[Federal Register Volume 77, Number 142 (Tuesday, July 24, 2012)]
[Notices]
[Pages 43355-43365]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-18079]


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DEPARTMENT OF THE INTERIOR

Office of Natural Resources Revenue

[Docket No. ONRR-2011-0021]


Agency Information Collection Activities: Submitted for Office of 
Management and Budget Review, Comment Request

AGENCY: Office of Natural Resources Revenue, Interior.

ACTION: Notice of an extension of a currently approved information 
collection (OMB Control Number 1012-0002).

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SUMMARY: To comply with the Paperwork Reduction Act of 1995 (PRA), the 
Office of Natural Resources Revenue (ONRR) is notifying the public that 
we have submitted to the Office of Management and Budget (OMB) an 
information collection request (ICR) to renew approval of the paperwork 
requirements in the regulations under 30 CFR parts 1202, 1206, and 
1207. This notice also provides the public with a second opportunity to 
comment on the paperwork burden of these regulatory requirements.

DATES: Submit written comments on or before August 23, 2012.

ADDRESSES: Submit written comments by either FAX (202) 395-5806 or 
email ([email protected]) directly to the Office of Information 
and Regulatory Affairs, OMB, Attention: Desk Officer for the Department 
of the Interior (OMB Control Number 1012-0002).
    You may submit a copy of your comments to ONRR by one of the 
following methods (please use ``ICR 1012-0002'' as an identifier in 
your comments):
     Electronically, go to http://www.regulations.gov. In the 
``Search'' box, enter ``ONRR-2011-0021,'' then click ``Search.'' Follow 
the instructions

[[Page 43356]]

to submit public comments. ONRR will post all comments.
     Mail comments to Armand Southall, Regulatory Specialist, 
ONRR, P.O. Box 25165, MS 64000A, Denver, Colorado 80225-0165.
     Hand-carry comments, or use an overnight courier service, 
to the Office of Natural Resources Revenue, Building 85, Room A-614, 
Denver Federal Center, West 6th Ave. and Kipling St., Denver, Colorado 
80225.

FOR FURTHER INFORMATION CONTACT: Armand Southall at (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 us to collect the information. You 
may also review the information collection request online at http://www.reginfo.gov/public/do/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: 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 United States Department of the 
Interior is responsible for mineral resource development on Federal and 
Indian lands and the Outer Continental Shelf (OCS). Various laws 
require the Secretary to manage mineral resource production from 
Federal and Indian lands and the OCS, collect the royalties and other 
mineral revenues due, and distribute the collected funds in accordance 
with applicable laws. The Secretary also has a trust responsibility to 
manage Indian lands and seek advice and information from Indian 
beneficiaries. ONRR performs the minerals revenue management functions 
for the Secretary and assists the Secretary in carrying out the 
Department's trust responsibility for Indian lands. Public laws 
pertaining to mineral leases on Federal and Indian lands are available 
at http://www.onrr.gov/Laws_R_D/PublicLawsAMR.htm.
    Information collections that we cover in this ICR are available at 
30 CFR part 1202, subparts C and J, which pertain to royalties; part 
1206, subparts B and E, which govern the valuation of produced oil and 
gas from leases on Indian lands; and part 1207, which pertains to 
recordkeeping. Indian Tribes and individual Indian mineral owners 
receive all royalties that generate 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 that lessees remove from their lands. Failure to collect 
the data that we describe in this ICR could result in the 
undervaluation of leased minerals on Indian lands. All reported data 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 that Indian oil and gas leases (tribal 
and allotted) produce, 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 that a lessee determines 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 that Indian oil and gas leases 
(tribal and allotted) produce. 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 produced gas from the lease. 
Lessees must elect to perform actual dual accounting, as we define in 
30 CFR 1206.176, or alternative dual accounting, as we define in 30 CFR 
1206.173. Lessees use Form MMS-4410, Accounting for Comparison [Dual 
Accounting], to certify that dual accounting is not an ONRR requirement 
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 they sell gas production from an Indian oil or gas lease 
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 royalty.

Indian Oil and Gas

    Lessees must use Form MMS-4393, Request to Exceed Regulatory 
Allowance Limitation, for both Federal and Indian leases. Most of the 
burden hours occur on Federal leases; therefore, this is an ONRR-
approved form under ICR 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.

Summary

    We are requesting 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 that it receives and does not collect items of a sensitive 
nature. The requirement to report is mandatory for Form MMS-4410, 
Accounting for Comparison [Dual Accounting], and for Form MMS-4411, 
Safety Net Report, under certain circumstances. For all other forms in 
this collection, the

[[Page 43357]]

requirement to report is mandatory 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: 2,269 
hours.
    We have not included in our estimates certain requirements that 
occur in the normal course of business and that we consider usual and 
customary. The following chart shows the estimated burden hours by CFR 
section and paragraph:

                                   Respondents' Estimated Annual Burden Hours
----------------------------------------------------------------------------------------------------------------
                                                                                  Average number
               30 CFR                Reporting and recordkeeping    Hour burden      of annual     Annual burden
                                             requirement                             responses         hours
----------------------------------------------------------------------------------------------------------------
                                              PART 1202--ROYALTIES
                                        Subpart C--Federal and Indian Oil
----------------------------------------------------------------------------------------------------------------
1202.101...........................  Standards for reporting and  Burden covered under OMB Control Number 1012-
                                      paying royalties.           0004. Burden covered under Sec.   1210.52.
                                     Oil volumes are to be
                                      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-
                                      volume of production for    0004. Burden covered under Sec.   1210.52.
                                      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 to   Burden covered under OMB Control Number 1012-
                                      report and pay royalties    0004. Burden covered under Sec.   1210.52.
                                      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 allowances--
                                      general.
                                     (b)(2) Upon request of a                  4               1               4
                                      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)
                                      transportation 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             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.
----------------------------------------------------------------------------------------------------------------

[[Page 43358]]

 
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.
----------------------------------------------------------------------------------------------------------------
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 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.
----------------------------------------------------------------------------------------------------------------
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 * * *.
----------------------------------------------------------------------------------------------------------------

[[Page 43359]]

 
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.
----------------------------------------------------------------------------------------------------------------
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.
----------------------------------------------------------------------------------------------------------------
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 * *
                                      *.
----------------------------------------------------------------------------------------------------------------
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 * * *.
----------------------------------------------------------------------------------------------------------------
1206.57(c)(2)(vi)..................  (c) Reporting requirements.  AUDIT PROCESS. See note.
                                     (2) Non-arm's-length or no
                                      contract..

[[Page 43360]]

 
                                     (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 requirements.  Burden covered under OMB Control Number 1012-
                                     (4) Transportation           0004. Burden covered under Sec.   1210.52.
                                      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 produced               4              58             232
                                      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 minimum               3              11              33
                                      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 minimum  Burden covered under OMB Control Number 1012-
                                      value for royalty purposes  0004. Burden covered under Sec.   1210.52.
                                      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 * * *.
                                                                 -----------------------------------------------
1206.172(f)(1)(ii), (f)(2), and      (f) Excluding some or all                40               1              40
 (f)(3).                              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?

[[Page 43361]]

 
                                     (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-
                                      production when an index-   0004. Burden covered under Sec.   1210.52.
                                      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 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      0004.
                                      production under paragraph
                                      (c) of this section, you
                                      must retain all data
                                      relevant to determination
                                      of royalty value.
----------------------------------------------------------------------------------------------------------------
1206.174(f)........................  (f) Value guidance. You may              40               1              40
                                      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 accounting  Burden covered under Sec.   1206.173(a)(1).
                                      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.
                                      perform dual accounting,    1206.172(b)(1)(ii).
                                      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 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 * *
                                      *.

[[Page 43362]]

 
                                     (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 * * *.
----------------------------------------------------------------------------------------------------------------
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.

[[Page 43363]]

 
                                     (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 *
                                      * *.
----------------------------------------------------------------------------------------------------------------
1206.178(d)(2), (e), and (f)(1)....  (d) Reporting your           Burden covered under OMB Control Number 1012-
                                      transportation 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                     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.

[[Page 43364]]

 
                                     (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                       100              12           1,200
                                      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 * * *.
----------------------------------------------------------------------------------------------------------------
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-
                                      processing 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                       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 to   AUDIT PROCESS. See note.
                                      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 * * *.
----------------------------------------------------------------------------------------------------------------
1207.5.............................  Contract and sales           AUDIT PROCESS. See note.
                                      agreement retention.

[[Page 43365]]

 
                                     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           2,269
----------------------------------------------------------------------------------------------------------------
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 does 
not have 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 in 
order 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 that 
the agency collects; and (d) minimize the burden on the respondents, 
including the use of automated collection techniques or other forms of 
information technology.
    To comply with the public consultation process, ONRR published a 
notice in the Federal Register on December 8, 2011 (76 FR 76746), 
announcing that we would submit this ICR to OMB for approval. (We 
published an additional notice in the Federal Register on December 15, 
2011 (76 FR 78033) correcting the response date for comments.) The 
notice provided the required 60-day comment period. We received no 
comments in response to the notice.
    If you wish to comment in response to this notice, you may send 
your comments to the offices that we listed under the ADDRESSES section 
of this notice. OMB has up to 60 days to approve or disapprove the 
information collection, but they may respond after 30 days. Therefore, 
to ensure maximum consideration, OMB should receive public comments by 
August 23, 2012.
    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, you should be aware that we 
may make your entire comment--including your personal identifying 
information--publicly available at any time. While you can ask us, in 
your comment, to withhold your personal identifying information from 
public view, we cannot guarantee that we will be able to do so.
    Office of the Secretary, Information Collection Clearance Officer: 
Laura Dorey (202) 208-2654.

    Dated: July 17, 2012.
Gregory J. Gould,
Director, Office of Natural Resources Revenue.
[FR Doc. 2012-18079 Filed 7-23-12; 8:45 am]
BILLING CODE 4310-T2-P