[Federal Register Volume 78, Number 155 (Monday, August 12, 2013)]
[Proposed Rules]
[Pages 49062-49078]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-19199]



[[Page 49061]]

Vol. 78

Monday,

No. 155

August 12, 2013

Part IV





Department of the Interior





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 Office of Natural Resources Revenue





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30 CFR Parts 1203, 1210, and 1218





 Valuation of Federal Coal for Advance Royalty Purposes and Information 
Collection Applicable to All Solid Minerals Leases; Proposed Rule

  Federal Register / Vol. 78, No. 155 / Monday, August 12, 2013 / 
Proposed Rules  

[[Page 49062]]


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DEPARTMENT OF THE INTERIOR

Office of Natural Resources Revenue

30 CFR Parts 1203, 1210, and 1218

[Docket No. ONRR-2012-0001; DS63610300 DR2PS0000.CH7000 134D0102R2]
RIN 1012-AA04


Valuation of Federal Coal for Advance Royalty Purposes and 
Information Collection Applicable to All Solid Minerals Leases

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

ACTION: Proposed rule.

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SUMMARY: ONRR proposes new regulations to implement the provisions of 
the Energy Policy Act of 2005 (EPAct) governing the payment of advance 
royalty on coal resources produced from Federal leases. The EPAct 
provisions amend the Mineral Leasing Act of 1920 (MLA). ONRR also 
proposes to add information collection requirements that are applicable 
to all solid minerals leases and also are necessary to implement the 
EPAct Federal coal advance royalty provisions.

DATES: Comments must be submitted on or before October 11, 2013.

ADDRESSES: You may submit comments to ONRR by one of the following 
methods (Please use ``ICR 1012-0010'' as an identifier in your 
comment):
     Electronically go to http://www.regulations.gov. In the 
entry titled ``Enter Keyword or ID,'' enter ``ONRR-2012-0001,'' then 
click ``Search.'' Follow the instructions to submit public comments. 
ONRR will post all comments. You also can review the ICR at http://www.reginfo.gov.
     Mail comments to Armand Southall, Regulatory Specialist, 
Office of Natural Resources Revenue, P.O. Box 25165, MS 61030A, Denver, 
Colorado 80225-0165.
     Hand-carry comments or use an overnight courier service. 
Our courier address is Building 85, Room A-614, MS 61030A, Denver 
Federal Center, West 6th Ave. and Kipling St., Denver, Colorado 80225.
     Information Collection Request (ICR) Comments: Submit 
written comments by either fax (202) 395-5806 or email ([email protected]) directly to the Office of Information and 
Regulatory Affairs, Office of Management and Budget (OMB), Attention: 
Desk Officer for the Department of the Interior. Include the title of 
the information collection, ``30 CFR Parts 1202, 1206, 1210, 1212, 
1217, and 1218, Solid Minerals and Geothermal Collections,'' and OMB 
Control Number, ``1012-0010.'' Please also submit your comments to ONRR 
at mail to: http://www.regulations.gov. Include your name and address. 
You may also mail a copy of your comments to Armand Southall, 
Regulatory Specialist, Office of Natural Resources Revenue, P.O. Box 
25165, MS 61030A, Denver, Colorado 80225-0165. If you use an overnight 
courier service or wish to hand-deliver your comments, our courier 
address is Building 85, Room A-614, MS 61030A, Denver Federal Center, 
West 6th Ave. and Kipling St., Denver, Colorado 80225.

FOR FURTHER INFORMATION CONTACT: For questions on technical issues, 
contact Sarah T. Holladay, ONRR, at (303) 231-3775. The principal 
authors of this rule are Sarah L. Inderbitzin, Karen Garza, and Sarah 
T. Holladay, ONRR. For comments or questions on procedural issues, 
contact Armand Southall, Regulatory Specialist, ONRR, at (303) 231-
3221, or by email at [email protected].

SUPPLEMENTARY INFORMATION:

I. Background

A. Pre-EPAct Statutory Provisions and Current Regulations

    Under the MLA at 30 U.S.C. 207(b), Federal coal leases are subject 
to conditions of diligent development and continued operation of the 
mine(s). Section 207(b) provides that when a lessee pays coal advance 
royalties, the Secretary of the Department of the Interior (Secretary) 
may suspend the condition of continued operation if the Secretary 
determines that such action will serve the public interest. Section 
207(b) also prescribes a methodology to compute coal advance royalties 
based upon a fixed reserve-to-production ratio that the Secretary 
determines, which shall be no less than the production royalty that 
lessees would otherwise pay. The value for coal advance royalty 
purposes is currently under existing Bureau of Land Management (BLM) 
regulations at 43 CFR 3483.4(c). and is either based on the (1) the 
unit value for coal sold from the Federal coal lease or logical mining 
unit (LMU) during the immediately preceding production royalty payment 
period (2) the average unit price coal was sold for from other Federal 
leases in the same region during the same period if no coal was 
produced and sold from the Federal coal lease or LMU during that period 
or BLM determines there is an insufficient number of sales to determine 
value; or (3) if there was no Federal coal sold from the region during 
the period or if BLM determines there are not enough sales to determine 
value, then BLM may determine value. Under each computation, coal 
advance royalties are based on commercial quantities of coal, and the 
advance royalties can be credited against future production royalties 
from the same lease or LMU.
    Prior to the passage of the EPAct, BLM was responsible for 
administering the advance royalty requirements for Federal coal leases 
and LMUs under its regulations at 43 CFR part 3480. On August 11, 1997, 
ONRR [the former Minerals Management Service (MMS)] issued a memorandum 
(ONRR Memorandum) clarifying that, under a June 1997 Tripartite 
Memorandum of Understanding (Tripartite MOU), BLM and ONRR shared 
responsibilities concerning coal advance royalties. This MOU also 
included the Bureau of Indian Affairs. The ONRR Memorandum standardized 
procedures and responsibilities for BLM and ONRR in determining coal 
advance royalties. Under the Tripartite MOU and the ONRR Memorandum, 
BLM continued to determine the volume of coal under 43 CFR 3483.4(c), 
but ONRR determined the value for the coal advance royalty due under 
that same section. Upon determining the coal advance royalty due, ONRR 
issued an Order to Pay Advance Royalty to the applicant.
    ONRR has been issuing Orders to Pay Advance Royalty since the 
Tripartite MOU went into effect. However, coal lessees have challenged 
ONRR's authority to determine coal advance royalty due through appeals 
of Orders to Pay Advance Royalty. Indeed, in BTU Empire Corp., 172 IBLA 
206, 221 (2007), the Interior Board of Land Appeals set aside an ONRR 
Director's Decision and remanded the decision to ONRR and BLM to ``* * 
* clari[fy] in a subsequent decision * * * the issue of the governing 
authority that establishes who is the final decisionmaker on the topic 
of advance royalty calculations.''
    To resolve the issue of authority and responsibility, and because 
ONRR and BLM agree that the authority and responsibility should reside 
in ONRR's regulations, this proposed rule would move the portion of the 
BLM regulations regarding valuation of Federal coal reserves for coal 
advance royalty purposes from its present location at 43 CFR 3483.4(c) 
to ONRR regulations in a new 30 CFR part 1218, subpart I, titled 
``Federal Coal Advance Royalty.''

B. The EPAct

    On August 8, 2005, the President signed into law the EPAct, Public 
Law 109-58, 119 Stat. 594. Section 434 of the EPAct, entitled the 
``Payment of

[[Page 49063]]

Advance Royalties Under Coal Leases,'' amended the MLA, 30 U.S.C. 
207(b). Section 434 of the EPAct amends the process for payment of 
advance royalties under Federal coal leases.
    The portion of this proposed rulemaking pertaining to payment of 
advance royalties would implement the EPAct section 434 provisions and 
would apply only to Federal coal leases. This proposed rulemaking also 
would further Congress's purpose of regulatory streamlining by:
     Implementing the revised Federal coal unit value 
methodology and payment provisions for coal advance royalty under 
proposed subpart I of 30 CFR part 1218; and
     Amending 30 CFR parts 1203, 1210, and 1218 to propose 
changes necessary to implement the Federal coal advance royalty 
provisions of the EPAct.

C. The Information Collection

    As further discussed below, ONRR is also proposing to add new 
information collection requirements applicable to all Federal and 
Indian solid minerals leases. However, as we also discuss below, this 
proposed information collection would not substantively impact Indian 
mineral owners.

II. Explanation of Proposed Amendments

    Before reading the explanatory information below, please turn to 
the proposed rule language, which immediately follows the List of 
Subjects in 30 CFR parts 1203, 1210, and 1218 and the signature page in 
this proposed rule. ONRR would codify this language in 30 CFR, chapter 
XII, when we finalize this rule.
    When you have read the rule thoroughly, please return to the 
preamble discussion below. The preamble contains additional information 
about the proposed rule, such as why we defined a term in a certain 
manner, why we chose a certain procedure, and how we interpret the law 
this rule implements.

A. Section-by-Section Analysis of 30 CFR Part 1203--Relief or Reduction 
in Royalty Rates

    ONRR proposes to remove Sec.  1203.250 and renumber Sec.  1203.251 
as Sec.  1203.250. Part 1218, subpart I, would address the provisions 
for payment of advance royalty in lieu of continued operation.

B. Section-by-Section Analysis of 30 CFR Part 1210--Forms and Reports, 
Subpart A--General Provisions

Section 1210.10 What are the OMB-approved information collections?
    In the table under the column ``Form or information collected'', 
ONRR proposes to delete the title ``Sales summaries--solid minerals,'' 
and replace it with a new ``Form ONRR-4440--Solid Minerals Sales 
Summary.'' We would place this form number and name after the title 
``Form ONRR-4430, Solid Minerals Production and Royalty Report'' and 
before the title ``Form ONRR-4292, Coal Washing Allowance Report.'' 
Currently, ONRR is updating all form numbers from MMS to ONRR in a 
separate rulemaking, RIN 1012-AA09. We would design Form ONRR-4440, 
Solid Minerals Sales Summary, to replace the current Sales Summaries, 
which require companies to submit their own internally generated 
documents to ONRR. We would use the proposed Form ONRR-4440 to collect 
information from operators in order to determine a company's compliance 
with applicable laws, rules, and regulations. In addition, ONRR would 
use this proposed form to identify spot market sales of comparable coal 
from the same region and to determine an average price for Federal coal 
advance royalty purposes. This proposed form should reduce industry's 
burden of responding to ONRR site visits, emails, and telephone 
contacts. ONRR believes the data would be valuable in (1) making 
valuation determinations, (2) trending coal prices, (3) comparing 
purchaser sources, and (4) ensuring that the Federal Government and 
Indian lessors receive fair market value for coal. In addition, ONRR's 
automated systems can use the standardized, formatted data more easily.
    ONRR is developing an automated system that would receive and store 
the sales summary data that lessees would submit on the proposed Form 
ONRR-4440. Industry would submit and ONRR would utilize the submitted 
data in two phases. Phase 1 is a modified version of the system 
currently used to submit and handle unformatted sales summary data. 
Phase 2 would require lessees to submit proposed Form ONRR-4440 
electronically. This submittal process would be similar to the current 
process ONRR requires lessees to follow to submit Form ONRR-4430, Solid 
Minerals Production and Royalty Report (Form ONRR-4430, P&R Report). 
Each phase would have the benefits and costs discussed below.
    In the Phase 1, ONRR would modify its current procedures and 
systems to incorporate critical additional data fields this proposed 
rulemaking would require. Under this proposed rule, lessees would 
submit Form ONRR-4440 in a standardized format. Under Phase 1, we would 
receive the new Form ONRR-4440 by email attachment that lessees would 
submit to a secure email address. We would then move the attachments 
into an electronic Room (eRoom) using a process similar to what ONRR 
currently uses to handle non-standardized sales summaries. Because the 
lessee would submit the data in a standardized format, ONRR would 
design a program under this phase that would automatically load the 
sales summaries into our databases.
    Phase 2 would require lessees to submit proposed Form ONRR-4440 
electronically. This submittal process would be similar to the current 
process ONRR requires lessees to follow to submit Form ONRR-4430. 
Lessees would submit data in a specific format permitting the Web site 
to accept the form. The accepted document would then load directly into 
ONRR's databases.
    For a more detailed discussion of the system changes, please see 
Section III, Procedural Matters, 2C(2), Administrative Costs--Federal 
Government.

C. Section-by-Section Analysis of 30 CFR Part 1210--Forms and Reports, 
Subpart E--Production and Royalty Reports-Solid Minerals

Section 1210.201 How do I submit Form ONRR-4430, Solid Minerals 
Production and Royalty Report?
    ONRR proposes amending Sec.  1210.201(c)(3) to eliminate the list 
of addresses and instead refer to the ONRR Web site where lessees can 
retrieve the current address. Eliminating the list of addresses would 
eliminate the need for ONRR to publish Federal Register notices 
advising of address changes and, thereby, save administrative costs. 
The Web site provides readers with immediate availability to changes.
Section 1210.202 How do I submit Form ONRR-4440, Solid Minerals Sales 
Summary?
    ONRR also proposes to change the title of Sec.  1210.202 and amend 
that section by revising paragraph (a)(1) to reflect that we would now 
require sales summaries to be reported for each mine that has 
production on Federal or Indian solid minerals leases rather than using 
company-generated documents. This section also would identify which 
version of the form to use for the specific mineral type. For example, 
coal

[[Page 49064]]

lessees would fill out and submit Form ONRR-4440A, but sodium and 
potassium lessees would fill out and submit Form ONRR-4440B.
    As stated above, ONRR would phase in the reporting requirements. 
Initially, we would require all lessees (excluding certain small 
businesses) to submit the forms electronically, using a spreadsheet 
format software, such as Microsoft Excel. Subsequently, lessees would 
submit Form ONRR-4440 electronically like solid minerals reporters 
currently use to submit Form ONRR-4430, P&R Report. We would make forms 
and instructions available on the Solid Minerals Reporting Information 
Web page at http://www.onrr.gov/FM/Forms/AFSSol_Min.htm.
    The EPAct requires the determination of coal advance royalty using 
spot market prices of comparable coal in the regions. This proposed 
Form ONRR-4440 would facilitate ONRR's ability to determine a reliable 
average spot market price for use in determining the coal advance 
royalty due under section 434 of the EPAct. The Royalty Policy 
Committee Coal Subcommittee interviewed two primary publishers of coal 
spot market prices. Both publishers indicated that published coal spot 
market prices do not truly represent actual spot market prices because 
published coal spot market prices are merely an average of surveyed 
prices from a portion of the coal industry and include other 
considerations, such as coal futures speculation. This proposed 
rulemaking would allow ONRR to determine a reliable average spot market 
price by using actual spot market prices that operators of mines with 
Federal coal leases submit on the proposed Form ONRR-4440.
    ONRR proposes to remove paragraph (a)(2) because ONRR has found 
that we may be able to complete compliance activities without requiring 
lessees to submit a separate form for each remote storage site. 
However, ONRR reserves the right to collect remote sales site Sales 
Summary data on an as-needed basis under 30 CFR 1210.206.
    ONRR proposes to renumber paragraph (a)(3) as paragraph (a)(2). In 
the renumbered paragraph (a)(2), we propose to specify the data 
elements for the products we require lessees to report on Form ONRR-
4440. Reporting is necessary only for those leases with ad valorem 
royalty terms. ONRR believes that the existing requirement allowing 
submittal of each company's internally generated documents, which have 
no standard format, is inefficient and results in additional work for 
ONRR and lessees. Although some of these data elements do not apply to 
coal advance royalty, ONRR believes requiring standardized forms for 
each mineral type with leases having ad valorem royalty terms would 
eliminate the need for ONRR to interpret company-generated documents 
and to call lessees or operators with questions regarding such 
documents. ONRR believes this process would save lessees, operators, 
and ONRR time and administrative costs.
    Requiring standardized forms would save ONRR administrative costs 
because it would enable ONRR to locate paired Solid Minerals Sales 
Summary (Form ONRR-4440) and Solid Minerals Production and Royalty 
Report (Form ONRR-4430) reports, in ONRR's data bases and to make 
automated comparisons of the data from both forms.
All Solid Mineral Leases
    The current regulations regarding sales summary data elements 
include ``(ii) Sales Units,'' which applies only to products. In this 
proposed rule, we would (1) keep this data element but renumber as 
``(xvii)''; (2) apply this data element to both products and 
byproducts; and (3) remove the current data element ``(xii) By-product 
Units.'' All other data elements in the current regulations remain 
unchanged; however, we have renumbered these data elements. We list 
these renumbered data elements in the revised table below titled 
``Required Data Elements for Solid Minerals Sales Summary.''
    Proposed new data elements numbered (i) through (iv) would provide 
ONRR with Mine Name, Mine Number, Customer Identification Number 
(Customer ID), and whether the lease is a Federal or Indian property. 
These ``header'' elements along with the following new elements (v) 
through (x) would provide ONRR with: Royalty Report Submission 
Identification Number (P&R Submission ID); Product Name as reported on 
the royalty report (P&R Equivalent Product Name); Sales Point (mine or 
remote storage site); Submission Type: Original (O) or Adjustment (A) 
or Revision of Original (O-R) or Revision of Adjustment (A-R); Sales 
Month/Year; and Purchaser Name.
    ONRR proposes to add other new data elements necessary to carry out 
its advance royalty and compliance responsibilities. The following new 
data elements (xi, xiii, xiv, xv, and xvi) would address specific 
contract parameters:
     (xi) Delivery Point would be an alpha identifier that you 
use to identify the location of product delivery.
     (xiii) Contract Identification (Contract ID) would be an 
alpha or numeric identifier that you would use to identify a specific 
contract;
     (xiv) Contract Term: Spot (S) or Long Term (LT) would 
identify whether the contract is of a short or long duration; and
     (xv) Contract Type: Arm's Length (ARMS) or Non-Arm's 
Length (NARM) would distinguish between contracts that are arm's length 
and those that are not arm's length.
     (xvi) Destination Point would mean the final destination 
point to which a product is delivered by you or your affiliate to an 
arm's-length purchaser. For example, enter the City and State for 
domestic destination point(s); or the Country name such as ``Korea,'' 
``China,'' ``United Kingdom,'' etc. for foreign destination point(s).
Coal Leases
    This proposed rule would require coal lessees to report the 
following revised and new quality parameter data elements:
     (xxv) Pounds Sulfur Dioxide per MMBtu (lbs SO2/
MMBTU); and
     (xxvi) Percent Sodium Oxide (Sodium Oxide %), 
respectively, which are coal quality measurements.

These coal quality parameters would help ONRR determine what coal sales 
are comparable to others when determining advance royalty.
Sodium/Potassium Leases
    The following new data elements (xxviii, xxix, and xxx) would 
require reporting specific contract information that would apply only 
to sodium/potassium leases:
     (xxviii) Foreign (F) or Domestic (D) would identify the 
market into which the lessee sold the product. ONRR would use this data 
element to determine how to value the product;
     (xxix) Reagent Costs would mean reagent costs the lessee 
proposes as allowable deductions used to reduce the value of sodium or 
potassium for royalty purposes; and
     (xxx) Bagging Costs would mean bagging costs the lessee 
proposes as allowable deductions used to reduce the value of sodium or 
potassium for royalty purposes.
    Currently, sodium/potassium lessees are required to report ``(xii) 
By-product Units'' to ONRR on sales summaries only when requested. 
After reviewing our past practices regarding sodium/potassium leases, 
we do not believe that sodium/potassium lessees produce byproducts. If 
ONRR determines that we need additional data, we may request the data 
from lessees on an as-needed basis under current regulations at 30 CFR 
1210.206. ONRR specifically

[[Page 49065]]

requests comments regarding the production of byproducts from sodium/
potassium lessees.
Western Phosphate Leases
    The following new data elements (xxxi, xxxii, xxxiii, and xxxiv) 
would apply only to Western Phosphate leases:
     (xxxi) Sales Units (Wet Tons) would mean the tons of raw 
ore produced;
     (xxxii) Sales Units (Dry Tons) would mean the tons of ore 
the lessee reports to ONRR on Form ONRR-4430, derived by subtracting 
the moisture content from the wet tons;
     (xxxiii) Unit Value would mean the value of each unit of 
P2O5, which is used to calculate royalty due; and
     (xxxiv) Phosphorus Pentoxide (P2O5) 
tons would mean the number of P2O5 tons the 
lessee used to calculate royalty due.
    The proposed rule also would continue to require Western Phosphate 
lessees to report byproduct information to ONRR at the product level. 
However, rather than reporting byproducts on Form ONRR-4440C, the 
lessee would report the phosphate byproduct information on Form ONRR-
4440E as Sales Units (xvii) and Gross Proceeds (xviii).
Metal Leases
    The proposed rule would not require any new data elements for 
metals. Currently, metal byproducts are reported to ONRR on sales 
summaries only when requested. Also, some lessees report gross proceeds 
for the sale of metals that include the gross proceeds from byproducts. 
Under the proposed rule, you would report all byproducts produced and 
sold from metal leases monthly on Form ONRR-4440D. And you would report 
the gross proceeds to ONRR on Form ONRR-4440D separately for all 
products, including byproducts, produced and sold from metal leases. 
Instructions for completing Form ONRR-4440D would be available at 
http://www.onrr.gov/FM/Forms/AFSSol_Min.htm.
Non-Ad Valorem Leases
    Additionally, current regulations require lessees holding leases 
with non-ad valorem royalty terms to report only sales units on a 
monthly basis. ONRR also requires these lessees to report the purchaser 
of lease production on an as-requested basis. This proposed rule would 
not require lessees with non-ad valorem royalty terms to report data on 
Form ONRR-4440. After reviewing our past practices regarding non-ad 
valorem leases, we do not believe that requiring lessees to submit Form 
ONRR-4440 would benefit our audit and compliance processes. If ONRR 
determines that we need additional data for non-ad valorem leases, we 
may request the data from lessees on an as-needed basis under current 
regulations at 30 CFR 1210.206.
    ONRR proposes to delete the existing table at paragraph (a)(3) and 
add to paragraph (a)(2) the following revised table titled ``Required 
Data Elements for Solid Minerals Sales Summary.'' We indicate the new 
and revised data elements and numbers in bold.
BILLING CODE 4310-T2-P

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[GRAPHIC] [TIFF OMITTED] TP12AU13.002


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[GRAPHIC] [TIFF OMITTED] TP12AU13.003

BILLING CODE 4310-T2-C
    ONRR would add paragraph (a)(3) to Sec.  1210.202. Paragraph (a)(3) 
would explain that instructions for completing Form ONRR-4440, Solid 
Minerals Sales Summary, are available at http://www.onrr.gov/FM/Forms/AFSSol_Min.htm.
    Finally, ONRR proposes to change paragraphs (b) and (c), making 
necessary changes to show that ONRR would use proposed Form ONRR-4440 
rather than company internally generated sales summaries to collect 
information.
    Another proposed change in the submission of sales summary data 
relates to adjustments to reported data. Currently, reporters submit a 
single monthly Sales Summary. This submittal represents a ``snapshot'' 
that corresponds to the data valid at the time when the reporter 
submits the corresponding monthly original Form ONRR-4430. In order to 
accomplish the advance royalty and compliance efforts discussed above, 
we would require reporters to submit a revised Form ONRR-4440 to 
correspond with an adjusted Form ONRR-4430 when they submit the 
adjusted Form ONRR-4430. Reporters must continue to revise Solid 
Minerals Sales Summaries as often as they revise Solid Minerals 
Production and Royalty Reports. This change would enhance ONRR's 
royalty compliance capabilities, particularly in monitoring lessees' 
royalty adjustments using Form ONRR-4430. In addition, the proposed 
requirement that lessees submit revised Form ONRR-4440 data would 
ensure that ONRR has up-to-date spot market data. These facts are the 
key to implementing ONRR's and BLM's proposed coal advance royalty 
rules. Furthermore, the submission of Form ONRR-4440 during these 
situations would enable ONRR to monitor lessees' sales contract 
performance and continuity, which is important for ONRR's royalty 
compliance efforts.
    Overall, ONRR's proposed changes for the sales summary would enable 
us to enforce Congress's intent regarding the calculation of advance 
royalties and would improve our royalty compliance capabilities. Over 
the past several years, ONRR has evaluated its royalty compliance 
efforts. The new processes

[[Page 49068]]

that we would implement to utilize increased data collections would 
strengthen our product sales verification efforts, particularly 
regarding verification of reported sales allocations between or among 
leases for (1) both mine and remote sales, (2) lessees' adherence to 
and enforcement of sales contract terms, and (3) lessees' reporting of 
production and sales adjustments.

D. Section-by-Section Analysis of 30 CFR Part 1218--Collection of 
Royalties, Rentals, Bonuses, and Other Monies Due the Federal 
Government

    In subpart A, ONRR proposes to make a technical amendment in Sec.  
1218.40(c)(1) to refer to the new Form ONRR-4440, Solid Minerals Sales 
Summary.
    We would amend part 1218 to add proposed subpart I titled ``Federal 
Coal Advance Royalty.''
    We would add proposed subpart I to part 1218 to implement section 
434 of the EPAct. By this rule, the Secretary has decided, for purposes 
of implementing section 434 of the EPAct, that ONRR, rather than BLM, 
would promulgate the regulations governing valuation of coal for 
advance royalty purposes.
Section 1218.601 What definitions apply to this subpart?
    This section would define new terms applicable to this subpart, use 
some current terms from BLM's 43 CFR Part 3400, and use a revised term 
from BLM's proposed rule. ONRR would use BLM's definitions in this 
subpart to ensure consistency between this proposed rulemaking and 
BLM's proposed rulemaking titled ``Lease Modifications, Lease and 
Logical Mining Unit Diligence, Advance Royalty, Royalty Rates, and 
Bonds,'' which BLM will publish concurrently with this proposed 
rulemaking.
    ONRR proposes the following definitions:
    Applicable continued operation year would mean the continued 
operation year (COY) for which payment of coal advance royalties is 
required in lieu of continued operation under current 43 CFR 3483.4.
    ONRR proposes this definition because section 434 of the EPAct 
requires that the coal advance royalties be computed based on the 
average price in the spot market ``during the last month of each 
applicable continued operation year.'' This definition changes both 
BLM's and ONRR's prior practices regarding establishing value for coal 
advance royalties based on the year prior to the COY at issue.
    For example, under this proposed rule, if you needed to pay coal 
advance royalty for the COY March 2006 through February 2007, that same 
period would be the ``applicable continued operation year.'' Thus, in 
this example, the value for coal advance royalty for the applicable 
continued operation year would be based on the average coal spot market 
prices for February 2007. As a result, lessees would pay advance 
royalties after the year in which the lessee chose to pay advance 
royalties in lieu of producing. This, in turn, results in a loss of 
time value of revenue to State governments and the Federal Government.
    ONRR specifically requests comments on whether we should define the 
``applicable continued operation year'' in the manner proposed, or in a 
manner consistent with previous practice. The previous practice was to 
determine value using prices of coal produced and sold during the 
immediately preceding production royalty payment period, which we 
interpreted to be the month preceding the start of the COY. Using the 
example above, if we defined ``applicable continued operation year'' 
consistent with prior practice, then, if you chose to pay coal advance 
royalty for the COY March 2006 through February 2007, the coal advance 
royalty value is based on the average coal spot market prices for 
February 2006. Under this definition, since the lessee would pay 
advance royalty at the beginning of the year in which the lessee chose 
to pay advance royalties in lieu of producing, State governments and 
the Federal Government would not lose the time value of revenue.
    Comparable coal would mean coal that is sold in a similar market 
and that is similar in chemical and physical characteristics to the 
coal produced at the lease or mine for which payment of advance 
royalties is required in lieu of continued operation under current 43 
CFR 3483.4. ONRR proposes this definition because section 434 of the 
EPAct requires that coal advance royalties be based on sales of 
``comparable coal.'' ONRR considered defining comparable coal as being 
``like quality coal,'' as defined under 30 CFR 1206.251. However, 
different markets require different quality requirements for coal. 
Therefore, we believe that it is reasonable to define ``comparable 
coal'' as not only of ``like quality'' but also sold in a similar 
market. For example, a coal mine may sell coal in both the steam market 
and the stoker market. However, coal sold in the stoker market can 
demand and receive a higher price and should not be considered 
comparable to the same coal sold in the steam market. Another example 
is boilers in steam power plants that may have lower ash requirements 
than boilers used in processing sugar beets.
    Likewise, coal sold to a captive power plant is likely not sold in 
similar market circumstances as coal sold on the open market. 
Furthermore, a coal mine on Indian land may be considered not 
comparable to a mine on Federal land, because of the possible 
differences in taxes and specific lease provisions imposed on 
production from the different lands.
    ONRR specifically requests comments on this definition of 
comparable coal.
    Region would mean one of the eight Federal coal production regions 
that BLM designates as follows: Denver-Raton Mesa Region, Fort Union 
Region, Green River-Hams Fork Region, Powder River Region, San Juan 
River Region, Southern Appalachian Region, Uinta-Southwestern Utah 
Region, and Western Interior Region. We propose this definition to be 
consistent with BLM-identified regions. Because these defined regions 
are very large geographically, we specifically request comments on 
other possible definitions of ``region.'' For example, should ONRR 
restrict the definition to include only other mines within a specified 
vicinity of the mine for which advance royalty value will be 
determined?
    Spot market would mean a market in which sales transactions occur 
wherein a seller agrees to sell to a buyer a specified amount of coal 
at a specified price over a fixed period usually not exceeding a year. 
Such transactions do not normally require a cancellation notice to 
terminate, do not contain an obligation, and do not imply intent to 
continue in subsequent periods. This definition is consistent with 
other ONRR valuation regulations. We specifically request comments on 
this definition, particularly whether we should include in the 
definition sales agreements of approximately 1-year duration in which 
an initial agreement continues upon renegotiation of the sales price. 
Such contracts are typically known as long-term contracts with annual 
price reopeners.
    Spot market price would mean the price in a spot market contract. 
Spot market prices would include the spot market prices that you or 
other entities report to ONRR on Form ONRR-4440. We request comments on 
whether we should narrow the definition of spot market price to include 
only prices in arm's-length spot market contracts.
    This proposed rule lists four BLM definitions that we would adopt. 
BLM defines the following terms at current 43 CFR 3480.0-5: Advance 
royalty,

[[Page 49069]]

continued operation, continued operation year, and logical mining unit 
(LMU). BLM proposes to revise the definition of continued operation in 
its proposed rulemaking. In this subpart, ONRR would utilize BLM's 
existing definitions and BLM's proposed definition for continued 
operation.
Section 1218.602 How will ONRR compute the coal advance royalty you 
owe?
    Because the Secretary has designated ONRR to compute coal advance 
royalty due in this rulemaking, we propose to move those BLM 
responsibilities from current 43 CFR 3483.4(c) to this section. 
Therefore, paragraph (a) would explain that ONRR will calculate the 
coal advance royalty due by multiplying the volume of coal that BLM 
computes under proposed 43 CFR 3483.4(g) by the value that ONRR 
calculates under paragraph (a) of this section and by the royalty rate 
that BLM prescribes under proposed 43 CFR 3483.4(d).
    In section 434 of the EPAct, Congress prescribed how the Secretary 
must value advance royalty for Federal coal leases. Therefore, 
consistent with EPAct, paragraph (a)(1) of this section would explain 
that ONRR will use the weighted average spot market prices for 
comparable coal from the same region during the last month of the 
applicable COY as the value for royalty purposes. Because we do not 
currently have a reliable source for average spot market prices for 
comparable coal from the same region, we propose to collect such 
information from Federal coal lessees in the new information collection 
described above for 30 CFR 1210.202(a).
    The EPAct section 434 also prescribes that if there are no spot 
market prices for comparable coal from the same region, the Secretary 
may establish a ``comparable method . . . to capture the commercial 
value of coal.'' Therefore, we propose an alternative means of 
establishing the value of coal for advance royalty purposes in 
paragraph (a)(2). In paragraph (a)(2)(i), we propose to use the 
weighted average spot market prices for comparable coal from another 
region as value. We believe that such prices are the most reasonable 
method to capture the comparable value of coal. In paragraph 
(a)(2)(ii), we propose to use any other reasonable value we determine 
if spot prices for comparable coal from another region are not 
available.
    We welcome your comments on these proposed alternatives as well as 
suggestions for other alternatives.
    Paragraph (b) would explain that ONRR would multiply the value 
computed under paragraph (a) by the royalty rate BLM prescribes under 
proposed 43 CFR 3483.4(d) to derive the coal advance royalty amount you 
would owe.
    Paragraph (c) would explain that ONRR would issue an order to pay 
coal advance royalty based upon its calculations under this section.
Section 1218.603 When is my coal advance royalty payment due?
    This section would provide that your coal advance royalty payment 
is due 30 days after you receive the Order to Pay Coal Advance Royalty, 
which ONRR issues under 30 CFR 1218.602(c). We believe that 30 days is 
a sufficient amount of time to allow the lessee to submit the coal 
advance royalty due.
Section 1218.604 How do I report and pay my coal advance royalty?
    This section would provide instructions on how to report and pay 
your coal advance royalty.
Section 1218.605 Is my coal advance royalty payment subject to late 
payment charges?
    This section would explain that, if you do not timely pay an ONRR 
Order to Pay Coal Advance Royalty that we issued under 30 CFR 
1218.602(c), then you must pay late payment interest under 30 CFR 
1218.202.
Section 1218.606 May I credit my coal advance royalty payments against 
future coal production royalties?
    This section would implement the provision in section 434 of the 
EPAct allowing lessees to credit any coal advance royalties against 
future production royalties due from that lease. This section also 
advises that you may not reduce production royalties for that lease 
below zero for any year.
Section 1218.607 How may I appeal an ONRR Order to Pay Coal Advance 
Royalty?
    This section would inform lessees that, if they receive an Order to 
Pay Coal Advance Royalty, they may appeal that order under 30 CFR part 
1290.
Section 1218.608 How may I suspend compliance with an ONRR Order to Pay 
Coal Advance Royalty?
    This section would inform lessees that, if they appeal an Order to 
Pay Coal Advance Royalty, they may suspend compliance with the order to 
pay coal advance royalty under 30 CFR 1243.4.

III. Procedural Matters

1. Summary Cost and Royalty Impact Data

    The proposed changes to the coal advance royalty valuation 
regulations, outlined above, would have royalty impacts on industry, 
states, and the Federal Government. There are also administrative costs 
that both industry and the Federal Government would incur under this 
proposed rulemaking.
    Industry and Federal Government costs would be offset by benefits 
resulting from this proposed rulemaking. The following table displays 
the expected costs associated with industry, State and local 
governments, and the Federal Government, with a detailed description of 
each cost category following the table.

       Summary of Expected Costs and Coal Advance Royalty Impacts
------------------------------------------------------------------------
                                             Administrative costs and
                                            advance royalties increases
                                                   or decreases
               Description               -------------------------------
                                                               Each
                                            First year      subsequent
                                                               year
------------------------------------------------------------------------
                               A. Industry
------------------------------------------------------------------------
(1) Time Value of Delayed Advance               $304,720        $304,720
 Royalty (Gain).........................
(2) Administrative Costs................         -21,150         -21,150
(3) Administrative Cost Savings.........          42,300          42,300
                                         -------------------------------
Net Expected Change to Industry.........         325,870         325,870
------------------------------------------------------------------------

[[Page 49070]]

 
                     B. State and Local Governments
------------------------------------------------------------------------
(1) Time Value of Delayed Advance               -149,313        -149,313
 Royalty (Loss).........................
(2) Administrative Cost Increase........               0               0
(3) Administrative Cost Savings.........               0               0
                                         -------------------------------
Net Expected Change to State and Local          -149,313        -149,313
 Governments............................
------------------------------------------------------------------------
                          C. Federal Government
------------------------------------------------------------------------
(1) Time Value of Delayed Advance               -155,407        -155,407
 Royalty (Loss).........................
                                         -------------------------------
(2) Administrative Cost Increase (Loss)
    Automated System Phase 1 ($270,500).        -270,500               0
    Automated System Phase 2 ($375,000).        -375,000               0
                                         -------------------------------
(3) Administrative Cost Savings (Gain)
    Phase 1--($54,000 + $108,000).......         162,000         162,000
    Phase 2--($5,760 + $54,000 +                 167,760         167,760
     $108,000)..........................
Net Expected Change to Federal
 Government
    Phase 1--(-$155,407-$270,500 +              -263,907           6,593
     $162,000)..........................
    Phase 2--(-$155,407-$375,000 +              -362,647          12,353
     $167,760)..........................
------------------------------------------------------------------------

    Section 434 of EPAct has an impact on coal advance royalty 
resulting from a new methodology for computing coal advance royalty. 
Under EPAct, ONRR would use average spot market prices for the sales of 
comparable coal from the same region during the last month of each 
applicable COY. The provision for using the last month of each 
applicable COY would change the date coal advance royalty is due from 
the beginning of the applicable COY to after the end of the applicable 
COY. Generally, for industry, this provision would mean they would have 
the benefit of not paying coal advance royalty for about a year. State 
governments and the Federal Government conversely would not have the 
use of the coal advance royalty payment for a year and, therefore, at a 
minimum, lose the time value of that advance royalty payment.
    Published coal spot market prices are not readily available or 
reliable. The Royalty Policy Committee's Coal Subcommittee interviewed 
two primary publishers of coal spot market prices. Both publishers 
indicated that the published coal spot market prices do not truly 
represent actual coal spot market prices because the published coal 
spot market prices are merely an average of surveyed prices from a 
portion of the coal industry and include other considerations such as 
coal futures speculation. This proposed rule would provide ONRR an 
alternative method of determining an average coal spot market pricing, 
which would be more reliable than publicly available prices. This 
alternative method would be based on actual coal spot market data 
operators of mines submit for Federal coal leases on proposed Form 
ONRR-4440, Solid Minerals Sales Summary. On this proposed form, ONRR 
would require industry to identify spot market prices, which we would 
use to determine a weighted average spot market price for comparable 
coal in the region.
    To estimate the impact of using spot market prices, ONRR used the 
only spot market pricing currently available, published coal spot 
market prices. We compared three previous coal advance royalty 
valuation cases based on the existing regulations for three different 
months to currently available coal spot market prices for those months.
    Our sampling demonstrated that in two cases, the average published 
coal spot market prices were higher than the ONRR-calculated value 
under the current regulations. In the third case, the average coal spot 
market price had a lower value than the ONRR-computed value. Thus, the 
royalty impact on industry, State governments, and the Federal 
Government can be either positive or negative. Therefore, on a case-by-
case basis, there may be a cost or a benefit.
    There are other ``Costs and Benefits'' under the meaning identified 
in OMB Circular A-4, as a result of this proposed rule. Under this 
proposed rule, administrative costs for both industry and the Federal 
Government would include those administrative costs required for 
changing the way industry submits sales summary information to ONRR. 
This proposed rule would standardize the format and data submission. We 
believe that overall there will be considerable benefits or savings to 
both industry and the Federal Government because of efficiency gains 
from the new submittal format.
    Indian leases do not contain coal advance royalty terms; therefore, 
the only portion of this proposed rule applicable to Indian leases is 
the information collection requirements. However, the cost of 
implementing information collection changes would only increase the 
burden upon industry and the Federal Government processing the new data 
elements.
A. Industry
    (1) Royalty Impacts--Time Value of Delayed Coal Advance Royalty 
(Gain). Under this proposed rule, industry would have the benefit of 
the time value of money because, under the EPAct, it would not have to 
make the coal advance royalty payment for an applicable COY until after 
the end of the COY. Section 434 of the EPAct mandated this change. 
Under the current regulations, lessees pay coal advance royalty for an 
applicable COY

[[Page 49071]]

before the applicable COY begins. To estimate this annual benefit to 
industry, ONRR calculated interest using 2010 coal advance royalty 
payments of approximately $5.2 million/year. We calculated simple 
interest accrued for a COY based on the Standard and Poor's Corporate 
Government Bond Yield Index for Industrial Triple B 15 year Bond Rate 
of 5.86 percent for July 2010. That calculation resulted in an 
estimated time value of the delayed coal advance royalty payment 
benefit to industry of $304,720 per year.
    (2) Administrative Costs--Industry. ONRR expects that industry 
would incur some administrative costs as a result of this proposed 
rule. Currently, industry submits internally generated documents to 
meet ONRR's sales summary data collection requirements. This proposed 
rule would instead require companies to complete and submit a 
standardized Solid Minerals Sales Summary, Form ONRR-4440. Because the 
proposed rule requires companies to complete and submit Form ONRR-4440, 
we estimate that this change in information collection methodology 
would increase industry sales summary data submission burden hours from 
\1/2\ hour to 1 hour. We project that industry would submit 
approximately 75 Solid Minerals Sales Summaries each month. Labor costs 
for industry accountants in a metropolitan area are approximately $47 
per hour ($33.69 [mean hourly wage] x 1.4 [benefit cost factor] = 
$47.166 per hour, rounded to $47) based on Bureau of Labor Statistics, 
National Occupational Employment and Wage Estimates. A one-half hour 
increase in reporting costs would increase industry costs by 
approximately $21,150 per year calculated as follows:

(75 Solid Minerals Sales Summaries/month) x (12 months/year) x (0.5 
hour/Solid Minerals Sales Summary) x ($47/hour).

    However, ONRR also believes that industry benefits from this 
proposed reporting change because industry should incur a decrease in 
operational costs as a result of the standardized submission. For 
proposed Form ONRR-4440, we use available information technology (for 
example: Spreadsheet programs, i.e., Microsoft Excel, web-based 
submittal system). Using a standardized form would reduce the number of 
ONRR site visits, emails, or telephone contacts needed to interpret 
company-generated sales summary documents. Our historical data shows 
that, for each internally generated sales summary document that 
industry submits, industry must spend approximately 1 hour explaining 
to ONRR the data that industry submitted. We calculated the estimated 
total annual cost to industry by multiplying the approximately 75 Sales 
Summaries that industry submits per month by 12 months and then 
multiplying by a labor cost factor of $47 per hour. The resulting total 
estimated cost to industry under the existing information collection 
would be $42,300 per year calculated as follows:

(75 Sales Summaries/month) x (12 months/year) x (1 hour/Sales Summary) 
x ($47/hour).

    We believe this cost would be greatly reduced with the 
implementation of proposed Form ONRR-4440.
    The net expected benefit to industry would be $325,870 per year 
calculated as follows:

$304,720 per year (Time Value of Delayed Advance Royalty (Gain))-
$21,150 per year (Administrative Costs) + $42,300 per year 
(Administrative Cost Savings).

    We invite industry to comment on estimated burden hours and 
reporting costs required to enter data into proposed Form ONRR-4440.
B. State and Local Governments
    (1) Royalty Impacts--Time Value of Delayed Coal Advance Royalty 
(Loss). This proposed rule would impact State governments and would 
impact local governments to the extent that they rely on State 
government distributions. As explained above, lessees would no longer 
pay advance royalties in advance of the applicable COY, resulting in an 
estimated benefit to industry of $304,720 per year. However, this will 
cost both States and the Federal Government the benefit of the time 
value of money of $304,720 per year. Since the States in which Federal 
coal leases are located receive 49 percent of the royalties under 30 
U.S.C. 191, the cost to the states resulting from this rulemaking would 
be approximately $149,313 per year (49 percent of the estimated total 
loss of $304,720 per year).
    (2) Administrative Costs--State and Local Governments. ONRR 
determined that this proposed rule would have no expected 
administrative costs for State and local governments because we process 
all collections and distributions.
C. Federal Government
    (1) Royalty Impacts--Time Value of Delayed Coal Advance Royalty 
(Loss). Like the states, under this proposed rule, there would be a 
cost to the Federal Government due to the loss of the time value of 
money. Thus, this proposed rule would reduce the annual royalties 
received by the Federal Government by approximately $155,407 (51 
percent of the estimated total loss of $304,720).
    (2) Administrative Costs--Federal Government. ONRR is developing an 
automated system that would receive and store the sales summary data 
that lessees would submit on the proposed Form ONRR-4440. Industry 
would submit and we would utilize the submitted data in two phases. 
Phase 1 is a modified version of the system currently used to submit 
and handle unformatted sales summary data. Phase 2 would require 
lessees to submit proposed Form ONRR-4440 electronically. This 
submittal process would be similar to the current process ONRR requires 
lessees to follow to submit Form ONRR-4430. Each phase would have the 
benefits and costs discussed below.
    In Phase 1, ONRR would modify its current procedures and systems to 
incorporate critical additional data fields this proposed rulemaking 
would require. Under this proposed rule, lessees would submit Form 
ONRR-4440 in a standardized format. Under Phase 1, ONRR would receive 
the new Form ONRR-4440 by email attachments that lessees would submit 
to a secure email address. We would then move the attachments into an 
eRoom using a process similar to what ONRR currently uses to handle 
non-standardized sales summaries. Because industry would submit the 
data in a standardized format, a program designed under this phase 
would automatically load the sales summaries into ONRR's databases.
    Phase 1, which has an estimated remaining cost to implement of 
$270,500, would benefit ONRR by eliminating the need to manually load 
data into our database. The current entry of the sales summary 
information into our database is an ONRR burden of 1 hour for each of 
the 75 Sales Summaries that industry submits each month. An employee 
paid at the United States General Schedule, Grade 12 pay-scale level, 
currently performs this task. We calculate the hourly labor cost as 
follows:

$40.10 per hour (GS-12, Step 5) x 1.5 (benefit cost factor) = $60.15 
per hour, rounded to $60.

    Therefore, in implementing Phase 1, we would eliminate the 
administrative costs of entering sales summary data into our database, 
resulting in a cost savings of $54,000 per year calculated as follows:


[[Page 49072]]


(75 Solid Minerals Sales Summaries/month) x (1 hour/Solid Minerals 
Sales Summary) x (12 months/year) x ($60/hour).

    Phase 1 also would benefit ONRR due to the savings realized from 
the standardized formatting of the sales summary data, which eliminates 
the cost of clarifying sales summary data for compliance reviews. The 
current clarification process is an ONRR burden of 2 hours for each of 
the 75 Solid Minerals Sales Summaries that industry submits each month. 
An employee paid at the Grade 12 pay-scale level (see GS-12 hourly 
labor cost above) currently performs this task. Therefore, in Phase 1, 
ONRR would eliminate the administrative costs of clarifying sales 
summary data, resulting in a cost savings of $108,000 per year 
calculated as follows:

(75 Solid Minerals Sales Summaries/month) x (2 hours/Solid Minerals 
Sales Summary) x (12 months/year) x ($60/hour).

    This combined savings realized from eliminating the need to 
manually load data into our database and the standard formatting of the 
sales summary data would be a benefit of $162,000 per year ($54,000 per 
year + $108,000 per year).
    In Phase 1, the net benefit to the Federal Government for the first 
year would be -$263,907 calculated as follows:

-$155,407 per year (Time Value of Delayed Advance Royalty (Loss)) -
$270,500 for first year (Automated System Phase 1) + $162,000 per year 
(Administrative Cost Savings--Gain for Phase 1).

    For subsequent years, the net expected benefit to the Federal 
Government would be $6,593 calculated as follows:

-$155,407 per year (Time Value of Delayed Advance Royalty (Loss)) + 
$162,000 per year (Administrative Cost Savings (Gain) for Phase 1).

    Phase 2 would require lessees to submit proposed Form ONRR-4440 
electronically. This submittal process would be similar to the current 
process ONRR requires lessees to follow to submit Form ONRR-4430. 
Lessees would submit data in a specific format permitting the Web site 
to accept the form. The accepted document would then load directly into 
ONRR's database. We would then analyze the data loaded into our 
databases using existing compliance tools. The estimated cost to 
implement Phase 2 would be $375,000.
    We would also benefit from implementing Phase 2. Phase 2 would 
eliminate ONRR's administrative costs of moving Sales Summaries from 
email to eRooms, which is required under Phase 1. The task of moving 
Sales Summaries from email to eRooms is an ONRR burden of 8 hours per 
month. An employee paid at the Grade 12 pay-scale level (see GS-12 
hourly labor cost above) currently performs this task. Therefore, using 
Phase 2, ONRR would eliminate the administrative costs of moving Sales 
Summaries, resulting in a cost savings of $5,760 per year calculated as 
follows:

(8 hours/month) x (12 months/year) x ($60/hour).

    Phase 2 also would benefit ONRR by eliminating the need to manually 
load data into our database. The current entry of the sales summary 
information into our database is an ONRR burden of 1 hour for each of 
the 75 Solid Minerals Sales Summaries that industry submits each month. 
An employee paid at the Grade 12 pay-scale level (see GS-12 hourly 
labor cost above) currently performs this task. Therefore, in 
implementing Phase 2, ONRR would eliminate the administrative costs of 
entering sales summary data into our database, resulting in a cost 
savings of $54,000 per year calculated as follows:

(75 Solid Minerals Sales Summaries/month) x (1 hour/Solid Minerals 
Sales Summaries) x (12 months/year) x ($60/hour).

    In addition, Phase 2 also would benefit ONRR due to savings 
realized from the standardized formatting of the sales summary data, 
which eliminates the cost of clarifying sales summary data for 
compliance reviews. The current clarification process is an ONRR burden 
of 2 hours for each of the 75 Solid Minerals Sales Summaries that 
industry submits each month. An employee paid at the Grade 12 pay-scale 
level (see GS-12 hourly labor cost above) currently performs this task. 
Therefore, Phase 2, would eliminate ONRR's administrative costs of 
clarifying sales summary data, resulting in a cost savings of $108,000 
per year calculated as follows:

(75 Solid Minerals Sales Summaries/month) x (2 hours/Solid Minerals 
Sales Summary) x (12 months/year) x ($60/hour).

    The combined savings realized from eliminating the cost of moving 
sales summary data and eliminating the need to manually load data into 
our database and the standard formatting of the sales summary data 
would be a benefit of $167,760 per year calculated as follows:

$5,760 per year + $54,000 per year + $108,000 per year.

    To implement Phase 2, the net cost to the Federal Government for 
the first year would be -$362,647 calculated as follows:

-$155,407 per year (Time Value of Delayed Advance Royalty (Loss)) -
$375,000 for first year (Automated System Phase 2) + $167,760 per year 
(Administrative Cost Savings (Gain) for Phase 2).

    For subsequent years, the net expected benefit to the Federal 
Government would be $12,353 calculated as follows:

-$155,407 per year (Time Value of Delayed Advance Royalty (Loss)) + 
$167,760 per year (Administrative Cost Savings (Gain) for Phase 2).

    During the implementation of each phase, ONRR would use data 
collected on proposed Form ONRR-4440 in other ways, which are not 
quantifiable, that would benefit the Federal Government. We believe the 
data would be valuable in making valuation determinations, trending 
coal prices, comparing purchaser sources, and ensuring that the Federal 
Government receives fair market value for coal.

2. Regulatory Planning and Review (E.O. 12866)

    This proposed rule is not a significant rule, and the Office of 
Management and Budget (OMB) will review this proposed rule under 
Executive Order (E.O.) 12866. We have made the assessments as E.O. 
12866 requires, and the results are given below.
    a. This proposed rule would not have an effect of $100 million or 
more on the economy. It would not adversely affect in a material way 
the economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities. The Summary of Expected Costs and Coal Advance Royalty 
Impacts table, in item 1 above, demonstrates that the economic impact 
on industry, State and local governments, and the Federal Government is 
well below the $100 million threshold used to define a rule as having a 
significant impact on the economy.
    b. This proposed rule would not create a serious inconsistency or 
otherwise interfere with another agency's actions or plans. BLM is also 
proposing a rule as a result of the EPAct. Because the EPAct provisions 
regarding coal advance royalty affect both ONRR and BLM, the two 
agencies are working in a concerted effort to ensure that their 
proposed rules complement each other. BLM and ONRR plan to publish the 
proposed and final rules concurrently for the benefit of those 
constituents

[[Page 49073]]

affected by the coal advance royalty provisions in the EPAct.
    c. This proposed rule would not alter the budgetary effects of 
entitlements, grants, user fees, or loan programs or the rights or 
obligations of their recipients. As demonstrated in the table above 
(see item 1), any budgetary effect on industry is expected to be an 
advantage to Federal coal lessees, with an estimated benefit of 
$325,870 per year.
    d. This proposed rule would not raise novel legal or policy issues. 
Departmental regulations have long required lessees to pay coal advance 
royalties in lieu of continued operation. The EPAct merely changes the 
way ONRR would calculate the coal advance royalty but does not use a 
novel valuation methodology.

3. Regulatory Flexibility Act

    The Department of the Interior certifies that this proposed rule 
would not have a significant economic effect on a substantial number of 
small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.). This proposed rule would not affect small entities. It would 
affect Federal coal lessees, which typically are made up of large 
industrial concerns.

4. Small Business Regulatory Enforcement Fairness Act (SBREFA)

    This proposed rule would not be a major rule under 5 U.S.C. 804(2), 
the Small Business Regulatory Enforcement Fairness Act. This proposed 
rule:
    a. Would not have an annual effect on the economy of $100 million 
or more. The effect would be limited to a maximum estimated amount of 
$362,647. See item 1 above.
    b. Would not cause a major increase in costs or prices for 
consumers, individual industries, Federal, State, or local government 
agencies or for geographic regions. See item 1 above.
    c. Would not have significant adverse effects on competition, 
employment, investment, productivity, innovation, or the ability of 
United States-based enterprises to compete with foreign-based 
enterprises. This proposed rule would benefit United States-based 
enterprises and would be a result of suggestions made through the 
Royalty Policy Committee made up, in part, of industry representatives.

5. Unfunded Mandates Reform Act

    This proposed rule would not impose an unfunded mandate on State, 
local, or tribal governments or the private sector of more than $100 
million per year. This proposed rule would not have a significant or 
unique effect on State, local, or tribal governments or the private 
sector. We are not required to provide a statement containing the 
information that the Unfunded Mandates Reform Act (2 U.S.C. 1501 et 
seq.) requires because the proposed rule is not a mandate.

6. Takings (E.O. 12630)

    Under the criteria in Executive Order 12630, this proposed rule 
would not have significant takings implications. This proposed rule 
would apply only to Federal coal leases: it would not apply to private 
property. This proposed rule does not require a Takings Implication 
Assessment.

7. Federalism (E.O. 13132)

    Under the criteria in Executive Order 13132, this proposed rule 
would not have sufficient federalism implications to warrant the 
preparation of a Federalism Assessment. The Secretary of the Interior 
is responsible for managing Federal coal leases. The Department shares 
advance royalties collected from Federal coal leases with State 
governments on a percentage basis as the law prescribes. This proposed 
rule would not alter any lease management or royalty value-sharing 
provisions. It would determine only the value of production for coal 
advance royalty purposes. This proposed rule would not impose 
administrative costs on States or localities. This proposed rule does 
not require a Federalism Assessment.

8. Civil Justice Reform (E.O. 12988)

    This proposed rule would comply with the requirements of Executive 
Order 12988, for the reasons outlined in the following paragraphs:
    (a) It meets the criteria of section 3(a), which requires that we 
review all regulations to eliminate errors and ambiguity and write them 
to minimize litigation.
    (b) It meets the criteria of section 3(b)(2), which requires that 
we write all regulations in clear language containing clear legal 
standards.

9. Consultation With Indian Tribes (E.O. 13175)

    Under the criteria in Executive Order 13175, we have evaluated this 
proposed rule and determined that it would have no potential effects on 
federally recognized Indian tribes. This proposed rule has two major 
portions: (1) Valuation of Federal coal for advance royalty purposes, 
and (2) information collection applicable to all solid minerals leases. 
Federal coal excludes Indian coal by definition. Information collection 
does apply to both Federal and Indian coal leases: Lessees, not Indian 
tribes, are responsible for reporting requirements.

10. Paperwork Reduction Act

    This proposed rule changes a currently approved information 
collection (OMB Control Number 1012-0010; expires 1/31/2014; 3,509 
total burden hours) by adding new requirements necessary for compliance 
efforts and to comply with the EPAct. Therefore, ONRR is submitting an 
Information Collection Request (ICR) to OMB for review and approval, as 
required under section 3507(d) of the Paperwork Reduction Act (PRA), 44 
U.S.C. 3501 et seq. The title of the ICR is ``Solid Minerals and 
Geothermal Resources.'' This rule also refers to, but does not change, 
the information collection requirements that OMB already approved under 
Control Number 1012-0006.
    The PRA 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.
    As part of our continuing effort to reduce paperwork and respondent 
burden, we invite the public and other Federal agencies to comment on 
any aspect of the reporting burden through the information collection 
process.
    Please see ICR Comments under ADDRESSES section to submit comments.
    OMB has up to 60 days to approve or disapprove this collection of 
information; however, submit your comments to OMB within 30 days in 
order to assure its maximum consideration. We will consider all 
comments received during the comment period for this notice of proposed 
rulemaking.
    The intent of this rulemaking is to implement provisions of the 
EPAct governing the payment of advance royalty on coal resources 
produced from Federal leases and to more efficiently collect 
information from all Federal and Indian solid minerals leases. The rule 
proposes to use a new standardized form (ONRR-4440) under 30 CFR 
1210.202(a)(1) to change the way all solid minerals lessees report 
sales summary data and to collect the additional required data. We 
collect this information to ensure that lessees accurately value and 
properly pay royalties. We require lessees to report production and 
sales on Form ONRR-4430 for approximately 161 producing Federal and 
Indian solid minerals properties. For approximately 75 of those 
properties, we would require the lessees to submit Form ONRR-4440.
    Currently, OMB has approved a total of 3,509 burden hours for OMB 
Control

[[Page 49074]]

Number 1012-0010. Of that total, OMB already approved 570 burden hours 
for existing sales summary reporting. ONRR estimates the total burden 
hours for the new Form ONRR-4440 would be 900 hours. Thus, the proposed 
form would result in a net increase of 330 burden hours. Therefore, the 
total proposed burden hours for OMB Control Number 1012-0010 would be 
3,839 hours (3,509 + 330 net hours = 3,839 hours).
    The following table displays the proposed requirements and 
estimated burden hours for this rule, by CFR citation, to be added to 
the existing collection under 1012-0010.

                                                Burden Breakdown
----------------------------------------------------------------------------------------------------------------
                                                                                Average number
    30 CFR 1210 and 1218        Reporting and recordkeeping      Hour burden      of  annual      Annual burden
                                        requirement                                responses          hours
----------------------------------------------------------------------------------------------------------------
                                          PART 1210--FORMS AND REPORTS
                                       SUBPART E--SOLID MINERALS, GENERAL
----------------------------------------------------------------------------------------------------------------
          Sec.   1210.201 HOW DO I SUBMIT FORM ONRR-4430, SOLID MINERALS PRODUCTION AND ROYALTY REPORT?
----------------------------------------------------------------------------------------------------------------
1210.201(c)(3)..............  (c) How to submit * * * (3)      Hour burden covered under Sec.   1210.201(a)(1).
                               Submit Form ONRR-4430 paper
                               copies to the address given
                               at the Solid Minerals
                               Reporting Information webpage
                               * * *.
----------------------------------------------------------------------------------------------------------------
                  Sec.   1210.202 HOW DO I SUBMIT FORM ONRR-4440, SOLID MINERALS SALES SUMMARY?
----------------------------------------------------------------------------------------------------------------
1210.202(a).................  (a) What to submit. (1) For     1 hour..........             900  900 (570 of
                               solid minerals produced or                                        which already
                               sold from Federal or Indian                                       approved by
                               solid minerals leases for                                         OMB).
                               each mine, you must submit a
                               completed Form ONRR-4440A for
                               coal; Form ONRR-4440B for
                               sodium/potassium; Form ONRR-
                               4440C for Western Phosphate;
                               Form ONRR-4440D for metals;
                               and Form ONRR-4440E for all
                               other minerals produced from
                               leases containing ad valorem
                               royalty terms not covered by
                               Forms ONRR-4440A through ONRR-
                               4440D. These forms and
                               instructions are available on
                               the Solid Minerals Reporting
                               Information webpage at http://www.onrr.gov/FM/Forms/AFSSol_Min.htm. (2) For all products
                               produced from leases having
                               ad valorem royalty terms, you
                               must include the required
                               data elements listed in the
                               following table on the
                               appropriate Form ONRR-4440.
                               (3) Instructions to complete
                               and submit Form ONRR-4440 are
                               available on the Solid
                               Minerals Reporting
                               Information webpage at http://www.onrr.gov/FM/Forms/AFSSol_Min.htm.
                                                             ---------------------------------------------------
1210.202(b).................  (b) When to submit. (1) You        Hour burden covered under Sec.   1210.202(a).
                               must use the table at Sec.
                               1210.202(a)(2) to determine
                               how often you must submit the
                               appropriate Form ONRR-4440.
                               (2) You must submit Form ONRR-
                               4440 each month after you
                               submit the corresponding Form
                               ONRR-4430 as required under
                               30 CFR 1210.201(a). (3) If
                               the information on a
                               previously reported Form ONRR-
                               4440 is no longer correct,
                               you must submit a revised
                               Form ONRR-4440 in the same
                               month after you submit the
                               corresponding revised Form
                               ONRR-4430 under 30 CFR
                               1210.201(b)(4). (4) For
                               leases with no ad valorem
                               royalty terms (that is,
                               leases in which the royalty
                               due is not a function of the
                               value of production, such as
                               a cents-per-ton or dollars-
                               per-unit), ONRR may request
                               that data from lessees on an
                               as-needed basis under Sec.
                               1210.206.
1210.202(c)(1)..............  (c) How to submit. (1) You         Hour burden covered under Sec.   1210.202(a).
                               must provide the appropriate
                               Form ONRR-4440 data
                               electronically using our
                               Internet reporting Web site
                               unless you meet the
                               conditions in subparagraph
                               (c)(2).
----------------------------------------------------------------------------------------------------------------
        PART 1218--COLLECTION OF ROYALTIES, RENTALS, BONUSES, AND OTHER MONIES DUE THE FEDERAL GOVERNMENT
                                     SUBPART I--FEDERAL COAL ADVANCE ROYALTY
----------------------------------------------------------------------------------------------------------------
                   Sec.   1218.607 HOW MAY I APPEAL AN ONRR ORDER TO PAY COAL ADVANCE ROYALTY?
----------------------------------------------------------------------------------------------------------------
1218.607....................  You may appeal an ONRR Order         Hour burden covered under ICR 1012-0006.
                               to Pay Coal Advance Royalty
                               under 30 CFR part 1290.
                                                                              See 30 CFR 1243.4.
----------------------------------------------------------------------------------------------------------------
          Sec.   1218.608 HOW MAY I SUSPEND COMPLIANCE WITH AN ONRR ORDER TO PAY COAL ADVANCE ROYALTY?
----------------------------------------------------------------------------------------------------------------
1218.608....................  You may suspend compliance           Hour burden covered under ICR 1012-0006.
                               with an ONRR Order to Pay
                               Coal Advance Royalty under 30
                               CFR 1243.4.
----------------------------------------------------------------------------------------------------------------
    Burden Hour Total.......................................  ................             900  900
----------------------------------------------------------------------------------------------------------------


[[Page 49075]]

    Public Comment Policy. The PRA 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. Before submitting an ICR to OMB, PRA 
Section[emsp14]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. Therefore, 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 (PRA's 
effective date); (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 proposed information 
collection and address them in our final rule. We will provide a copy 
of the ICR to you without charge upon request, and also post the ICR at 
http://www.onrr.gov/Laws_R_D/FRNotices/FRInfColl.htm. You also may 
review the ICR at http://www.reginfo.gov.
    We will post all comments in response to this proposed information 
collection at http://www.onrr.gov/Laws_R_D/PubComm/default.htm, and 
then click on ``AA04.''

11. National Environmental Policy Act

    This proposed rule would not constitute a major Federal action 
significantly affecting the quality of the human environment. A 
detailed statement is not required under the National Environmental 
Policy Act of 1969 (NEPA) because this rule is categorically excluded 
under: ``(i) Policies, directives, regulations, and guidelines: that 
are of an administrative, financial, legal, technical, or procedural 
nature.'' See 43 CFR 46.210(i) and the DOI Departmental Manual, part 
516, section 15.4.D. We have also determined that this rule is not 
involved in any of the extraordinary circumstances listed in 43 CFR 
46.215 that would require further analysis under NEPA. The procedural 
changes resulting from these amendments would have no consequences with 
respect to the physical environment. This proposed rule would not alter 
in any material way natural resource exploration, production, or 
transportation.

12. Data Quality Act

    In developing this proposed rule, we did not conduct or use a 
study, experiment, or survey requiring peer review under the Data 
Quality Act (Pub. L. 106-554), also known as the Information Quality 
Act. The Department of the Interior has issued guidance regarding the 
quality of information that it relies on for regulatory decisions. This 
guidance is available on DOI's Web site at http://www.doi.gov/ocio/iq.html.

13. Effects on the Energy Supply (E.O. 13211)

    This proposed rule would not be a significant energy action under 
the definition in Executive Order 13211, and, therefore, would not 
require a Statement of Energy Effects.

14. Clarity of This Regulation

    Executive Orders 12866 and 12988, and the Presidential Memorandum 
of June 1, 1998, require us to write all rules in plain language. This 
means that each rule we publish must: (a) Be logically organized; (b) 
use the active voice to address readers directly; (c) use clear 
language rather than jargon; (d) be divided into short sections and 
sentences; and (e) use lists and tables wherever possible.
    If you feel that we have not met these requirements, send us 
comments by one of the methods listed in the ADDRESSES section. To 
better help us revise the rule, your comments should be as specific as 
possible. For example, you should tell us the numbers of the sections 
or paragraphs that you think we wrote unclearly, which sections or 
sentences are too long, the sections where you feel lists or tables 
would be useful, etc.

15. Public Availability of Comments

    Before including your address, phone number, email address, or 
other personal identifying information in your comment, you should be 
aware 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 your personal identifying 
information from public view, we cannot guarantee that we will be able 
to do so.

List of Subjects

30 CFR Part 1203

    Coal, Rental, Royalty rate--reduction.

30 CFR Part 1210

    Coal, Continental shelf, Definitions, Federal and Indian leases, 
Geothermal resources, Information collection, Oil and gas reporting, 
Phosphate, Potassium, Reporting and recordkeeping requirements, 
Royalties, Sales contracts, Sales summary, Sodium, Solid minerals, 
Sulfur.

30 CFR Part 1218

    Advance royalty, Appeals, Bonuses, Coal, Continental shelf, 
Definitions, Electronic funds transfer, Federal and Indian leases, 
Geothermal resources, Government contracts, Information collection, Oil 
and gas, Payment credits, Recoupments, Rentals, Reporting and 
recordkeeping requirements, Royalties.

    Dated: June 5, 2013.
Rhea Suh,
Assistant Secretary, Policy, Management and Budget.
    For the reasons stated in the preamble, the Office of Natural 
Resources Revenue proposes to amend 30 CFR parts 1203, 1210, and 1218 
as set forth below:

PART 1203--RELIEF OR REDUCTION IN ROYALTY RATES

0
1. The authority for part 1203 continues to read as follows:

    Authority: 25 U.S.C. 396 et seq.; 25 U.S.C. 396a et seq.; 25 
U.S.C. 2101 et seq.; 30 U.S.C. 181 et seq.; 30 U.S.C. 351 et seq.; 
30 U.S.C.

[[Page 49076]]

1701 et seq.; 31 U.S.C. 9701; 43 U.S.C. 1301 et seq.; and 43 U.S.C. 
1331 et seq.


Sec.  1203.250  [Removed]

0
2. Remove Sec.  1203.250.


Sec.  1203.251  [Redesignated as Sec.  1203.250]

0
3. Redesignate Sec.  1203.251 as Sec.  1203.250.

PART 1210--FORMS AND REPORTS

0
4. The authority for part 1210 continues to read as follows:

    Authority: 5 U.S.C. 301 et seq.; 25 U.S.C. 396, 2107; 30 U.S.C. 
189, 190, 359, 1023, 1751(a); 31 U.S.C. 3716, 9701; 43 U.S.C. 1334, 
1801 et seq.; and 44 U.S.C. 3506(a).

Subpart A--General Provisions


Sec.  1210.10  [Amended]

0
5. In Sec.  1210.10:
0
a. Revise the table under the column ``Form or information collected'' 
by removing the entry for ``Sales summaries--solid minerals.''
0
b. Revise the table under the column ``Form or information collected'' 
by adding ``Form ONRR-4440--Solid Minerals Sales Summary'' following 
the entry for ``Form ONRR-4430, Solid Minerals Production and Royalty 
Report''.

Subpart E--Production and Royalty Reports-Solid Minerals

0
6. Amend Sec.  1210.201 by revising paragraph (c)(3) to read as 
follows:


Sec.  1210.201  How do I submit Form ONRR-4430, Solid Minerals 
Production and Royalty Report?

* * * * *
    (c) * * *
    (3) Submit Form ONRR-4430 paper copies to the address given at the 
Solid Minerals Reporting Information Web page at http://www.onrr.gov/FM/Forms/AFSSol_Min.htm, or you may contact us toll free at 1 (888) 
201-6416 for the address.
* * * * *
0
7. Revise Sec.  1210.202 to read as follows:


Sec.  1210.202  How do I submit Form ONRR-4440, Solid Minerals Sales 
Summary?

    (a) What to submit. (1) For solid minerals produced or sold from 
Federal or Indian solid minerals leases for each mine, you must submit 
a completed Form ONRR-4440A for coal; Form ONRR-4440B for sodium/
potassium; Form ONRR-4440C for Western Phosphate; Form ONRR-4440D for 
metals; and Form ONRR-4440E for all other minerals produced from leases 
containing ad valorem royalty terms not covered by Forms ONRR-4440A 
through ONRR-4440D. These forms and instructions are available at 
http://www.onrr.gov/FM/Forms/AFSSol_Min.htm.
    (2) For all products produced from leases having ad valorem royalty 
terms, you must include the required data elements listed in the 
following table on the appropriate Form ONRR-4440.

                                                 Required Data Elements for Solid Minerals Sales Summary
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                   All other leases with
          Data element               Coal ONRR-4440A      Sodium/ potassium ONRR-   Western  phosphate       Metals ONRR-4440D      ad valorem royalty
                                                                   4440B                ONRR-4440C                                   terms ONRR-4440E
--------------------------------------------------------------------------------------------------------------------------------------------------------
(i) Mine Name..................  Monthly................  Monthly...............  Monthly...............  Monthly...............  Monthly.
(ii) Mine Number...............  Monthly................  Monthly...............  Monthly...............  Monthly...............  Monthly.
(iii) Customer ID..............  Monthly................  Monthly...............  Monthly...............  Monthly...............  Monthly.
(iv) Federal/Indian Indicator    Monthly................  Monthly...............  Monthly...............  Monthly...............  Monthly.
 (FED/IND).
(v) P&R Submission ID..........  Monthly................  Monthly...............  Monthly...............  Monthly...............  Monthly.
(vi) P&R Equivalent Product      Monthly................  Monthly...............  Monthly...............  Monthly...............  Monthly.
 Name.
(vii) Sales Point..............  Monthly................  Monthly...............  Monthly...............  Monthly...............  Monthly.
(viii) Submission Type--         Monthly................  Monthly...............  Monthly...............  Monthly...............  Monthly.
 Original (O), Adjustment (A),
 Original Revision (O-R),
 Adjustment Revision (A-R).
(ix) Sales Month/Year (MM/YYYY)  Monthly................  Monthly...............  Monthly...............  Monthly...............  Monthly.
(x) Purchaser Name.............  Monthly................  Monthly...............  Monthly...............  Monthly...............  Monthly.
(xi) Delivery Point............  Monthly................  Monthly...............  Not Required..........  Monthly...............  Monthly.
(xii) Sales Summary Product      Monthly................  Monthly...............  Monthly...............  Monthly...............  Monthly.
 Name.
(xiii) Contract ID.............  Monthly................  Monthly...............  Not Required..........  Monthly...............  Monthly.
(xiv) Contract Term: Indicate    Monthly................  Monthly...............  Not Required..........  Monthly...............  Monthly.
 Spot (S) or Long Term (LT).
(xv) Contract Type Indicate Non- Monthly................  Monthly...............  Not Required..........  Monthly...............  Monthly.
 Arm's-Length (NARM) or Arm's-
 Length (ARMS).
(xvi) Destination Point........  Monthly................  Monthly...............  Not Required..........  Monthly...............  Monthly.
(xvii) Sales Units.............  Monthly................  Monthly...............  Not Required..........  Monthly...............  Monthly.
(xviii) Gross Proceeds.........  Monthly................  Monthly...............  Not Required..........  Monthly...............  Monthly.
(xix) Processing or Washing      Monthly................  Not Required..........  Not Required..........  Monthly...............  Monthly.
 Costs.
(xx) Transportation Costs......  Monthly................  Monthly...............  Not Required..........  Monthly...............  Monthly.
(xxi) Size.....................  Monthly................  Not Required..........  Not Required..........  Not Required..........  As Requested.
(xxii) Btu/lb..................  Monthly................  Not Required..........  Not Required..........  Not Required..........  Not Required.
(xxiii) Ash (%)................  Monthly................  Not Required..........  Not Required..........  Not Required..........  Not Required.
(xxiv) Sulfur (%)..............  Monthly................  Not Required..........  Not Required..........  Not Required..........  Not Required.
(xxv) lbs SO2/MMBTU............  Monthly................  Not Required..........  Not Required..........  Not Required..........  Not Required.
(xxvi) Sodium Oxide (%)........  Monthly................  Not Required..........  Not Required..........  Not Required..........  Not Required.
(xxvii) Moisture (%)...........  Monthly................  Not Required..........  Monthly...............  Not Required..........  Not Required.
(xxviii) Foreign (F) or          Not Required...........  Monthly...............  Not Required..........  Not Required..........  Not Required.
 Domestic (D).
(xxix) Reagent Costs...........  Not Required...........  Monthly...............  Not Required..........  Not Required..........  Not Required.
(xxx) Bagging Costs............  Not Required...........  Monthly...............  Not Required..........  Not Required..........  Not Required.
(xxxi) Sales Units (Wet Tons)..  Not Required...........  Not Required..........  Monthly...............  Not Required..........  Not Required.
(xxxii) Sales Units (Dry Tons).  Not Required...........  Not Required..........  Monthly...............  Not Required..........  Not Required.
(xxxiii) Unit Value............  Not Required...........  Not Required..........  Monthly...............  Not Required..........  Not Required.
(xxxiv) P2O5 tons..............  Not Required...........  Not Required..........  Monthly...............  Not Required..........  Not Required.
(xxxv) P2O5 (%)................  Not Required...........  Not Required..........  Monthly...............  Not Required..........  Not Required.
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 49077]]

    (3) Instructions to complete and submit Form ONRR-4440 are 
available at http://www.onrr.gov/FM/Forms/AFSSol_Min.htm.
    (b) When to submit. (1) You must use the table at 30 CFR 
1210.202(a)(2) to determine how often you must submit the appropriate 
Form ONRR-4440.
    (2) You must submit Form ONRR-4440 each month after you submit the 
corresponding Form ONRR-4430 as required under 30 CFR 1210.201(a).
    (3) If the information on a previously reported Form ONRR-4440 is 
no longer correct, you must submit a revised Form ONRR-4440 in the same 
month after you submit the corresponding revised Form ONRR-4430 under 
30 CFR 1210.201(b)(4).
    (4) For leases with no ad valorem royalty terms (that is, leases in 
which the royalty due is not a function of the value of production, 
such as a cents-per-ton or dollars-per-unit), ONRR may request that 
data from lessees on an as-needed basis under 30 CFR 1210.206.
    (c) How to submit. (1) You must provide the appropriate Form ONRR-
4440 data electronically using our Internet reporting Web site unless 
you meet the conditions in subparagraph (c)(2).
    (2) You are not required to report electronically if:
    (i) You are a small business as defined by the United States Small 
Business Administration (13 CFR 121.201); and
    (ii) You have no computer, no plans to purchase a computer, and no 
contract with an electronic reporting service.
    (3) Instructions for submitting Form ONRR-4440 are available at 
http://www.onrr.gov/FM/Forms/AFSSol_Min.htm.

PART 1218--COLLECTION OF ROYALTIES, RENTALS, BONUSES, AND OTHER 
MONIES DUE THE FEDERAL GOVERNMENT

0
8. The authority for part 1218 continues to read as follows:

    Authority: 25 U.S.C. 396 et seq., 396a et seq., 2101 et seq.; 30 
U.S.C. 181 et seq., 351 et seq., 1001 et seq., 1701 et seq.; 31 
U.S.C. 3335; 43 U.S.C. 1301 et seq., 1331 et seq., and 1801 et seq.

Subpart A--General Provisions


Sec.  1218.40  [Amended]

0
9. Amend Sec.  1218.40(c)(1) by adding ``Form ONRR-4440, Solid Minerals 
Sales Summary'' after ``Form ONRR-4430, Solid Minerals Production and 
Royalty Report;''.
0
10. Add Subpart I--Federal Coal Advance Royalty to read as follows:

Subpart I--Federal Coal Advance Royalty

Sec.
1218.601 What definitions apply to this subpart?
1218.602 How will ONRR compute the coal advance royalty you owe?
1218.603 When is my coal advance royalty payment due?
1218.604 How do I report and pay my coal advance royalty?
1218.605 Is my coal advance royalty payment subject to late payment 
charges?
1218.606 May I credit my coal advance royalty payments against 
future coal production royalties?
1218.607 How may I appeal an ONRR Order to Pay Coal Advance Royalty?
1218.608 How may I suspend compliance with an ONRR Order to Pay Coal 
Advance Royalty?

    Authority: The Energy Policy Act of 2005 (Pub. L. 109-58, Sec. 
434).


Sec.  1218.601  What definitions apply to this subpart?

    (a) The following definitions apply to this subpart:
    Applicable continued operation year means the continued operation 
year (COY) for which payment of coal advance royalties is required in 
lieu of continued operation under 43 CFR 3483.4.
    Comparable coal means coal that is sold in a similar market and is 
similar in chemical and physical characteristics to the coal produced 
at the lease or mine for which payment of advance royalties is required 
in lieu of continued operation under 43 CFR 3483.4.
    Region means one of the eight Federal coal production regions, 
which the Bureau of Land Management designates as follows: Denver-Raton 
Mesa Region, Fort Union Region, Green River-Hams Fork Region, Powder 
River Region, San Juan River Region, Southern Appalachian Region, 
Uinta-Southwestern Utah Region, and Western Interior Region.
    (4) Spot market means a market in which sales transactions occur 
where a seller agrees to sell to a buyer a specified amount of coal at 
a specified price over a fixed period usually not exceeding a year. 
Such transactions do not normally require a cancellation notice to 
terminate, do not contain an obligation, nor do they imply intent to 
continue in subsequent periods.
    (5) Spot market price means the price you or another seller report 
to ONRR on Form ONRR-4440 for a spot market contract.
    (b) The following terms are defined at 43 CFR 3480.0-5:

Advance Royalty;
Continued operation;
Continued operation year; and
Logical mining unit (LMU).


Sec.  1218.602  How will ONRR compute the coal advance royalty you owe?

    (a) ONRR will compute the value of coal advance royalties due for a 
lease or LMU by multiplying the commercial quantities in tons 
calculated under 43 CFR 3483.4(g) by:
    (1) The weighted average spot market price lessees reported to ONRR 
on Form ONRR-4440 under 30 CFR 1210.202(a) for sales of comparable coal 
from the same region during the last month of each applicable continued 
operation year; or,
    (2) In the absence of spot market prices for comparable coal from 
the same region:
    (i) The weighted average spot market price for comparable coal from 
another region during the last month of each applicable continued 
operation year; or, if none are available,
    (ii) Any other reasonable value ONRR determines.
    (b) The coal advance royalty you owe is the dollar amount ONRR 
computes under paragraph (a) of this section multiplied by the royalty 
rate BLM prescribes under 43 CFR 3483.4(d).
    (c) ONRR will issue you an Order to Pay Coal Advance Royalty based 
on its computation under paragraph (b) of this section.


Sec.  1218.603  When is my coal advance royalty payment due?

    Your coal advance royalty is due 30 days after you receive the ONRR 
Order to Pay Coal Advance Royalty under 30 CFR 1218.602(c).


Sec.  1218.604  How do I report and pay my coal advance royalty?

    (a) You must report coal advance royalty on Form ONRR-4430, Solid 
Minerals Production and Royalty Report, under 30 CFR 1210.201.
    (b) You must pay coal advance royalty according to the payment 
instructions at http://onrr.gov/FM/PayInfo.htm.


Sec.  1218.605  Is my coal advance royalty payment subject to late 
payment charges?

    If you fail to pay timely the amount due in the ONRR Order to Pay 
Coal Advance Royalty issued under 30 CFR 1218.602(c), then you must pay 
interest computed under 30 CFR 1218.202 from the date the payment was 
due.


Sec.  1218.606  May I credit my coal advance royalty payments against 
future coal production royalties?

    (a) You may credit a full coal advance royalty payment on a lease 
against future production royalties from that lease.

[[Page 49078]]

    (1) You may not credit a partial coal advance royalty payment until 
you pay the full amount due under the Order to Pay Coal Advance Royalty 
that ONRR issues to you under 30 CFR 1218.602(c).
    (2) If your coal advance royalty payment exceeds the production 
royalty payable in a particular year, you may credit any remaining coal 
advance royalty payment against production royalty payments from the 
lease in subsequent years.
    (b) You may not credit coal advance royalties paid on one lease 
against production royalties from another lease unless both leases are 
Federal and both are within the same LMU.
    (c) You may not use a coal advance royalty credit to reduce the 
amount of production royalty paid for any year below zero.
    (d) You may not request a refund of any coal advance royalty 
payment. You may only credit coal advance royalty payment against 
future production royalties from that lease.


Sec.  1218.607  How may I appeal an ONRR Order to Pay Coal Advance 
Royalty?

    You may appeal an ONRR Order to Pay Coal Advance Royalty under 30 
CFR part 1290.


Sec.  1218.608  How may I suspend compliance with an ONRR Order to Pay 
Coal Advance Royalty?

    You may suspend compliance with an ONRR Order to Pay Coal Advance 
Royalty under 30 CFR 1243.4.

[FR Doc. 2013-19199 Filed 8-9-13; 8:45 am]
BILLING CODE 4310-T2-P