[Federal Register Volume 76, Number 241 (Thursday, December 15, 2011)]
[Notices]
[Pages 78033-78042]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-32158]


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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; Correction

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

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

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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. ONRR published this notice on December 
8th, 2011, at 76 FR 76746, with an incorrect due date for comments. 
This revised notice amends the due date.

DATES: Submit written comments on or before February 13, 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.
    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

[[Page 78034]]

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:

                                   Respondents' Estimated Annual Burden Hours
----------------------------------------------------------------------------------------------------------------
                                                                                      Average
                                  Reporting and recordkeeping                        number of    Annual  burden
           30 CFR                         requirement              Hour  burden       annual           hours
                                                                                     responses
----------------------------------------------------------------------------------------------------------------
                                              Part 1202--ROYALTIES
                                        Subpart C--Federal and Indian Oil
----------------------------------------------------------------------------------------------------------------
1202.101....................  Standards for reporting and paying   Burden covered under OMB Control Number 1012-
                               royalties.                            0004 (expires 12/31/2012). Burden covered
                              Oil volumes are to be reported in                under Sec.   1210.52.
                               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 volume of     Burden covered under OMB Control Number 1012-
                               production for which I must pay      0004. Burden covered under Sec.   1210.52.
                               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. . .
                                                                 -----------------------------------------------

[[Page 78035]]

 
1202.551(c).................  (c) You and all other persons                    1               1               1
                               paying royalties on the lease may
                               ask ONRR for permission . . . .
                               to report entitlements. . .
----------------------------------------------------------------------------------------------------------------
1202.558(a) and (b).........  What standards do I use to report    Burden covered under OMB Control Number 1012-
                               and pay royalties on gas?            0004. Burden covered under Sec.   1210.52.
                              (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 allowances--                      4               1               4
                               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 transportation                AUDIT PROCESS. See note.
                               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 transportation      Burden covered under Sec.   1206.57(c)(1)(i)
                               contracts.                                           and (iii).
                              (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 transportation                AUDIT PROCESS. See note.
                               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 transportation       Burden covered under Sec.   1206.57(a)(3).
                               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.
                                                                 -----------------------------------------------
1206.57(a)(2)(ii)...........  (a) Arm's-length transportation                 20               1              20
                               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 transportation                 40               1              40
                               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 no           Burden covered under Sec.   1206.57(c)(2)(i)
                               contract.                                            and (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 no           Burden covered under OMB Control Number 1012-
                               contract.                            0004. 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 no                      20               1              20
                               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.
                                                                 -----------------------------------------------

[[Page 78036]]

 
1206.57(b)(2)(iv)(A)........  (b) Non-arm's-length or no                      20               1              20
                               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 no                      40               1              40
                               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 no                      20               1              20
                               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 no                      20               1              20
                               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 no                      20               1              20
                               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. .
                               .
                                                                 -----------------------------------------------
1206.57(c)(1)(i)............  (c) Reporting requirements.                      4               1               4
                              (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 requirements.                      4               1               4
                              (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 requirements.                    AUDIT PROCESS. See note.
                              (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.
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1206.57(c)(2)(i)............  (c) Reporting requirements.                      6               1               6
                              (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.
                                                                 -----------------------------------------------

[[Page 78037]]

 
1206.57(c)(2)(iii)..........  (c) Reporting requirements.                      6               1               6
                              (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 requirements.          Burden covered under Sec.   1206.57(c)(2)(i).
                              (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.
                               . .
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1206.57(c)(2)(v)............  (c) Reporting requirements.          Burden covered under Sec.   1206.57(c)(2)(i).
                              (2) Non-arm's-length or no
                               contract.
                              (v) . . . only those allowances
                               that have been approved by ONRR
                               in writing. . .
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1206.57(c)(2)(vi)...........  (c) Reporting requirements.                    AUDIT PROCESS. See note.
                              (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.
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1206.57(c)(4) and (e)(2)....  (c) Reporting requirements.          Burden covered under OMB Control Number 1012-
                              (4) Transportation allowances must    0004. Burden covered under Sec.   1210.52.
                               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 valuation                    20               1              20
                               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 and                   AUDIT PROCESS. See note.
                               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 produced from                 4              58             232
                               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 minimum value                3              11              33
                               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. . .
                                                                 -----------------------------------------------

[[Page 78038]]

 
1206.172(e)(6)(ii)..........  (e) Determining the minimum value    Burden covered under OMB Control Number 1012-
                               for royalty purposes of gas sold     0004. Burden covered under Sec.   1210.52.
                               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;.
                               . .
1206.172(f)(1)(ii), (f)(2),   (f) Excluding some or all tribal                40               1              40
 and (f)(3).                   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 alternative               2              12              24
                               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 accounting        Burden covered under Sec.   1206.173(a)(1).
                               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 production when   Burden covered under OMB Control Number 1012-
                               an index-based method cannot be      0004. Burden covered under Sec.   1210.52.
                               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 contracts.                    AUDIT PROCESS. See note.
 (b)(2); (d)(2).
                              (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 you          Burden covered under OMB Control Number 1012-
                               determine the value of production                       0004.
                               under paragraph (c) of this
                               section, you must retain all data
                               relevant to determination of
                               royalty value.
ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½
1206.174(f).................  (f) Value guidance. You may ask                 40               1              40
                               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.
                               . .
----------------------------------------------------------------------------------------------------------------

[[Page 78039]]

 
1206.175(d)(4)..............  How do I determine quantities and               20               1              20
                               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 accounting for       Burden covered under Sec.   1206.173(a)(1).
                               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 perform                Burden covered under Sec.
                               dual accounting, you must certify                1206.172(b)(1)(ii).
                               to ONRR that gas flows into such
                               a pipeline before it is
                               processed.
----------------------------------------------------------------------------------------------------------------
                                            Transportation Allowances
----------------------------------------------------------------------------------------------------------------
1206.177(c)(2) and (c)(3)...  What general requirements             Burden covered under Sec.   1206.56(b)(2).
                               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 transportation               AUDIT PROCESS. See note.
                               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 transportation                20               1              20
                               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.
1206.178(a)(3)(i) and (ii)..  (a) Determining a transportation                40               1              40
                               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 transportation                15               5              75
                               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.

[[Page 78040]]

 
1206.178(b)(2)(iv)..........  (b) Determining a transportation                20               1              20
                               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 transportation                20               1              20
                               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 transportation                40               1              40
                               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 transportation                20               1              20
                               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 transportation                40               1              40
                               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 transportation              AUDIT PROCESS. See note.
                               allowance.
                              (1) If ONRR requests, you must
                               submit all data used to determine
                               your transportation allowance.
                                                                 -----------------------------------------------
1206.178(d)(2), (e), and      (d) Reporting your transportation    Burden covered under OMB Control Number 1012-
 (f)(1).                       allowance.                           0004. Burden covered under Sec.   1210.52.
                              (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 actual                     1               2               2
                               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 processing                   AUDIT PROCESS. See note.
                               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.
                                                                 -----------------------------------------------

[[Page 78041]]

 
1206.180(a)(3)..............  (a) Determining a processing                    40               1              40
                               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 processing                    20              12             240
                               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.
1206.180(b)(2)(iv)..........  (b) Determining a processing                    20               1              20
                               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 processing                    20               1              20
                               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 processing                    20               1              20
                               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 processing                  AUDIT PROCESS. See note.
                               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 processing        Burden covered under OMB Control Number 1012-
                               allowance.                           0004. 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 processing                   40               1              40
                               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 to old                 AUDIT PROCESS. See note.
                               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 78042]]

 
1207.5......................  Contract and sales agreement                   AUDIT PROCESS. See note.
                               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://www.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: December 12, 2011.
Gregory J. Gould,
Director, Office of Natural Resources Revenue
[FR Doc. 2011-32158 Filed 12-14-11; 8:45 am]
BILLING CODE 4310-T2-P