[Federal Register Volume 73, Number 241 (Monday, December 15, 2008)]
[Notices]
[Pages 76047-76051]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-29523]


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DEPARTMENT OF THE INTERIOR

Minerals Management Service

[Docket No. MMS-2008-MRM-0010]


Agency Information Collection Activities: Proposed Collection, 
Comment Request

AGENCY: Minerals Management Service (MMS), Interior.

ACTION: Notice of an extension of a currently approved information 
collection (OMB Control Number 1010-0119).

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SUMMARY: To comply with the Paperwork Reduction Act of 1995 (PRA), we 
are notifying the public that we have submitted an information 
collection request (ICR) to the Office of Management and Budget (OMB) 
for renewal approval of the paperwork requirements in the regulations 
under 30 CFR part 208. This notice also provides the public a second 
opportunity to comment on the paperwork burden of these regulatory 
requirements. The previous title of this information collection request 
(ICR) was ``30 CFR Part 208--Sale of Federal Royalty Oil; Sale of 
Federal Royalty Gas; and Commercial Contracts (Forms MMS-4070, 
Application for the Purchase of Royalty Oil; MMS-4071, Letter of 
Credit; and MMS-4072, Royalty-in-Kind Contract Surety Bond).'' The new 
title of this ICR is ``30 CFR Part 208, RIK Oil and Gas.''

DATES: Submit written comments on or before January 14, 2009.

ADDRESSES: Submit written comments by either FAX (202) 395-6566 or e-
mail ([email protected]) directly to the Office of Information 
and Regulatory Affairs, OMB, Attention: Desk Officer for the Department 
of the Interior (OMB Control Number 1010-0119).
    Please submit copies of your comments to MMS by the following 
methods:
     Electronically go to http://www.regulations.gov. In the 
``Comment or Submission'' column, enter ``MMS-2008-MRM-0010'' to view 
supporting and related materials for this ICR. Information on using 
Regulations.gov, including instructions for accessing documents, 
submitting comments, and viewing the docket after the close of the 
comment period, is available through the site's ``User Tips'' link. All 
comments submitted will be posted to the docket.
     Mail comments to Armand Southall, Regulatory Specialist, 
Minerals Management Service, Minerals Revenue Management, P.O. Box 
25165, MS 302B2, Denver, Colorado 80225. Please reference ICR 1010-0119 
in your comments.
     Hand-carry comments or use an overnight courier service. 
Our courier address is Building 85, Room A-614, Denver Federal Center, 
West 6th Ave. and Kipling St., Denver, Colorado 80225. Please reference 
ICR 1010-0119 in your comments.

FOR FURTHER INFORMATION CONTACT: Armand Southall, telephone (303) 231-
3221, or e-mail [email protected]. You may also contact Armand 
Southall to obtain copies, at no cost, of (1) the ICR, (2) any 
associated forms, and (3) the regulations that require the subject 
collection of information.

SUPPLEMENTARY INFORMATION:
    Title: 30 CFR Part 208, RIK Oil and Gas.
    OMB Control Number: 1010-0119.
    Bureau Form Number: Forms MMS-4070, MMS-4071, and MMS-4072.
    Abstract: The Secretary of the U.S. Department of the Interior is 
responsible for mineral resource development on Federal and Indian 
lands and the Outer Continental Shelf (OCS). Under the Mineral Leasing 
Act of 1920 (30 U.S.C. 1923), the Indian Mineral Development Act of 
1982 (25 U.S.C. 2103), and the Outer Continental Shelf Lands Act (OCS 
Lands Act, 43 U.S.C. 1353), the

[[Page 76048]]

Secretary is responsible for managing the production of minerals from 
Federal and Indian lands and the OCS, collecting royalties and other 
mineral revenues from lessees who produce minerals, and distributing 
the funds collected in accordance with applicable laws.
    The Secretary also has a trust responsibility to manage Indian 
lands and seek advice and information from Indian beneficiaries. The 
MMS performs the minerals revenue management functions and assists the 
Secretary in carrying out the Department's trust responsibility for 
Indian lands.
    Public laws pertaining to mineral revenues are on our Web site at 
http://www.mrm.mms.gov/Laws_R_D/PublicLawsAMR.htm. These public laws 
and 30 CFR part 208, as well as specific language in the actual lease 
documents, authorize the Secretary to sell royalty oil and gas accruing 
to the United States. The standard lease terms state that royalties are 
due in amount or in value. The MMS directs communications between MMS 
operators and royalty-in-kind (RIK) purchasers through commercial 
contracts, situation-specific ``Dear Operator'' letters, or, in the 
case of eligible refiners, through regulations at part 208.
    General Information. The MMS is responsible for ensuring that all 
revenues from Federal and Indian mineral leases are accurately 
collected and accounted for and appropriately disbursed to recipients. 
The Federal Government's RIK program became a permanent operational 
program after several years of pilot project testing. The RIK program 
takes payment from mineral lessees ``in kind'' in the form of produced 
crude oil and natural gas volumes, rather than in cash payments. The 
lessee transfers the title of the crude oil or natural gas to the 
Federal Government, and MMS sells the received product (crude oil or 
natural gas) in the marketplace and disburses revenues as prescribed by 
law.
    The MMS sells Federal oil and gas competitively in the unrestricted 
marketplace. The MMS also sells some crude oil competitively to 
eligible refiners (a small and independent refiner, as defined under 30 
CFR 208.2). Additionally, when directed, MMS delivers oil or gas to 
other Federal agencies, as was the case during the most recent fill of 
the Strategic Petroleum Reserve (SPR), directed by the President in 
2007.
    The crude oil or natural gas purchasers and eligible refiners 
report data on three forms--Forms MMS-4070, Application for the 
Purchase of Royalty Oil; MMS-4071, Letter of Credit; and MMS-4072, 
Royalty-in-Kind Contract Surety Bond. These forms are located at http://www.mrm.mms.gov/rikweb/RIKForms.htm.
    Eligible Refiner Information--Determination of Need. The 
regulations, at 30 CFR part 208--Sale of Federal Royalty Oil, govern 
the eligible refiner sale. Under Sec.  208.4(a) and (b) on behalf of 
the Secretary, MMS performs a Determination of Need prior to the sale 
of royalty oil. The MMS uses the feedback from the Determination of 
Need respondents to assess the availability of crude oil supply for 
eligible refiners and to assess current marketplace conditions. The MMS 
published the most recent Determination of Need, requesting specific 
information from interested parties, in the Federal Register on January 
16, 2008 (73 FR 2938).
    (1) Eligible Refiner Prequalification. In order to qualify for RIK 
sales, eligible refiners must prequalify by (a) signing the MMS base 
contract, ``RIK Crude Oil General Terms and Conditions,'' which is 
located at http://www.mrm.mms.gov/rikweb/PDFDocs/gtcexh.pdf; and (b) 
providing detailed financial information. Upon prequalification, MMS 
will issue an amount of unsecured credit, based on the creditability of 
the offeror.
    (2) Notice of Availability of Royalty Oil. Under Sec.  208.5, if 
MMS finds from the Determination of Need process that the program 
should continue, MMS will then advise industry of a forthcoming RIK 
crude oil sale for eligible refiners and include administrative details 
concerning the application, allocation, and contract award processes 
for the royalty oil. The MMS will also advise industry of specific 
information about the crude oil types offered for sale and the location 
of delivery points. As a result of the most recent determination, MMS 
held an eligible refiner sale August 5-6, 2008, which was announced on 
July 30, 2008 (73 FR 44279).
    Under Sec.  208.10(e), eligible refiners who purchase royalty oil 
cannot transfer, assign, or sell their rights or interest in a royalty 
oil contract without written approval of the MMS Director. This 
provision is intended to ensure that only qualified eligible refiners 
benefit from these sales of royalty oil.
    (3) Form MMS-4070--Application for the Purchase of Royalty Oil. 
Under Sec.  208.6, eligible refiners interested in purchasing royalty 
oil must submit Form MMS-4070, which is located at http://www.mrm.mms.gov/ReportingServices/PDFDocs/4070.pdf. This form serves as 
certification that the company qualifies as a small and independent 
refiner, as defined under Sec.  208.2. The MMS uses the information 
collected on Form MMS-4070 to determine the eligibility of refiners 
wanting to enter into contracts to purchase royalty oil under 30 CFR 
208.2 and to provide a basis for the allocation of available royalty 
oil among eligible refiners.
    Directed Communications to Operators of Federal Oil and Gas Leases. 
Collection of RIK crude oil and natural gas for eligible refiners and 
other RIK purchasers requires communication between MMS and the 
operators of leases to ensure accurate and timely delivery of MMS' 
royalty share of production volumes. Information collected through MMS' 
directed communication is essential for MMS to ensure the delivery and 
acceptance of verifiable quantities and qualities of crude oil and 
natural gas.
    The types of directed communication and the supporting data, that 
MMS requires from operators, are standard business practices in the oil 
and gas industry. Sample ``Dear Operator'' letters are posted on RIK's 
Web site at http://www.mrm.mms.gov/rikweb/RIKOperLts.htm.
    Third-Party Agreements. Section 208.9 requires that eligible 
refiners who purchase royalty oil must submit to MMS two copies of any 
written third-party agreements (or two copies of a complete written 
explanation of any oral third-party agreements) and quality 
differential agreements. However, in practice, MMS does not currently 
require eligible refiners to submit these written third-party and 
quality differential agreements. The MMS reserves the right to request 
these agreements from eligible refiners, if needed.
    Offers, Financial Statements, and Surety Instruments for Sales of 
Royalty Oil and Gas. (1) Offers. The MMS requires eligible refiners 
and/or other RIK purchasers to report (a) Actual pricing offers for 
submission when MMS offers production for competitive sale; (b) 
statements of financial qualification (audited financial statements or 
10K report/statement); and (c) surety instruments, such as a Letter of 
Credit (LOC), bond, prepayment, or parent guaranty when financial 
qualification is not sufficient. All LOCs are irrevocable.
    The MMS typically offers royalty oil and gas production for sale by 
Invitation for Offers (IFOs) to those offerors who have previously 
established their qualifications. The MMS evaluates all offers to 
determine which combination of price and other terms comprises the

[[Page 76049]]

best return to the U.S. Department of the Treasury and to any affected 
state.
    (2) Financial Statements. The MMS may request that a bidder submit 
publicly available statements of its financial condition (updated, if 
needed) or other related qualification information. The MMS evaluates 
the bidder's financial and/or qualification information to determine 
the risk of financial default to the Federal Government.
    (3) Surety Instruments. Under MMS current practice, eligible 
refiners are subject to the same requirements as other RIK purchasers 
regarding MMS-acceptable surety instruments and qualification 
information. Reporting requirements in Sec.  208.11 discuss surety 
instruments for eligible refiners. Surety instruments include the broad 
field of financial instruments that MMS may require, e.g., bonds, 
prepayments, or parent guaranties. When required, eligible refiners and 
other RIK purchasers must provide surety documents, i.e., Form MMS-
4071, Letter of Credit; Form MMS-4072, Royalty-In-Kind Contract Surety 
Bond; or other acceptable commercial surety, within 5 business days 
prior to the first delivery under the contract. For bonds, MMS requires 
a specific MMS-approved format. All parent guaranties must specify a 
dollar amount of the guaranty and the effective term. The surety 
instruments provide the Federal Government with a means to collect 
money if purchasers do not report and pay the Federal royalties.
    Summary: This collection of information is necessary to support 
MMS' (1) Requirement of operators to deliver RIK crude oil or natural 
gas volumes to the purchasers who competitively buy these volumes in 
the unrestricted market; (2) determination of which refiners qualify as 
small and independent eligible refiners to purchase royalty oil; and 
(3) requirement of purchasers and eligible refiners to file actual 
pricing offers, respective financial statements, and MMS-specified 
surety instruments.
    The MMS requests OMB approval to continue to collect this 
information. Not collecting this information would limit the 
Secretary's ability to discharge his/her duties and may also result in 
loss of revenues. The MMS protects proprietary information submitted 
under this collection, and there are no questions of a sensitive nature 
included in this information collection.
    Frequency of Response: On occasion, weekly, monthly, annually, 
frequency varies within monthly reporting cycle, or as necessary.
    Estimated Number and Description of Respondents: 227 Federal 
lessees and/or operators; and 80 commercial oil and gas purchasers and/
or refiners.
    Estimated Annual Reporting and Recordkeeping ``Hour'' Burden: 1,969 
hours.
    We have not included in our estimates certain requirements 
performed in the normal course of business, which are considered usual 
and customary. The following chart shows the estimated annual burden 
hours by CFR section and paragraph:

                                                       Respondents' Estimated Annual Burden Hours
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                                                                                                                          Average number
               Citation 30 CFR                          Reporting and recordkeeping requirement             Hour burden      of annual     Annual burden
                                                                                                                             responses         hours
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                                          PART 208--SALE OF FEDERAL ROYALTY OIL, Subpart A--General Provisions
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                                                  Sec.   208.4 Royalty oil sales to eligible refiners.
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208.4(a).....................................  (a) Determination to take royalty oil in kind. The                      4               4              16
                                                Secretary may evaluate crude oil market conditions from
                                                time to time. * * * The Secretary will review these
                                                items and will determine whether eligible refiners have
                                                access to adequate supplies of crude oil and whether
                                                such oil is available to eligible refiners at equitable
                                                prices. * * *.
                                                                                                         -----------------------------------------------
208.4(b).....................................  (b) Sale to eligible refiners. (1) * * * The Secretary     Hour burden covered under Sec.   208.4(a).
                                                may authorize MMS to offer royalty oil for sale to
                                                eligible refiners only for use in their refineries * * *.
208.4(c).....................................  (c) Upon a determination by the Secretary * * * that       Hour burden covered under Sec.   208.4(a).
                                                eligible refiners do have access to adequate supplies of
                                                crude oil at equitable prices, MMS will not take
                                                royalties in kind from oil and gas leases for exclusive
                                                sale to such refiners. * * *.
208.4(d).....................................  (d) Interim sales. * * * The potentially eligible          Hour burden covered under Sec.   208.4(a).
                                                refiners, individually or collectively, must submit
                                                documentation demonstrating that adequate supplies of
                                                crude oil at equitable prices are not available for
                                                purchase. * * *.
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                                                      Sec.   208.6 General application procedures.
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208.6(a) and (b).............................  (a) To apply for the purchase of royalty oil, an                     1.25               4               5
                                                applicant must file a Form MMS-4070 with MMS in
                                                accordance with instructions provided in the ``Notice of
                                                Availability of Royalty Oil'' and in accordance with any
                                                instructions issued by MMS for completion of Form MMS-
                                                4070. The applicant will be required to submit a letter
                                                of intent from a qualified financial institution stating
                                                that it would be granted surety coverage for the royalty
                                                oil for which it is applying, or other such proof of
                                                surety coverage, as deemed acceptable by MMS. The letter
                                                of intent must be submitted with a completed Form MMS-
                                                4070. (b) In addition to any other application
                                                requirements specified in the Notice, the following
                                                information is required on Form MMS-4070 at the time of
                                                application: * * *.
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[[Page 76050]]

 
                                                       Sec.   208.7 Determination of eligibility.
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208.7(a).....................................  (a) The MMS will examine each application and may request            0.25               1            \*\1
                                                additional information if the information in the
                                                application is inadequate. * * *.
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                                                        Sec.   208.8 Transportation and delivery.
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208.8(a).....................................  (a) * * * The purchaser must have physical access to the                1               1               1
                                                oil at the alternate delivery point and such point must
                                                be approved by MMS.
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208.8(b).....................................  (b) * * * If the delivery point is on or immediately       Hour burden covered by OMB Control Number 1010-
                                                adjacent to the lease, the royalty oil will be delivered  0140.
                                                without cost to the Federal Government as an undivided    This provision is no different than the
                                                portion of production in marketable condition at          transportation allowances allowed in 30 CFR
                                                pipeline connections or other facilities provided by the  part 206 for royalties paid in value. The
                                                lessee, unless other arrangements are approved by MMS.    lessee enters allowance amount on Form MMS-
                                                If the delivery point is not on or immediately adjacent   2014.
                                                to the lease, MMS will reimburse the lessee for the
                                                reasonable cost of transportation to such point in an
                                                amount not to exceed the transportation allowance
                                                determined pursuant to 30 CFR part 206. * * *.
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                                                                Sec.   208.9 Agreements.
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208.9(a).....................................  (a) A purchaser must submit to MMS two copies of any                    1               1               1
                                                written third-party agreements, or two copies of a full
                                                written explanation of any oral third-party agreements,
                                                relating to the method and costs of delivery of royalty
                                                oil, or crude oil exchanged for the royalty oil, from
                                                the point of delivery under the contract to the
                                                purchaser's refinery. In addition, the purchaser must
                                                submit copies of agreements pertaining to quality
                                                differentials which may occur between leases and
                                                delivery points.
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                                                                 Sec.   208.10 Notices.
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208.10(d)....................................  (d) After MMS notification that royalty oil will be taken               2              20              40
                                                in kind, the operator shall be responsible for notifying
                                                each working interest on the Federal lease. * * *.
208.10(e)....................................  (e) A purchaser cannot transfer, assign, or sell its                    1               1               1
                                                rights or interest in a royalty oil contract without
                                                written approval of the Director, MMS. * * * Without
                                                express written consent from MMS for a change in
                                                ownership, the royalty oil contract shall be terminated.
                                                * * *.
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                                               Sec.   208.11 Surety requirements. [For eligible refiners]
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208.11(a), (b), (d), and (e).................  (a) The eligible purchaser, prior to execution of the      Hour burden covered under ``Offers, Financial
                                                contract, shall furnish an ``MMS-specified surety         Statements, and Surety Instruments for Sales
                                                instrument,'' in an amount equal to the estimated value   of Royalty Oil and Gas'' section.
                                                of royalty oil that could be taken by the purchaser in a
                                                99-day period, plus related administrative charges. * *
                                                *.
                                               (b) * * * The purchaser or its surety company may elect    (Forms MMS-4071, Letter of Credit, and MMS-
                                                not to renew the letter of credit at any monthly          4072, Royalty-In-Kind Contract Surety Bond).
                                                anniversary date, but must notify MMS of its intent not
                                                to renew at least 30 days prior to the anniversary date.
                                                * * *.
                                               (d) The ``MMS-specified surety instrument'' shall be in
                                                the form specified by MMS instructions or approved by
                                                MMS. * * *.
                                               (e) All surety instruments must be in a form acceptable
                                                to MMS and must include such other specific requirements
                                                as MMS may require adequately to protect the
                                                Government's interests.
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                                                                  Sec.   208.15 Audits.
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208.15.......................................  Audits of the accounts and books of lessees, operators,    Audit process. See note.
                                                payors, and/or purchasers of royalty oil taken in kind
                                                may be made annually or at other such times as may be
                                                directed by MMS. * * *.
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                                           Directed Communications to Operators of Federal Oil and Gas Leases
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Contract-Directed............................  Wyoming Gas..............................................               3               3               9
                                               Natural Gas [Texas 8G and Gulf of Mexico (GOM)]..........               3             108             324
                                               GOM Oil..................................................               3              64             192

[[Page 76051]]

 
                                               SPR Fill Initiative: In January 2008, 70,000 barrels of                 3              17              51
                                                oil per day were directed toward the SPR. (Oil volumes
                                                directed towards the SPR have been halted as of July 1,
                                                2008. This will continue to be the case for the
                                                remainder of the year unless the price of oil drops
                                                below $75 bbl. Volumes which were being directed to the
                                                SPR have been redirected back to commercial GOM RIK oil
                                                sales. Thus, information collection responses will
                                                continue at the same level during and after the SPR
                                                initiative--the only difference will be under which
                                                program they fall.).
                                               Eligible refiners........................................               3              35             105
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                                  Offers, Financial Statements, and Surety Instruments for Sales of Royalty Oil and Gas
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Contract-Directed............................  Offers...................................................               1             903             903
                                               Financial Statements.....................................               1              20              20
                                               Surety Instruments.......................................              10              30             300
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    Total Burden........................................................................................  ..............           1,212           1,969
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Note: The ORA determined that the audit process is not covered by the PRA because MMS staff asks non-standard questions to resolve exceptions.
* Rounded up from 0.25.

    Estimated Annual Reporting and Recordkeeping ``Non-hour'' Cost 
Burden: We have identified no ``non-hour'' cost burdens.
    Public Disclosure Statement: The PRA (44 U.S.C. 3501 et seq.) 
provides that an agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays 
a currently valid OMB control number.
    Comments: Section 3506(c)(2)(A) of the PRA requires each agency to 
``* * * provide 60-day notice in the Federal Register * * * and 
otherwise consult with members of the public and affected agencies 
concerning each proposed collection of information * * *.'' Agencies 
must specifically solicit comments to: (a) Evaluate whether the 
proposed collection of information is necessary for the agency to 
perform its duties, including whether the information is useful; (b) 
evaluate the accuracy of the agency's estimate of the burden of the 
proposed collection of information; (c) enhance the quality, 
usefulness, and clarity of the information to be collected; and (d) 
minimize the burden on the respondents, including the use of automated 
collection techniques or other forms of information technology.
    To comply with the public consultation process, we published a 
notice in the Federal Register on April 9, 2008 (73 FR 19241), 
announcing that we would submit this ICR to OMB for approval. The 
notice provided the required 60-day comment period. We received no 
comments in response to the notice.
    If you wish to comment in response to this notice, you may send 
your comments to the offices listed under the ADDRESSES section of this 
notice. The OMB has up to 60 days to approve or disapprove the 
information collection but may respond after 30 days. Therefore, to 
ensure maximum consideration, OMB should receive public comments by 
January 14, 2009.
    Public Comment Policy: We will post all comments in response to 
this notice on our Web site at http://www.mrm.mms.gov/Laws_R_D/FRNotices/FRInfColl.htm. We will also make copies of the comments 
available for public review, including names and addresses of 
respondents, during regular business hours at our offices in Lakewood, 
Colorado. Before including your address, phone number, e-mail address, 
or other personal identifying information in your comment, you should 
be aware that your entire comment--including your personal identifying 
information--may be made publicly available at any time. While you can 
ask us in your comment to withhold your personal identifying 
information from public view, we cannot guarantee that we will be able 
to do so.
    MMS Information Collection Clearance Officer: Arlene Bajusz (202) 
208-7744.

    Dated: October 21, 2008.
Gregory J. Gould,
Associate Director for Minerals Revenue Management.
[FR Doc. E8-29523 Filed 12-12-08; 8:45 am]
BILLING CODE 4310-MR-P