[Federal Register Volume 76, Number 127 (Friday, July 1, 2011)]
[Rules and Regulations]
[Pages 38555-38562]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-16681]



[[Page 38555]]

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DEPARTMENT OF THE INTERIOR

Bureau of Ocean Energy Management, Regulation and Enforcement

30 CFR Part 250

Office of Natural Resources Revenue

30 CFR Parts 1204, 1206, 1218, 1241, and 1290

[Docket No. ONRR-2011-0015]
RIN 1012-AA06


Reorganization of Title 30, Code of Federal Regulations

AGENCY: Bureau of Ocean Energy Management, Regulation and Enforcement; 
Office of Natural Resources Revenue, Interior.

ACTION: Correcting amendment to final rule.

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SUMMARY: The Office of Natural Resources Revenue (ONRR) published a 
rule in the Federal Register on October 4, 2010, announcing that the 
Minerals Revenue Management Program (MRM) of the Bureau of Ocean Energy 
Management, Regulation, and Enforcement (BOEMRE) (formerly known as the 
Minerals Management Service (MMS)) was renamed the Office of Natural 
Resources Revenue by the Secretary of the Interior and was separated 
from BOEMRE and transferred to the supervision of the Assistant 
Secretary for Policy, Management and Budget. In the rule, ONRR also 
announced the reorganization of title 30 of the Code of Federal 
Regulations (30 CFR) resulting from the division of BOEMRE into two 
separate agencies. The rule removed certain regulations from chapter II 
in 30 CFR, which pertains to BOEMRE and recodified them in new chapter 
XII, which pertains to ONRR. This document corrects the rule published 
on October 4, 2010.

DATES: This rule is effective on July 1, 2011.

FOR FURTHER INFORMATION CONTACT: For questions on technical issues, 
contact Amy White, Petroleum Engineer, BOEMRE, Regulations & Standards 
Branch, 381 Elden Street, MS 4024, Herndon, VA 20171; telephone (703) 
787-1665; or e-mail [email protected], or Armand Southall, 
Regulatory Specialist, ONRR, PMB, P.O. Box 25165, MS 61013B, Denver, 
Colorado 80225-0165; telephone (303) 231-3221; or e-mail 
[email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    The rule published in the Federal Register on October 4, 2010 (75 
FR 61051), omitted a few technical corrections in 30 CFR parts 1204, 
1206, and 1218. This document corrects those omissions. As explained 
below, this document also clarifies BOEMRE's authority to utilize the 
civil penalty provisions of the Federal Oil and Gas Royalty Management 
Act of 1982, 30 U.S.C. 1701 et seq. (FOGRMA). This rule makes only non-
substantive, technical changes to existing regulations which have no 
effect on the rights, obligations, or interests of affected parties. 
Because (1) the provisions of this rule pertain solely to the 
organization and codification of existing rules and related technical 
corrections and (2) clarifying BOEMRE's FOGRMA civil penalty authority 
will avoid unnecessary confusion and challenge, the Department for good 
cause finds that notice and comment on this rule are unnecessary and 
contrary to the public interest under 5 U.S.C. 553(b)(B). Furthermore, 
because this document qualifies as a ``rule[ ] of agency organization, 
procedure, or practice,'' 5 U.S.C. 553(b)(A), this document, in any 
event, is exempt from the notice and comment requirements of 5 U.S.C. 
553(b).
    Because this rule makes no changes to the legal obligations or 
rights of non-governmental entities, the Department further finds that 
good cause exists under 5 U.S.C. 553(d)(3) to make this rule effective 
immediately upon publication in the Federal Register rather than 30 
days after publication.
    The October 4, 2010, Federal Register notice stated that the rule 
was a ``direct final rule.'' It noted that ``[t]his direct final rule 
does not make any substantive changes to the regulations or 
requirements in 30 CFR. It merely moves ONRR's current regulations to a 
new chapter XII in 30 CFR and makes technical corrections to position 
titles, agency names, and acronyms.'' As a non-substantive rule which 
simply moved the then-current regulations to a new chapter in the Code 
of Federal Regulations and made corresponding technical changes to 
terminology (such as changing the references to agency names), the 
October 4, 2010, rule qualifies as a ``rule[ ] of agency organization, 
procedure, or practice[.]'' 5 U.S.C. 553(b)(A). It was therefore exempt 
from the notice and comment provisions of 5 U.S.C. 553(b).
    Nevertheless, the agency requested comments on the reorganization 
of the rules. The comments received pointed out a few technical errors 
in the October 4, 2010, rule which are corrected in this rule.

II. Comments on the October 4, 2010, Rule

    The Department received comments on the rule from one member of the 
petroleum industry. These comments are analyzed and discussed below.

A. Specific Comments on 30 CFR Part 1206--Product Valuation, Subpart 
C--Federal Oil and Subpart D--Federal Gas

    1. Sec.  1206.108 Does ONRR protect information I provide?
    2. Sec. Sec.  1206.152(l) Valuation standards--unprocessed gas and 
1206.153(l) Valuation standards--processed gas.
    Public comments: The petroleum industry member commented that the 
regulations for the royalty valuation of oil, unprocessed gas, and 
processed gas production should be modified to ensure that the 
submitter's information held by both agencies continues to have the 
same level of protection from disclosure to third parties.
    Department of the Interior (DOI) Response: The ONRR, not BOEMRE, 
collects documents and information for royalty valuation purposes under 
section 103 of FOGRMA, 30 U.S.C. 1713, and its implementing 
regulations. Because ONRR, not BOEMRE, is responsible for keeping the 
documents it collects under that authority confidential to the extent 
permitted by law, there is no need to either add BOEMRE to ONRR 
regulations or amend BOEMRE regulations.

B. Specific Comments on 30 CFR Part 1218--Collection of Monies and 
Provision for Geothermal Credits and Incentives, Subpart D--Oil, Gas 
and Sulfur, Offshore

    1. Sec.  1218.152 Fishermen's Contingency Fund.
    Public comments: The petroleum industry member commented that the 
regulations must be modified to reflect the differing responsibilities 
for the two new agencies and the limits of ONRR's functions, and a 
corresponding change would need to be included in BOEMRE regulations 
remaining in chapter II.
    DOI Response: Under 50 CFR 296.3(b)(2), ONRR, representing the 
Secretary of the Interior, not BOEMRE, has the authority to issue 
assessments and collect payments for, and deposit payments into, the 
Fishermen's Contingency Fund. Therefore, the Department will not revise 
Sec.  1218.152.
    2. Sec.  1218.154 Effect of suspensions on royalty and rental.
    Public comments: The petroleum industry member commented that the

[[Page 38556]]

references in this section to the ``Regional Supervisor'' are to a 
BOEMRE official, not an ONRR official, and therefore should be properly 
identified.
    DOI Response: The Department agrees that under the suspension rules 
at 30 CFR 250.173(a), the ``Regional Supervisor'' is a BOEMRE official. 
Therefore, for clarification purposes, the Department will add 
``BOEMRE'' to the title of ``Regional Supervisor'' in Sec.  1218.154.

C. Specific Comments on 30 CFR Part 219--Distribution and Disbursement 
of Royalties, Rentals, and Bonuses, Subpart D--Oil and Gas, Offshore

    1. Sec.  219.416 How will the qualified OCS revenues be allocated 
to coastal political subdivisions within the Gulf producing States?
    2. Sec.  219.418 When will funds be disbursed to Gulf producing 
States and eligible coastal political subdivisions?
    Public comments: The petroleum industry member commented that 
Sec. Sec.  219.416 and 219.418 of the existing subpart D in 30 CFR part 
219 refer to revenue disbursement functions that should be ONRR's 
responsibility. Also, the petroleum industry member commented that, if 
the disbursement function will be the responsibility of ONRR, then this 
subpart must be amended to reflect the different responsibilities of 
BOEMRE and ONRR with regard to calculation and then disbursement of 
qualified OCS revenues to coastal states.
    DOI Response: The Department agrees that, for clarification 
purposes, the BOEMRE rules at 30 CFR 219.416 and 219.418 should 
distinguish between BOEMRE's and ONRR's responsibilities. At this time, 
BOEMRE is preparing proposed revisions to its regulations in 30 CFR 
part 219 and will address the commenter's concern in that separate 
rulemaking effort.

D. Specific Comments on 30 CFR Part 1220--Accounting Procedures for 
Determining Net Profit Share Payment for Outer Continental Shelf Oil 
and Gas Leases

    Public comments: The petroleum industry member commented that 
determination of how a net profit share will be calculated should be 
the responsibility of the leasing agency, BOEMRE, as opposed to the 
revenue collection agency, ONRR. Also, the petroleum industry member 
commented that the auditing function could be transferred to ONRR, and 
the rules should be clear as to how responsibility for audit functions 
will be divided.
    DOI Response: Under the Outer Continental Shelf Lands Act of 1953 
(OCSLA), 43 U.S.C. 1331 et seq., FOGRMA section 101(a) and (b), 30 
U.S.C. 1711(a) and (b), and Departmental delegations, including 
applicable Secretarial Orders, ONRR, representing the Secretary of the 
Interior, not BOEMRE, has the authority to determine the calculation 
and audit of the lessee's net profit share payments. Therefore, the 
Department will not revise 30 CFR part 1220.

E. Specific Comments on 30 CFR Part 1241--Penalties

    Public comments: The petroleum industry member commented that some 
of the activities for which ``knowing or willful'' penalties may be 
assessed under these regulations are BOEMRE functions that are not the 
responsibility of ONRR.
    DOI Response: FOGRMA section 109, 30 U.S.C. 1719, contains some 
civil penalty provisions, which pertain exclusively to royalty (and 
therefore come within ONRR's delegation of authority), others which 
pertain exclusively to leasing and operations (and therefore come 
within BOEMRE's delegation of authority), and still others which 
pertain to both (and therefore come within the delegations of authority 
for both ONRR and BOEMRE). The October 4, 2010, rule inadvertently 
transferred all of the implementing civil penalty regulations from 30 
CFR chapter II to chapter XII. This transfer could cause confusion 
regarding BOEMRE's ability to exercise authority possessed by its 
predecessor component within the former MMS, which BOEMRE currently 
possesses by delegation from the Secretary of the Interior.
    This rule corrects this situation by restoring to 30 CFR chapter II 
the civil penalty regulations, currently found in 30 CFR chapter XII 
part 1241, which pertain to offshore leasing and operations violations. 
The penalty provisions that pertain to both royalty and leasing and 
operations violations will be restored to BOEMRE rules, but also remain 
in ONRR rules. Thus, the provisions at 30 CFR 1241.50 through 1241.56, 
1241.60(a)(2) and (b)(1), 1241.61 through 1241.70, 1241.71(b), and 
1241.72 through 1241.80 will be essentially duplicated in the BOEMRE 
rules as 30 CFR 250.1450 through 250.1480, with appropriate technical 
changes such as changing the reference to ONRR in several section 
headings to BOEMRE and removing the reference to Indian leases in new 
Sec.  250.1451(a). The provisions that pertain exclusively to leasing 
and operations violations will be removed from ONRR rules and put into 
BOEMRE rules. Thus, the current 30 CFR 1241.60(a)(3), (b)(2), and 
(b)(3) will be removed from ONRR rules and recodified as 30 CFR 
250.1460(a)(2), (b)(2), and (b)(3), respectively. The current 30 CFR 
1241.60(a)(1), which deals exclusively with royalties and is solely 
within ONRR's delegated enforcement authority, will remain in the ONRR 
rules and will have no counterpart in the BOEMRE rules. Like 30 CFR 
1241.60(a)(1), 30 CFR 1241.71(a) is inapplicable to BOEMRE because 
violations of offshore leasing or operations orders or regulations do 
not result in underlying underpayments or unpaid debts (excepting civil 
penalties), which could incur interest. Therefore, 30 CFR 1241.71(a) 
will not have a counterpart carried over into BOEMRE regulations. 
Finally, conforming changes have been made to 30 CFR 250.1455(b)(2) and 
250.1463(b)(2) to reflect the fact that the bonding and financial 
solvency requirements of 30 CFR part 1243, subparts B and C, have been 
duplicated in the same subpart, subpart N of part 250, as the civil 
penalty regulations.
    This rule also duplicates in BOEMRE regulations certain provisions 
regarding bonding and demonstration of financial solvency which are 
currently in ONRR regulations. These provisions are found at 30 CFR 
part 1243, subparts B and C, and are duplicated, with minor conforming 
changes, in this rule in 30 CFR 250.1490 through 250.1497. They specify 
the process by which a party appealing a Notice of Non-Compliance or 
Notice of Civil Penalty may post a bond or demonstrate financial 
solvency to stay accrual of civil penalties under 30 CFR 250.1455(b)(2) 
or 250.1463(b)(2). These provisions also specify the methodology by 
which BOEMRE will evaluate the sufficiency of a bond amount or 
demonstration of financial solvency.
    These provisions are identical to those found at 30 CFR part 1243, 
subparts B and C, with one minor exception and several conforming 
changes. The exception is that the new 30 CFR 250.1496(c)(2)(i) is 
modified to require that payments be made by Electronic Funds Transfer 
(EFT). This change is made to conform to 30 CFR 250.126, which requires 
that fees paid to BOEMRE be made by EFT.
    Duplicating these provisions in BOEMRE regulations will clarify 
that these processes apply to appeals of BOEMRE civil penalty orders 
issued under FOGRMA. Duplicating these regulations is not a substantive 
change, but rather carries over to BOEMRE regulations authorities which 
already exist and are an integral part of the FOGRMA civil penalty 
system.

[[Page 38557]]

    This rule does not change the civil penalty authorities assigned to 
ONRR or BOEMRE. It does not change the procedures by which those 
authorities are implemented. It merely revises the references in the 
regulations to conform to those in current Secretarial delegations. It 
has no effect on the rights, obligations, or interests of affected 
parties. It affects solely the organization, procedure, and practice of 
the agencies.

III. Change of Reference to Director, Bureau of Indian Affairs

    The appeals regulations in 30 CFR part 1290 provide that appeals of 
decisions involving reporting and payment obligations for Indian leases 
are decided by the Deputy Commissioner of Indian Affairs. The position 
of Deputy Commissioner of Indian Affairs was abolished upon the 
creation of the position of Director, Bureau of Indian Affairs, on 
April 21, 2003. The role of deciding appeals has since been performed 
by the Director, Bureau of Indian Affairs. This rule recognizes this by 
changing the current reference to the Deputy Commissioner of Indian 
Affairs to the Director, Bureau of Indian Affairs. Changing this 
reference simply reflects an internal organizational change effected 8 
years ago within the Department.

List of Subjects

30 CFR Part 250

    Administrative practice and procedure, Continental shelf, 
Environmental impact statements, Environmental protection, Government 
contracts, Investigations, Mineral royalties, Oil and gas exploration, 
Penalties, Pipelines, Public lands--mineral resources, Public lands--
right-of-way, Reporting and recordkeeping requirements, Sulfur.

30 CFR Part 1204

    Accounting and auditing relief, Barrels of oil equivalent (BOE), 
Continental shelf, Federal lease, Marginal property, Mineral royalties, 
Royalty prepayment, Royalty relief.

30 CFR Part 1206

    Coal, Continental shelf, Geothermal energy, Government contracts, 
Indians--lands, Mineral royalties, Oil and gas exploration, Public 
lands--mineral resources, Reporting and recordkeeping requirements.

30 CFR Part 1218

    Continental shelf, Electronic funds transfers, Geothermal energy, 
Indians--lands, Mineral royalties, Oil and gas exploration, Public 
lands--mineral resources, Reporting and recordkeeping requirements.

30 CFR Part 1241

    Administrative practice and procedure, Continental Shelf, 
Government contracts, Indians--lands, Mineral royalties, Oil and gas 
exploration, Penalties, Public lands--mineral resources, Sulfur.

30 CFR Part 1290

    Administrative practice and procedure.

     Dated: June 28, 2011.
David J. Hayes,
Deputy Secretary for Department of the Interior.

    Accordingly, 30 CFR parts 250, 1204, 1206, 1218, 1241, and 1290 are 
corrected by making the following amendments:

CHAPTER II--BUREAU OF OCEAN ENERGY MANAGEMENT, REGULATION, AND 
ENFORCEMENT, DEPARTMENT OF THE INTERIOR

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

0
1. Revise the authority citation for part 250 to read as follows:

    Authority:  30 U.S.C. 1751; 31 U.S.C. 9701; 43 U.S.C. 1334.

Subpart N--Outer Continental Shelf Civil Penalties

0
2. Revise the heading of subpart N to read as set forth above.

0
3. Add the following undesignated center heading before Sec.  250.1400 
in the Table of Contents for part 250, to read as follows:

Outer Continental Shelf Lands Act Civil Penalties

0
4. Add the following undesignated center headings and Sec. Sec.  
250.1450 through 250.1456, 250.1460 through 250.1464, 250.1470 through 
250.1477, 250.1480, 250.1490 through 250.1491, and 250.1495 through 
250.1497 after Sec.  250.1409 in the Table of Contents for part 250 to 
read as follows:

Federal Oil and Gas Royalty Management Act Civil Penalties Definitions

250.1450 What definitions apply to this subpart?

Penalties After a Period To Correct

250.1451 What may the Bureau of Ocean Energy Management, Regulation, 
and Enforcement (BOEMRE) do if I violate a statute, regulation, 
order, or lease term relating to a Federal oil and gas lease?
250.1452 What if I correct the violation?
250.1453 What if I do not correct the violation?
250.1454 How may I request a hearing on the record on a Notice of 
Noncompliance?
250.1455 Does my request for a hearing on the record affect the 
penalties?
250.1456 May I request a hearing on the record regarding the amount 
of a civil penalty if I did not request a hearing on the Notice of 
Noncompliance?

Penalties Without a Period To Correct

250.1460 May I be subject to penalties without prior notice and an 
opportunity to correct?
250.1461 How will BOEMRE inform me of violations without a period to 
correct?
250.1462 How may I request a hearing on the record on a Notice of 
Noncompliance regarding violations without a period to correct?
250.1463 Does my request for a hearing on the record affect the 
penalties?
250.1464 May I request a hearing on the record regarding the amount 
of a civil penalty if I did not request a hearing on the Notice of 
Noncompliance?

General Provisions

250.1470 How does BOEMRE decide what the amount of the penalty 
should be?
250.1471 Does the penalty affect whether I owe interest?
250.1472 How will the Office of Hearings and Appeals conduct the 
hearing on the record?
250.1473 How may I appeal the Administrative Law Judge's decision?
250.1474 May I seek judicial review of the decision of the Interior 
Board of Land Appeals?
250.1475 When must I pay the penalty?
250.1476 Can BOEMRE reduce my penalty once it is assessed?
250.1477 How may BOEMRE collect the penalty?

Criminal Penalties

250.1480 May the United States criminally prosecute me for 
violations under Federal oil and gas leases?

Bonding Requirements

250.1490 What standards must my BOEMRE-specified surety instrument 
meet?
250.1491 How will BOEMRE determine the amount of my bond or other 
surety instrument?

Financial Solvency Requirements

250.1495 How do I demonstrate financial solvency?
250.1496 How will BOEMRE determine if I am financially solvent?
250.1497 When will BOEMRE monitor my financial solvency?

0
5. Add the following undesignated center heading before Sec.  250.1400 
in subpart N for part 250, to read as follows:

[[Page 38558]]

Outer Continental Shelf Lands Act Civil Penalties

0
6. Add the following undesignated center headings and Sec. Sec.  
250.1450 through 250.1456, 250.1460 through 250.1464, 250.1470 through 
250.1477, 250.1480, 250.1490 through 250.1491, and 250.1495 through 
250.1497 after Sec.  250.1409 in subpart N, to read as follows:

Federal Oil and Gas Royalty Management Act Civil Penalties Definitions


Sec.  250.1450  What definitions apply to this subpart?

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

Penalties After a Period To Correct


Sec.  250.1451  What may the Bureau of Ocean Energy Management, 
Regulation, and Enforcement (BOEMRE) do if I violate a statute, 
regulation, order, or lease term relating to a Federal oil and gas 
lease?

    (a) If we believe that you have not followed any requirement of a 
statute, regulation, order, or lease term for any Federal oil or gas 
lease, we may send you a Notice of Noncompliance informing you what the 
violation is and what you need to do to correct it to avoid civil 
penalties under 30 U.S.C. 1719(a) and (b).
    (b) We will serve the Notice of Noncompliance by registered mail or 
personal service using the most current address on file as maintained 
by the BOEMRE Leasing Office in your respective Region.


Sec.  250.1452  What if I correct the violation?

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


Sec.  250.1453  What if I do not correct the violation?

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


Sec.  250.1454  How may I request a hearing on the record on a Notice 
of Noncompliance?

    You may request a hearing on the record on a Notice of 
Noncompliance by filing a request within 30 days of the date you 
received the Notice of Noncompliance with the Hearings Division 
(Departmental), Office of Hearings and Appeals, U.S. Department of the 
Interior, 801 North Quincy Street, Arlington, Virginia 22203. You may 
do this regardless of whether you correct the violations identified in 
the Notice of Noncompliance.


Sec.  250.1455  Does my request for a hearing on the record affect the 
penalties?

    (a) If you do not correct the violations identified in the Notice 
of Noncompliance, the penalties will continue to accrue even if you 
request a hearing on the record.
    (b) You may petition the Hearings Division (Departmental) of the 
Office of Hearings and Appeals, to stay the accrual of penalties 
pending the hearing on the record and a decision by the Administrative 
Law Judge under Sec.  250.1472.
    (1) You must file your petition within 45 calendar days of 
receiving the Notice of Noncompliance.
    (2) To stay the accrual of penalties, you must post a bond or other 
surety instrument, or demonstrate financial solvency, using the 
standards and requirements as prescribed in 30 CFR 250.1490 through 
250.1497, for the principal amount of any unpaid amounts due that are 
the subject of the Notice of Noncompliance, including interest thereon, 
plus the amount of any penalties accrued before the date a stay becomes 
effective.
    (3) The Hearings Division will grant or deny the petition under 43 
CFR 4.21(b).


Sec.  250.1456  May I request a hearing on the record regarding the 
amount of a civil penalty if I did not request a hearing on the Notice 
of Noncompliance?

    (a) You may request a hearing on the record to challenge only the 
amount of a civil penalty when you receive a Notice of Civil Penalty, 
if you did not previously request a hearing on the record under Sec.  
250.1454. If you did not request a hearing on the record on the Notice 
of Noncompliance under Sec.  250.1454, you may not contest your 
underlying liability for civil penalties.
    (b) You must file your request within 10 days after you receive the 
Notice of Civil Penalty with the Hearings Division (Departmental), 
Office of Hearings and Appeals, U.S. Department of the Interior, 801 
North Quincy Street, Arlington, Virginia 22203.

Penalties Without a Period To Correct


Sec.  250.1460   May I be subject to penalties without prior notice and 
an opportunity to correct?

    The Federal Oil and Gas Royalty Management Act sets out several 
specific violations for which penalties accrue without an opportunity 
to first correct the violation.
    (a) Under 30 U.S.C. 1719(c), you may be subject to penalties of up 
to $10,000 per day per violation for each day the violation continues 
if you:
    (1) Fail or refuse to permit lawful entry, inspection, or audit; or
    (2) Knowingly or willfully fail or refuse to notify the Secretary, 
within 5 business days after any well begins production on a lease site 
or allocated to a lease site, or resumes production in the case of a 
well which has been off production for more than 90 days, of the date 
on which production has begun or resumed.
    (b) Under 30 U.S.C. 1719(d), you may be subject to civil penalties 
of up to $25,000 per day for each day each violation continues if you:
    (1) Knowingly or willfully prepare, maintain, or submit false, 
inaccurate, or misleading reports, notices, affidavits, records, data, 
or other written information;
    (2) Knowingly or willfully take or remove, transport, use or divert 
any oil or gas from any lease site without having valid legal authority 
to do so; or
    (3) Purchase, accept, sell, transport, or convey to another person, 
any oil or gas knowing or having reason to know that such oil or gas 
was stolen or unlawfully removed or diverted.


Sec.  250.1461  How will BOEMRE inform me of violations without a 
period to correct?

    We will inform you of any violation, without a period to correct, 
by issuing a Notice of Noncompliance and Civil Penalty explaining the 
violation, how to correct it, and the penalty assessment. We will serve 
the Notice of Noncompliance and Civil Penalty by registered mail or 
personal service using your address of record as specified under 
subpart H of part 1218.

[[Page 38559]]

Sec.  250.1462  How may I request a hearing on the record on a Notice 
of Noncompliance regarding violations without a period to correct?

    You may request a hearing on the record of a Notice of 
Noncompliance regarding violations without a period to correct by 
filing a request within 30 days after you receive the Notice of 
Noncompliance with the Hearings Division (Departmental), Office of 
Hearings and Appeals, U.S. Department of the Interior, 801 North Quincy 
Street, Arlington, Virginia 22203. You may do this regardless of 
whether you correct the violations identified in the Notice of 
Noncompliance.


Sec.  250.1463  Does my request for a hearing on the record affect the 
penalties?

    (a) If you do not correct the violations identified in the Notice 
of Noncompliance regarding violations without a period to correct, the 
penalties will continue to accrue even if you request a hearing on the 
record.
    (b) You may ask the Hearings Division (Departmental) to stay the 
accrual of penalties pending the hearing on the record and a decision 
by the Administrative Law Judge under Sec.  250.1472.
    (1) You must file your petition within 45 calendar days after you 
receive the Notice of Noncompliance.
    (2) To stay the accrual of penalties, you must post a bond or other 
surety instrument, or demonstrate financial solvency, using the 
standards and requirements as prescribed in 30 CFR 250.1490 through 
250.1497, for the principal amount of any unpaid amounts due that are 
the subject of the Notice of Noncompliance, including interest thereon, 
plus the amount of any penalties accrued before the date a stay becomes 
effective.
    (3) The Hearings Division will grant or deny the petition under 43 
CFR 4.21(b).


Sec.  250.1464  May I request a hearing on the record regarding the 
amount of a civil penalty if I did not request a hearing on the Notice 
of Noncompliance?

    (a) You may request a hearing on the record to challenge only the 
amount of a civil penalty when you receive a Notice of Civil Penalty 
regarding violations without a period to correct, if you did not 
previously request a hearing on the record under Sec.  250.1462. If you 
did not request a hearing on the record on the Notice of Noncompliance 
under Sec.  250.1462, you may not contest your underlying liability for 
civil penalties.
    (b) You must file your request within 10 days after you receive 
Notice of Civil Penalty with the Hearings Division (Departmental), 
Office of Hearings and Appeals, U.S. Department of the Interior, 801 
North Quincy, Arlington, Virginia 22203.

General Provisions


Sec.  250.1470  How does BOEMRE decide what the amount of the penalty 
should be?

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


Sec.  250.1471   Does the penalty affect whether I owe interest?

    If you do not pay the penalty by the date required under Sec.  
250.1475(d), BOEMRE will assess you late payment interest on the 
penalty amount at the same rate interest is assessed under 30 CFR 
1218.54.


Sec.  250.1472  How will the Office of Hearings and Appeals conduct the 
hearing on the record?

    If you request a hearing on the record under Sec. Sec.  250.1454, 
250.1456, 250.1462, or 250.1464, the hearing will be conducted by a 
Departmental Administrative Law Judge from the Office of Hearings and 
Appeals. After the hearing, the Administrative Law Judge will issue a 
decision in accordance with the evidence presented and applicable law.


Sec.  250.1473  How may I appeal the Administrative Law Judge's 
decision?

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


Sec.  250.1474  May I seek judicial review of the decision of the 
Interior Board of Land Appeals?

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


Sec.  250.1475   When must I pay the penalty?

    (a) You must pay the amount of the Notice of Civil Penalty issued 
under Sec. Sec.  250.1453 or 250.1461, if you do not request a hearing 
on the record under Sec. Sec.  250.1454, 250.1456, 250.1462, or 
250.1464
    (b) If you request a hearing on the record under Sec. Sec.  
250.1454, 250.1456, 250.1462, or 250.1464, but you do not appeal the 
determination of the Administrative Law Judge to the Interior Board of 
Land Appeals under Sec.  250.1473, you must pay the amount assessed by 
the Administrative Law Judge.
    (c) If you appeal the determination of the Administrative Law Judge 
to the Interior Board of Land Appeals, you must pay the amount assessed 
in the IBLA decision.
    (d) You must pay the penalty assessed within 40 days after:
    (1) You received the Notice of Civil Penalty, if you did not 
request a hearing on the record under either Sec. Sec.  250.1454, 
250.1456, 250.1462, or 250.1464;
    (2) You received an Administrative Law Judge's decision under Sec.  
250.1472, if you obtained a stay of the accrual of penalties pending 
the hearing on the record under Sec.  250.1455(b) or Sec.  250.1463(b) 
and did not appeal the Administrative Law Judge's determination to the 
IBLA under Sec.  250.1473;
    (3) You received an IBLA decision under Sec.  250.1473 if the IBLA 
continued the stay of accrual of penalties pending its decision and you 
did not seek judicial review of the IBLA's decision; or
    (4) A final non-appealable judgment of a court of competent 
jurisdiction is entered, if you sought judicial review of the IBLA's 
decision and the Department or the appropriate court suspended 
compliance with the IBLA's decision pending the adjudication of the 
case.
    (e) If you do not pay, that amount is subject to collection under 
the provisions of Sec.  250.1477.


Sec.  250.1476  Can BOEMRE reduce my penalty once it is assessed?

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


Sec.  250.1477  How may BOEMRE collect the penalty?

    (a) BOEMRE may use all available means to collect the penalty 
including, but not limited to:
    (1) Requiring the lease surety, for amounts owed by lessees, to pay 
the penalty;
    (2) Deducting the amount of the penalty from any sums the United 
States owes to you; and
    (3) Using judicial process to compel your payment under 30 U.S.C. 
1719(k).
    (b) If the Department uses judicial process, or if you seek 
judicial review under Sec.  250.1474 and the court upholds assessment 
of a penalty, the court shall have jurisdiction to award the amount 
assessed plus interest assessed from the date of the expiration of the 
90-day period referred to in Sec.  250.1474. The amount of any penalty, 
as finally determined, may be deducted from any sum owing to you by the 
United States.

[[Page 38560]]

Criminal Penalties


Sec.  250.1480  May the United States criminally prosecute me for 
violations under Federal oil and gas leases?

    If you commit an act for which a civil penalty is provided at 30 
U.S.C. 1719(d) and Sec.  250.1460(b), the United States may pursue 
criminal penalties as provided at 30 U.S.C. 1720, in addition to any 
authority for prosecution under other statutes.

Bonding Requirements


Sec.  250.1490  What standards must my BOEMRE-specified surety 
instrument meet?

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


Sec.  250.1491  How will BOEMRE determine the amount of my bond or 
other surety instrument?

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

Financial Solvency Requirements


Sec.  250.1495  How do I demonstrate financial solvency?

    (a) To demonstrate financial solvency under this part, you must 
submit an audited consolidated balance sheet, and, if requested by the 
BOEMRE bond-approving officer, up to 3 years of tax returns to BOEMRE 
using the U.S. Postal Service, private delivery, courier, or overnight 
delivery at:
    (1) For Alaska OCS: Jeffrey Walker, RS/FO, BOEMRE Alaska OCS 
Region, 3801 Centerpoint Drive, Suite 500, Anchorage, AK 99503-5823, 
jeffrey,[email protected], (907) 334-5300.
    (2) For Gulf of Mexico and Atlantic OCS: Joshua Joyce, Regional 
FARM Program Coordinator, BOEMRE Gulf of Mexico OCS Region, 1201 
Elmwood Park Boulevard New Orleans, LA 70123-2394, 
[email protected], (504) 736-2779
    (3) For Pacific OCS: Jaron Ming, Lead Leasing Specialist, BOEMRE 
Pacific OCS Region, 770 Paseo Camarillo, 2nd Floor, Camarillo, CA 
93010, [email protected], (805) 389-7514
    (b) You must submit an audited consolidated balance sheet annually, 
and, if requested, additional annual tax returns on the date BOEMRE 
first determined that you demonstrated financial solvency as long as 
you have active appeals, or whenever BOEMRE requests.
    (c) If you demonstrate financial solvency in the current calendar 
year, you are not required to redemonstrate financial solvency for new 
appeals of orders during that calendar year unless you file for 
protection under any provision of the U.S. Bankruptcy Code (Title 11 of 
the United States Code), or BOEMRE notifies you that you must 
redemonstrate financial solvency.


Sec.  250.1496  How will BOEMRE determine if I am financially solvent?

    (a) The BOEMRE bond-approving officer will determine your financial 
solvency by examining your total net worth, including, as appropriate, 
the net worth of your affiliated entities.
    (b) If your net worth, minus the amount we would require as surety 
under 30 CFR 250.1490 and 250.1491 for all orders you have appealed is 
greater than $300 million, you are presumptively deemed financially 
solvent, and we will not require you to post a bond or other surety 
instrument.
    (c) If your net worth, minus the amount we would require as surety 
under 30 CFR 250.1490 and 250.1491 for all orders you have appealed is 
less than $300 million, you must submit the following to BOEMRE by one 
of the methods in Sec.  250.1495(a):
    (1) A written request asking us to consult a business-information, 
or credit-reporting service or program to determine your financial 
solvency; and
    (2) A nonrefundable $50 processing fee:
    (i) You must pay the processing fee to us following the 
requirements for making payments found in 30 CFR 250.126. You are 
required to use Electronic Funds Transfer (EFT) for these payments;
    (ii) You must submit the fee with your request under paragraph 
(c)(1) of this section, and then annually on the date we first 
determined that you demonstrated financial solvency, as long as you are 
not able to demonstrate financial solvency under paragraph (a) of this 
section and you have active appeals.
    (d) If you request that we consult a business-information or 
credit-reporting service or program under paragraph (c) of this 
section:
    (1) We will use criteria similar to that which a potential creditor 
would use to lend an amount equal to the bond or other surety 
instrument we would require under 30 CFR 250.1490 and 250.1491;
    (2) For us to consider you financially solvent, the business-
information or credit-reporting service or program must demonstrate 
your degree of risk as low to moderate:
    (i) If our bond-approving officer determines that the business-
information or credit-reporting service or program information 
demonstrates your financial solvency to our satisfaction, our bond-
approving officer will not require you to post a bond or other surety 
instrument under 30 CFR 250.1490 and 250.1491;
    (ii) If our bond-approving officer determines that the business-
information or credit-reporting service or program information does not 
demonstrate your financial solvency to our satisfaction, our bond-
approving officer will require you to post a bond or other surety 
instrument under 30 CFR

[[Page 38561]]

250.1490 and 250.1491 or pay the obligation.


Sec.  250.1497  When will BOEMRE monitor my financial solvency?

    (a) If you are presumptively financially solvent under Sec.  
250.1496(b), BOEMRE will determine your net worth as described under 
Sec. Sec.  250.1496(b) and (c) to evaluate your financial solvency at 
least annually on the date we first determined that you demonstrated 
financial solvency as long as you have active appeals and each time you 
appeal a new order.
    (b) If you ask us to consult a business-information or credit-
reporting service or program under Sec.  250.1496(c), we will consult a 
service or program annually as long as you have active appeals and each 
time you appeal a new order.
    (c) If our bond-approving officer determines that you are no longer 
financially solvent, you must post a bond or other BOEMRE-specified 
surety instrument under Sec. Sec.  250.1490 and 250.1491.

CHAPTER XII--OFFICE OF NATURAL RESOURCES REVENUE, DEPARTMENT OF THE 
INTERIOR

PART 1204--ALTERNATIVES FOR MARGINAL PROPERTIES

0
7. The authority citation for part 1204 continues to read as follows:

    Authority:  30 U.S.C. 1726.

0
8. Amend part 1204 as follows:

                      Amendment Table for Part 1204
------------------------------------------------------------------------
                                    By removing the    And adding in its
              Amend                  reference to:          place:
------------------------------------------------------------------------
Sec.   1204.207(b)..............  Sec.   204.208....  Sec.   1204.208.
Sec.   1204.207(b)..............  MMS...............  ONRR.
------------------------------------------------------------------------

PART 1206--PRODUCT VALUATION

0
9. The authority citation for part 1206 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.; 1801 et seq.

0
10. Amend part 1206 as follows:

                      Amendment Table for Part 1206
------------------------------------------------------------------------
                                    By removing the    And adding in its
              Amend                  reference to:          place:
------------------------------------------------------------------------
Sec.   1206.259(e)(1) (twice)...  MMS...............  ONRR.
Sec.   1206.259(e)(2)...........  MMS...............  ONRR.
------------------------------------------------------------------------

PART 1218--COLLECTION OF MONIES AND PROVISION FOR GEOTHERMAL 
CREDITS AND INCENTIVES [CORRECTION]

0
11. The authority citation for part 1218 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.

0
12. Amend part 1218 as follows:

                      Amendment Table for Part 1218
------------------------------------------------------------------------
                                    By removing the    And adding in its
              Amend                  reference to:          place:
------------------------------------------------------------------------
Sec.   1218.154(a)..............  Regional            BOEMRE Regional
                                   Supervisor.         Supervisor.
Sec.   1218.154(b)..............  Regional            BOEMRE Regional
                                   Supervisor.         Supervisor.
------------------------------------------------------------------------

PART 1241--PENALTIES

0
13. The authority citation for part 1241 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.; 43 
U.S.C. 1301 et seq., 1331 et seq.; 1801 et seq.

0
14. Amend Sec.  1241.60 as follows:
0
a. Remove paragraph (a)(3).
0
b. Remove ''; or'' after the word ``audit'' and add, in its place, a 
period in paragraph (a)(2).
0
c. Add ``or'' after ``lease;'' in paragraph (a)(1).
0
d. Revise paragraph (b) to read as follows:


Sec.  1241.60  May I be subject to penalties without prior notice and 
an opportunity to correct?

    (b) Under 30 U.S.C. 1719(d), you may be subject to civil penalties 
of up to $25,000 per day for each day each violation continues if you 
knowingly or willfully prepare, maintain, or submit false, inaccurate, 
or misleading reports, notices, affidavits, records, data, or other 
written information.
* * * * *

PART 1290--APPEAL PROCEDURES FOR OFFICE OF NATURAL RESOURCES 
REVENUE

0
16. The authority citation for part 1290 is revised to read as follows:

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

0
17. Amend part 1290 as follows:

[[Page 38562]]



                      Amendment Table for Part 1290
------------------------------------------------------------------------
                                    By removing the    And adding in its
              Amend                  reference to:          place:
------------------------------------------------------------------------
Sec.   1290.105(g)..............  Deputy              Director, Bureau
                                   Commissioner of     of Indian
                                   Indian Affairs.     Affairs.
Sec.   1290.108.................  Deputy              Director, Bureau
                                   Commissioner of     of Indian
                                   Indian Affairs.     Affairs.
Sec.   1290.110(a)(1)...........  Deputy              Director, Bureau
                                   Commissioner of     of Indian
                                   Indian Affairs.     Affairs.
------------------------------------------------------------------------

[FR Doc. 2011-16681 Filed 6-30-11; 8:45 am]
BILLING CODE 4310-MR-P