accounting arising from the same issue or cause as the specifically 
stated underpayment, the stated amount of royalties due plus the 
estimated amount due under the restructured accounting, subject to 
paragraphs (1) and (2) of this definition, together constitutes a 
single monetary obligation.
    Nonmonetary obligation means any duty of a lessee or its designee 
to deliver oil or gas in kind, or any duty of the Secretary to take oil 
or gas royalty in kind.
    Notice of Order means the notice that MMS or a delegated State 
issues to a lessee that informs the lessee that MMS or the delegated 
State has issued an order to the lessee's designee.
    Obligation means:
    (1) A lessee's, designee's or payor's duty to:
    (i) Deliver oil or gas royalty in kind; or
    (ii) Make a lease-related payment, including royalty, minimum 
royalty, rental, bonus, net profit share, proceeds of sale, interest, 
penalty, civil penalty, or assessment; and
    (2) The Secretary's duty to:
    (i) Take oil or gas royalty in kind; or
    (ii) Make a lease-related payment, refund, offset, or credit, 
including royalty, minimum royalty, rental, bonus, net profit share, 
proceeds of sale, or interest.
    Order means any document or portion of a document issued by the MMS 
Director, MMS RMP, or a delegated State, that contains mandatory or 
ordering language regarding any monetary or nonmonetary obligation 
under any Federal oil and gas lease or leases.
    (1) Order includes but is not limited to the following:
    (i) An order to pay;
    (ii) A MMS or delegated State decision to deny a lessee's, 
designee's, or payor's written request that asserts an obligation due 
the lessee, designee or payor.
    (2) Order does not include:
    (i) A non-binding request, information, or guidance, such as:
    (A) Advice or guidance on how to report or pay, including valuation 
determination, unless it contains mandatory or ordering language; and
    (B) A policy determination;
    (ii) A subpoena;
    (iii) An order to pay that MMS issues to a refiner or other person 
involved in disposition of royalty taken in kind; or
    (iv) a Notice of Noncompliance or a Notice of Civil Penalty issued 
under 30 U.S.C. 1719 and 30 CFR part 241, or a decision of an 
administrative law judge or of the IBLA following a hearing on the 
record on a Notice of Noncompliance or Notice of Civil Penalty.
    Party means MMS, any person who files a Notice of Appeal under 30 
CFR part 290 in effect prior to May 13, 1999 and contained in the 30 
CFR, parts 200 to 699, edition revised as of July 1, 1998, 30 CFR part 
290 subpart B, or 43 CFR part 4, subpart E, and any person who files a 
Notice of Joinder in an appeal under 30 CFR part 290, subpart B.
    Payor means any person responsible for reporting and paying 
royalties for Federal oil and gas leases for production before 
September 1, 1996.

[[Page 26261]]

Sec. 4.904  When does my appeal commence and end?

    For purposes of the period in which the Department must issue a 
final decision in your appeal under Sec. 4.906:
    (a) If you filed your Notice of Appeal and initial Statement of 
Reasons with MMS before August 13, 1996, your appeal commenced on 
August 13, 1996;
    (b) If you filed your Notice of Appeal or initial Statement of 
Reasons with MMS after August 13, 1996, under 30 CFR part 290, in 
effect prior to May 13, 1999 and contained in the 30 CFR, parts 200 to 
699, edition, revised as of July 1, 1998, your appeal commenced on the 
date MMS received your Notice of Appeal, or if later, the date MMS 
received your initial Statement of Reasons;
    (c) If you filed your Notice of Appeal under 30 CFR part 290, 
subpart B, your appeal commenced on the date MMS received your Notice 
of Appeal.
    (d) Your appeal ends on the same day of the month of the 33rd 
calendar month after your appeal commenced under paragraph (a), (b), or 
(c) of this section, plus the number of days of any applicable time 
extensions under Sec. 4.909 or 30 CFR 290.109. If the 33rd calendar 
month after your appeal commenced does not have the same day of the 
month as the day of the month your appeal commenced, then the initial 
33-month period ends on the last day of the 33rd calendar month.


Sec. 4.905  What if a due date falls on a day the Department or 
relevant office is not open for business?

    If a due date under this subpart falls on a day the relevant office 
is not open for business (such as a weekend, Federal holiday, or 
shutdown), the due date is the next day the relevant office is open for 
business.


Sec. 4.906  What if the Department does not issue a decision by the 
date my appeal ends?

    (a) If the IBLA or an Assistant Secretary (or the Secretary or the 
Director of OHA) does not issue a final decision by the date an appeal 
ends under Sec. 4.904(d), then under 30 U.S.C. 1724(h)(2), the 
Secretary will be deemed to have decided the appeal:
    (1) In favor of the appellant for any nonmonetary obligation at 
issue in the appeal, or any monetary obligation at issue in the appeal 
with a principal amount of less than $10,000;
    (2) In favor of the Secretary for any monetary obligation at issue 
in the appeal with a principal amount of $10,000 or more.
    (b)(1) If your appeal ends before the MMS Director issues a 
decision in your appeal, then the provisions of paragraph (a) of this 
section apply to the monetary and nonmonetary obligations in the order 
that you contested in your appeal to the Director.
    (2) If the MMS Director issues a decision in your appeal before 
your appeal ends, and if you appealed the Director's decision to IBLA 
under 43 CFR part 4, subpart E, then the provisions of paragraph (a) of 
this section apply to the monetary and nonmonetary obligations in the 
Director's decision that you contested in your appeal to IBLA.
    (3) If the MMS Director issues a decision in your appeal, and if 
you did not appeal the Director's decision to IBLA within the time 
required under 30 CFR part 290 in effect prior to May 13, 1999 and 
contained in the 30 CFR, parts 200 to 699, edition revised as of July 
1, 1998 (for appeals filed before May 13, 1999 or 30 CFR part 290 
subpart B (for appeals filed on or after May 13, 1999 and 43 CFR part 
4, subpart E, then the MMS Director's decision is the final decision of 
the Department and 30 U.S.C. 1724(h)(2) has no application.
    (c) If the IBLA issues a decision before the date your appeal ends, 
that decision is the final decision of the Department and 30 U.S.C. 
1724(h)(2) has no application. A petition for reconsideration does not 
extend or renew the 33-month period.
    (d) If any part of the principal amount of any monetary obligation 
is not specifically stated in an order or MMS Director's decision and 
must be computed to comply with the order or MMS Director's decision, 
then the principal amount referred to in paragraph (a) of this section 
means the principal amount MMS estimates you would be required to pay 
as a result of the computation required under the order, plus any 
amount due stated in the order.


Sec. 4.907  What if an IBLA decision requires MMS or a delegated State 
to recalculate royalties or other payments?

    (a) An IBLA decision modifying an order or an MMS Director's 
decision and requiring MMS or a delegated State to recalculate 
royalties or other payments is a final decision in the administrative 
proceeding for purposes of 30 U.S.C. 1724(h).
    (b) MMS or the delegated State must provide to IBLA and all parties 
any recalculation IBLA requires under paragraph (a) of this section 
within 60 days of receiving IBLA's decision.
    (c) There is no further appeal within the Department from MMS's or 
the State's recalculation under paragraph (b) of this section.
    (d) The IBLA decision issued under paragraph (a) of this section 
together with recalculation under paragraph (b) of this section are the 
final action of the Department that is judicially reviewable under 5 
U.S.C. 704.


Sec. 4.908  What is the administrative record for my appeal if it is 
deemed decided?

    If your appeal is deemed decided under Sec. 4.906, the record for 
your appeal consists of:
    (a) The record established in an appeal before the MMS Director;
    (b) Any additional correspondence or submissions to the MMS 
Director;
    (c) The MMS Director's decision in an appeal;
    (d) Any pleadings or submissions to the IBLA; and
    (e) Any IBLA orders and decisions.


Sec. 4.909  How do I request an extension of time?

    (a) If you are a party to an appeal subject to this subpart before 
the IBLA, and you need additional time after an appeal commences for 
any purpose, you may obtain an extension of time under this section.
    (b) You must submit a written request for an extension of time 
before the required filing date.
    (1) You must submit your request to the IBLA at Interior Board of 
Land Appeals, 4015 Wilson Boulevard, Arlington, Virginia 22203, using 
the U.S. Postal Service, a private delivery or courier service, hand 
delivery or telefax to (703) 235-8349;
    (2) If you file a document by telefax, you must send an additional 
copy of your document to the IBLA using the U.S. Postal Service, a 
private delivery or courier service or hand delivery so that it is 
received within 5 business days of your telefax transmission.
    (c) If you are an appellant, in addition to meeting the 
requirements of paragraph (b) of this section, you must agree in 
writing in your request to extend the period in which the Department 
must issue a final decision in your appeal under Sec. 4.906 by the 
amount of time for which you are requesting an extension.
    (d) If you are any other party, the IBLA may require you to submit 
a written agreement signed by the appellant to extend the period in 
which the Department must issue a final decision in the appeal under 
Sec. 4.906 by the amount of time for which you are requesting an 
extension.
    (e) The IBLA has the discretion to decline any request for an 
extension of time.

[[Page 26262]]

    (f) You must serve your request on all parties to the appeal.

[FR Doc. 99-11816 Filed 5-12-99; 8:45 am]
BILLING CODE 4310-MR-P