[Federal Register Volume 76, Number 20 (Monday, January 31, 2011)]
[Proposed Rules]
[Pages 5317-5319]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-2103]


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

DEPARTMENT OF THE INTERIOR

Office of Natural Resources Revenue

30 CFR Part 1206

[Docket No. BOEM-2010-0062]


Notice of Intent To Establish an Indian Oil Valuation Negotiated 
Rulemaking Committee

AGENCY: Office of Natural Resources Revenue (ONRR), Interior.

ACTION: Notice of intent; request for nominees and comments.

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

SUMMARY: The Office of Natural Resources Revenue (ONRR) is announcing 
its intent to establish an Indian Oil Valuation Negotiated Rulemaking 
Committee (Committee). The Committee will develop specific 
recommendations regarding proposed revisions to the existing 
regulations for oil production from Indian leases, especially the major 
portion valuation requirement. The Committee will include 
representatives of parties who would be affected by a final rule. The 
ONRR solicits comments on this initiative and requests interested 
parties to nominate representatives for membership on the Committee.

DATES: Submit nominations to the Committee or written comments on this 
notice on or before March 2, 2011

ADDRESSES: You may submit nominations to the Committee or comments on 
this notice by any of the following methods.
     Electronically go to http://www.regulations.gov. In the 
entry titled ``Enter Keyword or ID,'' enter BOEM-2010-0062, and then 
click search. Follow the instructions to submit public comments or 
nominations. The ONRR will post all comments.
     Mail comments or nominations to Hyla Hurst, Regulatory 
Specialist, Office of Natural Resources Revenue, P.O. Box 25165, MS 
61013B, Denver, Colorado 80225. Please reference the Docket No. BOEM-
2010-0062 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 
the Docket No. BOEM-2010-0062 in your comments.

FOR FURTHER INFORMATION CONTACT: John Barder, Western Audit and 
Compliance Management, ONRR; telephone (303) 231-3702; fax (303) 231-
3473; e-mail to [email protected]. Mailing address: Office of 
Natural Resources Revenue, Western Audit and Compliance Management, 
Denver B, P.O. Box 25165, MS 62220B, Denver, Colorado 80225-0165.

SUPPLEMENTARY INFORMATION:

I. Background

    The existing rule for valuation of oil produced from Indian leases, 
codified at 30 CFR part 1206, subpart B, was published on January 15, 
1988 (53 FR 1184), effective March 1, 1988. Since then, many changes 
have occurred in the oil market. Also, concerns have arisen about the 
need for revised valuation methodologies to address paragraph 3(c) of 
standard Indian oil and gas leases, such as the major portion analysis 
requirement for valuation of oil production from Indian leases.
    The Minerals Revenue Management (MRM) division of the Minerals 
Management Service (MMS), now ONRR, published proposed rules for Indian 
oil valuation in February 1998 (63 FR 7089) and in January 2000 (65 FR 
403). Each of these proposed rules was subsequently withdrawn because 
of market changes and the passage of time. In addition, eight public 
meetings were held during 2005 to consult with Indian tribes and 
individual Indian mineral owners and to obtain information from 
interested parties. Then a third proposed rule was published in 
February 2006 (71 FR 7453). Tribal and industry commenters on the 2006 
proposed rule did not agree on most issues regarding oil valuation, and 
none of the commenters supported the major portion provisions.
    The Royalty Policy Committee's Indian Oil Valuation Subcommittee 
evaluated the 2006 proposed rule but was unable to reach consensus 
about how the Department should proceed. Thus, MRM (now ONRR) decided 
to make only technical amendments to the existing Indian oil valuation 
regulations and to convene a negotiated rulemaking committee to make 
specific recommendations regarding the major portion provision. A final 
rule was published on December 17, 2007 (72 FR 71231), addressing the 
technical amendments. After publication of the final rule, MRM (now 
ONRR) started the process of forming the Indian Oil Valuation 
Negotiated Rulemaking Committee. However, the process was delayed 
because of the change in Administration. On June 8, 2010, the Secretary 
of the Interior signed a decision memorandum giving approval to go 
forward with establishing the Indian Oil Valuation Negotiated 
Rulemaking Committee.

II. Statutory Provisions

    The Negotiated Rulemaking Act of 1996 (NRA) (5 U.S.C 561 et seq.); 
the Federal Advisory Committee Act (FACA) (5 U.S.C. Appendix 2, section 
1 et seq.); the Indian Mineral Development Act of 1982 (25 U.S.C. 2101-
2108); the Indian Mineral Leasing Act of 1938 (25 U.S.C. 396a-g); the 
Act of March 3, 1909 (25 U.S.C. 396); 25 CFR parts 211, 212; and 225; 
30 CFR part 1206; and Indian oil and gas lease and agreement terms.

III. The Committee and Its Process

    In a negotiated rulemaking, the provisions for a proposed rule are 
developed by a committee composed of representatives of government and 
the interests that will be significantly affected by the rule. 
Decisions are made by ``consensus.''

    ``[C]onsensus'' means unanimous concurrence among the interests 
represented on a negotiated rulemaking committee established under 
this subchapter, unless such committee (A) agrees to define such 
term to mean a general but not unanimous concurrence; or (B) agrees 
upon another specified definition.

5 U.S.C. 562(2) (A) and (B).

    The negotiated rulemaking process is initiated by the agency's 
identification of interests potentially affected by the rulemaking 
under consideration. By this notice, ONRR is soliciting comments on 
this action.
    Following receipt of nominations or comments, ONRR will establish 
the Negotiated Rulemaking Committee representing the identified 
interests to develop the provisions of a proposed rule. The ONRR will 
be a member of the Committee to represent the Federal Government's 
statutory mission. The Committee will be chaired by a facilitator. 
After the Committee reaches consensus on the provisions of a

[[Page 5318]]

proposed rule, as discussed in more detail below, ONRR will develop a 
proposed rule to be published in the Federal Register.
    Under 30 U.S.C. 563, the head of the agency is required to 
determine that the use of the negotiated rulemaking procedure is in the 
public interest. In making such a determination, the agency head must 
consider certain factors. Taking these factors into account, ONRR has 
determined that a negotiated rulemaking is in the public interest 
because:
    1. A rule is needed. Royalty payors have considerable difficulty in 
complying with the current regulations.
    2. A limited number of identifiable interests will be significantly 
affected by the rule. Such interests are oil and gas companies who 
produce oil and pay royalties on Indian leases, and Indian tribes and 
individual Indian mineral owners who receive royalties from oil 
produced from Indian leases located on their lands.
    3. There is a reasonable likelihood that the Committee can be 
convened with a balanced representation of persons who can adequately 
represent the interests discussed in item 2 above and who are willing 
to negotiate in good faith to attempt to reach a consensus on 
provisions of a proposed rule.
    4. There is a reasonable likelihood that the Committee will reach 
consensus on a proposed rule within a fixed period of time. This 
objective was accomplished with the current Indian gas valuation 
regulations, which added certainty and simplicity through the 
negotiated rulemaking process.
    5. The use of negotiated rulemaking will not unreasonably delay the 
development of a proposed rule because time limits will be placed on 
the negotiation. We anticipate that negotiation will expedite a 
proposed rule and ultimately the acceptance of a final rule.
    6. The ONRR is making a commitment to ensure that the Committee has 
sufficient resources to complete its work in a timely fashion.
    7. The ONRR, to the maximum extent possible and consistent with the 
legal obligations of the agency, will use consensus of the Committee as 
the basis for a proposed rule for public notice and comment.

IV. Negotiated Rulemaking Procedures

    In compliance with FACA and NRA, ONRR will use the following 
procedures and guidelines for this negotiated rulemaking. The ONRR may 
modify them in response to comments received on this notice or during 
the negotiation process.

A. Committee Formation

    The Committee will be formed and operated in full compliance with 
the requirements of FACA and NRA and specifically under the guidelines 
of its charter.

B. Interests Involved

    The ONRR intends to ensure full and adequate representation of 
those interests that are expected to be significantly affected by the 
proposed rule. Under 30 U.S.C. 562(5), ```interest' means with respect 
to an issue or matter, multiple parties which have a similar point of 
view or which are likely to be affected in a similar manner.'' As 
discussed above, ONRR believes the interests significantly affected are 
oil and gas companies who produce oil and pay royalties on Indian 
leases, and Indian tribes and individual Indian mineral owners who 
receive royalties from oil produced from Indian leases located on their 
lands.

C. Members

    The Committee should not exceed 25 members, and ONRR prefers 15. 
The ONRR will provide at least two members plus a facilitator. The 
facilitator will not count against the membership and will not be a 
voting member.
    Responsibility for expenses is stated under 30 U.S.C. 568(c) as 
follows:

    Members of a negotiated rulemaking committee shall be 
responsible for their own expenses of participation in such 
committee, except that an agency may, in accordance with section 
7(d) of the Federal Advisory Committee Act, pay for a member's 
reasonable travel and per diem expenses, expenses to obtain 
technical assistance, and a reasonable rate of compensation, if--
    (1) such member certifies a lack of adequate financial resources 
to participate in the committee; and
    (2) the agency determines that such member's participation in 
the committee is necessary to assure an adequate representation of 
the member's interest.

    Therefore, ONRR commits to pay the travel and per diem expenses of 
Committee members if appropriate under the NRA and Federal travel 
regulations.

D. Request for Nominations

    The ONRR solicits nominations for appointment to membership on the 
Committee. Members can be individuals or representatives of 
organizations. An organization should identify the individual who will 
be its representative.
    Committee members need to have authorization to negotiate on behalf 
of their interests and be willing to negotiate in good faith. The ONRR 
interprets good faith to include a willingness to (1) bring all issues 
to the table; and (2) not to discuss the issues in other forums. Good 
faith also includes a willingness to move away from taking adversarial 
positions and instead to explore openly all relevant and productive 
ideas that may emerge from the discussion of the Committee.
    Authorization for each application or nomination must include:
    1. The name of the applicant or nominee and a description of the 
interests such person will represent;
    2. A description of the person's qualifications and expertise 
regarding those interests;
    3. A statement whether the participant will be seeking agency 
resources to participate on the Committee; and
    4. A written commitment of the applicant or nominee to actively 
participate in good faith in the negotiated rulemaking and keep all 
issues at the table.

E. Tentative Schedule

    If ONRR publishes a notice establishing the Committee, after 
considering comments and applications submitted in response to this 
notice, it will publish a list of proposed members as a result of the 
nominations received from this notice, a solicitation for comments on 
the proposed membership of the Committee, and an explanation of how a 
person may apply or nominate another person for membership. The notice 
establishing the Committee will also include a proposed agenda and 
schedule for completing the work of the Committee, including a target 
date for publication by the agency of a proposed rule for notice and 
comment. Further, the notice establishing the Committee will include a 
description of administrative support for the committee to be provided 
by ONRR, including technical assistance. The Committee will agree on 
dates, times, and locations of meetings. The ONRR plans to terminate 
the Committee if it does not reach consensus on the provisions of a 
proposed rule within 24 months of the first meeting. The Committee may 
end earlier upon the promulgation of the final rule under 
consideration, or if the ONRR, after consulting with the Committee, or 
the Committee itself specifies an earlier termination date.

V. Request for Nominations and Comments

    To comply with negotiated rulemaking procedures, ONRR invites 
written comments on this initiative and

[[Page 5319]]

nominations for the negotiated rulemaking Committee. Written comments 
are specifically requested on the suitability of using the negotiated 
rulemaking procedure to develop a proposed valuation rule for oil 
production from Indian leases. Nominations are for all interests that 
could be affected by an Indian oil valuation rulemaking and must comply 
with paragraph IV. D., Request for Nominations, of this notice. All 
nominations and written comments must be sent to an appropriate address 
as listed in the ADDRESSES section of this notice.

Certification

    For the above reasons, I hereby certify that the Indian Oil 
Valuation Negotiated Rulemaking Committee is in the public interest.

    Dated: January 25, 2011.
Ken Salazar,
Secretary, Department of the Interior.
[FR Doc. 2011-2103 Filed 1-28-11; 8:45 am]
BILLING CODE 4310-MR-P