[Federal Register Volume 78, Number 231 (Monday, December 2, 2013)]
[Notices]
[Pages 72099-72109]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-27084]


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DEPARTMENT OF THE INTERIOR

Office of Natural Resources Revenue

[Docket No. ONRR-2012-0006; DS63610300 DR2PS0000.CH7000 134D0102R2]


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

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

ACTION: Notice of a revision of currently approved information 
collection (OMB Control Number 1012-0005).

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SUMMARY: To comply with the Paperwork Reduction Act of 1995 (PRA), the 
Office of Natural Resources Revenue (ONRR) is notifying the public that 
we have submitted to the Office of Management and Budget (OMB) an 
information collection request (ICR) to renew approval of the paperwork 
requirements in the regulations under title 30, Code of Federal 
Regulations (CFR), parts 1202, 1204, and 1206. This ICR pertains to (1) 
Federal oil and gas valuation regulations, which include transportation 
and processing regulatory allowance limits; and (2) accounting and 
auditing relief for marginal properties. This ICR also includes Form 
ONRR-4393, Request to Exceed Regulatory Allowance Limitation. Effective 
January 1, 2014, ONRR will discontinue the information collection 
requirements of the Stripper Oil royalty rate reductions in this ICR. 
The revised title of this ICR is ``Federal Oil and Gas Valuation--30 
CFR Parts 1202, 1204, and 1206.''

DATES: OMB has up to 60 days to approve or disapprove the information 
collection request but may respond after 30 days; therefore, you should 
submit your public comments to OMB by January 2, 2014 for the assurance 
of consideration.

ADDRESSES: Submit comments to the Office of Information and Regulatory 
Affairs, Office of Management and Budget, Attention: Desk Officer for 
the Department of the Interior (1012-0005), by telefax at (202) 395-
5806 or via email to [email protected]. Also, please send a 
copy of your comments to Armand Southall, Regulatory Specialist, Office 
of Natural Resources Revenue, P.O. Box 25165, MS 61030A, Denver, 
Colorado 80225. Please reference ``ICR 1012-0005'' in your comments.

FOR FURTHER INFORMATION CONTACT: Armand Southall, Regulatory 
Specialist, email [email protected]. You may also contact Mr. 
Southall to obtain copies, at no cost, of (1) The ICR, (2) any 
associated form, and (3) the regulations that require us to collect the 
information. To see a copy of the entire ICR submitted to OMB, go to 
http://www.reginfo.gov/public/PRAMain and select ``Information 
Collection Review,'' then select ``Department of the Interior'' in the 
drop-down box under ``Currently Under Review.''

SUPPLEMENTARY INFORMATION:
    Title: Federal Oil and Gas Valuation--30 CFR Parts 1202, 1204, and 
1206.
    OMB Control Number: 1012-0005.
    Bureau Form Number: Form ONRR-4393.
    Abstract: The Secretary of the United States Department of the 
Interior is responsible for overseeing mineral resource development on 
Federal and Indian lands and the Outer Continental Shelf (OCS). The 
Secretary's responsibility, under various laws, is to manage mineral 
resource production from Federal and Indian lands and the OCS, collect 
the royalties and other mineral revenues due, and distribute the funds 
collected under those laws. We have posted those laws pertaining to 
mineral leases on Federal and Indian lands and the OCS at http://www.onrr.gov/Laws_R_D/PublicLawsAMR.htm.
    Effective October 1, 2010, ONRR reorganized and transferred our 
regulations from chapter II to chapter XII in title 30 CFR, resulting 
in a change to our citations. You can find the information collections 
covered in this ICR at 30 CFR part 1202, subparts C and D, which 
pertain to Federal oil and gas royalties; part 1204, subpart C, which 
pertains to accounting and auditing relief for marginal properties; and 
part 1206, subparts C and D, which pertain to Federal oil and gas 
product valuation.

I. General Information

    When a company or an individual enters into a lease to explore, 
develop, produce, and dispose of minerals from Federal or Indian lands, 
that company or individual agrees to pay the lessor a share in a value 
of production from the leased lands. The lessee, or designee, must 
report various kinds of information to the lessor relative to the 
disposition of the leased minerals. Such information is generally 
available within the records of the lessee or others involved in 
developing, transporting, processing, purchasing, or selling of such 
minerals.

II. Information Collections

    ONRR uses the information that we collect in this ICR to ensure 
that lessees accurately value and appropriately pay royalties on oil 
and gas produced from Federal onshore and offshore leases. Please refer 
to the chart for all reporting requirements and associated burden 
hours. All data submitted is subject to subsequent audit and 
adjustment.

A. Federal Oil and Gas Valuation Regulations

    The valuation regulations at 30 CFR part 1206, subparts C and D, 
mandate that lessees collect and/or submit information used to value 
their Federal oil and gas, including (1) transportation and processing 
allowances and (2) regulatory allowance limit information. Lessees 
report certain data on Form ONRR-2014, Report of Sales and Royalty 
Remittance (OMB Control Number 1012-0004). The information that we 
request is the minimum necessary to carry out our mission and places 
the least possible burden on respondents. If ONRR does not collect this 
information, both Federal and State governments may incur a loss of 
royalties.
    Transportation and Processing Regulatory Allowance Limits: Lessees 
may deduct the reasonable, actual costs of transportation and 
processing from Federal royalties. The lessees report these allowances 
on Form ONRR-2014. For oil and gas, regulations establish the allowable 
limit on transportation allowance deductions at 50 percent of the value 
of the oil or gas. For gas only, regulations establish the allowable 
limit on processing allowance deductions at 66\2/3\ percent of the 
value of each gas plant product.
    Request to Exceed Regulatory Allowance Limitation, Form ONRR-4393: 
Lessees may request to exceed regulatory limitations. Upon proper 
application from the lessee, ONRR may approve oil or gas transportation 
allowance in excess of 50 percent or gas processing allowance in excess 
of 66\2/3\ percent on Federal leases. Lessees must complete and submit 
Form ONRR-4393, including a letter and supporting documentation, for 
both Federal and

[[Page 72100]]

Indian leases to request to exceed allowance limitations. This ICR 
covers only Federal leases; therefore, we have not included burden 
hours of Form ONRR-4393 for Indian leases in this ICR. We include 
burden hours of Form ONRR-4393 for Indian leases in OMB Control Number 
1012-0002.

B. Accounting and Auditing Relief for Marginal Properties

    In 2004, we amended our regulations to comply with section 7 of the 
Federal Oil and Gas Royalty Simplification and Fairness Act of 1996. 
The regulations provide guidance for lessees and designees seeking 
accounting and auditing relief for qualifying Federal marginal 
properties. Under the regulations, both ONRR and the State concerned 
must approve any relief granted for a marginal property.

C. Stripper Oil Royalty Rate Reduction Program

    Under 43 CFR 3103.4-2, the Bureau of Land Management (BLM), the 
surface management agency for Federal onshore leases, established the 
Stripper Oil Royalty Rate Reduction Program (Stripper Oil Program). 
ONRR, who administered the Stripper Oil Program for BLM, approved 
royalty rate reductions for operators of stripper oil properties for 
applicable sales periods from October 1, 1992, through January 31, 
2006. Effective February 1, 2006, BLM terminated the reduced royalty 
rates under this program. On October 6, 2010, BLM published a final 
rule (75 FR 61624) that removed this citation from their regulations. 
This change is not currently reflected in title 30 CFR, chapter XII.
    For production through January 31, 2006, lessees submitted Form 
MMS-4377, Stripper Royalty Rate Reduction Notification, to notify ONRR 
of royalty rate changes. Although BLM terminated the royalty rate 
reductions, ONRR continues to verify previously submitted notifications 
and may require the operator to submit an amended Form ONRR-4377 
through December 31, 2013. However, effective January 1, 2014, ONRR 
will discontinue the Stripper Oil Program; therefore, ONRR will not 
request OMB approval for the Stripper Oil information collection 
requirements in this ICR.

III. OMB Approval

    We will request OMB approval to continue to collect, from companies 
and/or lessees and designees, information used (1) to value their 
Federal oil and gas, including (a) transportation and processing 
allowances and (b) the request to exceed regulatory allowance 
limitation and (2) to request accounting and auditing relief approval 
for qualifying Federal marginal properties. If ONRR does not collect 
this information, this would limit the Secretary's ability to discharge 
fiduciary duties and may also result in loss of royalty payments. ONRR 
protects the proprietary information that we receive, and we do not 
collect items of a sensitive nature.
    ONRR requires lessees to respond to information collections 
relating to valuing Federal oil and gas, including (a) transportation 
and processing allowances and (b) the request to exceed regulatory 
allowance limit information [Form ONRR-4393]. ONRR also requires that 
lessees submit the allowance information and form to obtain benefits 
for claiming allowances on Form ONRR-2014. In addition, ONRR requires 
lessees to respond to information collections in regards to requesting 
approval for accounting and auditing relief.
    Frequency: Annually and on occasion.
    Estimated Number and Description of Respondents: 120 Federal 
lessees/designees and 7 States for Federal oil and gas.
    Estimated Annual Reporting and Recordkeeping ``Hour'' Burden: 9,198 
hours.
    We have not included in our estimates certain requirements 
performed in the normal course of business and considered as usual and 
customary. We display the estimated annual burden hours by CFR section 
and paragraph in the following chart:

                                                       Respondents' Estimated Annual Burden Hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                              Average
                                                                                                                             number of    Annual  burden
         30 CFR 1202, 1204, and 1206                    Reporting and recordkeeping requirement             Hour burden       annual           hours
                                                                                                                             responses
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                                                                  PART 1202--ROYALTIES
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                                                            Subpart C--Federal and Indian Oil
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1202.101.....................................  Standards for reporting and paying royalties. Oil volumes  Burden covered under OMB Control Number 1012-
                                                are to be reported in barrels of clean oil of 42          0004.
                                                standard U.S. gallons (231 cubic inches each) at 60
                                                [deg]F. . . .
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                                                                 Subpart D--Federal Gas
--------------------------------------------------------------------------------------------------------------------------------------------------------
1202.152(a) and (b)..........................  Standards for reporting and paying royalties on gas......  Burden covered under OMB Control Number 1012-
                                                                                                          0004.
                                                                                                         -----------------------------------------------
                                               (a)(1) If you are responsible for reporting production or
                                                royalties you must:
                                               (i) Report gas volumes and British thermal unit (Btu)
                                                heating values, if applicable, under the same degree of
                                                water saturation;
                                               (ii) Report gas volumes in units of 1,000 cubic feet
                                                (mcf); and
                                               (iii) Report gas volumes and Btu heating value at a
                                                standard pressure base of 14.73 pounds per square inch
                                                absolute (psia) and a standard temperature base of 60
                                                [deg]F . . .
                                               (b) Residue gas and gas plant product volumes shall be
                                                reported as specified in this paragraph. . . .
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[[Page 72101]]

 
                                                     PART 1204--ALTERNATIVES FOR MARGINAL PROPERTIES
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Subpart C--Accounting and Auditing Relief
--------------------------------------------------------------------------------------------------------------------------------------------------------
1204.202(b)(1)...............................  What is the cumulative royalty reports and payments                    40               1              40
                                                relief option?
                                               (b) To use the cumulative royalty reports and payments
                                                relief option, you must do all of the following:
                                               (1) Notify ONRR in writing by January 31 of the calendar
                                                year for which you begin taking your relief. . . ..
                                                                                                         -----------------------------------------------
1204.202(b)(2) and (b)(3)....................  (b)(2) Submit your royalty report and payment . . . by     Burden covered under OMB Control Number 1012-
                                                the end of February of the year following the calendar    0004.
                                                year for which you reported annually. . . . If you have
                                                an estimated payment on file, you must submit your
                                                royalty report and payment by the end of March of the
                                                year following the calendar year for which you reported
                                                annually; (3) Use the sales month prior to the month
                                                that you submit your annual report and payment . . . for
                                                the entire previous calendar year's production for which
                                                you are paying annually. . . .
1204.202(b)(4), (b)(5), (c), (d)(1), (d)(2),   (b)(4) Report one line of cumulative royalty information   Burden covered under OMB Control Number 1012-
 (e)(1), and (e)(2).                            on Form ONRR-2014 for the calendar year . . . And         0004.
                                               (5) Report allowances on Form ONRR-2014 on the same
                                                annual basis as the royalties for your marginal property
                                                production..
                                                                                                         -----------------------------------------------
                                               (c) If you do not pay your royalty by the date due in
                                                paragraph (b) of this section, you will owe late payment
                                                interest . . . from the date your payment was due under
                                                this section until the date ONRR receives it. . . .
                                               (d) If you take relief you are not qualified for, you may
                                                be liable for civil penalties.
                                               Also you must: (1) Pay ONRR late payment interest
                                                determined under 30 CFR 1218.54 . . .(2) Amend your Form
                                                ONRR-2014 . . ..
                                               (e) If you dispose of your ownership interest in a
                                                marginal property for which you have taken relief . . .
                                                you must:
                                               (1) Report and pay royalties for the portion of the
                                                calendar year for which you had an ownership interest;
                                                and
                                               (2) Make the report and payment by the end of the month
                                                after you dispose of the ownership interest in the
                                                marginal property. If you do not report and pay timely,
                                                you will owe interest . . . from the date the payment
                                                was due. . . .
1204.203(b), 1204.205(a) and (b), and          What is the other relief option?.........................             200               1             200
 1204.206(a)(3)(i) and (b)(1).                 (b) You must request approval from ONRR . . . before
                                                taking relief under this option..
1204.208 (c)(1), (d)(1), and (e).............  May a State decide that it will or will not allow one or               40               7             280
                                                both of the relief options under this subpart?
                                               (c) If a State decides . . . that it will or will not
                                                allow one or both of the relief options . . . within 30
                                                days . . . the State must: (1) Notify the Director for
                                                Office of Natural Resources Revenue, in writing, of its
                                                intent to allow or not allow one or both of the relief
                                                options . . .
                                               (d) If a State decides in advance . . . that it will not
                                                allow one or both of the relief options . . . the State
                                                must: (1) Notify the Director for Office of Natural
                                                Resources Revenue, in writing, of its intent to allow
                                                one or both of the relief options . . .
                                               (e) If a State does not notify ONRR . . . the State will
                                                be deemed to have decided not to allow either of the
                                                relief options. . ..
1204.209(b)..................................  What if a property ceases to qualify for relief obtained                6               1               6
                                                under this subpart?

[[Page 72102]]

 
                                               (b) If a property is no longer eligible for relief . . .
                                                the relief for the property terminates as of December 31
                                                of that calendar year. You must notify ONRR in writing
                                                by December 31 that the relief for the property has
                                                terminated. . .
                                                                                                         -----------------------------------------------
1204.210(c) and (d)..........................  What if a property is approved as part of a nonqualifying  Burden covered under OMB Control Number 1012-
                                                agreement?                                                0004.
                                                                                                         -----------------------------------------------
                                               (c) . . . the volumes on which you report and pay royalty
                                                . . . must be amended to reflect all volumes produced on
                                                or allocated to your lease under the nonqualifying
                                                agreement as modified by BLM. . . . Report and pay
                                                royalties for your production using the procedures in
                                                Sec.   1204.202(b).
                                               (d) If you owe additional royalties based on the
                                                retroactive agreement approval and do not pay your
                                                royalty by the date due in Sec.   1204.202(b), you will
                                                owe late payment interest determined under Sec.
                                                1218.54 from the date your payment was due under Sec.
                                                1204.202(b)(2) until the date ONRR receives it.
                                                                                                         -----------------------------------------------
1204.214(b)(1) and (b)(2)....................  Is minimum royalty due on a property for which I took      Burden covered under OMB Control Number 1012-
                                                relief?                                                   0004.
                                                                                                         -----------------------------------------------
                                               (b) If you pay minimum royalty on production from a
                                                marginal property during a calendar year for which you
                                                are taking cumulative royalty reports and payment
                                                relief, and:
                                               (1) The annual payment you owe under this subpart is
                                                greater than the minimum royalty you paid, you must pay
                                                the difference between the minimum royalty you paid and
                                                your annual payment due under this subpart; or
                                               (2) The annual payment you owe under this subpart is less
                                                than the minimum royalty you paid, you are not entitled
                                                to a credit because you must pay at least the minimum
                                                royalty amount on your lease each year.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Accounting and Auditing Relief Subtotal.................................................................  ..............              10             526
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                                                              Part 1206--Product Valuation
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Subpart C--Federal Oil
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.102(e)(1)...............................  How do I calculate royalty value for oil that I or my      AUDIT PROCESS. See note.
                                                affiliate sell(s) under an arm's-length contract?
                                                                                                         -----------------------------------------------
                                               (e) If you value oil under paragraph (a) of this section:
                                                (1) ONRR may require you to certify that your or your
                                                affiliate's arm's-length contract provisions include all
                                                of the consideration the buyer must pay, either directly
                                                or indirectly, for the oil.
1206.103(a)(1), (a)(2), and (a)(3)...........  How do I value oil that is not sold under an arm's-length              45               5             225
                                                contract?
                                               This section explains how to value oil that you may not
                                                value under Sec.   1206.102 or that you elect under Sec.
                                                  1206.102(d) to value under this section. First
                                                determine whether paragraph (a), (b), or (c) of this
                                                section applies to production from your lease, or
                                                whether you may apply paragraph (d) or (e) with ONRR
                                                approval.
                                               (a) Production from leases in California or Alaska. Value
                                                is the average of the daily mean ANS spot prices
                                                published in any ONRR-approved publication during the
                                                trading month most concurrent with the production month.
                                                . . .
                                               (1) To calculate the daily mean spot price . . .
                                               (2) Use only the days . . .
                                               (3) You must adjust the value.
1206.103(a)(4)...............................  (a)(4) After you select an ONRR-approved publication, you               8               2              16
                                                may not select a different publication more often than
                                                once every 2 years, . . .

[[Page 72103]]

 
1206.103(b)(1)...............................  (b) Production from leases in the Rocky Mountain Region.              400               2             800
                                                . . . (1) If you have an ONRR-approved tendering
                                                program, you must value oil . . .
1206.103(b)(1)(ii)...........................  (b)(1)(ii) If you do not have an ONRR-approved tendering              400               2             800
                                                program, you may elect to value your oil under either
                                                paragraph (b)(2) or (b)(3) of this section.
1206.103(b)(4)...............................  (4) If you demonstrate to ONRR's satisfaction that                    400               2             800
                                                paragraphs (b)(1) through (b)(3) of this section result
                                                in an unreasonable value for your production as a result
                                                of circumstances regarding that production, the ONRR
                                                Director may establish an alternative valuation method.
1206.103(c)(1)...............................  (c) Production from leases not located in California,                  50              10             500
                                                Alaska or the Rocky Mountain Region. (1) Value is the
                                                NYMEX price, plus the roll, adjusted for applicable
                                                location and quality differentials and transportation
                                                costs under Sec.   1206.112.
1206.103(e)(1) and (e)(2)....................  (e) Production delivered to your refinery and the NYMEX               330               2             660
                                                price or ANS spot price is an unreasonable value. (1) .
                                                . . you may apply to the ONRR Director to establish a
                                                value (2) You must provide adequate documentation and
                                                evidence demonstrating the market value at the refinery.
                                                . . . representing the market at the refinery if: . . .
                                                                                                         -----------------------------------------------
1206.105.....................................  What records must I keep to support my calculations of     Burden covered under OMB Control Number 1012-
                                                value under this subpart?                                 0004.
                                                                                                         -----------------------------------------------
                                               If you determine the value of your oil under this
                                                subpart, you must retain all data relevant to the
                                                determination of royalty value . . .
1206.107(a)..................................  How do I request a value determination?..................              40              10             400
                                               (a) You may request a value determination from ONRR . . .
1206.109(c)(2)...............................  When may I take a transportation allowance in determining               8               2              16
                                                value?
                                               (c) Limits on transportation allowances. (2) You may ask
                                                ONRR to approve a transportation allowance in excess of
                                                the limitation in paragraph (c)(1) of this section. . .
                                                . Your application for exception (using Form ONRR-4393,
                                                Request to Exceed Regulatory Allowance Limitation) must
                                                contain all relevant and supporting documentation
                                                necessary for ONRR to make a determination . . .
                                                                                                         -----------------------------------------------
1206.110(a)..................................  How do I determine a transportation allowance under an     AUDIT PROCESS. See note.
                                                arm's-length transportation contract?
                                                                                                         -----------------------------------------------
                                               (a) . . . You must be able to demonstrate that your or
                                                your affiliate's contract is at arm's length . . .
1206.110(d)(3)...............................  (d) If your arm's-length transportation contract includes              20               2              40
                                                more than one liquid product, and the transportation
                                                costs attributable to each product cannot be determined
                                                . . .
                                               (3) You may propose to ONRR a cost allocation method . .
                                                ..
1206.110(e)..................................  (e) If your arm's-length transportation contract includes              20               1              20
                                                both gaseous and liquid products, and the transportation
                                                costs attributable to each product cannot be determined
                                                from the contract, then you must propose an allocation
                                                procedure to ONRR.
                                                                                                         -----------------------------------------------
1206.110(e)(1) and (e)(2)....................  (e)(1) . . . If ONRR rejects your cost allocation, you     Burden covered under OMB Control Number 1012-
                                                must amend your Form ONRR-2014 . . .                      0004.
                                                                                                         -----------------------------------------------
                                               (2) You must submit your initial proposal, including all
                                                available data, within 3 months after first claiming the
                                                allocated deductions on Form ONRR-2014.
1206.110(g)(2)...............................  (g) If your arm's-length sales contract includes a                      5               1               5
                                                provision reducing the contract price by a
                                                transportation factor, . . .
                                               (2) You must obtain ONRR approval before claiming a
                                                transportation factor in excess of 50 percent of the
                                                base price of the product.

[[Page 72104]]

 
1206.111(g)..................................  How do I determine a transportation allowance if I do not              30               1              30
                                                have an arm's-length transportation contract or arm's-
                                                length tariff?
                                               (g) To compute depreciation, you may elect to use either
                                                . . . After you make an election, you may not change
                                                methods without ONRR approval . . .
1206.111(k)(2)...............................  (k)(2) You may propose to ONRR a cost allocation method                30               1              30
                                                on the basis of the values . . .
1206.111(l)(1) and (l)(3)....................  (l)(1) Where you transport both gaseous and liquid                     20               1              20
                                                products through the same transportation system, you
                                                must propose a cost allocation procedure to ONRR . . .
                                               (3) You must submit your initial proposal, including all
                                                available data, within 3 months after first claiming the
                                                allocated deductions on Form ONRR-2014..
                                                                                                         -----------------------------------------------
1206.111(l)(2)...............................  (l)(2) . . . If ONRR rejects your cost allocation, you     Burden covered under OMB Control Number 1012-
                                                must amend your Form ONRR-2104 for the months that you    0004.
                                                used the rejected method and pay any additional royalty
                                                and interest due.
                                                                                                         -----------------------------------------------
1206.112(a)(1)(ii)...........................  What adjustments and transportation allowances apply when              80               1              80
                                                I value oil production from my lease using NYMEX prices
                                                or ANS spot prices?
                                               (a)(1)(ii) . . . under an exchange agreement that is not
                                                at arm's length, you must obtain approval from ONRR for
                                                a location and quality differential.
1206.112(a)(1)(ii)...........................  (a)(1)(ii) . . . If ONRR prescribes a different                        20               2              40
                                                differential, you must apply . . . You must pay any
                                                additional royalties owed . . . plus the late payment
                                                interest from the original royalty due date, or you may
                                                report a credit.
1206.112(a)(3) and (a)(4)....................  (a)(3) If you transport or exchange at arm's length (or                80               4             320
                                                both transport and exchange) at least 20 percent, but
                                                not all, of your oil produced from the lease to a market
                                                center, determine the adjustment between the lease and
                                                the market center for the oil that is not transported or
                                                exchanged (or both transported and exchanged) to or
                                                through a market center as follows: . . .
                                               (4) If you transport or exchange (or both transport and
                                                exchange) less than 20 percent of your crude oil
                                                produced from the lease between the lease and a market
                                                center, you must propose to ONRR an adjustment between
                                                the lease and the market center for the portion of the
                                                oil that you do not transport or exchange (or both
                                                transport and exchange) to a market center. . . . If
                                                ONRR prescribes a different adjustment. . . . You must
                                                pay any additional royalties owed . . . plus the late
                                                payment interest from the original royalty due date, or
                                                you may report a credit..
1206.112(b)(3)...............................  (b)(3) . . . you may propose an alternative differential               80               4             320
                                                to ONRR. . . . If ONRR prescribes a different
                                                differential. . . . You must pay any additional
                                                royalties owed . . . plus the late payment interest from
                                                the original royalty due date, or you may report a
                                                credit . . .
1206.112(c)(2)...............................  (c)(2) . . . If quality bank adjustments do not                        80               2             160
                                                incorporate or provide for adjustments for sulfur
                                                content, you may make sulfur adjustments, based on the
                                                quality of the representative crude oil at the market
                                                center, of 5.0 cents per one-tenth percent difference in
                                                sulfur content, unless ONRR approves a higher
                                                adjustment.
1206.114.....................................  What are my reporting requirements under an arm's-length
                                                transportation contract?
                                                                                                         -----------------------------------------------
                                               You or your affiliate must use a separate entry on Form    Burden covered under OMB Control Number 1012-
                                                ONRR-2014 to notify ONRR of an allowance based on         0004.
                                                transportation costs you or your affiliate incur.
                                               ONRR may require you or your affiliate to submit arm's-    AUDIT PROCESS. See note.
                                                length transportation contracts, production agreements,
                                                operating agreements, and related documents . . .

[[Page 72105]]

 
1206.115(a)..................................  What are my reporting requirements under a non-arm's-      Burden covered under OMB Control Number 1012-
                                                length transportation arrangement?                        0004.
                                                                                                         -----------------------------------------------
                                               (a) You or your affiliate must use a separate entry on
                                                Form ONRR-2014 to notify ONRR of an allowance based on
                                                transportation costs you or your affiliate incur.
1206.115(c)..................................  (c) ONRR may require you or your affiliate to submit all   AUDIT PROCESS. See note.
                                                data used to calculate the allowance deduction. . . .
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                                                                 Subpart D--Federal Gas
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.152(b)(1)(i) and (b)(1)(iii)............  Valuation standards--unprocessed gas.                      AUDIT PROCESS. See note.
                                                                                                         -----------------------------------------------
                                               (b)(1)(i) . . . The lessee shall have the burden of
                                                demonstrating that its contract is arm's-length. . . .
                                                (iii) . . . When ONRR determines that the value may be
                                                unreasonable, ONRR will notify the lessee and give the
                                                lessee an opportunity to provide written information
                                                justifying the lessee's value.
1206.152(b)(2)...............................  (b)(2) . . . The lessee must request a value                           80               1              80
                                                determination in accordance with paragraph (g) of this
                                                section for gas sold pursuant to a warranty contract;
                                                                                                         -----------------------------------------------
1206.152(b)(3)...............................  (b)(3) ONRR may require a lessee to certify that its       AUDIT PROCESS. See note.
                                                arm's-length contract provisions include all of the
                                                consideration to be paid by the buyer, either directly
                                                or indirectly, for the gas.
1206.152(e)(1)...............................  (e)(1) Where the value is determined pursuant to           Burden covered under OMB Control Number 1012-
                                                paragraph (c) of this section, the lessee shall retain    0004.
                                                all data relevant to the determination of royalty value
                                                . . .
1206.152(e)(2)...............................  Any Federal lessee will make available upon request to     AUDIT PROCESS. See note.
                                                the authorized ONRR or State representatives, to the
                                                Office of the Inspector General of the department of the
                                                Interior, or other person authorized to receive such
                                                information, arm's-length sales and volume data for like-
                                                quality production sold, purchased or otherwise obtained
                                                by the lessee from the field or area or from nearby
                                                fields or areas.
                                                                                                         -----------------------------------------------
1206.152(e)(3)...............................  (e)(3) A lessee shall notify ONRR if it has determined                 10              10             100
                                                value pursuant to paragraph (c)(2) or (c)(3) of this
                                                section . . .
1206.152(g)..................................  (g) The lessee may request a value determination from                  40               5             200
                                                ONRR. . . . The lessee shall submit all available data
                                                relevant to its proposal. . . .
                                                                                                         -----------------------------------------------
1206.153(b)(1)(i) and (b)(1)(iii)............  Valuation standards--processed gas.                        AUDIT PROCESS. See note.
                                                                                                         -----------------------------------------------
                                               (b)(1)(i) . . . The lessee shall have the burden of
                                                demonstrating that its contract is arm's-length. . . .
                                               (iii) . . . When ONRR determines that the value may be
                                                unreasonable, ONRR will notify the lessee and give the
                                                lessee an opportunity to provide written information
                                                justifying the lessee's value.
1206.153(b)(2)...............................  (b)(2) . . . The lessee must request a value                           80               1              80
                                                determination in accordance with paragraph (g) of this
                                                section for gas sold pursuant to a warranty contract;
                                                                                                         -----------------------------------------------
1206.153(b)(3)...............................  (b)(3) ONRR may require a lessee to certify that its       AUDIT PROCESS. See note.
                                                arm's-length contract provisions include all of the
                                                consideration to be paid by the buyer, either directly
                                                or indirectly, for the residue gas or gas plant product.
1206.153(e)(1)...............................  (e)(1) Where the value is determined pursuant to           Burden covered under OMB Control Number 1012-
                                                paragraph (c) of this section, the lessee shall retain    0004.
                                                all data relevant to the determination of royalty value
                                                . . .

[[Page 72106]]

 
1206.153(e)(2)...............................  (e)(2) Any Federal lessee will make available upon         AUDIT PROCESS. See note.
                                                request to the authorized ONRR or State representatives,
                                                to the Office of the Inspector General of the Department
                                                of the Interior, or other persons authorized to receive
                                                such information, arm's-length sales and volume data for
                                                like-quality residue gas and gas plant products sold,
                                                purchased or otherwise obtained by the lessee from the
                                                same processing plant or from nearby processing plants.
                                                                                                         -----------------------------------------------
1206.153(e)(3)...............................  (e)(2) A lessee shall notify ONRR if it has determined                 10               2              20
                                                any value pursuant to paragraph (c)(2) or (c)(3) of this
                                                section . . .
1206.153(g)..................................  206.153(g) The lessee may request a value determination                80              15           1,200
                                                from ONRR. . . The lessee shall submit all available
                                                data relevant to its proposal. . . .
1206.154(c)(4)...............................  Determination of quantities and qualities for computing                40               1              40
                                                royalties.
                                               (c)(4) . . . A lessee may request ONRR approval of other
                                                methods for determining the quantity of residue gas and
                                                gas plant products allocable to each lease. . . ..
1206.156(c)(3)...............................  Transportation allowances--general.                                    40               3             120
                                               (c)(3) Upon request of a lessee, ONRR may approve a
                                                transportation allowance deduction in excess of the
                                                limitation prescribed by paragraphs (c)(1) and (c)(2) of
                                                this section. . . . An application for exception (using
                                                Form ONRR-4393, Request to Exceed Regulatory Allowance
                                                Limitation) must contain all relevant and supporting
                                                documentation necessary for ONRR to make a
                                                determination. . . .
                                                                                                         -----------------------------------------------
1206.157(a)(1)(i)............................  Determination of transportation allowances                 AUDIT PROCESS. See note.
                                               (a) Arm's-length transportation contracts. (1)(i) . . .
                                                The lessee shall have the burden of demonstrating that
                                                its contract is arm's-length. . . .
                                               The lessee must claim a transportation allowance by        Burden covered under OMB Control Number 1012-
                                                reporting it on a separate line entry on the Form ONRR-   0004.
                                                2014.
1206.157(a)(1)(iii)..........................  (a)(1)(iii) . . . When ONRR determines that the value of   AUDIT PROCESS. See note.
                                                the transportation may be unreasonable, ONRR will notify
                                                the lessee and give the lessee an opportunity to provide
                                                written information justifying the lessee's
                                                transportation costs.
                                                                                                         -----------------------------------------------
1206.157(a)(2)(ii)...........................  (a)(2)(ii) . . . the lessee may propose to ONRR a cost                 40               1              40
                                                allocation method on the basis of the values of the
                                                products transported. . . .
1206.157(a)(3)...............................  (a)(3) If an arm's-length transportation contract                      40               1              40
                                                includes both gaseous and liquid products and the
                                                transportation costs attributable to each cannot be
                                                determined from the contract, the lessee shall propose
                                                an allocation procedure to ONRR. . . . The lessee shall
                                                submit all relevant data to support its proposal. . . .
1206.157(a)(5)...............................  (a)(5) . . . The transportation factor may not exceed 50               10               3              30
                                                percent of the base price of the product without ONRR
                                                approval.
                                                                                                         -----------------------------------------------
1206.157(b)(1)...............................  (b) Non-arm's-length or no contract. (1) The lessee must   Burden covered under OMB Control Number 1012-
                                                claim a transportation allowance by reporting it on a     0004.
                                                separate line entry on the Form ONRR-2014.
                                                                                                         -----------------------------------------------
1206.157.....................................  (b)(2)(iv) . . . After a lessee has elected to use either             100               1             100
(b)(2)(iv) and (b)(2)(iv)(A).................   method for a transportation system, the lessee may not
                                                later elect to change to the other alternative without
                                                approval of the ONRR.
                                               (A) . . . After an election is made, the lessee may not
                                                change methods without ONRR approval. . . ..
1206.157(b)(3)(i)............................  (b)(3)(i) . . . Except as provided in this paragraph, the             100               1             100
                                                lessee may not take an allowance for transporting a
                                                product which is not royalty bearing without ONRR
                                                approval.

[[Page 72107]]

 
1206.157(b)(3)(ii)...........................  (b)(3)(ii) . . . the lessee may propose to the ONRR a                 100               1             100
                                                cost allocation method on the basis of the values of the
                                                products transported. . . .
1206.157(b)(4)...............................  (b)(4) Where both gaseous and liquid products are                     100               1             100
                                                transported through the same transportation system, the
                                                lessee shall propose a cost allocation procedure to
                                                ONRR. . . . The lessee shall submit all relevant data to
                                                support its proposal. . . .
1206.157(b)(5)...............................  (b)(5) You may apply for an exception from the                        100               1             100
                                                requirement to compute actual costs under paragraphs
                                                (b)(1) through (b)(4) of this section.
                                                                                                         -----------------------------------------------
1206.157(c)(1)(i)............................  (c) Reporting Requirements. (1) Arm's-length contracts.    Burden covered under OMB Control Number 1012-
                                                (i) You must use a separate entry on Form ONRR-2014 to    0004.
                                                notify ONRR of a transportation allowance.
1206.157(c)(1)(ii)...........................  (c)(1)(ii) ONRR may require you to submit arm's-length     AUDIT PROCESS. See note.
                                                transportation contracts, production agreements,
                                                operating agreements, and related documents. . . .
1206.157(c)(2)(i)............................  (c)(2) Non-arm's-length or no contract. (i) You must use   Burden covered under OMB Control Number 1012-
                                                a separate entry on Form ONRR-2014 to notify ONRR of a    0004.
                                                transportation allowance.
1206.157(c)(2)(iii)..........................  (c)(2)(iii) ONRR may require you to submit all data used   AUDIT PROCESS. See note.
                                                to calculate the allowance deduction. . . .
                                                                                                         -----------------------------------------------
1206.157(e)(2), (e)(3), and (f)(1)...........  (e) Adjustments. (2) For lessees transporting production   Burden covered under OMB Control Number 1012-
                                                from onshore Federal leases, the lessee must submit a     0004.
                                                corrected Form ONRR-2014 to reflect actual costs,
                                                together with any payment, in accordance with
                                                instructions provided by ONRR. (3) For lessees
                                                transporting gas production from leases on the OCS, if
                                                the lessee's estimated transportation allowance exceeds
                                                the allowance based on actual costs, the lessee must
                                                submit a corrected Form ONRR-2014 to reflect actual
                                                costs, together with its payments, in accordance with
                                                instructions provided by ONRR
                                                                                                         -----------------------------------------------
                                               (f) Allowable costs in determining transportation
                                                allowances. . . . (1) Firm demand charges paid to
                                                pipelines. . . . if you receive a payment or credit from
                                                the pipeline for penalty refunds, rate case refunds, or
                                                other reasons, you must reduce the firm demand charge
                                                claimed on the Form ONRR-2014 by the amount of that
                                                payment. You must modify Form ONRR-2014 by the amount
                                                received or credited for the affected reporting period
                                                and pay any resulting royalty and late payment interest
                                                due;
1206.158(c)(3)...............................  Processing allowances--general...........................              80               8             640
                                               (c)(3) Upon request of a lessee, ONRR may approve a
                                                processing allowance in excess of the limitation
                                                prescribed by paragraph (c)(2) of this section. . . . An
                                                application for exception (using Form ONRR-4393, Request
                                                to Exceed Regulatory Allowance Limitation) shall contain
                                                all relevant and supporting documentation for ONRR to
                                                make a determination.
1206.158(d)(2)(i)............................  (d)(2)(i) If the lessee incurs extraordinary costs for                 80               1              80
                                                processing gas production from a gas production
                                                operation, it may apply to ONRR for an allowance for
                                                those costs. . .
                                                                                                         -----------------------------------------------
1206.158(d)(2)(ii)...........................  (d)(2)(ii) . . . to retain the authority to deduct the     Burden covered under OMB Control Number 1012-
                                                allowance the lessee must report the deduction to ONRR    0004.
                                                in a form and manner prescribed by ONRR.
1206.159(a)(1)(i)............................  Determination of processing allowances...................
                                               (a) Arm's-length processing contracts....................  AUDIT PROCESS. See note.
                                               (1)(i) . . . The lessee shall have the burden of
                                                demonstrating that its contract is arm's-length. . . .
                                               The lessee must claim a processing allowance by reporting  Burden covered under OMB Control Number 1012-
                                                it on a separate line entry on the Form ONRR-2014.        0004.

[[Page 72108]]

 
1206.159(a)(1)(iii)..........................  (a)(1)(iii) . . . When ONRR determines that the value of   AUDIT PROCESS. See note.
                                                the processing may be unreasonable, ONRR will notify the
                                                lessee and give the lessee an opportunity to provide
                                                written information justifying the lessee's processing
                                                costs.
                                                                                                         -----------------------------------------------
1206.159(a)(3)...............................  (a)(3) If an arm's-length processing contract includes                 20               1              20
                                                more than one gas plant product and the processing costs
                                                attributable to each product cannot be determined from
                                                the contract, the lessee shall propose an allocation
                                                procedure to ONRR. . . The lessee shall submit all
                                                relevant data to support its proposal. . . .
                                                                                                         -----------------------------------------------
1206.159(b)(1)...............................  (b) Non-arm's-length or no contract. (1). . . The lessee   Burden covered under OMB Control Number 1012-
                                                must claim a processing allowance by reflecting it as a   0004.
                                                separate line entry on the Form ONRR-2014. . . .
                                                                                                         -----------------------------------------------
1206.159(b)(2)(iv) and (b)(2)(iv)(A).........  (b)(2)(iv) . . . When a lessee has elected to use either              100               1             100
                                                method for a processing plant, the lessee may not later
                                                elect to change to the alternative without approval of
                                                the ONRR.
                                               (A) . . . After an election is made, the lessee may not
                                                change methods without ONRR approval . . ..
1206.159(b)(4)...............................  (b)(4) A lessee may apply to ONRR for an exception from               100               1             100
                                                the requirements that it compute actual costs in
                                                accordance with paragraphs (b)(1) through (b)(3) of this
                                                section. . . .
                                                                                                         -----------------------------------------------
1206.159(c)(1)(i)............................  (c) Reporting requirements--(1) Arm's-length contracts.    Burden covered under OMB Control Number 1012-
                                                (i) The lessee must notify ONRR of an allowance based on  0004.
                                                incurred costs by using a separate line entry on the
                                                Form ONRR-2014.
1206.159(c)(1)(ii)...........................  (c)(1)(ii) ONRR may require that a lessee submit arm's-    AUDIT PROCESS. See note.
                                                length processing contracts and related documents. . . .
1206.159(c)(2)(i)............................  (c)(2) Non-arm's-length or no contract. (i) The lessee     Burden covered under OMB Control Number 1012-
                                                must notify ONRR of an allowance based on incurred costs  0004.
                                                by using a separate line entry on the Form ONRR-2014.
1206.159(c)(2)(iii)..........................  (c)(2)(iii) Upon request by ONRR, the lessee shall submit  AUDIT PROCESS. See note.
                                                all data used to prepare the allowance deduction. . . .
1206.159(e)(2) and (e)(3)....................  (e) Adjustments . . . (2) For lessees processing           Burden covered under OMB Control Number 1012-
                                                production from onshore Federal leases, the lessee must   0004.
                                                submit a corrected Form ONRR-2014 to reflect actual
                                                costs, together with any payment, in accordance with
                                                instructions provided by ONRR. (3) For lessees
                                                processing gas production from leases on the OCS, if the
                                                lessee's estimated processing allowance exceeds the
                                                allowance based on actual costs, the lessee must submit
                                                a corrected Form ONRR-2014 to reflect actual costs,
                                                together with its payment, in accordance with
                                                instructions provided by ONRR . . .
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                             Oil and Gas Valuation Subtotal                                                          117           8,672
--------------------------------------------------------------------------------------------------------------------------------------------------------
    TOTAL....................................  .........................................................  ..............             127           9,198
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: AUDIT PROCESS--The Office of Regulatory Affairs determined that the audit process is exempt from the Paperwork Reduction Act of 1995 because ONRR
  staff asks non-standard questions to resolve exceptions.

    Estimated Annual Reporting and Recordkeeping ``Non-hour'' Cost 
Burden: We have identified no ``non-hour'' cost burden associated with 
the collection of information.
    Public Disclosure Statement: The PRA (44 U.S.C. 3501 et seq.) 
provides that an agency may not conduct or sponsor, and a person does 
not have to respond to, a collection of information unless it displays 
a currently valid OMB control number.
    Comments: Section 3506(c)(2)(A) of the PRA 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 that ONRR collects; and (d)

[[Page 72109]]

minimize the burden on the respondents, including the use of automated 
collection techniques or other forms of information technology.
    To comply with the public consultation process, we published a 
notice in the Federal Register on March 7, 2013 (78 FR 14824), 
announcing that we would submit this ICR to OMB for approval. The 
notice provided the required 60-day comment period. We received no 
unsolicited comments in response to the notice.
    If you wish to comment in response to this notice, you may send 
your comments to the offices listed under the ADDRESSES section of this 
notice. OMB has up to 60 days to approve or disapprove the information 
collection, but they may respond after 30 days. Therefore, in order to 
ensure maximum consideration, OMB should receive public comments by 
January 2, 2014.
    Public Comment Policy: We will post all comments, including names 
and addresses of respondents, at http://www.regulations.gov. Before 
including your address, phone number, email address, or other personal 
identifying information in your comment, you should be aware that we 
may make your entire comment--including your personal identifying 
information--publicly available at any time. While you can ask us in 
your comment to withhold from public view your personal identifying 
information, we cannot guarantee that we will be able to do so.
    Office of the Secretary, Information Collection Clearance Officer: 
David Alspach (202) 219-8526.

    Dated: November 1, 2013.
Gregory J. Gould,
Director, Office of Natural Resources Revenue.
[FR Doc. 2013-27084 Filed 11-29-13; 8:45 am]
BILLING CODE 4310-T2-P