[Federal Register Volume 76, Number 236 (Thursday, December 8, 2011)]
[Notices]
[Pages 76746-76757]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-31496]


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DEPARTMENT OF THE INTERIOR

Office of Natural Resources Revenue

[Docket No. ONRR-2011-0021]


Agency Information Collection Activities: Proposed Collection, 
Comment Request

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

ACTION: Notice of an extension of a currently approved information 
collection.

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

SUMMARY: To comply with the Paperwork Reduction Act of 1995 (PRA), we 
are inviting comments on a collection of information requests that we 
will submit to the Office of Management and Budget (OMB) for review and 
approval. The OMB formerly approved this information collection request 
(ICR) under OMB Control Number 1010-0103. After the Secretary of the 
Department of the Interior established ONRR (the former Minerals 
Revenue Management, a program under the Minerals Management Service) on 
October 1, 2010, OMB approved a new series number for ONRR and 
renumbered our ICRs. This ICR covers the paperwork requirements in the 
regulations under title 30, Code of Federal Regulations (CFR), parts 
1202, 1206, and 1207 (previously 30 CFR parts 202, 206, and 207). The 
revised title of this ICR is ``30 CFR Parts 1202, 1206, and 1207, 
Indian Oil and Gas Valuation.'' There are five forms associated with 
this information collection.

DATES: Submit written comments on or before January 9, 2012.

ADDRESSES: You may submit comments on this ICR to ONRR by any of the 
following methods. Please use ``ICR 1012-0002'' as an identifier in 
your comment.
     Electronically go to http://www.regulations.gov. In the 
entry titled ``Enter Keyword or ID,'' enter ``ONRR-2011-0021'' and then 
click ``Search.'' Follow the instructions to submit public comments. 
The ONRR will post all comments.
     Mail comments to Armand Southall, Regulatory Specialist, 
Office of Natural Resources, P.O. Box 25165, MS 64000A, Denver, 
Colorado 80225. Please reference ICR 1012-0002 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 1012-0002 in your comments.

FOR FURTHER INFORMATION CONTACT: Armand Southall, telephone (303) 231-
3221, or email [email protected]. You may also contact Mr. 
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. You may also review the information 
collection online at http://www.reginfo.gov/public/PRAMain.

SUPPLEMENTARY INFORMATION: 
    Title: 30 CFR Parts 1202, 1206, and 1207, Indian Oil and Gas 
Valuation.
    OMB Control Number: 1012-0002.
    Bureau Form Number: Forms MMS-4109, MMS-4110, MMS-4295, MMS-4410, 
and MMS-4411.

    Note: The ONRR will publish a rule updating our form numbers to 
Forms ONRR-4109, ONRR-4110, ONRR-4295, ONRR-4410, and ONRR-4411.

    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). The Secretary is required 
by various laws to manage mineral resource production on Federal and 
Indian lands and the OCS, collect the royalties and other mineral 
revenues due, and distribute the funds in accordance with those laws. 
Applicable laws pertaining to mineral leases on Federal and Indian 
lands and the OCS are posted on our Web site at http://www.onrr.gov/Laws_R_D/PublicLawsAMR.htm.

[[Page 76747]]

    The Secretary also has a trust responsibility to manage Indian 
lands and seek advice and information from Indian beneficiaries. The 
ONRR performs the minerals revenue management functions and assists the 
Secretary in carrying out the Department's trust responsibility for 
Indian lands. Indian Tribes and individual Indian mineral owners 
receive all royalties generated from their lands. Determining product 
valuation is essential to ensure that Indian Tribes and individual 
Indian mineral owners receive payment on the full value of the minerals 
removed from their lands. Failure to collect the data described in this 
information collection could result in the undervaluation of leased 
minerals on Indian lands.
    Effective October 1, 2010, ONRR reorganized and transferred their 
regulations from chapter II to chapter XII in title 30 of the Code of 
Federal Regulations (CFR), resulting in a change in our citations. 
Information collections covered in this ICR are found at 30 CFR part 
1202, subparts C and J, which pertain to royalties; part 1206, subparts 
B and E, which govern the valuation of oil and gas produced from leases 
on Indian lands; and part 1207, which pertains to recordkeeping. All 
data reported is subject to subsequent audit and adjustment.

Indian Oil

    Regulations at 30 CFR part 1206, subpart B, govern the valuation 
for royalty purposes of all oil produced from Indian oil and gas leases 
(Tribal and allotted), except leases on the Osage Indian Reservation, 
and are consistent with mineral leasing laws, other applicable laws, 
and lease terms. Generally, the regulations provide that lessees 
determine the value of oil based upon the higher of (1) The gross 
proceeds under an arm's-length contract; or (2) major portion analysis. 
The value determined by the lessee may be eligible for a transportation 
allowance.
    From information collected on Form MMS-4110, Oil Transportation 
Allowance Report, ONRR and Tribal audit personnel evaluate (1) Whether 
lessee-reported transportation allowances are within regulatory 
allowance limitations and calculated in accordance with applicable 
regulations; and (2) whether the lessees reported and paid the proper 
amount of royalties.

Indian Gas

    Regulations at 30 CFR part 1206, subpart E, govern the valuation 
for royalty purposes of natural gas produced from Indian oil and gas 
leases (Tribal and allotted). The regulations apply to all gas 
production from Indian oil and gas leases, except leases on the Osage 
Indian Reservation.
    Most Indian leases contain the requirement to perform accounting 
for comparison (dual accounting) for gas produced from the lease. 
Lessees must elect to perform actual dual accounting as defined in 30 
CFR 1206.176 or alternative dual accounting as defined in 30 CFR 
1206.173. Lessees use Form MMS-4410, Accounting for Comparison [Dual 
Accounting], to certify that dual accounting is not required on an 
Indian lease or to make an election for actual or alternative dual 
accounting for Indian leases.
    The regulations require lessees to submit Form MMS-4411, Safety Net 
Report, when gas production from an Indian oil or gas lease is sold 
beyond the first index pricing point. The safety net calculation 
establishes the minimum value, for royalty purposes, of natural gas 
production from Indian oil and gas leases. This reporting requirement 
ensures that Indian lessors receive all royalties due and aids ONRR 
compliance efforts.
    From information collected on Form MMS-4295, Gas Transportation 
Allowance Report, ONRR and Tribal audit personnel evaluate (1) Whether 
lessee-reported transportation allowances are within regulatory 
allowance limitations and calculated in accordance with applicable 
regulations; and (2) whether the lessees reported and paid the proper 
amount of royalties.
    From information collected on Form MMS-4109, Gas Processing 
Allowance Summary Report, ONRR and Tribal audit personnel evaluate (1) 
whether lessee-reported processing allowances are within regulatory 
allowance limitations and calculated in accordance with applicable 
regulations; and (2) whether the lessees reported and paid the proper 
amount of royalties.

Indian Oil and Gas

    Form MMS-4393, Request to Exceed Regulatory Allowance Limitation, 
is used for both Federal and Indian leases. Most of the burden hours 
are incurred on Federal leases; therefore, the form is approved under 
ICR 1010-0136, presently 1012-0005, pertaining to Federal oil and gas 
leases. However, we include a discussion of the form in this ICR, as 
well as the burden hours for Indian leases. To request permission to 
exceed a regulatory allowance limit, lessees must (1) submit a letter 
to ONRR explaining why a higher allowance limit is necessary; and (2) 
provide supporting documentation, including a completed Form MMS-4393. 
This form provides ONRR with the data necessary to make a decision 
whether to approve or deny the request and track deductions on royalty 
reports.

OMB Approval

    The ONRR will request OMB's approval to continue to collect this 
information. Not collecting this information would limit the 
Secretary's ability to discharge fiduciary duties and may also result 
in the inability to confirm the accurate royalty value to Indian Tribes 
and individual Indian mineral owners. ONRR protects proprietary 
information it receives, and does not collect items of a sensitive 
nature. The requirement to respond is mandatory for Form MMS-4410, 
Accounting for Comparison [Dual Accounting], and Form MMS-4411, Safety 
Net Report, under certain circumstances. And, the lessees are required 
to submit Forms MMS-4109, MMS-4110, and MMS-4295 in order to obtain a 
benefit.
    Frequency of Response: Annually and on occasion.
    Estimated Number and Description of Respondents: 148 Indian 
lessees.
    Estimated Annual Reporting and Recordkeeping ``Hour'' Burden: 1,309 
hours.
    We have not included in our estimates certain requirements 
performed in the normal course of business and considered usual and 
customary. The following chart shows the estimated burden hours by CFR 
section and paragraph:

[[Page 76748]]



                                   Respondents' Estimated Annual Burden Hours
----------------------------------------------------------------------------------------------------------------
                                                                                      Average
                                         Reporting and                               number of     Annual burden
              30 CFR                     recordkeeping           Hour burden          annual           hours
                                          requirement                                responses
----------------------------------------------------------------------------------------------------------------
                                              PART 1202--ROYALTIES
                                        Subpart C--Federal and Indian Oil
----------------------------------------------------------------------------------------------------------------
1202.101.........................  Standards for reporting    Burden covered under OMB Control Number 1012-0004
                                    and paying royalties.      (expires 12/31/2012). Burden covered under Sec.
                                   Oil volumes are to be                           1210.52.
                                    reported in barrels of
                                    clean oil of 42
                                    standard U.S. gallons
                                    (231 cubic inches each)
                                    at 60 [deg]F.
----------------------------------------------------------------------------------------------------------------
                                  Subpart J--Gas Production From Indian Leases
----------------------------------------------------------------------------------------------------------------
1202.551(b)......................  How do I determine the     Burden covered under OMB Control Number 1012-0004.
                                    volume of production             Burden covered under Sec.   1210.52.
                                    for which I must pay
                                    royalty if my lease is
                                    not in an approved
                                    Federal unit or
                                    communitization
                                    agreement (AFA)?
                                   (b) You and all other
                                    persons paying
                                    royalties on the lease
                                    must report and pay
                                    royalties based on your
                                    takes.
----------------------------------------------------------------------------------------------------------------
1202.551(c)......................  (c) You and all other                       1               1               1
                                    persons paying
                                    royalties on the lease
                                    may ask ONRR for
                                    permission * * * to
                                    report entitlements.
----------------------------------------------------------------------------------------------------------------
1202.558(a) and (b)..............  What standards do I use    Burden covered under OMB Control Number 1012-0004.
                                    to report and pay                Burden covered under Sec.   1210.52.
                                    royalties on gas?
                                   (a) You must report gas
                                    volumes as follows:.
                                   (b) You must report
                                    residue gas and gas
                                    plant product volumes
                                    as follows:.
----------------------------------------------------------------------------------------------------------------
                                          PART 1206--PRODUCT VALUATION
                                              Subpart B--Indian Oil
----------------------------------------------------------------------------------------------------------------
1206.56(b)(2)....................  Transportation                              4               1               4
                                    allowances--general.
                                   (b)(2) Upon request of a
                                    lessee, ONRR may
                                    approve a
                                    transportation
                                    allowance deduction in
                                    excess of the
                                    limitation prescribed
                                    by paragraph (b)(1) of
                                    this section. * * * An
                                    application for
                                    exception (using Form
                                    MMS-4393, Request to
                                    Exceed Regulatory
                                    Allowance Limitation)
                                    must contain all
                                    relevant and supporting
                                    documentation necessary
                                    for ONRR to make a
                                    determination.
----------------------------------------------------------------------------------------------------------------
1206.57(a)(1)(i).................  Determination of                        AUDIT PROCESS. See note.
                                    transportation
                                    allowances.
                                   (a) Arm's-length
                                    transportation
                                    contracts..
                                   (1)(i) * * * The lessee
                                    shall have the burden
                                    of demonstrating that
                                    its contract is arm's-
                                    length.
----------------------------------------------------------------------------------------------------------------
1206.57(a)(1)(i).................  (a) Arm's-length            Burden covered under Sec.   1206.57(c)(1)(i) and
                                    transportation                                  (iii).
                                    contracts.
                                   (1)(i) * * * Before any
                                    deduction may be taken,
                                    the lessee must submit
                                    a completed page one of
                                    Form MMS-4110 (and
                                    Schedule 1), Oil
                                    Transportation
                                    Allowance Report.
----------------------------------------------------------------------------------------------------------------
1206.57(a)(1)(iii)...............  (a) Arm's-length                        AUDIT PROCESS. See note.
                                    transportation
                                    contracts.
                                   (1)(iii) * * * When ONRR
                                    determines that the
                                    value of the
                                    transportation may be
                                    unreasonable, ONRR will
                                    notify the lessee and
                                    give the lessee an
                                    opportunity to provide
                                    written information
                                    justifying the lessee's
                                    transportation costs.
----------------------------------------------------------------------------------------------------------------
1206.57(a)(2)(i).................  (a) Arm's-length               Burden covered under Sec.   1206.57(a)(3).
                                    transportation
                                    contracts.
                                   (2)(i) * * * Except as
                                    provided in this
                                    paragraph, no allowance
                                    may be taken for the
                                    costs of transporting
                                    lease production which
                                    is not royalty-bearing
                                    without ONRR approval.
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[[Page 76749]]

 
1206.57(a)(2)(ii)................  (a) Arm's-length                           20               1              20
                                    transportation
                                    contracts.
                                   (2)(ii) Notwithstanding
                                    the requirements of
                                    paragraph (i), the
                                    lessee may propose to
                                    ONRR a cost allocation
                                    method on the basis of
                                    the values of the
                                    products transported.
----------------------------------------------------------------------------------------------------------------
1206.57(a)(3)....................  (a) Arm's-length                           40               1              40
                                    transportation
                                    contracts.
                                   (3) If an arm's-length
                                    transportation contract
                                    includes both gaseous
                                    and liquid products,
                                    and the transportation
                                    costs attributable to
                                    each product cannot be
                                    determined from the
                                    contract, the lessee
                                    shall propose an
                                    allocation procedure to
                                    ONRR. * * * The lessee
                                    shall submit all
                                    available data to
                                    support its proposal.
----------------------------------------------------------------------------------------------------------------
1206.57(b)(1)....................  (b) Non-arm's-length or     Burden covered under Sec.   1206.57(c)(2)(i) and
                                    no contract.                                    (iii).
                                   (1) * * * A
                                    transportation
                                    allowance may be
                                    claimed retroactively
                                    for a period of not
                                    more than 3 months
                                    prior to the first day
                                    of the month that Form
                                    MMS-4110 is filed with
                                    ONRR, unless ONRR
                                    approves a longer
                                    period upon a showing
                                    of good cause by the
                                    lessee.
----------------------------------------------------------------------------------------------------------------
1206.57(b)(1)....................  (b) Non-arm's-length or    Burden covered under OMB Control Number 1012-0004.
                                    no contract.                     Burden covered under Sec.   1210.52.
                                   (1) * * * When necessary
                                    or appropriate, ONRR
                                    may direct a lessee to
                                    modify its actual
                                    transportation
                                    allowance deduction.
----------------------------------------------------------------------------------------------------------------
1206.57(b)(2)(iv)................  (b) Non-arm's-length or                    20               1              20
                                    no contract.
                                   (2)(iv) * * * After a
                                    lessee has elected to
                                    use either method for a
                                    transportation system,
                                    the lessee may not
                                    later elect to change
                                    to the other
                                    alternative without
                                    approval of ONRR.
----------------------------------------------------------------------------------------------------------------
1206.57(b)(2)(iv)(A).............  (b) Non-arm's-length or                    20               1              20
                                    no contract.
                                   (2)(iv)(A) * * * After
                                    an election is made,
                                    the lessee may not
                                    change methods without
                                    ONRR approval.
----------------------------------------------------------------------------------------------------------------
1206.57(b)(3)(i).................  (b) Non-arm's-length or                    40               1              40
                                    no contract.
                                   (3)(i) * * * Except as
                                    provided in this
                                    paragraph, the lessee
                                    may not take an
                                    allowance for
                                    transporting lease
                                    production which is not
                                    royalty bearing without
                                    ONRR approval.
----------------------------------------------------------------------------------------------------------------
1206.57(b)(3)(ii)................  (b) Non-arm's-length or                    20               1              20
                                    no contract.
                                   (3)(ii) Notwithstanding
                                    the requirements of
                                    paragraph (i), the
                                    lessee may propose to
                                    ONRR a cost allocation
                                    method on the basis of
                                    the values of the
                                    products transported.
----------------------------------------------------------------------------------------------------------------
1206.57(b)(4)....................  (b) Non-arm's-length or                    20               1              20
                                    no contract.
                                   (4) Where both gaseous
                                    and liquid products are
                                    transported through the
                                    same transportation
                                    system, the lessee
                                    shall propose a cost
                                    allocation procedure to
                                    ONRR. * * * The lessee
                                    shall submit all
                                    available data to
                                    support its proposal.
----------------------------------------------------------------------------------------------------------------
1206.57(b)(5)....................  (b) Non-arm's-length or                    20               1              20
                                    no contract.
                                   (5) A lessee may apply
                                    to ONRR for an
                                    exception from the
                                    requirement that it
                                    compute actual costs in
                                    accordance with
                                    paragraphs (b)(1)
                                    through (b)(4) of this
                                    section.
----------------------------------------------------------------------------------------------------------------

[[Page 76750]]

 
1206.57(c)(1)(i).................  (c) Reporting                               4               1               4
                                    requirements.
                                   (1) Arm's-length
                                    contracts. (i) With the
                                    exception of those
                                    transportation
                                    allowances specified in
                                    paragraphs (c)(1)(v)
                                    and (c)(1)(vi) of this
                                    section, the lessee
                                    shall submit page one
                                    of the initial Form MMS-
                                    4110 (and Schedule 1),
                                    Oil Transportation
                                    Allowance Report, prior
                                    to, or at the same time
                                    as, the transportation
                                    allowance determined,
                                    under an arm's-length
                                    contract, is reported
                                    on Form MMS-2014,
                                    Report of Sales and
                                    Royalty Remittance.
----------------------------------------------------------------------------------------------------------------
1206.57(c)(1)(iii)...............  (c) Reporting                               4               1               4
                                    requirements.
                                   (1) Arm's-length
                                    contracts. (iii) After
                                    the initial reporting
                                    period and for
                                    succeeding reporting
                                    periods, lessees must
                                    submit page one of Form
                                    MMS-4110 (and Schedule
                                    1) within 3 months
                                    after the end of the
                                    calendar year, or after
                                    the applicable contract
                                    or rate terminates or
                                    is modified or amended,
                                    whichever is earlier,
                                    unless ONRR approves a
                                    longer period (during
                                    which period the lessee
                                    shall continue to use
                                    the allowance from the
                                    previous reporting
                                    period).
----------------------------------------------------------------------------------------------------------------
1206.57(c)(1)(iv)................  (c) Reporting                           AUDIT PROCESS. See note.
                                    requirements.
                                   (1) Arm's-length
                                    contracts. (iv) ONRR
                                    may require that a
                                    lessee submit arm's-
                                    length transportation
                                    contracts, production
                                    agreements, operating
                                    agreements, and related
                                    documents. Documents
                                    shall be submitted
                                    within a reasonable
                                    time, as determined by
                                    ONRR.
----------------------------------------------------------------------------------------------------------------
1206.57(c)(2)(i).................  (c) Reporting                               6               1               6
                                    requirements.
                                   (2) Non-arm's-length or
                                    no contract..
                                   (i) With the exception
                                    of those transportation
                                    allowances specified in
                                    paragraphs (c)(2)(v),
                                    (c)(2)(vii) and
                                    (c)(2)(viii) of this
                                    section, the lessee
                                    shall submit an initial
                                    Form MMS-4110 prior to,
                                    or at the same time as,
                                    the transportation
                                    allowance determined
                                    under a non-arm's-
                                    length contract or no-
                                    contract situation is
                                    reported on Form MMS-
                                    2014. * * * The initial
                                    report may be based
                                    upon estimated costs.
----------------------------------------------------------------------------------------------------------------
1206.57(c)(2)(iii)...............  (c) Reporting                               6               1               6
                                    requirements.
                                   (2) Non-arm's-length or
                                    no contract..
                                   (iii) For calendar-year
                                    reporting periods
                                    succeeding the initial
                                    reporting period, the
                                    lessee shall submit a
                                    completed Form MMS-4110
                                    containing the actual
                                    costs for the previous
                                    reporting period. If
                                    oil transportation is
                                    continuing, the lessee
                                    shall include on Form
                                    MMS-4110 its estimated
                                    costs for the next
                                    calendar year. * * *
                                    ONRR must receive the
                                    Form MMS-4110 within 3
                                    months after the end of
                                    the previous reporting
                                    period, unless ONRR
                                    approves a longer
                                    period (during which
                                    period the lessee shall
                                    continue to use the
                                    allowance from the
                                    previous reporting
                                    period).
----------------------------------------------------------------------------------------------------------------
1206.57(c)(2)(iv)................  (c) Reporting                Burden covered under Sec.   1206.57(c)(2)(i).
                                    requirements.
                                   (2) Non-arm's-length or
                                    no contract..
                                   (iv) For new
                                    transportation
                                    facilities or
                                    arrangements, the
                                    lessee's initial Form
                                    MMS-4110 shall include
                                    estimates of the
                                    allowable oil
                                    transportation costs
                                    for the applicable
                                    period.
----------------------------------------------------------------------------------------------------------------

[[Page 76751]]

 
1206.57(c)(2)(v).................  (c) Reporting                Burden covered under Sec.   1206.57(c)(2)(i).
                                    requirements.
                                   (2) Non-arm's-length or
                                    no contract..
                                   (v) * * * only those
                                    allowances that have
                                    been approved by ONRR
                                    in writing.
----------------------------------------------------------------------------------------------------------------
1206.57(c)(2)(vi)................  (c) Reporting                           AUDIT PROCESS. See note.
                                    requirements.
                                   (2) Non-arm's-length or
                                    no contract..
                                   (vi) Upon request by
                                    ONRR, the lessee shall
                                    submit all data used to
                                    prepare its Form MMS-
                                    4110. The data shall be
                                    provided within a
                                    reasonable period of
                                    time, as determined by
                                    ONRR.
----------------------------------------------------------------------------------------------------------------
1206.57(c)(4) and (e)(2).........  (c) Reporting              Burden covered under OMB Control Number 1012-0004.
                                    requirements.                    Burden covered under Sec.   1210.52.
                                   (4) Transportation
                                    allowances must be
                                    reported as a separate
                                    line item on Form MMS-
                                    2014.
                                   (e)Adjustments..........
                                   (2)For lessees
                                    transporting production
                                    from Indian leases, the
                                    lessee must submit a
                                    corrected Form MMS-2014
                                    to reflect actual costs.
----------------------------------------------------------------------------------------------------------------
1206.59..........................  May I ask ONRR for                         20               1              20
                                    valuation guidance?.
                                   You may ask ONRR for
                                    guidance in determining
                                    value. You may propose
                                    a value method to ONRR.
                                    Submit all available
                                    data related to your
                                    proposal and any
                                    additional information
                                    ONRR deems necessary.
----------------------------------------------------------------------------------------------------------------
1206.61(a) and (b)...............  What records must I keep                AUDIT PROCESS. See note.
                                    and produce?.
                                   (a) On request, you must
                                    make available sales,
                                    volume, and
                                    transportation data for
                                    production you sold,
                                    purchased, or obtained
                                    from the field or area.
                                    You must make this data
                                    available to ONRR,
                                    Indian representatives,
                                    or other authorized
                                    persons.
                                   (b) You must retain all
                                    data relevant to the
                                    determination of
                                    royalty value.
----------------------------------------------------------------------------------------------------------------
                                          PART 1206--PRODUCT VALUATION
                                              Subpart E--Indian Gas
----------------------------------------------------------------------------------------------------------------
1206.172(b)(1)(ii)...............  How do I value gas                          4              58             232
                                    produced from leases in
                                    an index zone?
                                   (b) Valuing residue gas
                                    and gas before
                                    processing..
                                   (1)(ii) Gas production
                                    that you certify on
                                    Form MMS-4410 * * * is
                                    not processed before it
                                    flows into a pipeline
                                    with an index but which
                                    may be processed later.
----------------------------------------------------------------------------------------------------------------
1206.172(e)(6)(i) and (iii)......  (e) Determining the                         3              11              33
                                    minimum value for
                                    royalty purposes of gas
                                    sold beyond the first
                                    index pricing point.
                                   (6)(i) You must report
                                    the safety net price
                                    for each index zone to
                                    ONRR on Form MMS-4411,
                                    Safety Net Report, no
                                    later than June 30
                                    following each calendar
                                    year;.
                                   (iii) ONRR may order you
                                    to amend your safety
                                    net price within one
                                    year from the date your
                                    Form MMS-4411 is due or
                                    is filed, whichever is
                                    later.
----------------------------------------------------------------------------------------------------------------
1206.172(e)(6)(ii)...............  (e) Determining the        Burden covered under OMB Control Number 1012-0004.
                                    minimum value for                Burden covered under Sec.   1210.52.
                                    royalty purposes of gas
                                    sold beyond the first
                                    index pricing point.
                                   (6)(ii) You must pay and
                                    report on Form MMS-2014
                                    additional royalties
                                    due no later than June
                                    30 following each
                                    calendar year.
----------------------------------------------------------------------------------------------------------------

[[Page 76752]]

 
1206.172(f)(1)(ii), (f)(2), and    (f ) Excluding some or                     40               1              40
 (f)(3).                            all Tribal leases from
                                    valuation under this
                                    section.
                                   (1) An Indian Tribe may
                                    ask ONRR to exclude
                                    some or all of its
                                    leases from valuation
                                    under this section.
                                   (ii) If an Indian Tribe
                                    requests exclusion from
                                    an index zone for less
                                    than all of its leases,
                                    ONRR will approve the
                                    request only if the
                                    excluded leases may be
                                    segregated into one or
                                    more groups based on
                                    separate fields within
                                    the reservation.
                                   (2) An Indian Tribe may
                                    ask ONRR S to terminate
                                    exclusion of its leases
                                    from valuation under
                                    this section.
                                   (3) The Indian Tribe's
                                    request to ONRR under
                                    either paragraph (f)(1)
                                    or (2) of this section
                                    must be in the form of
                                    a Tribal resolution.
----------------------------------------------------------------------------------------------------------------
1206.173(a)(1)...................  How do I calculate the                      2              12              24
                                    alternative methodology
                                    for dual accounting?
                                   (a) Electing a dual
                                    accounting method..
                                   (1) * * * You may elect
                                    to perform the dual
                                    accounting calculation
                                    according to either
                                    Sec.   1206.176(a)
                                    (called actual dual
                                    accounting), or
                                    paragraph (b) of this
                                    section (called the
                                    alternative methodology
                                    for dual accounting).
----------------------------------------------------------------------------------------------------------------
1206.173(a)(2)...................  (a) Electing a dual           Burden covered under Sec.   1206.173(a)(1).
                                    accounting method.
                                   (2) You must make a
                                    separate election to
                                    use the alternative
                                    methodology for dual
                                    accounting for your
                                    Indian leases in each
                                    ONRR S-designated area.
----------------------------------------------------------------------------------------------------------------
1206.174(a)(4)(ii)...............  How do I value gas         Burden covered under OMB Control Number 1012-0004.
                                    production when an               Burden covered under Sec.   1210.52.
                                    index-based method
                                    cannot be used?
                                   (a) Situations in which
                                    an index-based method
                                    cannot be used.
                                   (4)(ii) If the major
                                    portion value is
                                    higher, you must submit
                                    an amended Form MMS-
                                    2014 to ONRR by the due
                                    date specified in the
                                    written notice from
                                    ONRR of the major
                                    portion value.
----------------------------------------------------------------------------------------------------------------
1206.174 (b)(1)(i) and (iii);      (b) Arm's-length                        AUDIT PROCESS. See note.
 (b)(2); (d)(2).                    contracts.
                                   (1)(i) You have the
                                    burden of demonstrating
                                    that your contract is
                                    arm's-length.
                                   (iii) * * * In these
                                    circumstances, ONRR
                                    will notify you and
                                    give you an opportunity
                                    to provide written
                                    information justifying
                                    your value.
                                   (2) ONRR may require you
                                    to certify that your
                                    arm's-length contract
                                    provisions include all
                                    of the consideration
                                    the buyer pays, either
                                    directly or indirectly,
                                    for the gas, residue
                                    gas, or gas plant
                                    product.
                                   (d) Supporting data.....
                                   (2) You must make all
                                    such data available
                                    upon request to the
                                    authorized ONRR or
                                    Indian representatives,
                                    to the Office of the
                                    Inspector General of
                                    the Department, or
                                    other authorized
                                    persons.
----------------------------------------------------------------------------------------------------------------
1206.174(d)......................  (d) Supporting data. If    Burden covered under OMB Control Number 1012-0004.
                                    you determine the value
                                    of production under
                                    paragraph (c) of this
                                    section, you must
                                    retain all data
                                    relevant to
                                    determination of
                                    royalty value.
----------------------------------------------------------------------------------------------------------------

[[Page 76753]]

 
1206.174(f)......................  (f) Value guidance. You                    40               1              40
                                    may ask ONRR for
                                    guidance in determining
                                    value. You may propose
                                    a valuation method to
                                    ONRR. Submit all
                                    available data related
                                    to your proposal and
                                    any additional
                                    information ONRR deems
                                    necessary.
----------------------------------------------------------------------------------------------------------------
1206.175(d)(4)...................  How do I determine                         20               1              20
                                    quantities and
                                    qualities of production
                                    for computing
                                    royalties?
                                   (d)(4) You may request
                                    ONRR approval of other
                                    methods for determining
                                    the quantity of residue
                                    gas and gas plant
                                    products allocable to
                                    each lease.
----------------------------------------------------------------------------------------------------------------
1206.176(b)......................  How do I perform              Burden covered under Sec.   1206.173(a)(1).
                                    accounting for
                                    comparison?.
                                   (b) If you are required
                                    to account for
                                    comparison, you may
                                    elect to use the
                                    alternative dual
                                    accounting methodology
                                    provided for in Sec.
                                    1206.173 instead of the
                                    provisions in paragraph
                                    (a) of this section.
----------------------------------------------------------------------------------------------------------------
1206.176(c)......................  (c) * * * If you do not     Burden covered under Sec.   1206.172(b)(1)(ii).
                                    perform dual
                                    accounting, you must
                                    certify to ONRR that
                                    gas flows into such a
                                    pipeline before it is
                                    processed.
----------------------------------------------------------------------------------------------------------------
                                            Transportation Allowances
----------------------------------------------------------------------------------------------------------------
1206.177(c)(2) and (c)(3)........  What general                   Burden covered under Sec.   1206.56(b)(2).
                                    requirements regarding
                                    transportation
                                    allowances apply to me?
                                   (c)(2) If you ask ONRR,
                                    ONRR may approve a
                                    transportation
                                    allowance deduction in
                                    excess of the
                                    limitation in paragraph
                                    (c)(1) of this section.
                                   (3) Your application for
                                    exception (using Form
                                    MMS-4393, Request to
                                    Exceed Regulatory
                                    Allowance Limitation)
                                    must contain all
                                    relevant and supporting
                                    documentation necessary
                                    for ONRR to make a
                                    determination.
----------------------------------------------------------------------------------------------------------------
1206.178(a)(1)(i)................  How do I determine a                        1              18              18
                                    transportation
                                    allowance?.
                                   (a) Determining a
                                    transportation
                                    allowance under an
                                    arm's-length contract.
                                   (1)(i) * * * You are
                                    required to submit to
                                    ONRR a copy of your
                                    arm's-length
                                    transportation
                                    contract(s) and all
                                    subsequent amendments
                                    to the contract(s)
                                    within 2 months of the
                                    date ONRR receives your
                                    report which claims the
                                    allowance on the Form
                                    MMS-2014.
----------------------------------------------------------------------------------------------------------------
1206.178(a)(1)(iii)..............  (a) Determining a                       AUDIT PROCESS. See note.
                                    transportation
                                    allowance under an
                                    arm's-length contract.
                                   (1)(iii) If ONRR
                                    determines that the
                                    consideration paid
                                    under an arm's-length
                                    transportation contract
                                    does not reflect the
                                    value of the
                                    transportation because
                                    of misconduct by or
                                    between the contracting
                                    parties * * * In these
                                    circumstances, ONRR
                                    will notify you and
                                    give you an opportunity
                                    to provide written
                                    information justifying
                                    your transportation
                                    costs.
----------------------------------------------------------------------------------------------------------------
1206.178(a)(2)(i) and (ii).......  (a) Determining a                          20               1              20
                                    transportation
                                    allowance under an
                                    arm's-length contract.
                                   (2)(i) * * * you cannot
                                    take an allowance for
                                    the costs of
                                    transporting lease
                                    production that is not
                                    royalty bearing without
                                    ONRR approval, or
                                    without lessor approval
                                    on Tribal leases.
                                   (ii) As an alternative
                                    to paragraph (a)(2)(i)
                                    of this section, you
                                    may propose to ONRR a
                                    cost allocation method
                                    based on the values of
                                    the products
                                    transported.
----------------------------------------------------------------------------------------------------------------

[[Page 76754]]

 
1206.178(a)(3)(i) and (ii).......  (a) Determining a                          40               1              40
                                    transportation
                                    allowance under an
                                    arm's-length contract.
                                   (3)(i) If your arm's-
                                    length transportation
                                    contract includes both
                                    gaseous and liquid
                                    products and the
                                    transportation costs
                                    attributable to each
                                    cannot be determined
                                    from the contract, you
                                    must propose an
                                    allocation procedure to
                                    ONRR.
                                   (ii) You are required to
                                    submit all relevant
                                    data to support your
                                    allocation proposal.
----------------------------------------------------------------------------------------------------------------
1206.178(b)(1)(ii)...............  (b) Determining a                          15               5              75
                                    transportation
                                    allowance under a non-
                                    arm's-length contract
                                    or no contract.
                                   (1)(ii) * * * You must
                                    submit the actual cost
                                    information to support
                                    the allowance to ONRR
                                    on Form MMS-4295, Gas
                                    Transportation
                                    Allowance Report,
                                    within 3 months after
                                    the end of the 12-month
                                    period to which the
                                    allowance applies.
----------------------------------------------------------------------------------------------------------------
1206.178(b)(2)(iv)...............  (b) Determining a                          20               1              20
                                    transportation
                                    allowance under a non-
                                    arm's-length contract
                                    or no contract.
                                   (2)(iv) You may use
                                    either depreciation
                                    with a return on
                                    undepreciated capital
                                    investment or a return
                                    on depreciable capital
                                    investment. * * * you
                                    may not later elect to
                                    change to the other
                                    alternative without
                                    ONRR approval.
----------------------------------------------------------------------------------------------------------------
1206.178(b)(2)(iv)(A)............  (b) Determining a                          20               1              20
                                    transportation
                                    allowance under a non-
                                    arm's-length contract
                                    or no contract.
                                   (2)(iv)(A) * * * Once
                                    you make an election,
                                    you may not change
                                    methods without ONRR
                                    approval.
----------------------------------------------------------------------------------------------------------------
1206.178(b)(3)(i)................  (b) Determining a                          40               1              40
                                    transportation
                                    allowance under a non-
                                    arm's-length contract
                                    or no contract.
                                   (3)(i) * * * Except as
                                    provided in this
                                    paragraph, you may not
                                    take an allowance for
                                    transporting a product
                                    that is not royalty
                                    bearing without ONRR
                                    approval.
----------------------------------------------------------------------------------------------------------------
1206.178(b)(3)(ii)...............  (b) Determining a                          20               1              20
                                    transportation
                                    allowance under a non-
                                    arm's-length contract
                                    or no contract.
                                   (3)(ii) As an
                                    alternative to the
                                    requirements of
                                    paragraph (b)(3)(i) of
                                    this section, you may
                                    propose to ONRR a cost
                                    allocation method based
                                    on the values of the
                                    products transported.
----------------------------------------------------------------------------------------------------------------
1206.178(b)(5)...................  (b) Determining a                          40               1              40
                                    transportation
                                    allowance under a non-
                                    arm's-length contract
                                    or no contract.
                                   (5) If you transport
                                    both gaseous and liquid
                                    products through the
                                    same transportation
                                    system, you must
                                    propose a cost
                                    allocation procedure to
                                    ONRR. * * * You are
                                    required to submit all
                                    relevant data to
                                    support your proposal.
----------------------------------------------------------------------------------------------------------------
1206.178(d)(1)...................  (d) Reporting your                      AUDIT PROCESS. See note.
                                    transportation
                                    allowance.
                                   (1) If ONRR requests,
                                    you must submit all
                                    data used to determine
                                    your transportation
                                    allowance.
----------------------------------------------------------------------------------------------------------------

[[Page 76755]]

 
1206.178(d)(2), (e), and (f)(1)..  (d) Reporting your         Burden covered under OMB Control Number 1012-0004.
                                    transportation                   Burden covered under Sec.   1210.52.
                                    allowance.
                                   (2) You must report
                                    transportation
                                    allowances as a
                                    separate entry on Form
                                    MMS-2014.
                                   (e) Adjusting incorrect
                                    allowances. If for any
                                    month the
                                    transportation
                                    allowance you are
                                    entitled to is less
                                    than the amount you
                                    took on Form MMS-2014,
                                    you are required to
                                    report and pay
                                    additional royalties
                                    due, plus interest
                                    computed under 30 CFR
                                    1218.54 from the first
                                    day of the first month
                                    you deducted the
                                    improper transportation
                                    allowance until the
                                    date you pay the
                                    royalties due.
                                   (f) Determining
                                    allowable costs for
                                    transportation
                                    allowances.
                                   (1) Firm demand charges
                                    paid to pipelines. * *
                                    * You must modify the
                                    Form MMS-2014 by the
                                    amount received or
                                    credited for the
                                    affected reporting
                                    period.
----------------------------------------------------------------------------------------------------------------
                                              Processing Allowances
----------------------------------------------------------------------------------------------------------------
1206.180(a)(1)(i)................  How do I determine an                       1               2               2
                                    actual processing
                                    allowance?
                                   (a) Determining a
                                    processing allowance if
                                    you have an arm's-
                                    length processing
                                    contract.
                                   (1)(i) * * * You have
                                    the burden of
                                    demonstrating that your
                                    contract is arm's-
                                    length. You are
                                    required to submit to
                                    ONRR a copy of your
                                    arm's-length
                                    contract(s) and all
                                    subsequent amendments
                                    to the contract(s)
                                    within 2 months of the
                                    date ONRR receives your
                                    first report that
                                    deducts the allowance
                                    on the Form MMS-2014.
----------------------------------------------------------------------------------------------------------------
1206.180(a)(1)(iii)..............  (a) Determining a                       AUDIT PROCESS. See note.
                                    processing allowance if
                                    you have an arm's-
                                    length processing
                                    contract.
                                   (1)(iii) If ONRR
                                    determines that the
                                    consideration paid
                                    under an arm's-length
                                    processing contract
                                    does not reflect the
                                    value of the processing
                                    because of misconduct
                                    by or between the
                                    contracting parties * *
                                    * In these
                                    circumstances, ONRR
                                    will notify you and
                                    give you an opportunity
                                    to provide written
                                    information justifying
                                    your processing costs.
----------------------------------------------------------------------------------------------------------------
1206.180(a)(3)...................  (a) Determining a                          40               1              40
                                    processing allowance if
                                    you have an arm's-
                                    length processing
                                    contract.
                                   (3) If your arm's-length
                                    processing contract
                                    includes more than one
                                    gas plant product and
                                    the processing costs
                                    attributable to each
                                    product cannot be
                                    determined from the
                                    contract, you must
                                    propose an allocation
                                    procedure to ONRR. * *
                                    * You are required to
                                    submit all relevant
                                    data to support your
                                    proposal.
----------------------------------------------------------------------------------------------------------------
1206.180(b)(1)(ii)...............  (b) Determining a                          20              12             240
                                    processing allowance if
                                    you have a non-arm's-
                                    length contract or no
                                    contract.
                                   (1)(ii) * * * You must
                                    submit the actual cost
                                    information to support
                                    the allowance to ONRR
                                    on Form MMS-4109, Gas
                                    Processing Allowance
                                    Summary Report, within
                                    3 months after the end
                                    of the 12-month period
                                    for which the allowance
                                    applies.
----------------------------------------------------------------------------------------------------------------

[[Page 76756]]

 
1206.180(b)(2)(iv)...............  (b) Determining a                          20               1              20
                                    processing allowance if
                                    you have a non-arm's-
                                    length contract or no
                                    contract.
                                   (2)(iv) You may use
                                    either depreciation
                                    with a return on
                                    undepreciable capital
                                    investment or a return
                                    on depreciable capital
                                    investment. * * * you
                                    may not later elect to
                                    change to the other
                                    alternative without
                                    ONRR approval.
----------------------------------------------------------------------------------------------------------------
1206.180(b)(2)(iv)(A)............  (b) Determining a                          20               1              20
                                    processing allowance if
                                    you have a non-arm's-
                                    length contract or no
                                    contract.
                                   (2)(iv)(A) * * * Once
                                    you make an election,
                                    you may not change
                                    methods without ONRR
                                    approval.
----------------------------------------------------------------------------------------------------------------
1206.180(b)(3)...................  (b) Determining a                          20               1              20
                                    processing allowance if
                                    you have a non-arm's-
                                    length contract or no
                                    contract.
                                   (3) Your processing
                                    allowance under this
                                    paragraph (b) must be
                                    determined based upon a
                                    calendar year or other
                                    period if you and ONRR
                                    agree to an alternative.
----------------------------------------------------------------------------------------------------------------
1206.180(c)(1)...................  (c) Reporting your                      AUDIT PROCESS. See note.
                                    processing allowance.
                                   (1) If ONRR requests,
                                    you must submit all
                                    data used to determine
                                    your processing
                                    allowance.
----------------------------------------------------------------------------------------------------------------
1206.180(c)(2) and (d)...........  (c) Reporting your         Burden covered under OMB Control Number 1012-0004.
                                    processing allowance.            Burden covered under Sec.   1210.52.
                                   (2) You must report gas
                                    processing allowances
                                    as a separate entry on
                                    the Form MMS-2014 * * *.
                                   (d) Adjusting incorrect
                                    processing allowances.
                                    If for any month the
                                    gas processing
                                    allowance you are
                                    entitled to is less
                                    than the amount you
                                    took on Form MMS-2014,
                                    you are required to pay
                                    additional royalties,
                                    plus interest computed
                                    under 30 CFR 1218.54
                                    from the first day of
                                    the first month you
                                    deducted a processing
                                    allowance until the
                                    date you pay the
                                    royalties due.
----------------------------------------------------------------------------------------------------------------
1206.181(c)......................  How do I establish                         40               1              40
                                    processing costs for
                                    dual accounting
                                    purposes when I do not
                                    process the gas?
                                   (c) A proposed
                                    comparable processing
                                    fee submitted to either
                                    the Tribe and ONRR (for
                                    Tribal leases) or ONRR
                                    (for allotted leases)
                                    with your supporting
                                    documentation submitted
                                    to ONRR. If ONRR does
                                    not take action on your
                                    proposal within 120
                                    days, the proposal will
                                    be deemed to be denied
                                    and subject to appeal
                                    to the ONRR Director
                                    under 30 CFR part 1290.
----------------------------------------------------------------------------------------------------------------
                PART 1207--SALES AGREEMENTS OR CONTRACTS GOVERNING THE DISPOSAL OF LEASE PRODUCTS
                                          Subpart A--General Provisions
----------------------------------------------------------------------------------------------------------------
1207.4(b)........................  Contracts made pursuant                 AUDIT PROCESS. See note.
                                    to old form leases.
                                   (b) The stipulation, the
                                    substance of which must
                                    be included in the
                                    contract, or be made
                                    the subject matter of a
                                    separate instrument
                                    properly identifying
                                    the leases affected
                                    thereby, is as follows.
----------------------------------------------------------------------------------------------------------------

[[Page 76757]]

 
1207.5...........................  Contract and sales                      AUDIT PROCESS. See note.
                                    agreement retention.
                                   Copies of all sales
                                    contracts, posted price
                                    bulletins, etc., and
                                    copies of all
                                    agreements, other
                                    contracts, or other
                                    documents which are
                                    relevant to the
                                    valuation of production
                                    are to be maintained by
                                    the lessee and made
                                    available upon request
                                    during normal working
                                    hours to authorized
                                    ONRR, State or Indian
                                    representatives, other
                                    ONRR or BLM officials,
                                    auditors of the General
                                    Accounting Office, or
                                    other persons
                                    authorized to receive
                                    such documents, or
                                    shall be submitted to
                                    ONRR within a
                                    reasonable period of
                                    time, as determined by
                                    ONRR. Any oral sales
                                    arrangement negotiated
                                    by the lessee must be
                                    placed in written form
                                    and retained by the
                                    lessee. Records shall
                                    be retained in
                                    accordance with 30 CFR
                                    part 1212.
----------------------------------------------------------------------------------------------------------------
    TOTAL BURDEN.................  ........................  ...................             148           1,309
----------------------------------------------------------------------------------------------------------------
Note: AUDIT PROCESS--The Office of Regulatory Affairs determined that the audit process is exempt from the
  Paperwork Reduction Act of 1995 because ONRR staff asks non-standard questions to resolve exceptions.

    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: Before submitting an ICR to OMB, PRA section 
3506(c)(2)(A) 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.
    The PRA also requires agencies to estimate the total annual 
reporting ``non-hour cost'' burden to respondents or recordkeepers 
resulting from the collection of information. If you have costs to 
generate, maintain, and disclose this information, you should comment 
and provide your total capital and startup cost components or annual 
operation, maintenance, and purchase of service components. You should 
describe the methods you use to estimate major cost factors, including 
system and technology acquisition, expected useful life of capital 
equipment, discount rate(s), and the period over which you incur costs. 
Capital and startup costs include, among other items, computers and 
software you purchase to prepare for collecting information; 
monitoring, sampling, and testing equipment; and record storage 
facilities. Generally, your estimates should not include equipment or 
services purchased: (i) Before October 1, 1995; (ii) to comply with 
requirements not associated with the information collection; (iii) for 
reasons other than to provide information or keep records for the 
Government; or (iv) as part of customary and usual business or private 
practices.
    We will summarize written responses to this notice and address them 
in our ICR submission for OMB approval, including appropriate 
adjustments to the estimated burden. We will provide a copy of the ICR 
to you without charge upon request. We also will post the ICR at http://www.onrr.gov/Laws_R_D/FRNotices/FRInfColl.htm.
    Public Comment Policy: We will post all comments, including names 
and addresses of respondents, at http://regulations.gov. Before 
including your address, phone number, email address, or other personal 
identifying information in your comment, be advised 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 from public view your personal identifying information, we 
cannot guarantee that we will be able to do so.
    Office of the Secretary, Information Collection Clearance Officer: 
Laura Dorey (202) 208-2654.

    Dated: November 29, 2011.
Gregory J. Gould,
Director, Office of Natural Resources Revenue.
[FR Doc. 2011-31496 Filed 12-7-11; 8:45 am]
BILLING CODE 4310-T2-P