[Federal Register Volume 71, Number 130 (Friday, July 7, 2006)]
[Proposed Rules]
[Pages 38545-38561]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-5988]


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DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR Parts 206, 210, 216, and 218

RIN 1010-AD20


Reporting Amendments

AGENCY: Minerals Management Service (MMS), Interior.

ACTION: Proposed rule.

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SUMMARY: The MMS is proposing to amend its existing regulations for 
reporting production and royalties on oil, gas, coal, and geothermal 
resources produced on Federal and Indian leases in order to align the 
regulations with current MMS business practices. These amendments 
reflect changes that were implemented as a result of a major 
reengineering of MMS's financial system and other legal requirements.

DATES: Comments must be submitted on or before September 5, 2006.

ADDRESSES: Address your comments, suggestions, or objections regarding 
the proposed rule to:
    By Federal eRulemaking Portal. Follow the instructions on the Web 
site at http://www.regulations.gov.
    By e-mail. [email protected]. Please include ``Attn: RIN 1010-
AD20'' and your name and return address in your Internet message. If 
you do not receive a confirmation that we have received your Internet 
message, call the contact person listed below.
    By regular U.S. mail. Minerals Management Service, Minerals Revenue 
Management, P.O. Box 25165, MS 302B2, Denver, Colorado 80225.
    By overnight mail or courier. Minerals Management Service, Minerals 
Revenue Management, Building 85, Room A-614, Denver Federal Center, 
West 6th Ave. and Kipling Blvd., Denver, Colorado 80225.

FOR FURTHER INFORMATION CONTACT: Sharron L. Gebhardt, Lead Regulatory 
Specialist, Minerals Management Service, Minerals Revenue Management, 
P.O. Box 25165, MS 302B2, Denver, Colorado 80225; telephone: (303) 231-
3211; fax: (303) 231-3781; e-mail: [email protected]. The 
principal authors of this rule are Lorraine Corona, Louise Williams, 
Richard Adamski, and Paul Knueven of Minerals Revenue Management, MMS, 
Department of the Interior.

SUPPLEMENTARY INFORMATION:

I. Introduction

    The MMS implemented integrated reengineered systems on November 1, 
2001. This process included a major reengineering of the Minerals 
Revenue Management (MRM) financial system. The new systems are the core 
systems support for MMS's implementation of new royalty management 
business processes for the 21st century. The new systems were developed 
around new business processes and have been reengineered to be more 
effective and efficient. The reengineering, as well as changes required 
by law, resulted in changes to, or elimination of, some forms and 
requirements. The MMS is proposing to eliminate references in the 
regulations to forms that are no longer used; however, elimination of 
these forms by reengineering did not eliminate the requirements for 
record retention and making the records available to support the 
payment of royalties, as stated in 30 CFR part 212, Records and Files 
Maintenance.
    The MMS is proposing to amend its regulations to align the 
regulations with the following changes that were required as a result 
of reengineering: (1) Aligning the regulations with the updated Form 
MMS-2014, Report of Sales and Royalty Remittance (approved by the 
Office of Management and Budget (OMB)); (2) eliminating references in 
the regulations to report forms, designations, systems, and codes that 
are no longer applicable; (3) updating references to OMB-approved 
information collections; (4) revising the due date for production 
reports submitted electronically; (5) clarifying the requirement for 
production reporting of inventory on leases and agreements until all 
production has ceased and all inventory has been disposed of; (6) 
eliminating references to Federal oil and gas late and incorrect 
(erroneous) reporting assessments and failure to report; (7) 
eliminating references to some electronic reporting options that no 
longer exist as a result of reengineering; and (8) clarifying the 
reporting requirement for taxpayer identification numbers.

[[Page 38546]]

II. Explanation of Proposed Rule Amendments

    The proposed rule would affect four CFR parts: (1) 30 CFR Part 
206--Product Valuation; (2) Part 210--Forms and Reports; (3) Part 216--
Production Accounting; and (4) Part 218--Collection of Royalties, 
Rentals, Bonuses and Other Monies Due the Federal Government. The 
proposed changes to the regulations would align the regulations with 
current MMS business practices. These proposed changes to the 
regulations are explained in depth in the following sections:

A. 30 CFR Part 206--Product Valuation

    The proposed changes in part 206 would align the regulations with 
current reporting requirements for Form MMS-2014, Report of Sales and 
Royalty Remittance (OMB Control Number 1010-0140).
    1. Selling Arrangement v. Sales Type Code. Before October 1, 2001, 
MMS required payors to report at the selling arrangement level on Form 
MMS-2014, which entailed reporting one line for each sale under each 
type of contract. Effective October 1, 2001, the revised Form MMS-2014 
allows payors to roll up all sales (including rolling up pooling 
situations) under a contract type--referred to as a ``sales type code'' 
to one line per lease. To incorporate this change in our regulations, 
we propose to remove references to and definition of ``selling 
arrangement'' wherever it occurs and add a definition of ``sales type 
code'' as follows:

    Sales type code means the contract type and/or general 
disposition (arm's-length or non-arm's-length) of the production 
from Federal and Indian oil, gas, and geothermal leases. The sales 
type code applies to the sales contract/disposition and not to the 
arm's-length/non-arm's-length nature of the transportation or 
processing allowance.

    2. Transportation and Processing Allowance Deductions. Other 
reengineering changes to Form MMS-2014 allow payors to report 
transportation and processing allowance deductions on the same line as 
volumes and values. Prior to 2001, allowances were reported on separate 
lines from volumes and values. Allowances are now reported in a 
separate column but on the same line as the associated volumes and 
values. Consequently, in our regulations pertaining to transportation 
and processing allowances, we propose to remove all references to 
previous requirements to report an allowance on a separate line on Form 
MMS-2014. We propose to change the text to read a separate ``entry'' 
rather than ``line.'' The MMS discussed the benefit of this change in 
an information collection request (ICR) to OMB that was approved August 
2000, and renewed October 2003, under OMB Control Number 1010-0140.

B. 30 CFR Part 210--Forms and Reports

    We are proposing to revise part 210, subparts A, B, C, D, and E; 
and eliminate subparts F, G, H, and I in order to align the regulations 
with reengineered MMS business practices.
1. 30 CFR Part 210, Subpart A--General Provisions
    Subpart A would provide an updated comprehensive list of ICRs 
currently approved by OMB. We propose to include the following chart, 
listing the OMB control number, legal basis, and associated forms or 
information collected.

------------------------------------------------------------------------
                                                    Form or information
      OMB control No.            Legal basis             collected
------------------------------------------------------------------------
1010-0073.................  30 CFR Part 220--      No form, Net profit
                             Accounting             share payment
                             Procedures for         information.
                             Determining Net
                             Profit Share Payment
                             for Outer
                             Continental Shelf
                             Oil and Gas Leases.
1010-0087.................  30 CFR Part 227--      No form, Written
                             Delegation to          delegation proposal
                             States, and Part       to perform auditing
                             228--Cooperative       and investigative
                             Activities with        activities.
                             States and Indian     No form, Request for
                             Tribes.                cooperative
                                                    agreement and
                                                    subsequent
                                                    requirements.
1010-0090.................  30 CFR Part 216--      Form MMS-4377,
                             Production             Stripper Royalty
                             Accounting, Subpart    Rate Reduction
                             B--Oil and Gas,        Notification.
                             General.
1010-0103.................  30 CFR Part 202--      Form MMS-4109, Gas
                             Royalties, Subpart     Processing Allowance
                             J--Gas Production      Summary Report.
                             From Indian Leases,   Form MMS-4295, Gas
                             and Part 206--         Transportation
                             Product Valuation,     Allowance Report.
                             Subpart B--Indian     Form MMS-4110, Oil
                             Oil, and Subpart E--   Transportation
                             Indian Gas.            Allowance Report.
                                                   Form MMS-4411, Safety
                                                    Net Report.
                                                   Form MMS-4410,
                                                    Accounting for
                                                    Comparison [Dual
                                                    Accounting].
                                                   Form MMS-4393,
                                                    Request to Exceed
                                                    Regulatory Allowance
                                                    Limitation (Note:
                                                    Form MMS-4393 is
                                                    used for both
                                                    Federal and Indian
                                                    oil and gas leases.
                                                    Burden hours are
                                                    applied to both 1010-
                                                    0103 and 1010-0136;
                                                    however, the form
                                                    resides with ICR
                                                    1010-0136.).
1010-0107.................  30 CFR Part 218--      Form MMS-4425,
                             Collection of          Designation Form for
                             royalties, rentals,    Royalty Payment
                             bonuses and other      Responsibility.
                             monies due the        No form, Cross-lease
                             Federal Government,    netting
                             Subpart A--General     documentation.
                             Provisions, and       No form, Indian over-
                             Subpart B--Oil and     recoupment approval.
                             Gas, General.
1010-0110.................  Executive Order        Form MMS-4420A-E,
                             12862--Setting         Training and
                             Customer Service       Outreach Evaluation
                             Standards.             Form.
1010-0119.................  30 CFR Part 208--Sale  Form MMS-4070,
                             of Federal Royalty     Application for the
                             Oil.                   Purchase of Royalty
                                                    Oil.
                                                   Form MMS-4071, Letter
                                                    of Credit (RIK).
                                                   Form MMS-4072,
                                                    Royalty-in-Kind
                                                    Contract Surety
                                                    Bond.
                                                   No form, Royalty oil
                                                    sales to eligible
                                                    refiners.

[[Page 38547]]

 
1010-0120.................  30 CFR Part 206--      Form MMS-4430, Solid
                             Production             Minerals Production
                             Valuation, Subpart     and Royalty Report.
                             F--Federal Coal, and  Form 4292, Coal
                             Subpart J--Indian      Washing Allowance
                             Coal; Part 210--       Report.
                             Forms and Reports,    Form 4293, Coal
                             Subpart B--Oil, Gas,   Transportation
                             and OCS Sulfur--       Allowance Report.
                             General, Subpart E--  No form, Facility
                             Solid Minerals,        data--solid
                             General, and Subpart   minerals.
                             H--Geothermal         No form, Sales
                             Resources; and Part    contracts--solid
                             218--Collection of     minerals.
                             royalties, rentals,   No form, Sales
                             bonuses and other      summaries--solid
                             monies due the         minerals.
                             Federal Government,
                             Subpart B--Oil and
                             Gas, General, and
                             Subpart E--Solid
                             Minerals--General.
1010-0122.................  30 CFR Part 243--      Form MMS-4435,
                             Suspensions Pending    Administrative
                             Appeal and Bonding--   Appeal Bond.
                             Minerals Revenue      Form MMS-4436, Letter
                             Management.            of Credit.
                                                   Form MMS-4437,
                                                    Assignment of
                                                    Certificate of
                                                    Deposit.
                                                   No form, Self
                                                    bonding.
                                                   No form, U.S.
                                                    Treasury securities.
1010-0136.................  30 CFR Part 206--      Form MMS-4393,
                             Product Valuation,     Request to Exceed
                             Subpart C--Federal     Regulatory Allowance
                             Oil.                   Limitation.
                                                   No form, Federal oil
                                                    valuation support
                                                    information.
1010-0139.................  30 CFR Part 216--      Form MMS-4054, Oil
                             Production             and Gas Operations
                             Accounting, Subpart    Report (OGOR).
                             A--General            Form MMS-4058 (Parts
                             Provisions, and        A, B, and C),
                             Subpart B--Oil and     Production
                             Gas, General; and      Allocation Schedule
                             Part 210--Forms and    Report (PASR).
                             Reports.
1010-0140.................  30 CFR Part 210--      Form MMS-2014, Report
                             Forms and Reports.     of Sales and Royalty
                                                    Remittance.
1010-0155.................  30 CFR Part 204--      No form, Notification
                             Alternatives for       and relief request
                             Marginal Properties,   for accounting and
                             Subpart C--            auditing relief.
                             Accounting and
                             Auditing Relief.
1010-0162.................  Chief Financial        No form, Accounts
                             Officers Act of 1990.  receivable
                                                    confirmations.
------------------------------------------------------------------------

    The proposed sections would align with reengineered MMS business 
practices as follows:

Section 210.1 What is the purpose of this subpart?

    Section 210.1 would be added to explain that the purpose of this 
part is to identify OMB-approved information collections currently 
required by reengineered MMS business operations.

Section 210.2 To whom do these regulations apply?

    Section 210.2 would apply to any person who is assigned or assumes 
an obligation to report data and/or make payment to MMS and may include 
lessees, designees, operators, purchasers, reporters, payors, and 
working interest owners, but is not restricted to these parties.

Section 210.10 What are MMS's approved information collections?

    Currently, 30 CFR 210.10(a) contains a list of information 
collections approved by OMB prior to reengineering. Paragraph (c) 
contains a brief description of the information collections listed in 
paragraph (a). In this rule, we propose to update the list of OMB-
approved ICRs and combine the information about individual ICRs in 
paragraphs (a) and (c) into one chart with references to relevant CFR 
citations. Paragraph (b) would be eliminated, and mailing addresses 
would be specified only in CFR sections relevant to specific 
information collections.

Section 210.20 What if I disagree with MMS's burden estimates?

    The text in Sec.  210.10(d) pertaining to commenting on the 
accuracy of our burden estimates would be moved to new Sec.  210.20 and 
updated with current information.

Section 210.21 How do I report my taxpayer identification number?

    The proposed rule would clarify taxpayer identification number 
(TIN) reporting at 30 CFR 210.21. The MMS requires reporters to use a 
TIN to report and pay mineral revenues to MMS. A TIN is either a Social 
Security Number (SSN) or an Employer Identification Number (EIN) 
assigned by the Internal Revenue Service (IRS). The proposed rule would 
require all MMS reporters to report using an EIN. All reporters are 
presumed to have entrepreneurial or business activities and, thus, 
should either already have an EIN or qualify to apply for an EIN. To 
protect individuals' privacy, MMS would no longer accept SSNs to meet 
the requirement of reporting using a TIN.
    The MMS would use IRS Form W-9, Request for Taxpayer Identification 
Number, or equivalent certification, to collect EINs. The collection of 
TIN data on IRS Form W-9 is not subject to the provisions of the 
Paperwork Reduction Act of 1995 (PRA) and does not require OMB approval 
because only information to identify the respondent is requested [5 CFR 
1320.3(h)]. However, filing IRS Form SS-4, Application for Employer 
Identification Number, is subject to the PRA and is covered under an 
IRS information collection (OMB Control Number 1545-00033).

Section 210.30 What are my responsibilities as a reporter/payor?

    The text in Sec.  216.21 pertaining to reporter responsibilities 
would be moved to new Sec.  210.30.

Section 210.40 Will MMS keep the information I provide confidential?

    The text in Sec.  216.25 pertaining to confidentiality of 
information provided to MMS would be moved to new Sec.  210.40.
2. 30 CFR Part 210, Subpart B--Royalty Reports--Oil, Gas, and 
Geothermal Resources
    Subpart B would explain current reengineered MMS reporting 
practices, including the report that must be submitted when reporting 
royalties on oil and gas and geothermal resources produced from Federal 
and Indian lands. In addition to the changes to the regulations listed 
below, we propose to rewrite the text in subpart B in plain English and 
insert questions in the section headings.

Section 210.50 What is the purpose of this subpart?

    We propose to add Sec.  210.50 to state that the purpose of subpart 
B is to explain the royalty reporting requirements for Federal and 
Indian oil and gas and geothermal leases, which were implemented as a 
result of reengineering.

Section 210.51 Who must submit royalty reports?

    Section 210.51 would apply to any person who pays royalty to MMS.

[[Page 38548]]

Section 210.52 What royalty reports must I submit?

    The information in Sec.  210.52(a) would be moved to new Sec.  
210.52.

Section 210.53 When are my royalty reports and payments due?

    The information in Sec.  210.52(c) through (e) would be moved to 
new Sec.  210.53.

Section 210.54 Must I submit this royalty report electronically?

    The information pertaining to Form MMS-2014 in Sec. Sec.  210.20, 
210.21, and 210.22 would be moved to new Sec.  210.54.
    The proposed rule would eliminate references in the regulations to 
several electronic reporting options, which are no longer used to 
submit production and royalty reports to MMS. The MMS has contracted 
with an electronic commerce (EC) service that collects regulatory 
report data electronically from reporters and forwards that data to MMS 
in American National Standards Institute (ANSI) Accredited Standards 
Committee (ASC) X12 Electronic Data Interchange (EDI) reporting format. 
This EC service allows MMS to consolidate and streamline our 
infrastructure, thereby eliminating multiple input processes and 
required maintenance, and to address changing and obsolete technology. 
Based on the new technology requirements, the proposed rule would 
eliminate references to magnetic tape/cartridge reporting as well as 
electronic mail, template software, and diskette reporting formats. The 
proposed rule would describe the revised list of approved electronic 
reporting options at 30 CFR 210.54 and 210.104.

Section 210.55 May I submit this royalty report manually?

    Section 210.55 would allow manual submission of Form MMS-2014 under 
specific conditions and would provide mailing instructions.

Section 210.56 Where can I find more information on how to complete the 
royalty report?

    The information pertaining to Form MMS-2014 in Sec.  210.53 would 
be moved to new Sec.  210.56.
3. 30 CFR Part 210, Subpart C--Production Reports--Oil, Gas, and 
Geothermal Resources
    Subpart C would explain current reengineered MMS reporting 
practices, including the report that must be submitted when reporting 
production on oil and gas and geothermal resources produced from 
Federal and Indian lands. To make production reporting requirements 
easier to find, we propose to combine all production reporting 
information found in part 216 with the production reporting information 
found in part 210, thus eliminating part 216. In addition to the 
changes to the regulations listed below, we propose to write the text 
in subpart C in plain English and insert questions in the section 
headings.

Section 210.100 What is the purpose of this subpart?

    We propose to add Sec.  210.100 to explain that the purpose of 
subpart C is to provide the production reporting requirements for 
Federal and Indian oil and gas and geothermal leases, which were 
implemented as a result of reengineering.

Section 210.101 Who must submit production reports?

    Section 210.101--would identify those who must submit production 
reports as anyone who operates a Federal or Indian oil and gas or 
geothermal lease or federally approved agreement.

Section 210.102 What production reports must I submit?

    In our final electronic reporting rule, published July 15, 1999 (64 
FR 38116), we clarified a long-standing practice concerning unsold 
inventory on a terminated lease or agreement. If the last production 
report submitted to MMS on a terminated lease or agreement indicated 
unsold inventory on the property, our previous practice was to notify 
the Bureau of Land Management (BLM), if the property was located 
onshore, or the MMS Offshore Minerals Management (OMM) program, if the 
property was located on the Outer Continental Shelf. The BLM and OMM 
then monitored the inventory from the point of termination, and the 
operator was not required to submit further production reports to MMS.
    In this rule, we are proposing at the new 30 CFR 210.102(a) to 
eliminate in its entirety 30 CFR 216.50, which references the 
eliminated Form MMS-3160 and 30 CFR 216.53(d), which references Form 
MMS-4054. We are proposing to amend the regulations to reflect current 
reengineered business practices, which require an operator to submit a 
production report (Form MMS-4054) on a lease or agreement until no 
production remains on the property. In other words, a production report 
must be submitted if any production remains on the property and until 
all inventory has been disposed of. This would include the time after 
all production has ceased, including the period after the well is 
plugged or a lease or agreement terminates, if inventory remains on the 
property. This process has improved the tracking of unsold inventory 
and is more efficient than transferring the responsibility between 
agencies.

Section 210.103 When are my production reports due?

    In our final electronic reporting rule published July 15, 1999 (64 
FR 38116), MMS extended the due date for submitting electronic 
production reports from the 15th day of the second month following 
production to the 25th day of the second month following production as 
an incentive to increase electronic production reporting. This change 
is reflected in 30 CFR 216.53, Oil and Gas Operations Report. After 
operating under these procedures for more than 7 years, we now receive 
more than 98 percent of our production data electronically. However, 
the extended due date for electronic reporters has had an unexpected 
effect on our ability to timely perform the MMS reservoir management, 
inspection, and enforcement functions. Production reports on offshore 
leases are forwarded to the OMM program weekly as they are received and 
corrected. Consequently, extending the due date for electronic 
reporters (also our largest volume reporters) unduly delays OMM's 
initiation of certain verification procedures. For this reason, we are 
proposing to eliminate the extended due date for electronic reporters. 
Under the proposed rule, all production reporters (electronic and other 
than electronic) would be required to submit Form MMS-4054 by the 15th 
day of the second month following production. The proposed rule 
reflects this change at 30 CFR 210.103.

Section 210.104 Must I submit these production reports electronically?

    No. You may submit the forms by non-electronic means if you qualify 
for one of the exemptions under Sec.  210.105. The information 
pertaining to completing Forms MMS-4054 and MMS-4058 in Sec. Sec.  
210.20, 210.21, and 210.22 would be moved to new Sec.  210.104. As we 
discussed above in Sec.  210.54, we would also eliminate references to 
some electronic reporting options.

Section 210.105 May I submit these production reports manually?

    Section 210.105 would allow manual submission of Forms MMS-4054 and 
MMS-4058 under specific conditions and would provide mailing 
instructions.

[[Page 38549]]

Section 210.106 Where can I find more information on how to complete 
these production reports?

    The information pertaining to Forms MMS-4054 and MMS-4058 in Sec.  
216.15 would be moved to new Sec.  210.106.
4. 30 CFR Part 210, Subpart D--Special-Purpose Forms and Reports--Oil 
and Gas and Geothermal Resources
    Subpart D would explain the special circumstances under which each 
of the remaining OMB-approved information collections, pertaining to 
oil and gas and geothermal resources in subpart A, must be submitted.
    Sections 210.150 through 210.158 would be added in subpart D to 
summarize the current reengineered MMS requirements of our special-
purpose forms and reports. Our special-purpose forms and reports are 
the remaining information collections not discussed in subparts B 
(basic royalty reporting) and C (basic production reporting). These 
sections would also provide acceptable reporting options for each 
report, addresses to submit completed reports and other required 
documents, and regulatory cites to direct the reader to additional 
information about each requirement. If you do not submit these special-
purpose forms and reports in accordance with the regulations, MMS may 
disallow allowances, assess penalties, or take other appropriate 
enforcement actions. The added sections would be:

210.150 What reports must I submit to claim an excess allowance?
210.151 What reports must I submit to claim allowances on an Indian 
lease?
210.152 What reports must I submit for Indian gas valuation 
purposes?
210.153 What reports must I submit for Federal oil valuation 
purposes?
210.154 What reports must I submit for Federal onshore stripper oil 
properties?

    Note: This is a BLM program that has been suspended; however it 
could be reinstated at any time in the future. In addition, MMS will 
continue to process amendments for Form MMS-4377, Stripper Royalty 
Rate Reduction Notification, indefinitely. Therefore, this section 
remains.

210.155 What reports must I submit for net profit share leases?
210.156 What reports must I submit for the small refiner royalty-in-
kind program?
210.157 What reports must I submit to suspend an MMS order under 
appeal?
210.158 What reports must I submit to designate someone to make my 
royalty payments?
5. 30 CFR Part 210, Subpart E--Solid Minerals, General [Amended]
    Subpart E would pertain to current reengineered business 
requirements for production and royalty reporting for solid mineral 
leases on Form MMS-4430, Solid Minerals Production and Royalty Report 
(OMB Control Number 1010-0120). The title of subpart E would be revised 
and a section added on the special reporting requirements, which were 
implemented as a result of reengineering, for allowances on Indian coal 
production.
    Sections 210.205 and 210.206 would be redesignated as Sec. Sec.  
210.206 and 210.207, respectively.

Section 210.205 What reports must I submit to claim allowances on 
Indian coal leases?

    We propose to add Sec.  210.205 to explain requirements implemented 
as a result of reengineering for reporting allowances related to Indian 
leases. If reporters do not submit these allowance forms and reports as 
required in the regulations, MMS may disallow allowances, assess 
penalties, or take other appropriate enforcement actions.
6. 30 CFR Part 210, Subpart F--Coal [Reserved]; Subpart G--Other Solid 
Minerals [Reserved]; Subpart H--Geothermal Resources; and Subpart I--
OCS Sulfur [Reserved]
    We propose to remove subparts F through I.
7. The MMS Proposes To Eliminate 30 CFR 210.51 and 210.352 in Their 
Entirety, Which Reference Form MMS-4025, Payor Information Form
    Form MMS-4025, Payor Information Form (PIF), was used to establish 
payor reference data such as the lease and agreement number and product 
code on which the payor was assuming responsibility to pay royalty. 
During reengineering of our core business processes, the specific need 
for Form MMS-4025 was eliminated when MMS removed the revenue source 
code reporting requirement from Form MMS-2014. The MMS determined that 
other information reported on Form MMS-2014 could be used to establish 
necessary payor reference data in our financial system. Therefore, Form 
MMS-4025 was unnecessary.
    The MMS discussed the reasons for, and benefits of, eliminating 
Form MMS-4025 in an information collection request to OMB that was 
approved in August 2000, and renewed in August 2003, under OMB Control 
Number 1010-0140. On May 29, 2001, MMS issued a ``Dear Payor'' letter 
informing reporters that Form MMS-4025 had been eliminated effective 
April 1, 2001. The proposed rule would eliminate 30 CFR 210.51 and 
210.352 in their entirety, remove Form MMS-4025 from our list of 
required information collections, and remove all references to this 
form in the MMS regulations.

C. 30 CFR Part 216--Production Accounting

    We propose to move all production reporting information in part 216 
to subpart C of part 210 and remove part 216 in its entirety.
    1. Eliminate references to report forms, designations, systems, and 
codes that are no longer applicable.
    We propose to eliminate the following 30 CFR part 216 sections, 
referencing forms that are no longer used.
    (a) The MMS proposes to eliminate 30 CFR 216.50 in its entirety, 
which references Form MMS-3160, Monthly Report of Operations.
    Since the late 1980s, for onshore Federal and Indian oil and gas 
lease production, MMS has required operators to submit Form MMS-3160, 
Monthly Report of Operations. For offshore oil and gas lease 
production, MMS has required operators to submit Form MMS-4054, Oil and 
Gas Operations Report (OGOR). Some operators also used Form MMS-4054 
for their onshore properties.
    During the reengineering of our core business processes, MMS 
determined that Form MMS-3160 was not adequate for our new compliance 
verification process. Previously, on Form MMS-3160, reporters grouped 
all dispositions, other than the seven most common situations, in a 
field called ``Other'' with an explanation in a ``Comments'' section. 
When MMS detected a reporting exception, MMS had to analyze this 
grouping of several dispositions manually to determine the volume, 
method, and propriety of each disposition. Form MMS-4054 accommodates 
more types of dispositions, allowing MMS to resolve more exceptions 
automatically, thus reducing the burden on industry and MMS.
    Further, under previous reporting using both Forms MMS-3160 and 
MMS-4054, many companies that reported both offshore and onshore 
properties had to maintain and support two separate production 
reporting systems. It is more efficient for all parties to have one 
form for production reporting.
    The MMS discussed the benefits of eliminating Form MMS-3160 and 
streamlining remaining production reporting Forms MMS-4054 and MMS-
4058, Production Allocation Schedule Report (PASR), in an information 
collection request to OMB that was approved in July 2000, and renewed 
in August 2003, under OMB Control Number 1010-0139 (formerly OMB

[[Page 38550]]

Control Number 1010-0040). Moreover, effective October 1, 2001, 
reporters began reporting all onshore and offshore production on Form 
MMS-4054. The proposed rule would reflect this change at 30 CFR part 
210, subpart C--Production Reports--Oil, Gas, and Geothermal Resources, 
by eliminating 30 CFR 216.50 in its entirety, removing Form MMS-3160 
from our list of required information collections. The proposed rule 
also would remove all references to this form in the MMS regulations.
    (b) The MMS proposes to eliminate 30 CFR 216.51 in its entirety, 
which references Form MMS-4051, Facility and Measurement Information 
Form. This information is now collected on the Form MMS-4054.
    The purpose of Form MMS-4051, Facility and Measurement Information 
Form (FMIF), was to identify facilities where oil and gas production is 
stored or processed and the metering points where production is 
measured for sale or transfer. This information established a reference 
database used to account for all oil and gas production. Effective 
October 1, 2001, the MMS converted compilations of this information 
into an internal MMS worksheet and companies were no longer required to 
file the Form MMS-4051 report form.
    The MMS discussed the benefits of converting this information into 
an internal MMS worksheet in an information collection request to OMB 
that was approved in July 2000, and renewed in August 2003, under OMB 
Control Number 1010-0139. The proposed rule would eliminate 30 CFR 
216.51 in its entirety, remove Form MMS-4051 from our list of required 
information collections, and remove all references to this form in the 
MMS regulations.
    (c) The MMS proposes to eliminate 30 CFR 216.52 in its entirety, 
which references Form MMS-4053, First Purchaser Report.
    The purpose of Form MMS-4053, First Purchaser Report, was to 
document the first purchaser of minerals produced from Federal and 
Indian oil and gas leases. The MMS no longer requires this information 
or uses this form. The OMB approval for Form MMS-4053 expired May 31, 
1995. The proposed rule would eliminate 30 CFR 216.52 in its entirety, 
remove Form MMS-4053 from our list of required information collections, 
and remove all references to this form in the MMS regulations.
    (d) The MMS proposes to eliminate 30 CFR 216.54 in its entirety, 
which references Form MMS-4055, Gas Analysis Report.
    The purpose of Form MMS-4055, Gas Analysis Report (GAR), was to 
report the composition of a lease gas stream transferred to a gas plant 
before royalty determination. During the reengineering of our core 
business processes, MMS determined that it is more efficient to obtain 
a copy of gas sample results, if necessary, during our compliance 
verification or audit processes than to require reporters to transcribe 
and submit the information on an MMS form. The information requested on 
Form MMS-4055 was covered under OMB Control Number 1010-0040, which 
expired September 30, 2001. Effective October 1, 2001, companies were 
no longer required to submit this form. The proposed rule would 
eliminate 30 CFR 216.54 in its entirety, remove Form MMS-4055 from our 
list of required information collections, and remove all references to 
this form in the MMS regulations.
    (e) The MMS proposes to eliminate 30 CFR 216.55 in its entirety, 
which references Form MMS-4056, Gas Plant Operations Report.
    The purpose of Form MMS-4056, Gas Plant Operations Report (GPOR), 
was to report a summary of all operations conducted at a gas plant 
during a specific period. Form MMS-4056, used in conjunction with Form 
MMS-4055, was used to determine the quantity and quality of gas plant 
products attributed to a specific Federal or Indian lease when the gas 
was transferred to a gas plant before royalty determination. During the 
reengineering of our core business processes, MMS determined that it is 
more efficient to obtain a copy of the entire gas plant report during 
our compliance verification or audit processes than to require 
reporters to transcribe and submit the information on an MMS form. The 
information requested on Form MMS-4056 was covered under OMB Control 
Number 1010-0040, which expired September 30, 2001. Effective October 
1, 2001, companies were no longer required to submit this form. The 
proposed rule would eliminate 30 CFR 216.55 in its entirety, remove 
Form MMS-4056 from our list of required information collections, and 
remove all references to this form in the MMS regulations. The MMS is 
proposing to eliminate references to forms that are no longer used; 
however, elimination of these forms by reengineering did not eliminate 
the requirements for record retention and making the records available 
to support the payment of royalties, as stated in 30 CFR part 212, 
Records and Files Maintenance.
    2. Revise the due date for production reports submitted 
electronically.
    As we discussed above, the information in Sec. Sec.  216.53(c), 
216.56(c), and 216.16(c) would be moved to new Sec.  210.104. We also 
propose to eliminate the 10-day reporting extension for production 
reports submitted electronically.
    3. Clarify the requirement for production reporting of inventory on 
leases and agreements until all inventory has been disposed of and all 
production has ceased.
    The information in Sec. Sec.  216.53(a), (b), and (d) and 216.56(a) 
and (b) would be moved to new Sec.  210.102. As we discussed above, we 
also would clarify current requirements to submit production reports on 
terminated leases and agreements until all inventory is disposed of.

D. 30 CFR Part 218--Collection of Royalties, Rentals, Bonuses and Other 
Monies Due the Federal Government

    The proposed changes in part 218 would:
    1. Eliminate references to Federal oil and gas late or incorrect 
(erroneous) reporting, failure to submit payment of same amount as Form 
MMS-2014 or bill document or to provide adequate information 
assessments and failure to report.
    We propose to revise the following sections: (1) 30 CFR 218.40, 
Assessments for incorrect or late reports and failure to report; and 
(2) Sec.  218.41, Assessments for failure to submit payment of same 
amount as Form MMS-2014 or bill document or to provide adequate 
information.
    The proposed rule would eliminate only the language in Sec.  
218.40(c)(2) that provided for assessments for Federal oil and gas 
leases. This section would remain in effect for assessments related to 
solid minerals, geothermal, and Indian oil and gas.
    The primary reason we propose these changes is that section 116 of 
the Federal Oil and Gas Royalty Simplification and Fairness Act of 1996 
(RSFA), 30 U.S.C. 1725, limited MMS's discretion to issue assessments 
for Federal oil and gas lease reporting to those who chronically submit 
erroneous reports. In addition, as a result of our extensive 
reengineering initiative, we implemented a new financial system on 
November 1, 2001. The new financial system incorporated significantly 
revised and streamlined reporting forms and new electronic reporting 
methods, resulting in lower error rates. For the remaining Federal oil 
and gas reporting errors, we intend to use the general penalty 
provisions at 30 CFR part 241.
    2. Eliminate references in Sec.  218.50(b) to Form DI-1040b, Bill 
for Collection,

[[Page 38551]]

and replace with current terminology, as appropriate.
    3. Correct the definition of ``Invoice Document Identification'' in 
Sec.  218.51(a) and eliminate parenthetical descriptions of fields in 
Sec.  218.51(f) that are no longer relevant to the revised Form MMS-
2014.
    4. Remove the requirement in Sec.  218.52(a)(4) and (d) that 
lessees provide the percentage of their record title or operating 
rights ownership when they designate another party to make royalty and 
other payments on their behalf.
    We have determined that we can obtain this information from records 
maintained by other Federal agencies or during our compliance 
verification and audit processes. We also added Form MMS-4425, 
Designation Form for Royalty Payment Responsibility (OMB Control Number 
1010-0107), to meet RSFA requirements. Lessees are required to complete 
Form MMS-4425 when designating a designee.
    5. Eliminate 30 CFR 218.57 in its entirety, which references Form 
MMS-4280, Application for Reward for Original Information.
    This section referencing a reward program was written in the 1980s; 
however, Congress has never appropriated funds for a rewards program, 
nor has MMS ever received an application for a reward. The information 
requested on Form MMS-4280, Application for Reward for Original 
Information, is currently covered under OMB Control Number 1010-0120, 
which includes 1 burden hour for this rare and unusual possibility. The 
proposed rule would eliminate 30 CFR 218.57 in its entirety, remove 
Form MMS-4280 from our listing of required information collections, and 
remove all references to this form in the MMS regulations.
    6. Change the reference to paragraph (a) to (b) in Sec.  
218.154(c).
    7. Add the option to refund bonus monies via Electronic Funds 
Transfer (EFT) as well as via checks in Sec.  218.155(b)(2).

III. Procedural Matters

1. Public Comment Policy

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

2. Summary Cost and Royalty Impact Data

    This rule will not have any costs or royalty impacts on any of the 
potentially affected groups: Industry, state and local governments, 
Indian tribes, individual Indian mineral owners, or the Federal 
Government. The proposed rule amends existing MMS regulations to align 
the regulations with current MMS business practices, which were 
implemented as a result of a major reengineering of MMS's financial 
systems.
    The net impact of reengineering resulted in an overall estimated 
annual savings in reporting costs (on a continuing basis) of $2,225,050 
(44,501 burden hour reduction x $50). However, the reporting changes 
and reduced costs of reengineering have already been incorporated into 
14 information collections, which have been approved by OMB and 
published in the Federal Register. The effects of the seven eliminated 
report forms were either incorporated in these information collections 
or were associated with insignificant burden hour reduction. For a 
current listing of OMB-approved ICRs, see the chart in new Sec.  
210.10.
    Under the proposed rule, MMS would no longer accept SSNs to meet 
the requirement to report using a TIN. To protect individual's privacy, 
MMS would require the use of an EIN as a TIN for reporting purposes. 
The one-time cost to obtain an EIN from the IRS is covered under an IRS 
information collection (OMB Control Number 1545-0003).
A. Industry
    The proposed rule would not impose any additional burden on 
industry.
B. State and Local Governments
    The proposed rule would not impose any additional burden on states 
and local governments.
C. Indian Tribes and Individual Indian Mineral Owners
    The proposed rule would not impose any additional burden on Indian 
tribes and individual Indian mineral owners.
D. Federal Government
    The proposed rule would not impose any additional burden on the 
Federal Government.
E. Summary Cost and Royalty Impact Data
    The proposed rule would not impose any additional burden on 
industry, state and local governments, Indian tribes and individual 
Indian mineral owners, or the Federal Government.

3. Regulatory Planning and Review, Executive Order 12866

    Under the criteria in Executive Order 12866, this rule is not a 
significant regulatory action requiring review by the Office of 
Management and Budget.
    1. This rule will not have an annual effect of $100 million or 
adversely affect an economic sector, productivity, jobs, the 
environment, or other units of government. The MMS has evaluated the 
costs of this rule and has determined that it will impose no additional 
administrative costs.
    2. This rule will not create inconsistencies with other agencies' 
actions.
    3. This rule will not materially affect entitlements, grants, user 
fees, loan programs, or the rights and obligations of their recipients.
    4. This rule will not raise novel legal or policy issues.

4. Regulatory Flexibility Act

    The Department of the Interior certifies this rule will not have a 
significant economic effect on a substantial number of small entities 
as defined under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.).
    Your comments are important. The Small Business and Agricultural 
Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards were 
established to receive comments from small businesses about Federal 
agency enforcement actions. The Ombudsman will annually evaluate the 
enforcement activities and rate each agency's responsiveness to small 
business. You may comment to the Small Business Administration without 
fear of retaliation. Disciplinary action for retaliation by an MMS 
employee may include suspension or termination from employment with the 
Department of the Interior.

[[Page 38552]]

5. 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:
    1. Does not have an annual effect on the economy of $100 million or 
more. See Summary Cost and Royalty Impact Data, section III.2.E of 
Procedural Matters.
    2. Will not cause a major increase in costs or prices for 
consumers, individual industries, Federal, state, or local government 
agencies, or geographic regions.
    3. 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.

6. Unfunded Mandates Reform Act

    In accordance with the Unfunded Mandates Reform Act (2 U.S.C. 1501 
et seq.):
    1. This rule will not significantly or uniquely affect small 
governments. Therefore, a Small Government Agency Plan is not required.
    2. This rule will not produce a Federal mandate of $100 million or 
greater in any year; i.e., it is not a significant regulatory action 
under the Unfunded Mandates Reform Act. The analysis prepared for 
Executive Order 12866 will meet the requirements of the Unfunded 
Mandates Reform Act. See Summary Cost and Royalty Impact Data, section 
III.2.E of Procedural Matters.

7. Governmental Actions and Interference With Constitutionally 
Protected Property Rights (Takings), Executive Order 12630

    In accordance with Executive Order 12630, this rule does not have 
significant takings implications. A takings implication assessment is 
not required.

8. Federalism, Executive Order 13132

    In accordance with Executive Order 13132, this rule does not have 
federalism implications. A federalism assessment is not required. It 
will not substantially and directly affect the relationship between 
Federal and state governments. The management of Federal leases is the 
responsibility of the Secretary of the Interior. Royalties collected 
from Federal leases are shared with state governments on a percentage 
basis as prescribed by law. This rule will not alter any lease 
management or royalty sharing provisions. This rule will not impose 
costs on states or localities.

9. Civil Justice Reform, Executive Order 12988

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

10. Paperwork Reduction Act of 1995

    This rulemaking does not contain new information collection 
requirements or change existing information collection requirements; 
therefore, a submission to OMB is not required. The 14 information 
collections referenced in this rule and listed in the chart below are 
currently approved by OMB. The total hour burden currently approved is 
235,180 hours.

------------------------------------------------------------------------
                                                                Annual
 OMB control No. expiration date,     Form or information       burden
         and legal basis                   collected            hours
------------------------------------------------------------------------
1010-0073, September 30, 2006 (in  No form, Net profit             1,583
 renewal).                          share payment
                                    information.
30 CFR Part 220--Accounting
 Procedures for Determining Net
 Profit Share Payment for Outer
 Continental Shelf Oil and Gas
 Leases.
1010-0087, September 30, 2006 (in  No form, Written                6,091
 renewal).                          delegation proposal to
                                    perform auditing and
                                    investigative
                                    activities.
30 CFR Part 227--Delegation to     No form, Request for
 States, and Part 228--             cooperative agreement
 Cooperative Activities with        and subsequent
 States and Indian Tribes.          requirements.
1010-0090, October 31, 2007......  Form MMS-4377, Stripper         1,080
                                    Royalty Rate Reduction
                                    Notification.
30 CFR Part 216, Subpart B--Oil
 and Gas, General.
10-0103, April 30, 2006 (in        Form MMS-4109, Gas              1,836
 renewal).                          Processing Allowance
                                    Summary Report.
30 CFR Part 202--Royalties,        Form MMS-4295, Gas
 Subpart J--Gas Production.         Transportation
                                    Allowance Report.
From Indian Leases, and Part 206-- Form MMS-4110, Oil
 Product Valuation, Subpart B--     Transportation
 Indian Oil, and Subpart E--        Allowance Report.
 Indian Gas.                       Form MMS-4411, Safety
                                    Net Report.
                                   Form MMS-4410,
                                    Accounting for
                                    Comparison [Dual
                                    Accounting].
                                   Form MMS-4394, Request
                                    to Exceed Regulatory
                                    Allowance Limitation
                                    (Note: Form MMS-4393 is
                                    used for both Federal
                                    and Indian oil and gas
                                    leases. Burden hours
                                    for Indian leases are
                                    included here. The form
                                    resides with ICR 1010-
                                    0136.).
1010-0107, August 31, 2008.......  Form MMS-4425,                  1,220
                                    Designation Form for
                                    Royalty Payment
                                    Responsibility.
30 CFR Part 218, Subpart A--       No form, Cross-lease
 General Provisions, and Subpart    netting documentation.
 B--Oil and Gas, General.          No form, Indian over-
                                    recoupment approval.
1010-0110, October 31, 2007,       Form MMS-4420A-E                  160
 Executive Order 12862.             Training and Outreach
                                    Evaluation Form.
1010-0119, February 28, 2009.....  Form MMS-4070,                  2,284
                                    Application for the
                                    Purchase of Royalty Oil.
30 CFR Part 208--Sale of Federal   Form MMS-4071, Letter of
 Royalty Oil.                       Credit (RIK).
                                   Form MMS-4072, Royalty-
                                    in-Kind Contract Surety
                                    Bond.
                                   No form, Royalty oil
                                    sales to eligible
                                    refiners.
1010-0120, October 31, 2007......  Form MMS-4430, Solid            1,751
                                    Minerals Production and
                                    Royalty Report.
30 CFR Part 206, Subpart F--       Form 4292, Coal. Washing
 Federal Coal, and Subpart J--      Allowance Report.
 Indian Coal; Part 210, Subpart    Form 4293, Coal
 B--Oil, Gas, and OCS Sulfur--      Transportation
 General, Subpart E--Solid          Allowance Report..
 Minerals, General, and Subpart    No form, Facility data--
 H--Geothermal Resources; and       solid minerals..
 Part 218, Subpart B--Oil and      No form, Sales
 Gas, General, and Subpart E--      contracts--solid
 Solid Minerals--General.           minerals..
                                   No form, Sales
                                    summaries--solid
                                    minerals..
1010-0122, July 31, 2008.........  Form MMS-4435,                    300
                                    Administrative Appeal
                                    Bond.

[[Page 38553]]

 
30 CFR Part 243--Suspensions       Form MMS-4436, Letter of
 Pending Appeal and Bonding--       Credit.
 Minerals Revenue Management.      Form MMS-4437,
                                    Assignment of
                                    Certificate of Deposit..
                                   No form, Self bonding...
                                   No form, U.S. Treasury
                                    securities.
1010-0136, May 31, 2006 (in        Form MMS-4393, Request         13,863
 renewal).                          to Exceed Regulatory
                                    Allowance Limitation.
30 CFR Part 206--Product           No form, Federal oil
 Valuation, Subpart C--Federal      valuation support
 Oil.                               information.
1010-0139, August 31, 2006 (in     Form MMS-4054, Oil and         76,630
 renewal).                          Gas Operations Report.
30 CFR Part 216--Production        Form MMS-4058 (Parts A,
 Accounting, Subpart A--General     B, and C), Production
 Provisions, and Subpart B--Oil     Allocation Schedule
 and Gas, General; and Part 210--   Report.
 Forms and Reports.
1010-0140, October 31, 2006 (in    Form MMS-2014, Report of      126,144
 renewal).                          Sales and Royalty
                                    Remittance.
30 CFR Part 210--Forms and
 Reports.
1010-0155, May 31, 2006 (in        No form, Notification           2,206
 renewal).                          and relief request for
                                    accounting and auditing
                                    relief.
30 CFR Part 204--Alternatives for
 Marginal Properties, Subpart C--
 Accounting and Auditing Relief.
1010-0162, February 28, 2006 (in   No form, Accounts                  32
 renewal).                          receivable
                                    confirmations.
Chief Financial Officers Act of
 1990.
                                                            ------------
    Total Burden Hours...........  ........................      235,180
------------------------------------------------------------------------

11. National Environmental Policy Act (NEPA)

    This rule does not constitute a major Federal action significantly 
affecting the quality of the human environment. This rule deals with 
financial matters and has no direct effect on MMS decisions on 
environmental activities. According to Departmental Manual 516 DM 
2.3A(2), Section 1.10 of 516 DM 2, Appendix 1 excludes from 
documentation in an environmental assessment or impact statement 
``policies, directives, regulations and guidelines of an 
administrative, financial, legal, technical or procedural nature; or 
the environmental effects of which are too broad, speculative or 
conjectural to lend themselves to meaningful analysis and will be 
subject later to the NEPA process, either collectively or case-by-
case.'' Section 1.3 of the same appendix clarifies that royalties and 
audits are considered to be routine financial transactions that are 
subject to categorical exclusion from the NEPA process. A detailed 
statement is not required because none of the NEPA exceptions apply.

12. Government-to-Government Relationship With Tribes

    In accordance with the President's memorandum of April 29, 1994, 
``Government-to-Government Relations with Native American Tribal 
Governments'' (59 FR at 22951) and 512 DM 2, we have evaluated 
potential effects on federally recognized Indian tribes, and found no 
significant impacts. We also extended our review to individual Indian 
mineral owners and determined no potential effect on them.

13. Effects on the Nation's Energy Supply, Executive Order 13211

    In accordance with Executive Order 13211, this regulation does not 
have a significant adverse effect on the Nation's energy supply, 
distribution, or use.

14. Consultation and Coordination With Indian Tribal Governments, 
Executive Order 13175

    In accordance with Executive Order 13175, this rule does not have 
tribal implications that impose substantial direct compliance costs on 
Indian tribal governments. As noted above, this rule also has no 
implications on individual Indian mineral owners.

15. 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 
its 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. (5) 
What is the purpose of this part? (6) Is the description of the rule in 
the Supplementary Information section of the preamble helpful in 
understanding the rule? (7) 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.

List of Subjects

30 CFR Part 206

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

30 CFR Part 210

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

30 CFR Part 216

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

30 CFR Part 218

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


[[Page 38554]]


    Dated: June 13, 2006.
R.M. ``Johnnie'' Burton,
Director for Minerals Management Service, Exercising the delegated 
authority of the Assistant Secretary for Land and Minerals Management.
    For reasons stated in the preamble, we propose to amend 30 CFR 
parts 206, 210, 216, and 218 as follows:

PART 206--PRODUCT VALUATION

    1. The authority for part 206 continues to read as follows:

    Authority: 5 U.S.C. 301 et seq.; 25 U.S.C. 396 et seq., 396a et 
seq., 2101 et seq.; 30 U.S.C. 181 et seq., 351 et seq., 1001 et 
seq., 1701 et seq.; 31 U.S.C. 9701; 43 U.S.C. 1301 et seq., 1331 et 
seq., and 1801 et seq.

    2. Amend Sec.  206.51 as follows:
    A. Remove the definition of ``selling arrangement.''
    B. Add in alphabetical order the definition of ``sales type code.''
    The addition reads as follows:


Sec.  206.51  Definitions.

* * * * *
    Sales type code means the contract type and/or general disposition 
(arms'-length or non-arm's-length) of the production from Federal and 
Indian oil, gas, and geothermal leases. The sales type code applies to 
the sales contract/disposition and not to the arm's-length/non-arm's-
length nature of the transportation or processing allowance.
* * * * *

Subparts B and D [Nomenclature change]

    3. In subparts B and D, remove the words ``selling arrangement'' 
and ``selling arrangements'' wherever they appear and add in their 
place the words ``sales type code'' and ``sales type codes,'' 
respectively.


Sec.  206.55  [Amended]

    4. In Sec.  206.55, paragraph (c)(4), remove the words ``line 
item'' and add in their place ``entry.''
    5. Amend Sec.  206.116 as follows:
    A. Revise the section title to read as set forth below.
    B. Remove paragraph (a).
    C. Remove the paragraph designation from paragraph (b).
    The revision reads as follows:


Sec.  206.116  What interest applies if I improperly report a 
transportation allowance?

* * * * *
    6. Amend Sec.  206.151 as follows:
    A. Revise the definition of ``Netting.''
    B. Add in alphabetical order the definition of ``sales type code.''
    C. Remove the definition of ``selling arrangement.''
    The revision and addition read as follows:


Sec.  206.151  Definitions.

* * * * *
    Netting means the deduction of an allowance from the sales value by 
reporting a net sales value, instead of correctly reporting the 
deduction as a separate entry on the Form MMS-2014.
* * * * *
    Sales type code means the contract type and/or general disposition 
(arms'-length or non-arm's-length) of the production from Federal and 
Indian oil, gas, and geothermal leases. The sales type code applies to 
the sales contract/disposition and not to the arm's-length/non-arm's-
length nature of the transportation or processing allowance.
* * * * *


Sec.  206.156  [Amended]

    7. In Sec.  206.156(d), remove the last sentence.


Sec.  206.157  [Amended]

    8. Amend Sec.  206.157 as follows:
    A. In paragraphs (a) and (b), remove the words ``line entry'' 
wherever they appear and add in their place the word ``entry.''
    B. Remove paragraph (d)(1) and redesignate paragraphs (d)(2) 
through (d)(4) as paragraphs (d)(1) through (d)(3), respectively.


Sec.  206.158  [Amended]

    9. In Sec.  206.158, paragraph (e), last sentence, remove the words 
``line item'' and add in their place ``entry.''


Sec.  206.159  [Amended]

    10. In Sec.  206.159, remove the word ``line'' wherever it appears 
and in paragraph (d)(1), remove the words ``selling arrangement'' and 
add in their place ``sales type code.''
    11. Amend Sec.  206.171 as follows:
    a. Remove the definition of ``selling arrangement.''
    b. Add in alphabetical order the definition of ``sales type code.'' 
The addition reads as follows:


Sec.  206.171  What definitions apply to this subpart?

* * * * *
    Sales type code means the contract type and/or general disposition 
(arms'-length or non-arm's-length) of the production from Federal and 
Indian oil, gas, and geothermal leases. The sales type code applies to 
the sales contract/disposition and not to the arm's-length/non-arm's-
length nature of the transportation or processing allowance.
* * * * *


Sec.  206.177  [Amended]

    12. In Sec.  206.177, paragraphs (c)(1), first sentence, and 
(c)(2), last sentence, remove the words ``selling arrangement'' and add 
in their place ``sales type code.''


Sec.  206.178  [Amended]

    13. In Sec.  206.178, paragraph (d)(2), first sentence, remove the 
words ``line item'' and add in their place the word ``entry.''


Sec.  206.180  [Amended]

    14. In Sec.  206.180, paragraph (c)(2), first sentence, remove the 
words ``line item'' and add in their place ``entry.''
    15. Amend Sec.  206.351 as follows:
    a. Remove the definition of ``selling arrangement.''
    b. Add in alphabetical order the definition of ``sales type code.'' 
The addition reads as follows:


Sec.  206.351  Definitions.

* * * * *
    Sales type code means the contract type and/or general disposition 
(arms-length or non-arm's-length) of the production from Federal and 
Indian oil, gas, and geothermal leases. The sales type code applies to 
the sales contract/disposition and not to the arm's-length/non-arm's-
length nature of the transportation or processing allowance.
* * * * *


Sec.  206.357  [Amended]

    16. Amend Sec.  206.357 as follows:
    a. In paragraph (b), remove the words ``selling arrangement'' and 
add in their place ``sales type code.''
    b. In paragraph (g), remove the word ``lines'' and add in its place 
``entries.''

PART 210--FORMS AND REPORTS

    17. The authority citation for part 210 continues to read as 
follows:

    Authority: 5 U.S.C. 301 et seq.; 25 U.S.C. 396, 2107; 30 U.S.C. 
189, 190, 359, 1023, 1751(a); 31 U.S.C. 3716, 9701; 43 U.S.C. 1334, 
1801 et seq.; and 44 U.S.C. 3506(a).

    18. Revise subparts A and B, and add subparts C and D to read as 
follows:
Subpart A--General Provisions
210.1 What is the purpose of this subpart?
210.2 To whom do these regulations apply?
210.10 What are MMS's approved information collections?
210.20 What if I disagree with MMS's burden estimates?
210.21 How do I report my taxpayer identification number?
210.30 What are my responsibilities as a reporter/payor?
210.40 Will MMS keep the information I provide confidential?
Subpart B--Royalty Reports--Oil, Gas, and Geothermal Resources
210.50 What is the purpose of this subpart?

[[Page 38555]]

210.51 Who must submit royalty reports?
210.52 What royalty reports must I submit?
210.53 When are my royalty reports and payments due?
210.54 Must I submit this royalty report electronically?
210.55 May I submit this royalty report manually?
210.56 Where can I find more information on how to complete the 
royalty report?
Subpart C--Production Reports--Oil, Gas, and Geothermal Resources
210.100 What is the purpose of this subpart?
210.101 Who must submit production reports?
210.102 What production reports must I submit?
210.103 When are my production reports due?
210.104 Must I submit these production reports electronically?
210.105 May I submit these production reports manually?
210.106 Where can I find more information on how to complete these 
production reports?
Subpart D--Special-Purpose Forms and Reports--Oil and Gas, and 
Geothermal Resources
210.150 What reports must I submit to claim an excess allowance?
210.151 What reports must I submit to claim allowances on an Indian 
lease?
210.152 What reports must I submit for Indian gas valuation 
purposes?
210.153 What reports must I submit for Federal oil valuation 
purposes?
210.154 What reports must I submit for Federal onshore stripper oil 
properties?
210.155 What reports must I submit for net profit share leases?
210.156 What reports must I submit for the small refiner royalty-in-
kind program?
210.157 What reports must I submit to suspend an MMS order under 
appeal?
210.158 What reports must I submit to designate someone to make my 
royalty payments?

Subpart A--General Provisions


Sec.  210.1  What is the purpose of this subpart?

    This subpart identifies information collections required by the 
Minerals Management Service (MMS), Minerals Revenue Management, in the 
normal course of operations. This information is submitted by various 
parties associated with Federal and Indian leases such as lessees, 
designees, and operators. The information is collected to meet MMS's 
congressionally mandated accounting and auditing responsibilities 
relating to Federal and Indian mineral revenue management. Information 
collected regarding production, royalties, and other payments due the 
Government from activities on leased Federal or Indian land is 
authorized by the Federal Oil and Gas Royalty Management Act of 1982, 
as amended (30 U.S.C. 1701 et seq.), for oil and gas production; and by 
30 U.S.C. 189, 359, and 396d for solid minerals production.


Sec.  210.2  To whom do these regulations apply?

    These regulations apply to any person, referred to in this subpart 
as a Reporter/Payor, who is assigned or assumes an obligation to report 
data and/or make payment to MMS. The Reporter/Payor may include 
lessees, designees, operators, purchasers, reporters, payors, and 
working interest owners, but is not restricted to these parties. This 
section does not affect the liability to pay and report royalties as 
established by other regulations, laws, and the lease terms.


Sec.  210.10  What are MMS's approved information collections?

    The information collection requirements identified in this section 
have been approved by the Office of Management and Budget (OMB) under 
44 U.S.C. 3501 et seq. The information collection requests (ICR) and 
associated MMS form numbers, if applicable, are listed below:

------------------------------------------------------------------------
                                                    Form or information
      OMB control No.            Legal basis             collected
------------------------------------------------------------------------
1010-0073.................  30 CFR Part 220--      No form, Net profit
                             Accounting             share payment
                             Procedures for         information.
                             Determining Net
                             Profit Share Payment
                             for Outer
                             Continental Shelf
                             Oil and Gas Leases.
1010-0087.................  30 CFR Part 227--      No form, Written
                             Delegation to          delegation proposal
                             States, and Part       to perform auditing
                             228--Cooperative       and investigative
                             Activities with        activities.
                             States and Indian     No form, Request for
                             Tribes.                cooperative
                                                    agreement and
                                                    subsequent
                                                    requirements.
1010-0090.................  30 CFR Part 216--      Form MMS-4377,
                             Production             Stripper Royalty
                             Accounting, Subpart    Rate Reduction
                             B--Oil and Gas,        Notification.
                             General.
1010-0103.................  30 CFR Part 202--      Form MMS-4109, Gas
                             Royalties, Subpart     Processing Allowance
                             J--Gas Production      Summary Report.
                             From Indian Leases,   Form MMS-4295, Gas
                             and Part 206--         Transportation
                             Product Valuation,     Allowance Report.
                             Subpart B--Indian     Form MMS-4110, Oil
                             Oil, and Subpart E--   Transportation
                             Indian Gas.            Allowance Report.
                                                   Form MMS-4411, Safety
                                                    Net Report.
                                                   Form MMS-4410,
                                                    Accounting for
                                                    Comparison [Dual
                                                    Accounting].
                                                   Form MMS-4393,
                                                    Request to Exceed
                                                    Regulatory Allowance
                                                    Limitation (Note:
                                                    Form MMS-4393 is
                                                    used for both
                                                    Federal and Indian
                                                    oil and gas leases.
                                                    Burden hours are
                                                    applied to both 1010-
                                                    0103 and 1010-0136;
                                                    however, the form
                                                    resides with ICR
                                                    1010-0136.).
1010-0107.................  30 CFR Part 218--      Form MMS-4425,
                             Collection of          Designation Form for
                             royalties, rentals,    Royalty Payment
                             bonuses and other      Responsibility.
                             monies due the        No form, Cross-lease
                             Federal Government,    netting
                             Subpart A--General     documentation.
                             Provisions, and       No form, Indian over-
                             Subpart B--Oil and     recoupment approval.
                             Gas, General.
1010-0110.................  Executive Order        Form MMS-4420A-E,
                             12862--Setting         Training and
                             Customer Service       Outreach Evaluation
                             Standards.             Form.
1010-0119.................  30 CFR Part 208--Sale  Form MMS-4070,
                             of Federal Royalty     Application for the
                             Oil.                   Purchase of Royalty
                                                    Oil.
                                                   Form MMS-4071, Letter
                                                    of Credit (RIK).
                                                   Form MMS-4072,
                                                    Royalty-in-Kind
                                                    Contract Surety
                                                    Bond.
                                                   No form, Royalty oil
                                                    sales to eligible
                                                    refiners.

[[Page 38556]]

 
1010-0120.................  30 CFR Part 206--      Form MMS 4430, Solid
                             Production             Minerals Production
                             Valuation, Subpart     and Royalty Report.
                             F--Federal Coal, and  Form 4292, Coal.
                             Subpart J--Indian      Washing Allowance
                             Coal; Part 210--       Report.
                             Forms and Reports,    Form 4293, Coal
                             Subpart B--Oil, Gas,   Transportation
                             and OCS Sulfur--       Allowance Report.
                             General, Subpart E--  No form, Facility
                             Solid Minerals,        data--solid
                             General, and Subpart   minerals.
                             H--Geothermal         No form, Sales
                             Resources; and Part    contracts--solid
                             218--Collection of     minerals.
                             royalties, rentals,   No form, Sales
                             bonuses and other      summaries--solid
                             monies due the         minerals.
                             Federal Government,
                             Subpart B--Oil and
                             Gas, General, and
                             Subpart E--Solid
                             Minerals--General.
1010-0122.................  30 CFR Part 243--      Form MMS-4435,
                             Suspensions Pending    Administrative
                             Appeal and Bonding--   Appeal Bond.
                             Minerals Revenue      Form MMS-4436, Letter
                             Management.            of Credit.
                                                   Form MMS-4437,
                                                    Assignment of
                                                    Certificate of
                                                    Deposit.
                                                   No form, Self
                                                    bonding.
                                                   No form, U.S.
                                                    Treasury securities.
1010-0136.................  30 CFR Part 206--      Form MMS-4393,
                             Product Valuation,     Request to Exceed
                             Subpart C--Federal     Regulatory Allowance
                             Oil.                   Limitation.
                                                   No form, Federal oil
                                                    valuation support
                                                    information.
1010-0139.................  30 CFR Part 216--      Form MMS-4054, Oil
                             Production             and Gas Operations
                             Accounting, Subpart    Report (OGOR).
                             A--General            Form MMS-4058 (Parts
                             Provisions, and        A, B, and C),
                             Subpart B--Oil and     Production
                             Gas, General; and      Allocation Schedule
                             Part 210--Forms and    Report (PASR).
                             Reports.
1010-0140.................  30 CFR Part 210--      Form MMS-2014, Report
                             Forms and Reports.     of Sales and Royalty
                                                    Remittance.
1010-0155.................  30 CFR Part 204--      No form, Notification
                             Alternatives for       and relief request
                             Marginal Properties,   for accounting and
                             Subpart C--            auditing relief.
                             Accounting and
                             Auditing Relief.
1010-0162.................  Chief Financial        No Form, Accounts
                             Officers Act of 1990.  receivable
                                                    confirmations.
------------------------------------------------------------------------

Sec.  210.20  What if I disagree with MMS's burden estimates?

    Burden estimates are included on MMS's Web site at http://www.mrm.mms.gov/Laws_R_D/FRNotices/FRNotices.htm. Send comments on 
the accuracy of these burden estimates or suggestions on reducing the 
burden to the Minerals Management Service, Attention: Information 
Collection Clearance Officer (OMB Control Number 1010-XXXX [insert 
appropriate OMB control number]), Mail Stop 4230, 1849 C Street, NW., 
Washington, DC 20240. 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.


Sec.  210.21  How do I report my taxpayer identification number?

    (a) Before paying or reporting to MMS, you must obtain a payor code 
(see our Minerals Revenue Reporter Handbook). At the time, you request 
a payor code, you must provide your Employer Identification Number 
(EIN) by submitting:
    (1) An IRS Form W-9; or
    (2) An equivalent certification containing:
    (i) Your name;
    (ii) The name of your business, if different from your name;
    (iii) The form of your business entity; for example a sole 
proprietorship, corporation, or partnership;
    (iv) The address of your business;
    (v) The EIN of your business; and
    (vi) A signed and dated certification that you are a U.S. citizen 
or resident alien and that the EIN number provided is correct.
    (b) If you are already paying or reporting to MMS but do not have 
an EIN, MMS may request that you submit an IRS Form W-9 or equivalent 
certification containing the information required under paragraph 
(a)(2) of this section.
    (c) The collection of this data is not subject to the provisions of 
the Paperwork Reduction Act because it only requires information 
necessary to identify the respondent [5 CFR 1320.3(h)].
    (d) The EIN you provide to MMS under paragraph (a) of this section:
    (1) Means the taxpayer identification number (TIN) of an individual 
or other person (whether or not an employer), which is assigned under 
26 U.S.C. 6011(b), or a corresponding version of prior law, or under 26 
U.S.C. 6109.
    (2) Must contain nine digits separated by a hyphen as follows: 00-
0000000.
    (3) May not be a Social Security Number.


Sec.  210.30  What are my responsibilities as a reporter/payor?

    Reporters/Payors must submit accurate, complete, and timely 
information to MMS according to the requirements in this part. If you 
discover an error in a previous report, you must file an accurate and 
complete amended report within 30 days of your discovery of the error. 
Failure to comply may result in penalties under the provisions of 30 
CFR part 241.


Sec.  210.40  Will MMS keep the information I provide confidential?

    The MMS will treat information it obtains under this part under the 
regulations at 43 CFR part 2.

Subpart B--Royalty Reports--Oil, Gas, and Geothermal Resources


Sec.  210.50  What is the purpose of this subpart?

    The purpose of this subpart is to explain royalty reporting 
requirements when energy and mineral resources are removed from Federal 
and Indian oil and gas and geothermal leases and federally approved 
agreements. This includes leases and agreements located onshore and on 
the Outer Continental Shelf (OCS).


Sec.  210.51  Who must submit royalty reports?

    (a) Any person who pays royalty to MMS must submit royalty reports 
to MMS.
    (b) Before you pay or report to MMS, you must obtain a payor code. 
To obtain a payor code, refer to our Minerals Revenue Reporter Handbook 
for instructions and MMS contact information (also see Sec.  210.56 for 
information on how to obtain a handbook).


Sec.  210.52  What royalty reports must I submit?

    You must submit a completed Form MMS-2014, Report of Sales and 
Royalty Remittance, to MMS with:
    (a) All royalty payments; and
    (b) Rents on nonproducing leases, where specified in the lease.

[[Page 38557]]

Sec.  210.53  When are my royalty reports and payments due?

    (a) Completed Forms MMS-2014 for royalty payments and the 
associated payments (see also Sec.  218.50) are due by the end of the 
month following the production month.
    (b) Completed Forms MMS-2014 for rental payments, where applicable, 
and the associated payments (see also Sec.  218.50), are due no later 
than the anniversary date of the lease.
    (c) You may submit reports and payments early.


Sec.  210.54  Must I submit this royalty report electronically?

    (a) You must submit Form MMS-2014 electronically unless you qualify 
for an exception under Sec.  210.55(a).
    (b) You must use one of the following electronic media types, 
unless MMS instructs you differently:
    (1) Electronic Data Interchange (EDI)--The direct computer-to-
computer interchange of data using standards set forth by the X12 
American National Standards Institute (ANSI) Accredited Standards 
Committee (ASC). The interchange uses the services of a third party 
with which either party may contract.
    (2) Web-based reporting--Reporters/Payors may enter report data 
directly or upload files using the MMS electronic Web form located at 
www.mrmreports.net. The uploaded files must be in one of the following 
formats: the American Standard Code for Information Interchange (ASCII) 
or Comma Separated Values (CSV) formats. External files created by the 
sender must be in the proprietary ASCII and CSV File Layout formats 
defined by MMS. These external files can be generated from a reporter's 
system application.
    (c) Refer to our electronic reporting guidelines for the most 
current reporting options, instructions, and security measures. The 
guidelines may be found on our Internet Web site or you may call your 
MMS customer service representative.


Sec.  210.55  May I submit this royalty report manually?

    (a) The MMS will allow you to submit Form MMS-2014 manually if:
    (1) You have never reported to MMS before. You have 3 months from 
the date your first report is due to begin reporting electronically;
    (2) You report only rent, minimum royalty, or other annual 
obligations on Form MMS-2014; or
    (3) You are a small business, as defined by the U.S. Small Business 
Administration, and you have no computer.
    (b) If you meet the qualifications under paragraph (a) of this 
section, you may submit your form manually to MMS by:
    (1) U.S. Postal Service regular or express mail addressed to 
Minerals Management Service, P.O. Box 5810, Denver, Colorado 80217-
5810; or
    (2) Special couriers or overnight mail addressed to Minerals 
Management Service, Building 85, Room A-614, Denver Federal Center, 
West 6th Ave. and Kipling Blvd., Denver, CO 80225.


Sec.  210.56  Where can I find more information on how to complete the 
royalty report?

    (a) Specific guidance on how to prepare and submit Form MMS-2014 is 
contained in our Minerals Revenue Reporter Handbook. The handbook is 
available on our Internet Web site at www.mrm.mms.gov/ReportingServices/Handbooks/Handbks.htm or from MMS at P.O. Box 5760, 
Denver, Colorado 80217-5760.
    (b) Royalty reporters/payors should refer to the handbook for 
specific guidance on royalty reporting requirements. If you require 
additional information, you should contact MMS at the above address. A 
customer service telephone number is also listed in our handbook.
    (c) You may find copies of blank Forms MMS-2014 on our Internet Web 
site at www.mrm.mms.gov/ReportingServices/Forms/AFSOil_Gas.htm, or you 
may request the forms from MMS at P.O. Box 5760, Denver, Colorado 
80217-5760.

Subpart C--Production Reports--Oil, Gas, and Geothermal Resources


Sec.  210.100  What is the purpose of this subpart?

    The purpose of this subpart is to explain production reporting 
requirements when energy and mineral resources are removed from Federal 
and Indian oil and gas and geothermal leases and federally approved 
agreements. This includes leases and agreements located onshore and on 
the Outer Continental Shelf (OCS).


Sec.  210.101  Who must submit production reports?

    (a) If you operate a Federal or Indian oil and gas or geothermal 
lease or federally approved agreement, you must submit production 
reports.
    (b) Before reporting production to MMS, you must obtain an operator 
number. To obtain an operator number, refer to our Minerals Production 
Reporter Handbook for instructions and MMS contact information (also 
see Sec.  210.106 for information on how to obtain a handbook).


Sec.  210.102  What production reports must I submit?

    (a) Oil and Gas Operations Report (Form MMS-4054). If you operate 
an onshore or OCS oil and gas or geothermal lease or federally approved 
agreement that contains one or more wells that are not permanently 
plugged or abandoned, you must submit Form MMS-4054 to MMS:
    (1) You must submit Form MMS-4054 for each well for each calendar 
month, beginning with the month in which you complete drilling, unless:
    (i) You have only test production from a drilling well; or
    (ii) MMS tells you in writing to report differently.
    (2) You must continue reporting until:
    (i) The Bureau of Land Management (BLM) or MMS approves all wells 
as permanently plugged or abandoned or the lease or agreement is 
terminated; and
    (ii) You dispose of all inventory.
    (b) Production Allocation Schedule Report (Form MMS-4058). If you 
operate an offshore facility measurement point (FMP) handling 
production from a Federal oil and gas or geothermal lease or federally 
approved agreement that is commingled (with approval) with production 
from any other source prior to measurement for royalty determination, 
you must file Form MMS-4058.
    (1) You must submit Form MMS-4058 for each calendar month beginning 
with the month in which you first handle production covered by this 
section.
    (2) Form MMS-4058 is not required whenever all of the following 
conditions are met:
    (i) All leases involved are Federal leases;
    (ii) All leases have the same fixed royalty rate;
    (iii) All leases are operated by the same operator;
    (iv) The facility measurement device is operated by the same person 
as the leases/agreements;
    (v) Production has not been previously measured for royalty 
determination; and
    (vi) The production is not subsequently commingled and measured for 
royalty determination at an FMP for which Form MMS-4058 is required 
under this part.


Sec.  210.103  When are my production reports due?

    (a) The MMS must receive your completed Form MMS-4054 and Form MMS-
4058 by the 15th day of the second month following the month for which 
you are reporting.
    (b) A report is considered received when it is delivered to MMS by 
4 p.m.

[[Page 38558]]

mountain time at the addresses specified in Sec.  210.105. Reports 
received after 4 p.m. mountain time are considered received the 
following business day.


Sec.  210.104  Must I submit these production reports electronically?

    (a) You must submit Forms MMS-4054 and MMS-4058 electronically 
unless you qualify for an exception under Sec.  210.105.
    (b) You must use one of the following electronic media types, 
unless MMS instructs you differently:
    (1) Electronic Data Interchange (EDI)--The direct computer-to-
computer interchange of data using standards set forth by the X12 
American National Standards Institute (ANSI) Accredited Standards 
Committee (ASC). The interchange uses the services of a third party 
with which either party may contract.
    (2) Web-based reporting--Reporters may enter report data directly 
or upload files using the MMS electronic Web form located at 
www.mrmreports.net. The uploaded files must be in one of the following 
formats: the American Standard Code for Information Interchange (ASCII) 
or Comma Separated Values (CSV) formats. External files created by the 
sender must be in the proprietary ASCII and CSV File Layout formats 
defined by MMS. These external files can be generated from a reporter's 
system application.
    (c) Refer to our electronic reporting guidelines for the most 
current reporting options, instructions, and security measures. The 
guidelines may be found on our Internet Web site or you may call your 
MMS customer service representative.


Sec.  210.105  May I submit these production reports manually?

    (a) The MMS will allow you to submit Forms MMS-4054 and MMS-4058 
manually if:
    (1) You have never reported to MMS before. You have 3 months from 
the day your first report is due to begin reporting electronically; and
    (2) You are a small business, as defined by the U.S. Small Business 
Administration, and you have no computer.
    (b) If you meet the qualifications under paragraph (a) of this 
section, you may submit your forms manually to MMS by:
    (1) U.S. Postal Service regular or express mail addressed to 
Minerals Management Service, P.O. Box 17110, Denver, Colorado 80217-
0110; or
    (2) Special couriers or overnight mail addressed to Minerals 
Management Service, Building 85, Room A-614, Denver Federal Center, 
West 6th Ave. and Kipling Blvd., Denver, Colorado 80225.


Sec.  210.106  Where can I find more information on how to complete 
these production reports?

    (a) Specific guidance on how to prepare and submit production 
reports to MMS is contained in our Minerals Production Reporter 
Handbook. The handbook is available on our Internet Web site at 
www.mrm.mms.gov/ReportingServices/Handbooks/Handbks.htm or from MMS at 
P.O. Box 17110, Denver, Colorado 80217-0110.
    (b) Production reporters should refer to the handbook for specific 
guidance on production reporting requirements. If you require 
additional information, you should contact MMS at the above address. A 
customer service telephone number is also listed in our handbook.
    (c) You may find copies of blank Forms MMS-4054 or MMS-4058 on our 
Internet Web site at www.mrm.mms.gov/ReportingServices/Forms/PAASOff.htm, or you may request the forms from MMS at P.O. Box 17110, 
Denver, Colorado 80217-0110.

Subpart D--Special-Purpose Forms and Reports--Oil and Gas, and 
Geothermal Resources


Sec.  210.150  What reports must I submit to claim an excess allowance?

    (a) General. If you are a lessee, you must submit Form MMS-4393, 
Request to Exceed Regulatory Allowance Limitation, to request approval 
from MMS to exceed prescribed transportation and processing allowance 
limits on Federal and Indian oil and gas leases under part 206 of this 
chapter. OMB Control Number 1010-0136.
    (b) Reporting options. You may find an electronic copy of Form MMS-
4393 on our Web site at www.mrm.mms.gov/ReportingServices/Forms/AFSOil_Gas.htm. You may also request copies of the form from MMS at 
P.O. Box 25165, MS 392B2, Denver, Colorado 80217-0165.
    (c) Reporting address. Submit completed Form MMS-4393 as follows:
    (1) Complete and submit the form electronically as an e-mail 
attachment;
    (2) Send the form by U.S. Postal Service regular or express 
addressed to Minerals Management Service, P.O. Box 25165, MS 392B2, 
Denver, Colorado 80217-0165; or
    (3) Deliver the form to MMS by special couriers or overnight mail 
addressed to Minerals Management Service, Building 85, Room A-614, MS 
392B2, Denver Federal Center, West 6th Ave. and Kipling Blvd., Denver, 
Colorado 80225.


Sec.  210.151  What reports must I submit to claim allowances on an 
Indian lease?

    (a) General. You must submit three additional forms to MMS to claim 
transportation and processing allowances on Indian oil and gas leases:
    (1) You must submit Form MMS-4110, Oil Transportation Allowance 
Report, to claim an allowance for expenses incurred by a reporter/payor 
to transport oil from the lease site to a point remote from the lease 
where value is determined under Sec.  206.55 of this chapter. OMB 
Control Number 1010-0103.
    (2) You must submit Form MMS-4109, Gas Processing Allowance Summary 
Report, to claim an allowance for the reasonable, actual costs of 
removing hydrocarbon and nonhydrocarbon elements or compounds from a 
gas stream under Sec.  206.180 of this chapter. OMB Control Number 
1010-0103.
    (3) You must submit Form MMS-4295, Gas Transportation Allowance 
Report, to claim an allowance for the reasonable, actual costs of 
transporting gas from the lease to the point of first sale under Sec.  
206.178 of this chapter. OMB Control Number 1010-0103.
    (b) Reporting options. You may submit Forms MMS-4110, MMS-4109, and 
MMS-4295 manually. You may find copies of the forms on our Internet Web 
site at www.mrm.mms.gov/ReportingServices/Forms/AFSOil_Gas.htm, or you 
may request the forms from MMS at P.O. Box 25165, MS 396B2, Denver, 
Colorado 80217-0165.
    (c) Reporting address. You may submit completed Forms MMS-4110, 
MMS-4109, and MMS-4295 by:
    (1) U.S. Postal Service regular or express mail addressed to 
Minerals Management Service, P.O. Box 25165, MS 396B2, Denver, Colorado 
80217-0165; or
    (2) Special couriers or overnight mail addressed to Minerals 
Management Service, Building 85, Room A-614, MS 396B2, Denver Federal 
Center, West 6th Ave. and Kipling Blvd., Denver, Colorado 80225.


Sec.  210.152  What reports must I submit for Indian gas valuation 
purposes?

    (a) General. For Indian gas valuation, lessees must submit the 
following forms under certain conditions under Sec.  206.172 of this 
chapter:
    (1) Form MMS-4411, Safety Net Report, OMB Control Number 1010-0103; 
or
    (2) Form MMS-4410, Accounting for Comparison (Dual Accounting), 
Part A

[[Page 38559]]

or Part B, OMB Control Number 1010-0103.
    (b) Reporting options. You must submit Forms MMS-4410 and MMS-4411 
manually. You may find copies of the forms on our Internet Web site at 
www.mrm.mms.gov/ReportingServices/Forms/AFSOil_Gas.htm or request 
forms from MMS at P.O. Box 25165, MS 396B2, Denver, Colorado 80217-
0165.
    (c) Reporting address. You may submit completed Forms MMS-4410 and 
MMS-4411 by:
    (1) U.S. Postal Service regular or express mail addressed to 
Minerals Management Service, P.O. Box 25165, MS 396B2, Denver, Colorado 
80217-0165; or
    (2) Special couriers or overnight mail addressed to Minerals 
Management Service, Building 85, Room A-614, MS 396B2, Denver Federal 
Center, West 6th Ave. and Kipling Blvd., Denver, Colorado 80225.


Sec.  210.153  What reports must I submit for Federal oil valuation 
purposes?

    (a) General. The MMS may require lessees to submit several 
documents or other information to MMS to support their valuation of 
Federal oil under 30 CFR part 206. See information collection OMB 
Control Number 1010-0136. There are no specific forms related to this 
information collection.
    (b) Reporting options. You must submit the documents manually.
    (c) Reporting address. You may submit required documents by:
    (1) U.S. Postal Service regular or express mail addressed to 
Minerals Management Service, P.O. Box 25165, MS 392B2, Denver, Colorado 
80217-0165; or
    (2) Special couriers or overnight mail addressed to Minerals 
Management Service, Building 85, Room A-614, MS 392B2, Denver Federal 
Center, West 6th Ave. and Kipling Blvd., Denver, Colorado 80225.


Sec.  210.154  What reports must I submit for Federal onshore stripper 
oil properties?

    (a) General. Operators who have been granted a reduced royalty rate 
by the Bureau of Land Management (BLM) under 43 CFR 3103.4-2 must 
submit Form MMS-4377, Stripper Royalty Rate Reduction Notification 
under 43 CFR 3103.4-2(b)(3). OMB Control Number 1010-0090.
    (b) Reporting options. You may find copies of Form MMS-4377 on our 
Internet Web site at www.mrm.mms.gov/ReportingServices/Forms/AFSOil_Gas.htm or request the form from MMS at P.O. Box 17110, Denver, 
Colorado 80217-0110. You may file the form:
    (1) Electronically by filling the form out in electronic format and 
submitting it to MMS as an e-mail attachment; or
    (2) Manually by filling out the form and submitting it by:
    (i) U.S. Postal Service regular or express mail addressed to 
Minerals Management Service, P.O. Box 25165, MS 392B2, Denver, Colorado 
80217-0165; or
    (ii) Special couriers or overnight mail addressed to Minerals 
Management Service, Building 85, Room A-614, MS 392B2, Denver Federal 
Center, West 6th Ave. and Kipling Blvd., Denver, Colorado 80225.


Sec.  210.155  What reports must I submit for net profit share leases?

    (a) General. After entering into a net profit share lease (NPSL) 
agreement, a lessee must report under part 220 of this chapter. OMB 
Control Number 1010-0073.
    (b) Reporting options. You must submit the reports manually.
    (c) Reporting address. You may submit the required documents by:
    (1) U.S. Postal Service regular or express mail addressed to 
Minerals Management Service, P.O. Box 25165, MS 382B2, Denver, Colorado 
80217-0165; or
    (2) Special couriers or overnight mail addressed to Minerals 
Management Service, Building 85, Room A-614, MS 382B2, Denver Federal 
Center, West 6th Ave. and Kipling Blvd., Denver, Colorado 80225.


Sec.  210.156  What reports must I submit for the small refiner 
royalty-in-kind program?

    (a) General. You may be required to submit the following forms or 
documents to participate in the small refiner royalty-in-kind program:
    (1) Refiners interested in the purchase of royalty oil must submit 
their applications and Form MMS-4070 under part 208 of this chapter for 
additional information. OMB Control Number 1010-0119;
    (2) Eligible small refiners must provide specific information that 
MMS requests under part 208 of this chapter. OMB Control Number 1010-
0119;
    (3) Small refiners must submit a letter of credit, Form MMS-4072, 
and a contract surety bond, Form MMS-4071, as part of their bidding 
application under part 208 of this chapter for additional information. 
OMB Control Number 1010-0119.
    (b) Reporting options. You must submit the forms and other 
documents manually. You may find copies of the forms on our Internet 
Web site at www.www.mrm.mms.gov/ReportingServices/Forms/Forms.htm, or 
you may request forms from MMS at the address listed in the Federal 
Register Notice of Availability of Royalty Oil.
    (c) Reporting address. You must mail the forms and documents 
required in this section to the address identified in the applicable 
Federal Register Notice of Availability of Royalty Oil.


Sec.  210.157  What reports must I submit to suspend an MMS order under 
appeal?

    (a) General. Reporters/Payors or other recipients of MMS's Minerals 
Revenue Management (MRM) orders may be required to post a bond or other 
surety, under part 243 of this chapter. The MMS accepts the following 
surety types: Form MMS-4435, Administrative Appeal Bond; Form MMS-4436, 
Letter of Credit; Self-bonding; Form MMS-4437, Assignment of 
Certificate of Deposit; and U.S. Treasury Securities. OMB Control 
Number 1010-0122.
    (b) Reporting options. You must submit these forms and other 
documents manually.
    (c) Reporting address. You may submit the required forms and other 
documents by:
    (1) U.S. Postal Service regular or express mail addressed to 
Minerals Management Service, P.O. Box 5760, MS 370B2, Denver, Colorado 
80217-0165;
    (2) Special couriers or overnight mail addressed to Minerals 
Management Service, Building 85, Room A-614, MS 370B2, Denver Federal 
Center, West 6th Ave. and Kipling Blvd., Denver, Colorado 80225.


Sec.  210.158  What reports must I submit to designate someone to make 
my royalty payments?

    (a) General. You must submit Form MMS-4425, Designation Form for 
Royalty Payment Responsibility, if you want to designate a person to 
make royalty payments on your behalf, under 30 CFR 218.52. OMB Control 
Number 1010-0107.
    (b) Reporting options. You must submit Form MMS-4425 manually. You 
may find copies of the form on our Internet Web site at 
www.mrm.mms.gov/ReportingServices/Forms/AFSOil_Gas.htm or request the 
form from MMS at P.O. Box 5760, Denver, Colorado 80217-5760.
    (c) Reporting address. You must submit completed Form MMS-4425 by:
    (1) U.S. Postal Service regular or express mail addressed to 
Minerals Management Service, P.O. Box 25165, MS 357B1, Denver, Colorado 
80217-0165; or
    (2) Special couriers or overnight mail addressed to Minerals 
Management Service, Building 85, Room A-614, MS

[[Page 38560]]

357B1, Denver Federal Center, West 6th Ave. and Kipling Blvd., Denver, 
Colorado 80225.

Subpart E--Production and Royalty Reports--Solid Minerals

    19. Revise the title of subpart E to read as set forth above.


Sec. Sec.  210.205, 210.206  [Redesignated]

    20. Redesignate Sec. Sec.  210.205 and 210.206 as Sec. Sec.  
210.206 and 210.207.
    21. Add new Sec.  210.205 to read as follows:


Sec.  210.205  What reports must I submit to claim allowances on Indian 
coal leases?

    (a) General. You must submit two MMS forms to claim transportation 
and washing allowances on Indian coal leases:
    (1) Form MMS-4292, Coal Washing Allowance Report, to claim an 
allowance for the reasonable, actual costs incurred to wash coal under 
Sec.  206.458 of this chapter. OMB Control Number 1010-0120.
    (2) Form MMS-4293, Coal Transportation Allowance Report, to claim 
an allowance for the reasonable, actual costs of transporting coal to a 
sales point or a washing facility remote from the mine or lease under 
Sec.  206.461 of this chapter. OMB Control Number 1010-0120.
    (b) Reporting options. You must submit the forms manually. You may 
find copies of the forms on our Internet Web site at www.mrm.mms.gov/ReportingServices/Forms/AFSSol_Min.htm or request forms from MMS at 
P.O. Box 25165, MS 390B2, Denver, Colorado 80217-0165.
    (c) Reporting address. You may submit completed Forms MMS-4292 and 
MMS-4293 by:
    (1) U.S. Postal Service regular or express mail addressed to 
Minerals Management Service, P.O. Box 25165, MS 390B2, Denver, Colorado 
80217-0165; or
    (2) Special couriers or overnight mail addressed to Minerals 
Management Service, Building 85, Room A-614, MS 390B2, Denver Federal 
Center, West 6th Ave. and Kipling Blvd., Denver, Colorado 80225.

Subparts F-I [Removed]

    22. Remove subparts F through I.

PART 216--PRODUCTION ACCOUNTING [Removed]

    23. Remove part 216.

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

    24. The authority citation for part 218 continues to read as 
follows:

    Authority: 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. 3335; 43 U.S.C. 1301 et seq., 1331 et seq., 1801 et seq.

    25. In Sec.  218.40, revise paragraphs (a) through (c) to read as 
follows:


Sec.  218.40  Assessments for incorrect or late reports and failure to 
report.

    (a) An assessment of an amount not to exceed $10 per day may be 
charged for each report not received by MMS by the designated due date 
for geothermal, solid mineral, and Indian oil and gas leases.
    (b) An assessment of an amount not to exceed $10 may be charged for 
each incorrectly completed report for geothermal, solid mineral, and 
Indian oil and gas leases.
    (c) For purpose of assessments discussed in this section, a report 
is defined as follows:
    (1) For coal and other solid mineral leases, a report is each line 
on the Solid Minerals Production and Royalty Report, Form MMS-4430.
    (2) For Indian oil and gas and all geothermal leases, a report is 
each line on the Report of Sales and Royalty Remittance, Form MMS-2014.
* * * * *
    26. In Sec.  218.41, revise paragraphs (a) through (d) to read as 
follows:


Sec.  218.41  Assessments for failure to submit payment of same amount 
as Form MMS-2014 or bill document or to provide adequate information.

    (a) An assessment of an amount not to exceed $250 may be charged 
when the amount of a payment submitted by a payor for geothermal, solid 
mineral, and Indian oil and gas leases is not equivalent in amount to 
the total of individual line items on the associated Form MMS-2014 or 
bill document, unless the difference in amount has been authorized by 
MMS.
    (b) An assessment of amount not to exceed $250 may be charged for 
each payment for geothermal, solid mineral, and Indian oil and gas 
leases submitted by a payor that cannot be automatically applied by AFS 
to the associated Form MMS-2014 or bill document because of inadequate 
or erroneous information submitted by the payor. For purposes of this 
section, inadequate or erroneous information is defined as:
    (1) Absent or incorrect payor assigned document number, required to 
be identified by the payor in Block 4 on a Form MMS-2014, or the reuse 
of the same payor assigned document (``4'') number in a subsequent 
reporting period.
    (2) Absent or incorrect bill document invoice number (to include 
the three character alpha prefix and the nine digit number) or the pay-
assigned 3a number required to be identified by the payor on the 
associated payment document, or the reuse of the same payor assigned 4 
number in a subsequent reporting period.
    (3) Absent or incorrect name of the administering Bureau of Indian 
Affairs Agency/Area office and the word ``allotted'' or the tribe name 
on payment documents remitted to MMS for an Indian tribe or allottee. 
If the payment is made by EFT, the payor must identify the tribe/
allottee on the EFT message by a pre-established five digit code.
    (4) Absent or incorrect MMS assigned payor code on a payment 
document.
    (c) For purposes of this section, the term ``Form MMS-2014'' 
includes submission of reports of royalty information.
    (d) For purposes of this section, a bill document is defined as any 
Invoice that has been issued by MMS for assessments, late-payment 
interest charges, or other amount owed.
* * * * *
    27. In Sec.  218.50, revise paragraph (b) to read as follows:


Sec.  218.50  Timing of payment.

* * * * *
    (b) Payments made on a Invoice are due as specified by the Invoice. 
Invoices will be issued and payable as final collection actions.
* * * * *
    28. In Sec.  218.51, in paragraph (a), revise the definition of 
``Invoice Document Identification'' and revise paragraphs (f)(1) and 
(f)(2) to read as follows:


Sec.  218.51  How to make payments.

    (a) * * *
    Invoice Document Identification--The MMS-assigned invoice document 
identification (three alpha and nine numeric characters).
* * * * *
    (f) * * * (1) For Form MMS-2014 payments, you must include both 
your payor code and your payor-assigned document number.
    (2) For invoice payments, including RIK invoice payments, you must 
include both your payor code and invoice document identification.
* * * * *
    29. Amend Sec.  218.52 by revising paragraphs (a) introductory text 
(a)(1),

[[Page 38561]]

(a)(4)(i), (a)(4)(ii), (c) introductory text, and (d), to read as 
follows:


Sec.  218.52  How does a lessee designate a Designee?

    (a) If you are a lessee under 30 U.S.C. 1701(7), and you want to 
designate a person to make all or part of the payments due under a 
lease on your behalf under 30 U.S.C. 1712(a), you must notify MMS or 
the applicable delegated State in writing of such designation by 
submitting Form MMS-4425, Designation Form for Royalty Payment 
Responsibility, OMB Control Number 1010-0107. Your notification for 
each lease must include the following:
    (1) The lease number for the lease;
* * * * *
    (4) * * *
    (i) A lessee of record (record title owner) in the lease; or
    (ii) An operating rights owner (working interest owner) in the 
lease;
* * * * *
    (c) If you want to terminate a designation you made under paragraph 
(a) of this section, you must provide to MMS in writing using Form MMS-
4425 before the termination:
* * * * *
    (d) MMS may require you to provide notice when there is a change in 
your record title or operating rights ownership.


Sec.  218.57  [Removed]

    30. Remove Sec.  218.57.


Sec.  218.154  [Amended]

    31. In Sec.  218.154, paragraph (c), remove the words ``paragraph 
(a) of this section'' and add in their place ``paragraph (b) of this 
section.''
    32. In Sec.  218.155, paragraph (b)(2), revise the fourth and fifth 
sentences to read as follows:


Sec.  218.155  Method of payment.

* * * * *
    (b) * * *
* * * * *
    (2) * * * The one-fifth bonus amounts submitted with bids other 
than the highest valid bid shall be returned to respective bidders 
after bids are opened, recorded, and ranked. Return of such amounts 
will not affect the status, validity, or ranking of bids.* * *
* * * * *
[FR Doc. 06-5988 Filed 7-6-06; 8:45 am]
BILLING CODE 4310-MR-P