[Federal Register Volume 70, Number 172 (Wednesday, September 7, 2005)]
[Rules and Regulations]
[Pages 53072-53074]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-17618]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF THE INTERIOR

Bureau of Land Management

43 CFR Part 3100

[WO-310-1310-PB-24-1A]
RIN 1004-AD71


Oil and Gas Leasing: Onshore Oil and Gas Operations--Fees, 
Rentals and Royalty Stripper Well Royalty Reductions Retention of 
Records

AGENCY: Bureau of Land Management, Interior.

ACTION: Final rule.

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

SUMMARY: The Bureau of Land Management (BLM) is revising the 
regulations to require that records supporting a stripper well royalty 
reduction be retained for seven years from the last date that an 
operator claims the reduction.

DATES: This rule is effective on September 7, 2005.

FOR FURTHER INFORMATION CONTACT: Rudy Baier, Fluid Minerals Group, 
Bureau of Land Management, (202) 452-5024 (Commercial or FTS). Persons 
who use a telecommunications device for the deaf (TDD) may call the 
Federal Information Relay Service (FIRS) at 1-800-877-8339, 24 hours a 
day, seven days a week, except holidays, for assistance in reaching Mr. 
Baier.

SUPPLEMENTARY INFORMATION:

I. Background
II. Final Rule as adopted
III. Procedural Matters

I. Background

    The existing regulation at 43 CFR 3103.4-2 authorizes the operator 
of a stripper well property to pay a reduced royalty tied to the lowest 
average production of oil per eligible well per well-day for any 12-
month period since the initial qualifying period of August 1, 1990 
through July 31, 1991. The regulations permit the operator to use the 
reduced royalty rate upon certifying that the royalty rate was 
calculated under the instructions and procedures in the regulations 
using reports of oil production and well-days for the qualifying 
period. However, current regulations do not require a submission of 
supporting evidence or specify the retention of records supporting the 
reduced royalty.
    The Inspector General of the Department, as well as several States, 
have expressed concern about the inability of auditors to confirm the 
validity of the claimed production per eligible well per well day 
during the qualifying period, if it were more than seven years after 
the qualifying period. Although August 1990 through July 1991 
production may be the basis for the royalty rate claimed after 
September 1992, some operators have inferred from the absence of 
specific regulatory requirements that they need not retain those 
records more than seven years from July 1991.
    The Secretary is authorized under 30 U.S.C. 1713 and 1724(f) to 
require the retention of records for seven years from the date of the 
transactions for which they are required for ``determining compliance 
with rules or orders'' or ``for the purpose of determining obligations 
due.'' Since the royalty rate for stripper well properties depends on 
the lowest level of production per well since the ``qualifying 
period,'' BLM is revising the regulations to require that records of 
production (on which the claimed royalty rate is based) be retained for 
seven years after the benefit of the reduced royalty is last claimed.

II. Final Rule as Adopted

    This rulemaking establishes a requirement that records supporting 
the reduced royalty rate claimed under 43 CFR 3103.4-2 be retained for 
seven years from the last date on which the operator is relying upon it 
to support its royalty rate.

III. Procedural Matters

Waiver of Notice of Proposed Rulemaking

Waiver of 30-Day Delay of Effective Date

    In accordance with 5 U.S.C. 553, BLM finds that notice and public 
comment on this rule is contrary to the public interest, as that 
concept is defined in 5 U.S.C. 553(b)(3)(B), because to provide advance 
notice of the requirement prior to its effectiveness would frustrate 
the public interest, by allowing operators with questionable claims to 
royalty relief to destroy, without penalty, records in their possession 
that might document their ineligibility for the royalty relief claimed. 
The risk of destruction of records is also good cause to waive the 30-
day delay of the effective date.

[[Page 53073]]

Executive Order 12866, Regulatory Planning and Review

    This rulemaking is not a significant regulatory action and is not 
subject to review by the Office of Management and Budget (OMB) under 
Executive Order 12866. This rulemaking will not have an effect of $100 
million or more on the economy. They 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 rulemaking will not create a serious 
inconsistency or otherwise interfere with an action taken or planned by 
another agency. This rulemaking does not alter the budgetary effects of 
entitlements, grants, user fees, or loan programs or the right or 
obligations of their recipients; nor does it raise novel legal or 
policy issues. This rule will have little or no impact on operators who 
are currently eligible for royalty reductions under the stripper well 
program. The rule merely requires operators to retain records which 
they currently have in their possession.

Regulatory Flexibility Act

    Congress enacted the Regulatory Flexibility Act (RFA) of 1980, as 
amended, 5 U.S.C. 601-612, to ensure that Government regulations do not 
unnecessarily or disproportionately burden small entities. The RFA 
requires a regulatory flexibility analysis if a rule would have 
significant economic impact, either detrimental or beneficial, on a 
substantial number of small entities. Because this rule would merely 
require operators receiving a royalty reduction under the program to 
retain records they currently have, BLM has determined under the RFA 
that this rule would not have a significant economic impact on a 
substantial number of small entities.

Small Business Regulatory Enforcement Fairness Act

    This rulemaking is not a major rule under 5 U.S.C. 804(2), the 
Small Business Regulatory Enforcement Fairness Act. This rulemaking 
does not have an annual effect on the economy of $100 million or more. 
It will not cause an increase in costs or prices for consumers, 
individual industries, Federal, State, or local governments agencies, 
or geographic regions. The rulemaking 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. As stated above, this rule only requires 
operators to retain records they currently have.

Unfunded Mandates Reform Act

    This rulemaking does not impose an unfunded mandate on State, 
local, or tribal governments or the private sector of more than $100 
million per year; nor does this rule have a significant or unique 
effect on State, local, or tribal governments or the private sector. 
The rule does not impose any unfunded mandate on State, local, or 
tribal governments or the private sector. The rule merely requires 
operators to retain records which they currently have. Therefore, BLM 
is not required to prepare a statement containing the information 
required by the Unfunded Mandates Reform Act (2 U.S.C. 1531 et seq.).

Executive Order 12630, Governmental Actions and Interference With 
Constitutionally Protected Property Rights

    The rulemaking does not represent a government action capable of 
interfering with constitutionally protected property rights. It merely 
requires operators to retain records they currently have. Therefore, 
the DOI has determined that the rule would not cause a taking of 
private property or require further discussion of takings implications 
under this Executive Order.

Executive Order 13132, Federalism

    The rulemaking will not have a substantial direct effect on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. This records retention rule has no effect 
on the relationship between the national government and the States, or 
on the distribution of power and responsibilities among the various 
levels of government. The BLM has determined that this rulemaking does 
not have sufficient Federalism implications to warrant preparation of a 
Federalism Assessment.

Executive Order 12988, Civil Justice Reform

    Under Executive Order 12988, the Office of the Solicitor has 
determined that this rule would not unduly burden the judicial system 
and that it meets the requirements of paragraph 3(a) and 3(b)(2) of the 
Order.

Paperwork Reduction Act of 1995

    BLM has determined this rulemaking does not contain any new 
information collection requirements that the Office of Management and 
Budget must approve under the Paperwork Reduction Act of 1995.

National Environmental Policy Act

    BLM has determined that this rule is administrative and involves 
only procedural changes addressing the retention of records for the 
stripper well property royalty rate reduction program. Therefore, it is 
categorically excluded from environmental review under paragraph 
102(2)(C) of the National Environmental Policy Act of 1969 pursuant to 
516 Departmental Manual (DM) 2.3A and 516 DM 2, Appendix 1, Item 1.10. 
BLM has further determined that none of the exceptions at 516 DM 
Appendix 2 apply.
    Pursuant to Council on Environmental Quality regulations (40 CFR 
1508.4) and the environmental policies and procedures of the DOI, the 
term ``categorical exclusions'' means categories of actions which do 
not individually or cumulatively have a significant effect on the human 
environment and which have no such effect in procedures adopted by a 
Federal agency and therefore require neither an environmental 
assessment nor an environmental impact statement.

Executive Order 13175, Consultation and Coordination With Indian Tribal 
Governments

    Under Executive Order 13175, we have found that this rulemaking 
does not include policies that have tribal implications. This rule does 
not apply to leases of Indian minerals.

Executive Order 13211, Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use

    Under Executive Order 13211, BLM has determined that the rulemaking 
will not have substantial direct effects on the energy supply, 
distribution or use, including a shortfall in supply or price increase. 
The rule merely requires operators to retain records which they 
currently have. This rule will not have a significant impact on the 
national energy supply.

Author

    The principal author of this rule is Rudy Baier, Fluid Minerals 
Group, assisted by Shirlean Beshir of the Regulatory Affairs Group.

List of Subjects in 43 CFR Part 3100

    Government contracts, Mineral royalties, Oil and gas exploration, 
Public lands-mineral resources, Reporting and recordkeeping 
requirements, and Surety bonds.


[[Page 53074]]


    Dated: August 24, 2005.
Chad Calvert,
Acting Assistant Secretary, Land and Minerals Management.

0
Accordingly, for the reasons stated in the preamble and exercising the 
authorities stated, we amend part 3100 of Title 43 of the Code of 
Federal Regulations as set forth below:

PART 3100--OIL AND GAS LEASING

0
1. Revise the authority citation for part 3100 to read as follows:

    Authority: 30 U.S.C. 189 and 359; 30 U.S.C. 1713 and 1751; and 
43 U.S.C. 1732(b), 1733, and 1740.

Subpart 3103--Fees, Rentals and Royalty

0
2. Amend Sec.  3103.4-2 by redesignating paragraph (b)(3)(vi) as 
paragraph (b)(3)(vii) and adding a new paragraph (b)(3)(vi) to read as 
follows:


Sec.  3103.4-2  Stripper well royalty reductions.

* * * * *
    (b) * * *
    (3) * * *
    (vi) Record retention. For seven years after production on which 
the operator claims a royalty rate reduction for stripper well 
properties, the operator must retain and make available to BLM for 
inspection all documents on which the calculation of the applicable 
royalty rate under this section relies.

[FR Doc. 05-17618 Filed 9-6-05; 8:45 am]
BILLING CODE 4310-84-P