[Federal Register Volume 79, Number 61 (Monday, March 31, 2014)]
[Proposed Rules]
[Pages 17948-17964]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-06848]



[[Page 17948]]

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DEPARTMENT OF THE INTERIOR

Bureau of Ocean Energy Management

30 CFR Part 519

Office of Natural Resources Revenue

30 CFR Part 1219

[Docket ID: ONRR-2011-0024; DS63610000 DR2PS0000.CH7000 145D0102R2]
RIN 1012-AA11


Allocation and Disbursement of Royalties, Rentals, and Bonuses--
Oil and Gas, Offshore

AGENCY: Office of Natural Resources Revenue, Interior.

ACTION: Proposed rule.

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SUMMARY: The Office of Natural Resources Revenue (ONRR) is amending the 
regulations on the distribution and disbursement of qualified revenues 
from certain leases on the Gulf of Mexico's Outer Continental Shelf, in 
accordance with the provisions of the Gulf of Mexico Energy Security 
Act of 2006. These proposed regulations set forth ONRR's formulas and 
methodologies for calculating and allocating revenues during the second 
phase of revenue sharing to the States of Alabama, Louisiana, 
Mississippi, and Texas; their eligible coastal political subdivisions; 
the Land and Water Conservation Fund; and the United States Treasury. 
Additionally, in this proposed rule, the Department of the Interior 
moves the Gulf of Mexico Energy Security Act of 2006's Phase I 
regulations from the Bureau of Ocean Energy Management's (BOEM) title 
30 of the Code of Federal Regulations (CFR) chapter V to ONRR's 30 CFR 
chapter XII, and proposes additional clarification and minor definition 
changes to the current revenue-sharing regulations.

DATES: Submit comments by May 30, 2014. ONRR may not consider comments 
received after this date.

ADDRESSES: You may submit comments to ONRR by any of the following 
methods (please reference ``1012-AA11'' in your comments):
     Electronically, go to www.regulations.gov. In the entry 
titled ``Enter Keyword or ID,'' enter ``ONRR-2011-0024,'' then click 
``Search.'' Follow the instructions to submit public comments. ONRR 
will post all comments.
     Mail comments to Armand Southall, Regulatory Specialist, 
ONRR, P.O. Box 25165, MS 61030A, Denver, Colorado 80225-0165.
     Hand-carry comments, or use an overnight courier service, 
to the Office of Natural Resources Revenue, Building 85, Room A-614, 
Denver Federal Center, West 6th Ave. and Kipling St., Denver, Colorado 
80225.

FOR FURTHER INFORMATION CONTACT: For questions, contact Karen Osborne, 
Supervisory Management & Program Analyst, Office of the Deputy 
Director, ONRR, at [email protected].

SUPPLEMENTARY INFORMATION: 

I. Background

    The President signed the Gulf of Mexico Energy Security Act of 2006 
(GOMESA or Act) into law on December 20, 2006 (Pub. L. 109-432, 120 
Stat. 2922; 43 U.S.C. 1331 note), as part of H.R. 6111, The Tax Relief 
and Health Care Act of 2006. With regard to the Gulf of Mexico (GOM) 
Outer Continental Shelf (OCS) provisions (Division C, Title 1, 120 
Stat. 3000), GOMESA:
     Provided for sharing leasing revenues with Gulf producing 
States, coastal political subdivisions (CPSs) within those States, and 
the Land and Water Conservation Fund (LWCF) for coastal protection, 
conservation, and restoration projects.
     Lifted the congressional moratorium on oil and gas leasing 
and development in a portion of the Eastern and Central GOM.
     Mandated lease sales for 8.3 million acres in the Eastern 
and Central GOM, including 5.8 million acres in the Central GOM 
previously held under Congressional moratoria.
     Barred oil and gas leasing within 125 miles of the Florida 
coastline in the Eastern Planning Area, all areas in the GOM east of 
the Military Mission Line (86[deg]4' W. longitude), and within 100 
miles of the Florida coastline in the Central Planning Area, until June 
30, 2022.
     Established a process for companies to exchange with the 
Federal government certain existing leases in moratorium areas for 
bonus or royalty credits to use on other GOM leases.
    This proposed rule sets forth how the Department of the Interior 
(DOI, hereafter ``We'') plans to implement the second phase of GOMESA 
revenue sharing in fiscal year 2017 and beyond. In addition, we propose 
several clarifications and conforming modifications to the GOMESA Phase 
I revenue-sharing regulations, currently found in part 519, subpart D, 
of 30 CFR chapter V. We propose these changes to differentiate between 
the two GOMESA revenue-sharing phases. We also propose moving BOEM's 
regulations in 30 CFR chapter V, part 519, subpart D, to ONRR's 
regulations at 30 CFR chapter XII.
    We published a final rule (73 FR 78622, December 23, 2008) in the 
Federal Register on the allocation and disbursement of qualified 
revenues from two designated areas in the Gulf of Mexico, known as the 
181 Area in the Eastern Planning Area and the 181 South Area. That 
final rule addresses such allocation and disbursement for each of 
fiscal years 2007 through 2016, to which we refer as ``GOMESA Phase I'' 
revenue sharing. You may find the 181 Area and the 181 South Area on 
the map available at www.boem.gov/Oil-and-Gas-Energy-Program/Mapping-and-Data/Map-Gallery/Index.aspx. The majority of this proposed rule 
covers revenue sharing from the 181 Area, the 181 South Area, and the 
2002-2007 Planning Area subject to GOMESA, for fiscal year 2017 and 
thereafter, to which we refer as ``GOMESA Phase II'' revenue sharing. 
To avoid confusion between the two GOMESA revenue-sharing phases, we 
are proposing a new subpart E for GOMESA Phase II. The differences 
between GOMESA Phase I and Phase II include the calculation 
methodology, revenue-sharing areas, and the imposition of a cap on 
shared revenues in Phase II. Moving the GOMESA Phase I regulations to 
30 CFR chapter XII and modifying the definitions would not change the 
existing revenue-sharing methodology.
    We have drawn on our experience gained during the first few years 
of GOMESA Phase I revenue sharing, along with comments and questions 
received, to refine the definitions. We have worked to eliminate any 
uncertainty, consistent with the Secretary's authority under GOMESA.

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 for 30 CFR parts 519 and 1219 and the signature page in this 
proposed rule. DOI will codify this language in the CFR if we finalize 
this rule as written.
    After you have read the proposed rule language, please return to 
the preamble discussion below. The preamble contains additional 
information about the proposed rule, such as why we define a term in a 
certain manner, why we choose a certain procedure, and how we interpret 
the laws that this rule implements. We welcome comments on our reading 
and interpretation of the Act.
    We propose to remove and reserve part 519 including subpart D of 
chapter V and to recodify part 519, subpart D, as part 1219, subpart D. 
We also propose

[[Page 17949]]

to modify several definitions used in the subpart D regulations to 
differentiate and to avoid confusion between the two GOMESA revenue-
sharing subparts. None of the proposed changes affect the formula or 
methodology for the distribution of GOMESA Phase I qualified OCS 
revenues. We propose a new subpart at 30 CFR Part 1219, Subpart E--Oil 
and Gas, Offshore, GOMESA Phase II Revenue Sharing.
    Finally, we rewrote all sections of 30 CFR part 1219, including 
subpart C (sections 1219.100 through 1219.105), in plain language to 
meet the criteria of Executive Orders 12866 and 12988, and the 
Presidential Memorandum of June 1, 1998, which require clean and 
consistent writing of Federal rules to enable the public to understand 
and follow them. We did not, however, make any substantive changes to 
subpart C; therefore, this Preamble presents no section-by-section 
analysis of sections 1219.100 through 1219.105.

A. Section-by-Section Analysis of 30 CFR Part 519--Distribution and 
Disbursement of Royalties, Rentals, and Bonuses, Subpart D--Oil and 
Gas, Offshore

    The following is a derivation table for the recodified part 1219, 
subpart D, of chapter XII, deriving from part 519, subpart D, of 
chapter V, and a section-by-section explanation of the amended and new 
subpart D (omitting sections that require no further explanation):

                     Derivation Table for Part 1219
------------------------------------------------------------------------
                                                          Derive from
            The requirements of  section:                   section:
------------------------------------------------------------------------
                          Subpart A [Reserved]
------------------------------------------------------------------------
                          Subpart B [Reserved]
------------------------------------------------------------------------
                                Subpart C
                            No New Sections.
  Internal changes made to existing sections 1219.100 through 1219.105
                                  only.
------------------------------------------------------------------------
                                Subpart D
------------------------------------------------------------------------
1219.410.............................................            519.410
1219.411.............................................            519.411
1219.412.............................................   519.412, 519.413
1219.413.............................................            519.414
1219.414.............................................            519.416
1219.415.............................................            519.417
1219.416.............................................            519.418
------------------------------------------------------------------------

B. Section-by-Section Analysis of Proposed 30 CFR Part 1219--
Distribution and Disbursement of Royalties, Rentals, and Bonuses, 
Subpart D--Oil and Gas, Offshore, GOMESA Phase I Revenue Sharing

    ONRR proposes to revise the title of subpart D to add the phrase 
``GOMESA Phase I Revenue Sharing.'' We are proposing the title revision 
to differentiate between the two phases of GOMESA revenue sharing in 
subparts D and E.

Subpart D, Oil and Gas, Offshore, GOMESA Phase I Revenue Sharing

1219.410 What does this subpart contain?

    ONRR proposes to revise paragraph (b) to change the responsible 
agency named in paragraph (b) from BOEM to ONRR. In this section, we 
would add the following new sentences after the first sentence: 
``Leasing revenues disbursed under this subpart originate from leases 
issued on or after December 20, 2006, in the 181 Area in the Eastern 
Planning Area and the 181 South Area, subject to restrictions 
identified in GOMESA. We collectively refer to the revenue sharing from 
these areas for each of these fiscal years as GOMESA Phase I revenue 
sharing.''

1219.411 What definitions apply to this subpart?

    In this section, we propose to clarify several definitions in order 
to improve users' understanding and to differentiate between similar 
terms proposed in this rule for subpart E. The proposed revisions would 
affect the following definitions:
    The definition of 181 Area would delete the first reference to the 
``Minerals Management Service'' and update the second reference to the 
``Minerals Management Service,'' to the ``Bureau of Ocean Energy 
Management.''
    Applicable leased tract would change to ``Applicable leased tract 
(Phase I).'' This change would differentiate between the terms 
``Applicable leased tract (Phase I)'' in subpart D and ``Applicable 
leased tract (Phase II),'' found in subpart E of this part. 
Additionally, we propose adding the phrase ``and issued on or after 
December 20, 2006,'' to the definition to further clarify that an 
applicable leased tract must have been leased on or after GOMESA's 
effective date. There are currently several active leases in the 181 
Area in the Eastern Planning Area that we issued before 2006. Without 
the change, it may not be clear to those reading the regulation that we 
would not consider these leases to be applicable leased tracts for the 
purpose of the proportional inverse distance calculations.
    Qualified OCS revenues would change to ``Qualified OCS revenues 
(Phase I).'' This change would differentiate between the terms 
``Qualified OCS revenues (Phase I)'' in subpart D and ``Qualified OCS 
revenues (Phase II),'' found in subpart E of this part.

1219.412 How will ONRR divide the qualified OCS revenues?

    We would move the language referring to the Coastal Political 
Subdivisions' (CPS's) share of shared revenues currently found in Sec.  
519.413 to Sec.  1219.412. This would provide consistency between 
subparts D and E. The remainder of the section would not change.

1219.413 How will ONRR determine each Gulf producing State's share of 
the qualified OCS revenues (Phase I) from leases in the 181 Area in the 
Eastern Planning Area and the 181 South Area?

    ONRR proposes moving the text at Sec.  519.414 to Sec.  1219.413, 
and revising Sec.  1219.413 to meet the criteria of Executive Orders 
12866 and 12988, and the Presidential Memorandum of June 1, 1998, which 
require that Federal rules be written in plain language.

1219.414 How will ONRR allocate the qualified OCS revenues (Phase I) to 
coastal political subdivisions within the Gulf producing States?

    ONRR proposes moving the text at Sec.  519.416 to Sec.  1219.414, 
and revising Sec.  1219.414 to meet the criteria of Executive Orders 
12866 and 12988, and the Presidential Memorandum of June 1, 1998, which 
require us to write all rules in plain language.

1219.415 How will ONRR allocate qualified OCS revenues (Phase I) to 
coastal political subdivisions if, during any fiscal year, there are no 
applicable leased tracts in the 181 Area in the Eastern Gulf of Mexico 
Planning Area?

    ONRR proposes moving the current language at Sec.  519.417 to Sec.  
1219.415. The current language at Sec.  519.417 explains how if, during 
any fiscal year, there are no applicable leased tracts in the 181 Area 
of the Eastern Gulf of Mexico Planning Area, qualified OCS revenue 
(Phase I) will be allocated to CPSs. There is no substantive difference 
between the current language in Sec.  519.417 and the proposed language 
for Sec.  1219.415, but ONRR has revised the language of Sec.  1219.415 
to meet the criteria of Executive Orders 12866 and 12988, and the 
Presidential Memorandum of June 1, 1998, which require that Federal 
rules be written in plain language.
    ONRR also proposes deleting the current language at Sec.  519.415, 
which concerns the use of bonus and royalty credits issued under GOMESA 
Sec.  104(c). Section 519.415 states that, if such

[[Page 17950]]

credits are used to pay bonuses or royalties on leases in the 181 Area 
located in the Eastern Planning Area and the 181 South Area, there will 
be a corresponding reduction in qualified OCS revenues (Phase I) 
available for distribution. This provision is no longer necessary for 
two reasons: (1) All record title interest owners interested in 
obtaining bonus or royalty credit had to submit a request for such a 
credit on or before October 14, 2010, under 30 CFR 556.92(a), and (2) 
all such credits that were issued have already been applied to bonus or 
royalty obligations. Therefore, no more credits will be issued in the 
future, and all credits issued in the past have been used, so they can 
no longer affect the amount of qualified OCS revenues (Phase I) 
available for distribution. Hence, ONRR proposes to delete as obsolete 
the current language at Sec.  519.415.

1219.416 When will ONRR disburse funds to Gulf producing States and 
eligible coastal political subdivisions?

    ONRR proposes moving the text from Sec.  519.418 to Sec.  1219.416, 
and revising Sec.  1219.416 to meet the criteria of Executive Orders 
12866 and 12988, and the Presidential Memorandum of June 1, 1998, which 
require us to write all rules in Plain Language.

C. Section-By-Section Analysis of Proposed 30 CFR Part 1219, Subpart E, 
Oil and Gas Offshore, GOMESA Phase II Revenue Sharing

Background
    For each of the fiscal years 2017 and thereafter, GOMESA directs 
the Secretary of the Interior to deposit 50 percent of qualified OCS 
revenues (Phase II) received on or after October 1, 2016, from OCS oil 
and gas leases in the 181 Area, the 181 South Area, and the 2002-2007 
Planning Area, into a special account in the U.S. Treasury. From that 
account, we would distribute 25 percent of the qualified revenues to 
the Land and Water Conservation Fund (LWCF) and distribute the 
remaining 75 percent to the States of Alabama, Louisiana, Mississippi, 
and Texas (collectively identified as the ``Gulf producing States'') 
and their eligible CPSs. Under GOMESA Phase II, we share the revenues 
from leases issued on or after December 20, 2006, in the 181 Area, the 
181 South Area, and the 2002-2007 Planning Area. You may find the 
definition of these Phase II revenue-sharing areas in Section 102 of 
GOMESA, and you may also locate them on the map and supporting 
documentation available at www.boem.gov/Oil-and-Gas-Energy-Program/Mapping-and-Data/Map-Gallery/Index.aspx.
    We would allocate the GOMESA Phase II qualified OCS revenues among 
the Gulf producing States based upon proportional inverse distance 
calculations from applicable leased tracts (Phase II) in the 181 Area 
and the 181 South Area, and historical lease sites in the 2002-2007 
Planning Area, in accordance with GOMESA. In determining the individual 
Gulf producing States' share of the GOMESA Phase II qualified OCS 
revenues, GOMESA provides that no State would receive less than 10 
percent of the revenues that we would disburse to the Gulf producing 
States, regardless of the amount established by the application of the 
proportional inverse distance formula. Additionally, the shared 
revenues from certain GOMESA Phase II areas are subject to a cap of 
$500 million for each of fiscal years 2016 through 2055. The result of 
this inverse distance calculation is that States closest to the most 
applicable leased tracts (Phase II) and historical lease sites will 
receive the greatest share of revenues.
    The CPSs located in the State's coastal zone, and within 200 
nautical miles of the geographic center of any OCS leased tract, would 
receive 20 percent of the qualified OCS revenues (Phase II) allocated 
to the State. We would allocate revenues to the CPSs based upon their 
in-State relative population, coastline length, and proportional 
inverse distance from applicable leased tracts (Phase II) in the 181 
Area, and historical lease sites in the 2002-2007 Planning Area.
    There are a few substantive differences between GOMESA Phase I and 
Phase II revenue sharing. First, the GOM acreage and resulting 
qualified revenues would be greater in GOMESA Phase II because Phase II 
acreage consists of the entire 181 Area, the 181 South Area, and the 
2002-2007 Planning Area, whereas Phase I acreage consists of only the 
181 Area in the Eastern Planning Area and the 181 South Area. Second, 
GOMESA Phase II would require that the proportional inverse distance 
calculations be from both applicable leased tracts in the 181 Area and 
the 181 South Area, and historical lease sites in the 2002-2007 
Planning Area, rather than from only applicable leased tracts. 
Additionally, under GOMESA Phase II we must update the group of 
historical lease sites in the 2002-2007 Planning Area once every five 
years. The result of the five-year periods between updates is that each 
Gulf producing State's subset of inverse distances to historic lease 
sites would remain static for five years following each update. Third, 
GOMESA Phase I ends with the disbursement of fiscal year 2016 qualified 
OCS revenues. GOMESA Phase II begins with the disbursement of fiscal 
year 2017 qualified OCS revenues. Fourth, for Phase II, GOMESA directs 
a $500 million annual cap on the majority of shared revenues, which 
equates to a $375 million annual cap among the four Gulf producing 
States and their eligible CPSs, and a $125 million annual cap to the 
LWCF for each of fiscal years 2016 through 2055. The remaining 
differences are minor, and we discuss them later in the preamble of 
this rule.
Revenues Shared Under GOMESA Phase II
    Qualified OCS revenues under GOMESA Phase II are revenues from 
leases issued after the passage of GOMESA (December 20, 2006) in the 
181 Area, the 181 South Area, and the 2002-2007 Planning Area, as 
delineated by GOMESA. Section 102(9)(A)(ii) of GOMESA defines qualified 
OCS revenues as (fiscal year 2017 and each fiscal year thereafter) all 
rentals, royalties, bonus bids, and other sums due and payable to the 
United States received on or after October 1, 2016, from leases entered 
into on or after the date of enactment of this Act for the 181 Area, 
the 181 South Area, and 2002-2007 planning area.
    Exclusions to qualified OCS revenues under GOMESA Phase II are 
described in the preamble discussion for the definition of ``Qualified 
OCS revenues (Phase II)'' in Sec.  1219.511.
Excluded Acreage
    Selected acreage in the De Soto Canyon Protraction Area does not 
fall within the 181 Area, the 181 South Area, or the 2002-2007 Planning 
Area, as defined by GOMESA. You can locate the 21 blocks in the De Soto 
Canyon Protraction area bordering the Eastern Planning Area and not 
covered under GOMESA on the ``Call for Information and Nominations Map, 
Central Planning Area Lease Sale 213,'' available at www.boem.gov/Oil-and-Gas-Energy-Program/Leasing/Regional-Leasing/Gulf-of-Mexico-Region/Lease-Sales/213/index.aspx.
GOMESA Phase II Revenue Distribution of Qualified OCS Revenues and the 
$500 Million Annual Cap
    As explained below in our discussion of proposed Sec.  1219.512, 
the GOMESA revenue-sharing distribution among recipient categories does 
not change from that in Phase I unless the GOMESA Phase II annual $500 
million cap is exceeded. The following table shows a

[[Page 17951]]

summary of mandated Phase II revenue shares:

------------------------------------------------------------------------
                                                         Percentage of
    GOMESA Recipients of qualified OCS  revenues:        qualified OCS
                                                           revenues:
------------------------------------------------------------------------
U.S. Treasury (General Fund)........................                50
Land and Water Conservation Fund....................                12.5
Gulf Producing States...............................                30
Gulf Producing State CPSs...........................                 7.5
------------------------------------------------------------------------

    Section 105(f)(1) of GOMESA states that the total amount of 
qualified outer Continental Shelf revenues made available under 
subsection (a)(2) shall not exceed $500,000,000 for each of fiscal 
years 2016 through 2055.
    The language imposing the $500 million cap in section 105(f)(1) 
refers to ``fiscal years 2016 through 2055,'' while GOMESA sections 
102(9)(A)(ii) and 105(b)(2)(A) each define the Phase II revenue-sharing 
period as being ``fiscal year 2017 and each fiscal year thereafter . . 
.'' We reasonably consider the reference to fiscal year 2016 obsolete 
since the Act, in sections 102(9)(A)(ii) and 105(b)(2)(A), is explicit 
that GOMESA Phase II does not share any revenues before fiscal year 
2017.
    Section 105(f)(2) of GOMESA excludes, through 2055, from this 
annual cap of $500 million, the ``receipts from that fiscal year from 
any area in the 181 Area in the Eastern Planning Area and the 181 South 
Area.'' These are the areas from which States began receiving shares 
from the qualified OCS revenues under GOMESA Phase I. Thus, the cap 
applies only to GOMESA Phase II qualified OCS revenues from the 181 
Area in the Central Planning Area and the 2002-2007 Planning Area.
Allocation Methodology for Shared Revenues Under GOMESA Phase II
    Under both phases of GOMESA, the United States mandates sharing 
revenues only from leases issued after December 20, 2006, with the Gulf 
producing States. Further, the conceptual methodology for allocating 
each State's percentage share under GOMESA Phase II would be the same 
as it is for Phase I. Critical details in the methodology differ, 
however. To determine the percentage of State shares, Phase I relies on 
proportional inverse distances only from applicable leased tracts in 
the 181 Area in the Eastern Planning Area and the 181 South Area. In 
contrast, Phase II would rely on proportional inverse distances from 
applicable leased tracts in the 181 Area and the 181 South Area, and 
historical lease sites in the 2002-2007 Planning Area, to compute the 
States' percentage shares. All revenues shared under Phase II, with the 
exception of revenues from leases in the 181 Area in the Eastern 
Planning Area and the 181 South Area, would be subject to the $500 
million-per-year cap, while there is no cap on the revenue shares in 
Phase I.
    Based upon the current group of historical lease sites in the 2002-
2007 Planning Area and applicable lease tracts in the 181 Area and 181 
South Area, the following table shows a summary of the estimated GOMESA 
Phase II percentage shares among the four Gulf producing States as of 
May 2012:

------------------------------------------------------------------------
                                                        Estimated share
                                                            based on
                                                        historical lease
                 Gulf producing State                      sites and
                                                       applicable leased
                                                         tracts (Phase
                                                        II)*  (percent)
------------------------------------------------------------------------
Alabama..............................................                 13
Louisiana............................................                 47
Mississippi..........................................                 14
Texas................................................                 26
                                                      ------------------
  Total..............................................                100
------------------------------------------------------------------------
* NOTE: The actual percentage distributions would be different than
  shown in the table because of (1) new historical lease sites that
  would be added between May 1, 2012, and December 31, 2015; (2)
  applicable leased tracts (Phase II) that would be added between May 1,
  2012, and September 30, 2018; (3) and applicable leased tracts (Phase
  II) that would be removed if they are relinquished, expire, or
  terminate between May 1, 2012, and September 30, 2018.

DOI's Role in GOMESA Revenue Sharing
    GOMESA does not provide the Secretary of the Interior with a 
compliance responsibility or enforcement mechanism similar to the plan 
review and approval authority included in the Outer Continental Shelf 
Lands Act (OCSLA) Coastal Impact Assistance Program (CIAP). 
Accordingly, while the recipients of the GOMESA revenue-sharing funds 
are legally obligated under GOMESA to expend the funds received only on 
the authorized uses enumerated in the Act, our primary role in this 
program is to calculate shares and transfer the applicable funds to the 
States and CPSs. This approach is similar to what we follow when 
disbursing revenue-sharing funds to the States under section 8(g) of 
the OCSLA or the onshore oil and gas revenues under the Mineral Leasing 
Act (30 U.S.C. 191). Beginning with fiscal year 2011, the amounts of 
GOMESA and other Department of the Interior mineral revenues shared 
with States and localities are available in the Catalog of Federal 
Domestic Assistance (CFDA), in compliance with OMB Circular A-89.
Structure of the Subpart E
    This proposed rule for subpart E, in many ways, mirrors subpart D, 
which includes the GOMESA Phase I revenue-sharing regulations. While 
many of the Phase I and Phase II definitions, formulas, and 
methodologies are the same between subpart D and the proposed subpart 
E, the differences are significant enough that ONRR proposes a new 
subpart. The primary ways in which GOMESA Phase II differs from Phase I 
are (1) the leasing areas from which qualified OCS revenues originate; 
(2) the cap on certain Phase II shared revenues that GOMESA imposes; 
and (3) the use of proportional inverse distance calculations in Phase 
II from both applicable leased tracts (Phase II) and historical lease 
sites to distribute the revenue that States share. The following 
section-by-section analysis describes the specific definitions, 
methodologies, and calculations proposed.

Subpart E--Oil and Gas, Offshore, GOMESA Phase II Revenue Sharing

1219.510 What does this subpart contain?

    This section would describe the general purpose of the subpart and 
enumerate the five authorized uses for revenue-sharing funds. We also 
would provide ONRR contact information for GOMESA-related questions. 
This introduction is similar to the subpart D introduction.

1219.511 What definitions apply to this subpart?

    This section would provide the definition of terms used throughout 
subpart E. Some of the definitions used in this subpart are definitions 
that legislation (GOMESA or OCSLA) established or definitions that we 
included in subpart D (GOMESA Phase I). We would differentiate and 
modify several of the definitions in the subpart E regulations to make 
them unique to the GOMESA Phase II revenue sharing, when necessary. 
Discussed below are the definitions that we propose to add or to expand 
in order to clarify their meaning. In some cases, we explain why we did 
not include definitions used in the GOMESA Phase I regulations in Phase 
II, in order to provide interested parties with further clarification 
and explanation of the differences between the two revenue-sharing 
phases.

[[Page 17952]]

    181 Area--The inclusion of the 181 Area in Phase II revenue sharing 
comes directly from section 102 of GOMESA, and the 181 Area is defined 
at 30 CFR part 1219, subpart D. GOMESA's delineation of the 181 Area is 
important to both GOMESA Phase I and Phase II revenue sharing and is 
occasionally the source of confusion. It is important to note that 
GOMESA's definition of the ``181 Area'' excludes the acreage actually 
offered in the OCS Lease Sale 181, held on December 5, 2001.
    ``181 Area in the Central Planning Area'' would be comprised of the 
area of overlap of the two geographic areas defined at Sec.  1219.411 
as the ``181 Area'' and the ``Central Planning Area.''
    2002-2007 Planning Area--We would define the ``2002-2007 Planning 
Area'' using language directly from section 102 of GOMESA.
    The planning area boundaries that GOMESA uses to delineate the 
2002-2007 Planning Area are the ``former'' planning area boundaries 
from the 2002-2007 Five-Year Program. These boundaries are displayed on 
Map 7, page 49 of the ``Proposed Final Outer Continental Shelf Leasing 
Program 2002-2007,'' dated April 2002. Note that the planning area 
boundaries in BOEM's subsequent Five-Year Programs differ from the 
boundaries in the 2002-2007 Five-Year Program.
    The Central Planning Area-Eastern Planning Area boundary used in 
the 2002-2007 Five-Year Program is an important delineation because of 
the Presidential withdrawal and Congressional moratoria restrictions 
that GOMESA references. Besides the withdrawal and moratoria 
exclusions, the remaining key exclusions are the 181 Area and 181 South 
Area.
    Within GOMESA sections 102(6)(B)(i) and (ii), which contribute to 
the definition of the 2002-2007 Planning Area, there are several 
important references to the 1998 Presidential Withdrawal and the 
Congressional Moratoria through the Interior Appropriations Acts. These 
``exclusions'' to the 2002-2007 Planning Area remove acreage from 
revenue sharing and from historical lease site inverse distance 
calculations.
    GOMESA section 102(6)(B)(i) excludes from the 2002-2007 Planning 
Area all acreage under Congressional Moratoria in the 2006 Interior 
Appropriations Act as in effect on August 2, 2005. See sections 104 
through 106 of the 2006 Appropriations Act for details.
    The relevant effect of section 104 of the Appropriations Act on 
GOMESA Phase II revenue sharing is that it excludes the area due north 
of the Florida Keys. Section 105 of the Appropriations Act covers the 
same acreage referenced in section 104, plus the remaining Eastern 
Planning Area acreage, except for the 181 Area, as defined in the 1997-
2002 Five-Year Program. Section 106 applies to the Atlantic OCS Region 
and has no applicability to GOM OCS acreage.
    GOMESA, section 102(6)(B)(ii), excludes from the 2002-2007 Planning 
Area ``an area withdrawn from leasing under the `Memorandum on 
Withdrawal of Certain Areas of the United States Outer Continental 
Shelf from Leasing Disposition,' from 34 Weekly Comp. Pres. Doc. 1111, 
dated June 12, 1998.'' The June 12, 1998, Presidential Memorandum on 
Withdrawal that President Clinton signed describes the withdrawn areas 
by referring to Public Law 105-83 and the Marine Protection, Research, 
and Sanctuaries Act of 1972, 33 U.S.C. 1401-1445 (Marine Sanctuaries 
Act). The key references are to sections 108-111 of Public Law 105-83, 
which are the Fiscal Year 1998 Interior Appropriations Act, and the 
Marine Sanctuaries Act.
    The referenced areas from the fiscal year 1998 Interior 
Appropriations Act are largely duplicative of those included in the 
later 2006 Interior Appropriations Act language. Sections 109 and 111 
contain no references to the GOM, so they are not applicable to the 
delineation of the 2002-2007 Planning Area in the GOM. Please note that 
``Sale 181'' as referenced in section 110 of Public Law 105-83 and 
section 105 of Public Law 109-54 is different from the ``181 Area'' 
that GOMESA defines. GOMESA includes the acreage actually offered for 
leasing in Sale 181, held on December 5, 2001, in the ``2002-2007 
Planning Area,'' not the ``181 Area.'' The only result of the moratoria 
reference to the Marine Sanctuaries Act is the exclusion of the Flower 
Garden Banks acreage from the definition of the 2002-2007 Planning 
Area.
    ``Applicable leased tract (Phase II)'' would mean a tract that is 
subject to a lease under section 8 of the OCSLA for the purpose of 
drilling for, developing, and producing oil or natural gas resources, 
issued on or after December 20, 2006, and located fully or partially in 
either the 181 Area or the 181 South Area. As mentioned in the preamble 
section on proposed revisions to 30 CFR part 1219, subpart D, the term 
``Applicable leased tract'' would add ``(Phase I)'' to its title to 
differentiate between the applicable leased tracts in each phase of 
GOMESA revenue sharing.
    ``Central Planning Area,'' ``Coastal political subdivision,'' 
``Coastline,'' ``Distance, Eastern Planning Area,'' and ``Gulf 
producing State''--are defined the same as in 30 CFR 1219.411.
    Historical lease site--The term ``Historical lease site'' would 
mean any tract leased after October 1, 1982, under section 8 of the 
OCSLA for the purpose of drilling for, developing, and producing oil or 
natural gas resources in the 2002-2007 Planning Area. We would count a 
tract meeting these requirements even if it is not currently covered by 
an active lease.
    Because GOMESA's intent is to allocate leasing revenues to States 
based upon the distance from historical lease sites to the various 
States, we would interpret a historical lease site as a single site, 
and count it one time, regardless of how many times lessors have leased 
it since October 1, 1982. The other interpretation, counting a tract 
more than once if lessors have leased it multiple times, over-weights 
tracts that repeatedly turn over with little development and/or 
production activity. Further, the interpretation also under-weights 
tracts that lessors have leased only once and that have continuously 
been in production.
    GOMESA section 105(b)(2)(C)(i) provides the Secretary of the 
Interior with the option of including, as ``Historical lease sites,'' 
leases entered into earlier than October 1, 1982. Most GOM OCS tracts 
in the 2002-2007 Planning Area have been leased since October 1, 1982. 
There are only a few shallow-water tracts leased before this 
measurement date--all distributed along the Gulf coast. Adding these 
few historical lease sites would have a negligible effect on inverse-
distance weighting; therefore, they have not been added.
    GOMESA section 105(b)(2)(C) states that ``the historical lease 
sites in the 2002-2007 planning area shall include all leases entered 
into . . . during the period beginning on October 1, 1982 . . . and 
ending on December 31, 2015.'' Section 105(b)(2)(C)(ii) adds that 
``Effective January 1, 2022, and every 5 years thereafter, the ending 
date described in clause (i) shall be extended for an additional 5 
calendar years.'' Regulations at 30 CFR 1219.515 sets forth the process 
by which ONRR will update the group of historical lease sites.
    Leased tract--The term ``Leased tract'' is the same as in 30 CFR 
1219.411.
    Qualified OCS revenues (Phase II)--The term ``Qualified OCS 
revenues (Phase II)'' would mean, in the case of fiscal year 2017 and 
each fiscal year thereafter, all rentals, royalties, bonus bids, and 
other sums that the United States receives from certain leases that

[[Page 17953]]

lessees enter(ed) into on or after December 20, 2006. These leases are 
located in the 181 Area, the 181 South Area or the 2002-2007 Planning 
Area.
    The term ``Qualified OCS revenues (Phase II)'' would not include:
     Revenues from the forfeiture of a bond or other surety 
instrument securing obligations other than royalties.
     Civil penalties.
     Royalties ``taken by the Secretary in-kind and not sold.'' 
(Pub. L. 109-432, Dec 20, 2006)
     Revenues generated from leases subject to section 8(g) of 
the Outer Continental Shelf Lands Act (43 U.S.C. 1337(g)).
     User fees.
     Lease revenues explicitly excluded from GOMESA revenue 
sharing by statute or appropriations law.
    The term ``Qualified OCS revenues (Phase II)'' consists wholly of 
the two subsets defined as ``Qualified OCS revenues (Phase II--
capped)'' and ``Qualified OCS revenues (Phase II--uncapped)''.
    The proposed definition ``Qualified OCS revenues (Phase II)'' 
includes several variations from the GOMESA definition and is 
consistent with the regulations published for GOMESA Phase I revenue 
sharing. First, the GOMESA definition refers to ``leases entered into 
on or after the date of enactment of this Act.'' The definition 
proposed for this rule states the actual GOMESA enactment date.
    Second, in GOMESA section 102(9)(A)(i), we interpret the phrase 
``due and payable to'' to mean ``received by.'' The GOMESA definition 
``Qualified OCS revenues'' refers to ``. . . all rentals, royalties, 
bonus bids, and other sums due and payable to the United States . . . 
,'' which could imply that the revenues to allocate to the Gulf 
producing States, CPSs, and the LWCF for a given fiscal year would be 
the amounts that the lessees owe for the payment of royalties in that 
fiscal year, whether or not we actually received the payments during 
that fiscal year. This interpretation, however, is not consistent with 
our system of collecting, disbursing, and accounting for royalty 
revenues.
    Royalties on oil and gas produced in one month are due and payable 
by the end of the following month; for example, royalties on oil and 
gas produced in October must be paid by the end of November. We do not 
calculate royalty amounts owed and bill the payors; rather, we accept 
the amounts payors report and pay, subject to subsequent audit and 
other verification procedures.
    Royalty payors frequently make adjustments to previous months' 
royalty payments as final data becomes available on sales volumes, 
prices, and the amount of allowable transportation or processing 
deductions. The adjustments may result in payors paying additional 
royalties or, if they overpaid previous royalties, claiming a credit 
against their current royalty obligation. These adjustments may not 
occur until several months after the payment was originally due. As a 
result, they may adjust payments made in one fiscal year in a 
subsequent fiscal year.
    The value of these adjustments, for those leases subject to the 
GOMESA revenue-sharing provisions, will tend to balance-out over time 
as payors make both positive and negative adjustments from one fiscal 
year to the next. As the permanent indefinite appropriation requires, 
all qualified rentals, royalties, bonus bids, and other sums received 
within a fiscal year and subsequently transferred to the appropriate 
receipt account establishes the amount of revenues due and payable for 
that fiscal year.
    Third, to maintain consistency with other laws that appropriate OCS 
lease revenues and fees associated with actions on OCS leases, this 
proposed definition of ``Qualified OCS revenues (Phase II)'' (section 
(2)(v) and (2)(vi)) excludes any leasing revenues and fees that 
Congress may authorize DOI to retain in appropriations legislation or 
that it otherwise precludes from GOMESA revenue sharing.
    Beginning in Fiscal Year 2009, the Appropriations Acts for the 
Department of the Interior have contained language that excludes 
certain rental receipts, which Congress has appropriated to fund 
certain Departmental operations, from GOMESA qualified OCS revenues. 
Appropriations legislation for Fiscal Year 2012 made that exclusion 
permanent.
    Additionally, we collect fee payments for special services based on 
the cost of providing those services. We collect these fees under the 
authority of the Independent Office Appropriations Act consistent with 
the Office of Management and Budget's Circular A-25. We do not derive 
these fees from the lease. For these reasons, Congress designates such 
fees to be retained by the Department as part of our appropriation, and 
they do not qualify as qualified OCS revenues under GOMESA.
    Fourth, the definition of ``Qualified OCS revenues (Phase II)'' 
excludes revenues described under GOMESA section 102(9)(A)(i), which 
defines qualified OCS revenues for the period 2007 through 2016 (Phase 
I) for the 181 Area in the Eastern Planning Area and the 181 South 
Area. The regulations for Phase I of GOMESA revenue sharing found in 30 
CFR part 1219, subpart D, cover the allocations of qualified OCS 
revenues for these areas during this time period.
    Fifth, GOMESA excludes from the definition of ``Qualified OCS 
revenues'' those Federal revenues obtained from the ``forfeiture of a 
bond or other surety securing obligations other than royalties, civil 
penalties, or royalties taken by the Secretary in-kind and not sold.''
    Lastly, GOMESA specifically excludes revenues ``generated from 
leases subject to section 8(g) of the Outer Continental Shelf Lands 
Act.'' (Pub. L. 109-432, Dec 20, 2006). We interpret this last 
exclusion to mean that, if a lease is subject to OCSLA 8(g), it is not 
subject to GOMESA because revenues from leases under section 8(g) are 
already shared with coastal States. Section 8(g)(2) of the OCSLA (43 
U.S.C. 1337(g)(2)) provides that coastal States receive 27 percent of 
revenues generated from the leasing of lands within 3 miles of the 
seaward boundary of the coastal State. It is important to note that 
some 8(g) leases lie only partially within the 8(g) area. So only the 
portion of revenues associated with the acreage within the 8(g) area is 
shared with the States. However, GOMESA excludes sharing of any 
revenues from these leases, even if a portion of the lease lies seaward 
of the 8(g) area.
    We believe these elements of the definitions are consistent with 
the intent of the GOMESA provisions and other applicable laws.
    ``Qualified OCS revenues (Phase II--capped)'' would mean, in the 
case of fiscal year 2017 and each fiscal year thereafter, the subset of 
qualified OCS revenues (Phase II) due and payable to the United States 
from leases that lessees enter(ed) into on or after December 20, 2006, 
located:
     In the 181 Area in the Central Planning Area.
     In the 2002-2007 Planning Area.
    ``Qualified OCS revenues (Phase II--uncapped)'' would mean, in the 
case of fiscal year 2017 and each fiscal year thereafter, the subset of 
qualified OCS revenues (Phase II) due and payable to the United States 
from leases that lessees enter(ed) into on or after December 20, 2006, 
located:
     In the 181 Area in the Eastern Planning Area.
     In the 181 South Area.

[[Page 17954]]

Disposition of Qualified OCS Revenues to Gulf Producing States

1219.512 How will ONRR divide the qualified OCS revenues (Phase II)?

    GOMESA section 105(a)(2) requires that ``50 percent of qualified 
[OCS] revenues [would be deposited] in a special account in the 
Treasury from which the Secretary shall disburse--75 percent to the 
Gulf producing States [(of which 20 percent would subsequently be 
allocated to local eligible CPSs)]. . . 25 percent to provide financial 
assistance to States in accordance with section 6 of the [LWCF].'' Each 
Gulf producing State will receive at least 10 percent of the qualified 
OCS revenues (Phase II) available for allocation to the Gulf producing 
States each fiscal year.
    The following table shows the revenue shares from the qualified OCS 
revenues (Phase II--uncapped) only:

   Revenue Distribution of Qualified OCS Revenues (Phase II--Uncapped)
                          Under GOMESA Phase II
------------------------------------------------------------------------
                                                         Percentage of
         Recipient of qualified OCS revenues:            qualified OCS
                                                           revenues:
------------------------------------------------------------------------
U.S. Treasury (General Fund).........................                 50
Land and Water Conservation Fund.....................               12.5
Gulf Producing States................................                 30
Gulf Producing State CPSs............................                7.5
------------------------------------------------------------------------

    All of the revenues from the two areas noted in the definition of 
qualified OCS revenues (Phase II--uncapped) will be distributed as 
shown in the table above. But GOMESA section 105(f)(1) limits the total 
amount of qualified OCS revenues (Phase II--capped) made available to 
the Gulf producing States, CPSs and the LWCF to $500,000,000 for each 
of the fiscal years 2017 through 2055. In each fiscal year, ONRR will 
first apply the cap and deposit all qualified OCS revenues (Phase II--
capped) above $500,000,000 in the U.S. Treasury (General Fund). ONRR 
will then deposit the remaining qualified OCS revenues (Phase II--
capped), up to $500,000,000, in a special account in the U.S. Treasury. 
ONRR will disburse the money in that account in the same portions noted 
above for qualified OCS revenues (Phase II-uncapped).
    As an illustrative example, suppose that fiscal year qualifying OCS 
revenues (Phase II--capped) are $1.5 billion. Fifty percent of $1.5 
billion is $750 million, which exceeds the $500 million cap. In this 
example we would deposit $500 million in a special account in the 
Treasury, $125 million of which would go to the LWCF, and $375 million 
of which would be shared among the Gulf producing States and their 
CPSs. We would deposit the remaining $1 billion in the U.S. Treasury 
(General Fund). Thus, the percentage of total qualified OCS revenues 
(Phase II--capped) that would go to the LWCF is 8.3% ($125 million), 
the Gulf producing States and their CPSs would share 25% ($375 
million), and the U.S. Treasury (General Fund) would receive 66.7% of 
the revenues ($1 billion). As the amount of total qualified OCS 
revenues (Phase II--capped) increases, the mathematical proportion of 
the total that the LWCF, Gulf producing States, and CPSs share 
decreases due to the application of the cap. Thus, we cannot illustrate 
the distribution percentages in a table, since they will vary depending 
on the total revenues received in a particular year.

1219.513 How will ONRR determine each Gulf producing State's share of 
the qualified OCS revenues (Phase II) from leases in the 181 Area, the 
181 South Area, and the 2002-2007 Planning Area?

    The GOMESA Phase II revenue-sharing provisions direct that we 
allocate qualified OCS revenues (Phase II) to each Gulf producing State 
in amounts that are inversely proportional to the respective distances 
between (a) the point on the coastline of each Gulf producing State 
that is closest to the geographic center of the applicable leased tract 
(Phase II) or historical lease site and (b) the geographic center of 
the tract or site. To implement these provisions, we must make three 
key sets of determinations:
     The points that are the geographic centers of each 
applicable leased tract (Phase II) and historical lease site;
     The point on the coastline of each Gulf producing State 
that is closest to the geographic center of each applicable leased 
tract (Phase II) and historical lease site; and
     The distance between the two points for each applicable 
leased tract (Phase II) and historical lease site.
    As mentioned earlier, GOMESA Phase II uses the inverse distances 
from both the applicable leased tracts (Phase II) in the 181 Area and 
the 181 South Area, and historical lease sites in the 2002-2007 
Planning Area. For inverse distance calculations and the allocation of 
revenues to Gulf producing States, we will treat both the applicable 
leased tracts (Phase II) and the historical lease sites in the same 
manner.
    The methodology to calculate the distances between the Gulf 
producing States and the geographic center of the applicable leased 
tracts (Phase II) and historical lease sites for GOMESA Phase II is the 
same as the GOMESA Phase I methodology. The formula we would use to 
calculate the Gulf producing States' shares of qualified OCS revenues 
(Phase II) derives from their cumulative proportional inverse distances 
from the applicable leased tracts (Phase II) and historical lease 
sites.
    In determining the individual Gulf producing States' shares of the 
qualified OCS revenues (Phase II), GOMESA provides that no State, 
regardless of the amount established by applying the proportional 
inverse distance formula, would receive less than 10 percent of the 
disbursable revenues.
Distance Calculation Procedures
    The following information describes how we propose to calculate the 
distances between the Gulf producing States and the applicable leased 
tracts (Phase II) and historical lease sites that we would use in the 
proportional inverse distance calculations to allocate the qualified 
OCS revenues (Phase II).
    Determining applicable leased tract and historical lease site 
center points--We would identify all applicable leased tracts (Phase 
II) in the 181 Area and the 181 South Area, updated each year, and we 
would identify all historical lease sites in the 2002-2007 Planning 
Area, updated once every five years. We would calculate the geographic 
center of each tract, which is the location that provides a balancing 
point in two-dimensional space. See 73 FR 30331, 30334 (May 27, 2008) 
for additional details.
    Determining measurement points on State coastlines--According to 
the Submerged Lands Act (43 U.S.C. 1301), the term ``coastline'' means 
the line of ordinary low water along that portion of the coast that is 
in direct contact with the open sea and the line marking the seaward 
limit of inland waters. The definition of ``coastline'' is in 30 CFR 
1219.411. For the purpose of both international and domestic law, we 
call the boundary line dividing the land from the ocean the 
``baseline.'' We determined the baseline according to principles 
described in the 1958 United Nations Convention on the Territorial Sea 
and the Contiguous Zone and the 1982 United Nations Convention on the 
Law of the Sea (LOS Convention), and it is normally the low water line 
along the coast, as marked on officially recognized charts.
    In the United States, we have further refined the definition based 
on Federal court decisions. The United States baseline is the mean 
lower low water line along the coast, as shown on official United 
States nautical charts. The

[[Page 17955]]

baseline is the set of points and connected lines representing the mean 
lower low water line in direct contact with the open sea and marking 
the seaward limit of inland waters. The baseline is drawn across river 
mouths, bay openings, and along the outer points of complex coastlines. 
The normal baseline from which the international maritime zones are 
charted is usually synonymous with the coastline as defined by the 
Submerged Lands Act. However, differences exist in certain 
circumstances, such as where a United States Supreme Court Supplemental 
Decree has fixed the Submerged Lands Act baseline or boundary.
    We would use the latitudinal and longitudinal data for the 
Submerged Lands Act, 43 U.S.C. 1301, baseline points in conjunction 
with the tract or site center point data to identify the positions on 
the States' coastlines that are closest to the geographic center of the 
applicable leased tracts and historical lease sites. We would base all 
coordinates used in these calculations and depicted on Official 
Protraction Diagrams, Leasing Maps, and Supplemental Official OCS Block 
Diagrams on the North American Datum of 1927.
    Measuring distances from States to applicable leased tracts (Phase 
II) and historical lease sites--Using the data identifying the 
geographic centers of the tracts and the above described points on each 
of the four States' coastlines, we would find the nearest coastline 
points for each State to each applicable leased tract (Phase II) and 
historical lease site. We would do this by measuring the distances 
between all States' coastline points and each geographic tract or site 
center, and then determining the pairs of points with the shortest 
distance for each State/tract pair.
    We used the ``great circle distance'' to establish the distances 
between the States' coastlines and the applicable leased tracts for 
GOMESA Phase I and propose to do the same for GOMESA Phase II. The 
great circle distance is the shortest distance between any two points 
on the surface of the Earth measured along a path on the surface of the 
Earth. Between any two points on a sphere that are not directly 
opposite each other, there is a unique great circle. The two points 
separate the great circle into two arcs. The length of the shorter arc 
is the great circle distance between the points.
Calculating Gulf Producing State Revenue Allocations
    We propose calculating each Gulf producing State's share of the 
qualified OCS revenues (Phase II) using the following procedure. For 
the examples presented, we round results after each intermediate 
calculation to facilitate the methodology demonstration. In actual 
practice, we would compute actual calculations of shared revenue with 
full precision and round only the final disbursement amount to the 
nearest cent. The revenue-sharing formula that we would use to 
calculate each Gulf producing State's share of GOMESA Phase II 
qualified OCS revenues is:
    (1) For each Gulf producing State, we propose calculating and 
totaling, over all applicable leased tracts (Phase II) and historical 
lease sites, the mathematical inverses of the distances between the 
points on the State's coastline that are closest to the geographic 
centers of the applicable leased tracts (Phase II) and historical lease 
sites, and the geographic centers of the applicable leased tracts 
(Phase II) and historical lease sites.
    (2) For each Gulf producing State, we would divide the sum of each 
State's inverse distances, from all applicable leased tracts (Phase II) 
and historical lease sites, by the sum of the inverse distances from 
all applicable leased tracts (Phase II) and historical lease sites 
across all four Gulf producing States. We would multiply the result by 
the amount of shareable, qualified OCS revenues (Phase II), as shown 
below. In the formulas, IAL, ILA, IMS, and ITX represent the sum of the 
inverses of the shortest distances between Alabama, Louisiana, 
Mississippi, and Texas and all applicable leased tracts (Phase II) and 
historical lease sites, respectively.

Alabama Share = (IAL / (IAL + ILA + IMS + ITX)) x qualified OCS 
revenues (Phase II)

Louisiana Share = (ILA / (IAL + ILA + IMS + ITX)) x qualified OCS 
revenues (Phase II)

Mississippi Share = (IMS / (IAL + ILA + IMS + ITX)) x qualified OCS 
revenues (Phase II)

Texas Share = (ITX / (IAL + ILA + IMS + ITX)) x qualified OCS revenues 
(Phase II)

    The following simplified example, involving only two tracts, 
illustrates the application of the steps above in calculating the 
revenue allocations for the Gulf producing States and also demonstrates 
how the inverse distance formulas work to reward those closest to the 
sources of revenue.
    Suppose that there are two tracts (t1 and t2) 
and the following table shows the shortest distance from each Gulf 
producing State to the tracts' geographic centers:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Applicable leased tracts and historical lease sites
                                                               ------------------------------------------------------------------------
                                                                                t1                                  t2                   Sum of inverse
                     Gulf producing state                      ------------------------------------------------------------------------     distances
                                                                    Distance                            Distance
                                                                (nautical miles)  Inverse distance  (nautical miles)  Inverse distance
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama.......................................................                50            0.0200                70            0.0143            0.0343
Louisiana.....................................................                90            0.0111                80            0.0125            0.0236
Mississippi...................................................                70            0.0143                60            0.0167            0.0310
Texas.........................................................               230            0.0043               210            0.0048            0.0091
                                                               -----------------------------------------------------------------------------------------
    All States................................................               440            0.0497               420            0.0483            0.0980
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Further, suppose that fiscal year qualified OCS revenues (Phase II) 
are $96 million, $12 million of which would go to the LWCF, and $36 
million of which would be shared among the Gulf producing States and 
their CPSs. Since $48 million ($36 million + $12 million) is below the 
$500 million annual cap, the cap is not relevant in this simplified 
example. Applying the formulas above, we would allocate $36 million to 
the Gulf producing States, as shown below.

Alabama Share = (0.0343 / 0.0980) x $36 million = $12,600,000.00

Louisiana Share = (0.0236 / 0.0980) x $36 million = $8,669,387.76

Mississippi Share = (0.0310 / 0.0980) x $36 million = $11,387,755.10

Texas Share = (0.0091 / 0.0980) x $36 million = $3,342,857.14

    However, because Texas's share is less than $3.6 million, or 10 
percent of

[[Page 17956]]

the allocation of $36 million, we would allocate a 10-percent share to 
Texas and recalculate the other Gulf producing States' shares, omitting 
Texas and its 10-percent share from the calculation, as shown below.

Texas Share = 10 percent x $36 million = $3,600,000.00

Alabama Share = (0.0343 / (0.0980-0.0091)) x $32.4 million = 
$12,500,787.40

Louisiana Share = (0.0236 / (0.0980-0.0091)) x $32.4 million = 
$8,601,124.86

Mississippi Share = (0.0310 / (0.0980-0.0091)) x $32.4 million = 
$11,298,087.74

    Adding the three States' shares to Texas's 10-percent share equals 
$36,000,000.
    This example did not reach the GOMESA $500 million Phase II annual 
cap. If the Phase II qualified OCS revenues (Phase II) exceed the cap, 
we would proportionally reduce all recipients' allocations accordingly.

1219.514 How will ONRR allocate the qualified OCS revenues (Phase II) 
to coastal political subdivisions within the Gulf producing States?

    We would distribute 20 percent of each Gulf producing State's 
allocable share directly to eligible CPSs. The following table shows 
the CPSs eligible for GOMESA funds:

                        CPSs Eligible for a Share of Qualified OCS Revenues Under GOMESA
----------------------------------------------------------------------------------------------------------------
  Alabama counties          Louisiana parishes          Mississippi  counties            Texas counties
----------------------------------------------------------------------------------------------------------------
Baldwin, Mobile.      Assumption, Calcasieu,          Hancock, Harrison,        Arkansas, Brazoria, Calhoun,
                       Cameron, Iberia, Jefferson,     Jackson.                  Cameron, Chambers, Galveston,
                       Lafourche, Livingston,                                    Harris, Jackson, Jefferson,
                       Orleans, Plaquemines, St.                                 Kenedy, Kleberg, Matagorda,
                       Bernard, St. Charles, St.                                 Nueces, Orange, Refugio, San
                       James, St. John the Baptist,                              Patricio, Victoria, Willacy.
                       St. Martin, St. Mary, St.
                       Tammany, Tangipahoa,
                       Terrebonne, Vermillion.
----------------------------------------------------------------------------------------------------------------

    In the allocation of revenues among the States' CPSs, GOMESA refers 
to the CIAP provisions in the Energy Policy Act of 2005 that amend 
section 31 of the OCSLA (43 U.S.C. 1356a). Specifically, GOMESA section 
105(b)(3)(B) states that the funds ``shall be allocated to each CPS in 
accordance with subparagraphs (B), (C), and (E) of section 31(b)(4) of 
the OCSLA (43 U.S.C. 1356a(b)(4)). To determine the population shares, 
we would make our allocations using the latest official U.S. Census 
Bureau population data. The ``coastline'' definition for CPSs is used 
in section 2 of the Submerged Lands Act (43 U.S.C. 1301) and is the 
same line established for use in CIAP by section 384 of the Energy 
Policy Act of 2005, codified at 43 U.S.C 1356a.
    GOMESA requires us to use applicable leased tracts (Phase II) and 
historical lease sites for the inverse proportional distance 
calculations in GOMESA Phase II. Additionally, no part of the 181 Area 
or the 2002-2007 Planning Area was subject to the January 1, 2005, 
leasing moratorium, referenced above in ``(E) Exclusion of certain 
leased tracts.'' However, the 181 South Area was under a moratorium as 
of January 1, 2005, and no lease has ever produced in this area, thus 
ONRR cannot include those tracts in the calculations for CPSs in 
accordance with 43 U.S.C. 1356a(b)(4) referenced above. Therefore, in 
calculating the inverse proportional distances for States, we will use 
applicable leased tracts in the 181 Area and the 181 South Area, and 
historical lease sites in the 2002-2007 Planning Area. However, we 
would use only applicable leased tracts in the 181 Area, and historical 
leases sites in the 2002-2007 Planning Area, to calculate each CPS's 
revenue share.
    The following is a continuation of the prior example, detailing the 
estimated allocations for the two State of Alabama eligible CPSs--
Baldwin and Mobile Counties. For this example, t1 and 
t2 could be either applicable leased tracts in the 181 Area 
or could be historical lease sites in the 2002-2007 Planning Area. The 
revenue allocated to the Alabama CPSs is 20 percent of the 
$12,500,787.40 calculated in the earlier example, equal to 
$2,500,157.48.
    We base 25 percent of the allocation on the CPS's population 
proportion. The 2010 Census population numbers are: Baldwin County--
182,265 and Mobile County--412,992. The corresponding population 
proportions are 30.62 percent and 69.38 percent, respectively.
    We base a second 25 percent of the allocation on the CPS's 
proportion of coastline length. The coastline lengths, in nautical 
miles, for Alabama's CPSs are: Baldwin--28.249 and Mobile--22.045. The 
corresponding proportions of coastline length are 56.17 percent and 
43.83 percent, respectively.
    Finally, we base the 50 percent allocation on the proportion of 
summed inverse distances between the CPSs, and the applicable leased 
tracts (Phase II) and historical lease sites in the 2002-2007 Planning 
Area. The distance measures and inverse distance calculations for the 
CPSs are conceptually identical to those employed above in assessing 
the State shares. Let us assume that the following distances and 
resulting inverse distance calculations for the two CPSs are as 
follows:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Applicable leased tracts or historical lease sites
                                                               ------------------------------------------------------------------------
                                                                                t1                                  t2                   Sum of inverse
                     Alabama eligible CPS                      ------------------------------------------------------------------------     distances
                                                                    Distance                            Distance
                                                                (nautical miles)  Inverse distance  (nautical miles)  Inverse distance
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baldwin.......................................................                50            0.0200                70            0.0143            0.0343
Mobile........................................................                54            0.0185                74            0.0135            0.0320
                                                               -----------------------------------------------------------------------------------------
    All CPSs..................................................  ................            0.0385  ................            0.0278            0.0663
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 17957]]

    According to the table above, the proportions of the summed inverse 
distances for each CPS are: Baldwin County--51.73 percent and Mobile 
County--48.27 percent. The table below shows the total allocation for 
each CPS, based on the three components:

 
----------------------------------------------------------------------------------------------------------------
                                     Population       Coastline allocation    Inverse distance        Total %
          Alabama CPS             allocation  (25%)           (25%)           allocation  (50%)     allocation
----------------------------------------------------------------------------------------------------------------
Baldwin.......................  .25 * .3062 = .07655         .25 * .5617 =  .50 * .5173 = .25865         47.5625
                                                                   .140425
Mobile........................  .25 * .6938 = .17345         .25 * .4383 =  .50 * .4827 = .24135         52.4375
                                                                   .109575
----------------------------------------------------------------------------------------------------------------

In this hypothetical example, Baldwin County would receive 
$1,189,137.40 (47.5625 percent) and Mobile County would receive 
$1,311,020.08 (52.4375 percent) of the $2,500,157.48 Alabama CPSs' 
share.

1219.515 How will ONRR update the group of ``historical lease sites'' 
and ``applicable leased tracts (Phase II)'' used for determining the 
allocation of shared revenues?

    GOMESA section 105(b)(2)(C)(ii) requires 5-year updates for 
historical lease sites. The schedule for historical lease site updates 
would follow the requirements of GOMESA section 105(b)(2)(C). On 
December 31, 2015, we would freeze the group of historical lease sites 
and use it in determining the percentage of revenue shares due from 
Fiscal Years 2017 through 2021. Beginning January 1, 2022, and every 
fifth year thereafter, we would extend the ending date for determining 
the group of qualified historical lease sites by an additional five 
calendar years. Every five years, we would add any new historical lease 
sites to the existing group. We would use the group as one subset of 
distances in determining the percentage revenue shares for the next 
five fiscal years, for example, we would use the December 31, 2020, 
update in the revenue-sharing calculations for Fiscal Years 2022 
through 2026.
    The group of applicable leased tracts (Phase II) changes as leases 
are relinquished, expire, or terminate. Similar to GOMESA Phase I, for 
the purposes of GOMESA Phase II revenue-sharing, the distance to an 
applicable leased tract (Phase II) would be included if that tract was 
actively leased at any point within the fiscal year associated with the 
revenue sharing. We would use this group of distances as the second 
subset of distances in determining the percentage revenue shares.
    In summary, the group of historical lease sites can only grow over 
time, while the group of applicable leased tracts (Phase II) would 
likely fluctuate up and down depending on leasing interest in the 181 
Area and the 181 South Area.

1219.516 When will ONRR disburse funds to Gulf producing States and 
eligible coastal political subdivisions?

    Under section 105(c) of GOMESA, we must make funds available during 
the fiscal year immediately following the fiscal year that the United 
States received the funds. We received comments during the GOMESA Phase 
I revenue-sharing rulemaking requesting that we disburse funds as early 
as possible in the fiscal year following the year in which the revenues 
were earned. We also received inquiries about the possibility of 
monthly disbursements to States and CPSs in the same manner that we 
disburse section 8(g) revenues. Because of GOMESA section 105(c), we do 
not have the flexibility to disburse monthly. We intend to disburse 
revenues within the first half of the fiscal year following the year 
that we collect qualified OCS revenues.
    We welcome comments on our reading and interpretation of the Act.

III. Procedural Matters

Regulatory Planning and Review (Executive Orders 12866 and 13563)

    Executive Order (E.O.) 12866 provides that the Office of 
Information and Regulatory Affairs (OIRA) of the Office of Management 
and Budget (OMB) will review all significant rules. OIRA has determined 
that this rule is not significant.
    Executive Order 13563 reaffirms the principles of E.O. 12866 while 
calling for improvements in the nation's regulatory system to promote 
predictability, to reduce uncertainty, and to use the best, most 
innovative, and least burdensome tools for achieving regulatory ends. 
The executive order directs agencies to consider regulatory approaches 
that reduce burdens and maintain flexibility and freedom of choice for 
the public where these approaches are relevant, feasible, and 
consistent with regulatory objectives. E.O. 13563 emphasizes further 
that regulations must be based on the best available science and that 
the rulemaking process must allow for public participation and an open 
exchange of ideas. We have developed this rule in a manner consistent 
with these requirements.
    This proposed rule would not have an annual effect of $100 million 
or more on the economy because the appropriated revenues are simply 
transfer payments to States, coastal political subdivisions (CPSs), and 
the LWCF. This proposed rule only describes the formula and methodology 
we would use to allocate the GOMESA Phase I and Phase II revenues among 
the Gulf producing States and the CPSs. 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. In the context of a cost-benefit analysis, 
the payments to States and CPSs do not represent real resource costs 
and, thus, they fall under the definition of ``transfer payments.'' 
From a cost-benefit perspective, these payments do not enter into the 
Net Benefits Calculation.
    GOMESA directs the Secretary of the Interior to disburse a portion 
of qualified OCS revenues to the Gulf producing States, CPSs, and the 
LWCF. This proposed rule is the result of a permanent appropriation in 
GOMESA of oil and gas leasing revenues to the States of Alabama, 
Louisiana, Mississippi, Texas, their CPSs, and the LWCF. The law 
requires the sharing of qualified OCS leasing revenues, and this is not 
subject to the Department of the Interior's discretion. The transfer of 
revenues from the Federal Government to State and local governments 
would not impose additional costs on any sector of the United States 
economy and would not have an appreciable effect on the national 
economy.
    GOMESA section 105(e)(1) states that the revenues are to ``be made 
available, without further appropriation . . .'' and GOMESA section 
105(f)(1) states that all revenues distributed under this proposed rule 
``shall not exceed

[[Page 17958]]

$500,000,000 for each of fiscal years 2016 through 2055.'' We expect 
that GOMESA Phase II (30 CFR part 1219, subpart E) shared revenues are 
likely to meet the annual statutory cap of $500 million beginning in 
Fiscal Year 2017, which is the first year of sharing qualified OCS 
revenues under this proposed rule. Since these are transfer payments 
shifted from Federal to State and local governments, the net effect of 
this rulemaking on the national economy would be ``no measureable 
economic effect.'' Therefore, the annual net effect would not exceed 
the threshold of ``a significant economic effect'' of $100 million. The 
revenues shared annually under the GOMESA Phase I (30 CFR part 1219, 
subpart D) regulations are significantly less than $100 million. It is 
speculative to project future revenues in this area because it had not 
been available for leasing prior to the passing of GOMESA.
    This proposed rule would not create any serious inconsistency or 
otherwise interfere with another agency's actions or plans. GOMESA's 
mandated disbursements affect no other agency.
    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. If Congress did not appropriate the 
shared revenues to the States and the LWCF, the revenues would enter 
the U.S. Treasury General Fund to appropriate as part of another 
Federal program. Whether appropriated for coastal restoration, 
conservation, or protection in the United States GOM, for national 
defense, or for other Federal programs, the difference in economic 
effect or impact on the national economy is likely to be minimal. 
Therefore, according to the standard set under E.O. 12866, this 
proposed rule would not have an annual economic effect of more than 
$100 million.
    While GOMESA payments do not introduce an economic effect on the 
national economy, there is a distributional effect in how the United 
States population shares the benefits. The GOMESA statute specifies 
that the shared revenues be provided to the four Gulf producing States 
and their CPSs. There are no regulatory alternatives consistent with 
the statute that allows us to consider a different distribution.
    This proposed rule would not raise novel legal or policy issues. It 
merely provides formulas and methods to implement an Act of Congress. 
There are no alternative actions available to the Secretary of the 
Interior for the GOMESA-required sharing of qualified OCS revenues.

Regulatory Flexibility Act

    DOI 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 
specifies the formulas and methodologies for distributing shared 
revenues that DOI collects to the qualified Gulf producing States, 
their CPSs, and the LWCF. This proposed rule would have no effect on 
the amount of royalties, rents, or bonuses that lessees, operators, or 
payors owe, regardless of size and, consequently, would not have a 
significant economic effect on offshore lessees or operators, including 
those classified as small businesses. Small entities may be the 
beneficiary of contracts that GOMESA revenues fund and that Gulf 
producing States or CPSs manage for coastal protection, conservation, 
or restoration services, but that is solely at the local government 
entity's discretion rather than the Federal Government's discretion. It 
is not possible to estimate the effects on small entities since, under 
the statute, States and CPSs would ultimately be the entities 
disbursing the shared revenues for one or more of the five GOMESA-
authorized uses.

Small Business Regulatory Enforcement Fairness Act

    This proposed rule would not be a major rule under 5 U.S.C. 801 et 
seq., the Small Business Regulatory Enforcement Fairness Act, for the 
reasons outlined in the following paragraphs.
    This proposed rule would not have an annual effect on the economy 
of $100 million or more. The provisions of this proposed rule specify 
how we would allocate qualified OCS revenues to States and CPSs during 
the second phase of GOMESA revenue sharing. The proposed rule would 
have no effect on the amount of royalties, rents, or bonuses that 
lessees, operators, or payors owe, regardless of size and, 
consequently, would not have a significant adverse economic effect on 
offshore lessees or operators, including those classified as small 
businesses. The Gulf producing States and CPS recipients of the 
revenues would likely fund contracts that would benefit the local 
economies, small entities, and the environment. We project these annual 
effects to be less than $100 million.
    This proposed rule would not cause a major increase in costs or 
prices for consumers, individual industries, Federal, State, local 
government agencies, or geographic regions.
    This proposed rule 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. We project the effects, if any, of distributing 
revenues to the States and CPSs to be beneficial.

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. The 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 proposal is not a mandate. This proposed 
rule merely provides the formulas and methods to implement an 
allocation of revenue to certain States and eligible CPSs, as Congress 
directed.

Takings Implication Assessment (E.O. 12630)

    Under the criteria in section 2 of E.O. 12630, this proposed rule 
would not have significant takings implications. This proposed rule 
would not be a governmental action capable of interference with 
constitutionally protected property rights. This proposed rule does not 
require a Takings Implication Assessment.

Federalism (E.O. 13132)

    Under the criteria in section 1 of E.O. 13132, this proposed rule 
would not have federalism implications to warrant the preparation of a 
Federalism summary impact statement. This proposed rule would not 
substantially and directly affect the relationship between the Federal 
and State governments. To the extent that State and local governments 
have a role in OCS activities, this proposed rule would not affect that 
role. However, the underlying statute funds State and local government 
activities that mitigate challenges attributed to OCS exploration and 
development. This proposed rule does not require a Federalism summary 
impact statement.

Civil Justice Reform (E.O. 12988)

    This proposed rule would comply with the requirements of E.O. 
12988, for the reasons outlined in the following paragraphs.
    This proposed rule would meet the criteria of section 3(a), which 
requires that we review all regulations to

[[Page 17959]]

eliminate errors and ambiguity and write them to minimize litigation.
    This proposed rule would meet the criteria of section 3(b)(2), 
which requires that we write all regulations in clear language with 
clear legal standards.

Consultation With Indian Tribes (E.O. 13175)

    The Department of the Interior strives to strengthen its 
government-to-government relationship with Indian Tribes through a 
commitment to consultation with Indian Tribes and recognition of their 
right to self-governance and tribal sovereignty. Under the Department's 
consultation policy and the criteria in E.O. 13175, we have evaluated 
this proposed rule and determined that it would have no substantial 
direct effects on federally recognized Indian Tribes.

Paperwork Reduction Act

    This proposed rule would not contain any information collection 
requirements and does not require a submission under the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3501 et seq.).

National Environmental Policy Act

    This proposed rule would not constitute a major Federal action, and 
it would not significantly affect the quality of the human environment. 
The procedural changes resulting from these amendments have no 
consequences with respect to the physical environment. We are not 
required to provide a detailed statement under the National 
Environmental Policy Act of 1969 (NEPA) because this rule qualifies for 
categorical exclusion under 43 CFR 46.210(i), which excludes ``(i) 
Policies, directives, regulations, and guidelines: That are of an 
administrative, financial, legal, technical, or procedural nature.'' We 
have also determined that this proposed rule does not involve any of 
the extraordinary circumstances listed in 43 CFR 46.215 that would 
require further analysis under NEPA.

Data Quality Act

    In developing this proposed rule, we would 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 www.doi.gov/ocio/information_management/iq.cfm.

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

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

Clarity of This Regulation

    Executive Orders 12866 (section 1(b)(2)), 12988 (section 
3(b)(1)(B)), and, 13563 (section 1(a)), and the Presidential Memorandum 
of June 1, 1998, require that Federal rules be written in plain 
language. This means that each rule that we publish must: (a) Have 
logical organization; (b) use the active voice to address readers 
directly; (c) use common, everyday words, and clear language rather 
than jargon; (d) use short sections and sentences; and (e) use lists 
and tables wherever possible.
    If you feel that we have not met these requirements, send your 
comments to [email protected]. 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.

Public Availability of Comments

    We will post all comments, including names and addresses of 
respondents, at www.regulations.gov. Before including your address, 
phone number, email address, or other personal identifying information 
in your comment, you should be aware that we may make your entire 
comment--including your personal identifying information--publicly 
available at any time. While you can ask us in your comment to withhold 
your personal identifying information from public view, we cannot 
guarantee that we will be able to do so.

List of Subjects

30 CFR Part 519

    Government contracts, Indian-lands, Mineral royalties, Oil and gas 
exploration, Public lands--mineral resources.

30 CFR Part 1219

    Government contracts, Mineral royalties, Oil and gas exploration, 
Public lands--mineral resources.

    Dated: March 11, 2014.
Rhea Suh,
Assistant Secretary for Policy, Management and Budget.

    Dated: March 27, 2014.
Tommy Beaudreau,
Principal Deputy Assistant Secretary for Land and Minerals.

    For the reasons discussed in the preamble, under the authority 
provided by the Reorganization Plan No. 3 of 1950 (64 Stat. 1262) and 
Secretarial Order Nos. 3299, 3302, and 3306, the Department of the 
Interior proposes to amend part 519 of title 30 CFR chapter V and part 
1219 of 30 CFR chapter XII as follows:

CHAPTER V--BUREAU OF OCEAN ENERGY MANAGEMENT, DEPARTMENT OF THE 
INTERIOR

Subchapter A--Minerals Revenue Management

PART 519--[REMOVED AND RESERVED]

0
1. Remove and reserve part 519, consisting of subparts A through D 
(Sec. Sec.  519.410 through 519.418).

CHAPTER XII--OFFICE OF NATURAL RESOURCES REVENUE, DEPARTMENT OF THE 
INTERIOR

Subchapter A--Natural Resources Revenue

0
2. Revise part 1219 to read as follows:

PART 1219--DISTRIBUTION AND DISBURSEMENT OF ROYALTIES, RENTALS, AND 
BONUSES

Subpart A--General Provisions [Reserved]
Subpart B--Oil and Gas, General [Reserved]
Subpart C--Oil and Gas, Onshore
Sec.
1219.100 What is ONRR's timing of payment to the States?
1219.101 What receipts are subject to an interest charge?
1219.102 What is ONRR's method of payment to the States?
1219.103 How will ONRR manage payments to Indian accounts?
1219.104 What are Explanation of Payments to the States and Indian 
Tribes?
1219.105 What definitions apply to this subpart?
Subpart D--Oil and Gas, Offshore, GOMESA Phase I Revenue Sharing
1219.410 What does this subpart contain?
1219.411 What definitions apply to this subpart?
1219.412 How will ONRR divide the qualified OCS revenues (Phase I)?
1219.413 How will ONRR determine each Gulf producing State's share 
of the qualified OCS revenues (Phase I) from leases in the 181 Area 
in the Eastern Planning Area and the 181 South Area?

[[Page 17960]]

1219.414 How will ONRR allocate the qualified OCS revenues (Phase I) 
to coastal political subdivisions within the Gulf producing States?
1219.415 How will ONRR allocate qualified OCS revenues (Phase I) to 
the coastal political subdivisions if, during any fiscal year, there 
are no applicable leased tracts in the 181 Area in the Eastern Gulf 
of Mexico Planning Area?
1219.416 When will ONRR disburse funds to Gulf producing States and 
eligible coastal political subdivisions?
Subpart E--Oil and Gas, Offshore, GOMESA Phase II Revenue Sharing
1219.510 What does this subpart contain?
1219.511 What definitions apply to this subpart?
1219.512 How will ONRR divide the qualified OCS revenues (Phase II)?
1219.513 How will ONRR determine each Gulf producing State's share 
of the qualified OCS revenues (Phase II) from leases in the 181 
Area, the 181 South Area, and the 2002-2007 Planning Area?
1219.51 How will ONRR allocate the qualified OCS revenues (Phase II) 
to coastal political subdivisions within the Gulf producing States?
1219.515 How will ONRR update the group of ``historical lease 
sites'' and ``applicable leased tracts (Phase II)'' used for 
determining the allocation of shared revenues?
1219.516 When will ONRR disburse funds to Gulf producing States and 
eligible coastal political subdivisions?

    Authority: Pub. L. 109-432, Div C, Title I, 120 Stat. 3000 (43 
U.S.C. 1331 note) as amended; 43 U.S.C. 1301 et seq.; 1331 et seq.

Subpart A--General Provisions [Reserved]

Subpart B--Oil and Gas, General [Reserved]

Subpart C--Oil and Gas, Onshore


Sec.  1219.100  What is ONRR's timing of payment to the States?

    ONRR will pay a State's share of mineral leasing revenues to the 
State not later than the last business day of the month in which the 
U.S. Treasury issues a warrant authorizing the disbursement, except for 
any portion of such revenues which is under challenge and placed in a 
suspense account pending resolution of a dispute.


Sec.  1219.101  What receipts are subject to an interest charge?

    (a) Subject to the availability of appropriations, the Office of 
Natural Resources Revenue (ONRR) will pay the State its proportionate 
share of any interest charge for royalty and related monies that are 
placed in a suspense account pending resolution of any matters that may 
disallow distribution and disbursement. Such monies not disbursed by 
the last business day of the month following receipt by ONRR will 
accrue interest until paid.
    (b) Upon resolution of any matters that may disallow distribution 
and disbursement, ONRR will disburse the suspended monies found due in 
paragraph (a) of this section, plus interest, to the State, under the 
provisions of Sec.  1219.100.
    (c) ONRR will apply paragraph (a) of this section to revenues that 
ONRR cannot disburse to the State because the payor/lessee provided to 
ONRR incorrect, inadequate, or incomplete information, which prevented 
ONRR from identifying the proper recipient of the payment.


Sec.  1219.102  What is ONRR's method of payment to the States?

    ONRR will disburse monies to a State either by Treasury check or by 
Electronic Funds Transfer (EFT). If a State prefers to receive its 
payment by EFT, it should request this payment method in writing and 
send the request to the Program Manager, Financial Management, Office 
of Natural Resources Revenue, P.O. Box 25165, Denver, Colorado 80225-
0165.


Sec.  1219.103  How will ONRR manage payments to Indian accounts?

    ONRR will transfer mineral revenues received from Indian leases to 
the appropriate Indian accounts that the Bureau of Indian Affairs (BIA) 
manages for allotted and tribal revenues. These accounts are 
specifically designated Treasury accounts. ONRR will transfer these 
revenues to the Indian accounts at the earliest practicable date after 
such funds are received, but in no case later than the last business 
day of the month in which ONRR receives these revenues.


Sec.  1219.104  What are Explanation of Payments to the States and 
Indian Tribes?

    (a) ONRR will describe the payments to States and BIA, on behalf of 
Indian Tribes or Indian allottees, discussed in this part in ONRR-
prepared Explanation of Payment reports. ONRR will prepare these 
reports at the lease level and will include a description of the type 
of payment made, the period covered by the payment, the source of the 
payment, sales amounts upon which the payment is based, the royalty 
rate, and the unit value. If any State or Indian Tribe needs additional 
information pertaining to mineral revenue payments, the State or Tribe 
may request this information from ONRR.
    (b) ONRR will provide these reports to:
    (1) States not later than the 10th day of the month following the 
month in which ONRR disburses the State's share of royalties and 
related monies; and
    (2) BIA, on behalf of Tribes and Indian allottees, not later than 
the 10th day of the month following the month in which ONRR disburses 
the funds.
    (c) ONRR will not include in these reports revenues that we cannot 
distribute to States, Tribes, or Indian allottees because the payor/
lessee provided incorrect, inadequate, or incomplete information about 
the proper recipient of the payment, until the payor/lessee has 
submitted to ONRR the missing information.


Sec.  1219.105  What definitions apply to this subpart?

    Terms that ONRR uses in this subpart shall have the same meaning as 
in 30 U.S.C. 1702.

Subpart D--Oil and Gas, Offshore, GOMESA Phase I Revenue Sharing


Sec.  1219.410  What does this subpart contain?

    (a) The Gulf of Mexico Energy Security Act of 2006 (GOMESA) directs 
the Secretary of the Interior to disburse a portion of the rentals, 
royalties, bonus bids, and other sums derived from certain Outer 
Continental Shelf (OCS) leases in the Gulf of Mexico (GOM) to the 
States of Alabama, Louisiana, Mississippi, and Texas (collectively 
identified as the Gulf producing States); to eligible coastal political 
subdivisions within those States; and to the Land and Water 
Conservation Fund. Shared GOMESA revenues are reserved for the 
following purposes:
    (1) Projects and activities for the purposes of coastal protection, 
including conservation, coastal restoration, hurricane protection, and 
infrastructure directly affected by coastal wetland losses;
    (2) Mitigation of damage to fish, wildlife, or natural resources;
    (3) Implementation of a federally-approved marine, coastal, or 
comprehensive conservation management plan;
    (4) Mitigation of the impact of OCS activities through the funding 
of onshore infrastructure projects; and
    (5) Planning assistance and administrative costs not-to-exceed 3 
percent of the amounts received.
    (b) This subpart sets forth the formula and methodology ONRR will 
use to determine the amount of revenues allocated and disbursed to each 
Gulf producing State and each eligible coastal political subdivision 
(CPS) for each of fiscal years 2007 through 2016. Leasing revenues 
disbursed under this subpart originate from leases issued on

[[Page 17961]]

or after December 20, 2006, in the 181 Area in the Eastern Planning 
Area and the 181 South Area subject to restrictions identified in 
GOMESA. We collectively refer to the revenue sharing from these areas 
for these fiscal years as GOMESA Phase I revenue sharing. For questions 
related to the revenue-sharing provisions in this subpart, please 
contact: Program Manager, Financial Management, Office of Natural 
Resources Revenue, P.O. Box 25165, Denver Federal Center, Building 85, 
Denver, CO 80225-0165, or at (303) 231-3217.


Sec.  1219.411  What definitions apply to this subpart?

    For purposes of this subpart:
    181 Area means the area identified in map 15, page 58, of the 
``Proposed Final Outer Continental Shelf Oil and Gas Leasing Program 
for 1997-2002,'' dated August 1996, available in the Office of the 
Director of the Bureau of Ocean Energy Management, excluding the area 
offered in OCS Lease Sale 181, held on December 5, 2001.
    181 Area in the Eastern Planning Area is comprised of the area of 
overlap of the two geographic areas defined as the ``181 Area'' and the 
``Eastern Planning Area.''
    181 South Area means any area--
    (1) Located:
    (i) South of the 181 Area;
    (ii) West of the Military Mission Line; and
    (iii) In the Central Planning Area;
    (2) Excluded from the ``Proposed Final Outer Continental Shelf Oil 
and Gas Leasing Program for 1997-2002,'' dated August 1996, of the 
Bureau of Ocean Energy Management; and
    (3) Included in the areas considered for oil and gas leasing, as 
identified in map 8, page 84, of the document entitled, ``Revised Outer 
Continental Shelf Oil and Gas Leasing Program 2007-2012,'' approved 
December 2010.
    Applicable leased tract (Phase I) means a tract that is subject to 
a lease under section 8 of the Outer Continental Shelf Lands Act 
(OCSLA), 43 U.S.C. 1337, for the purpose of drilling for, developing, 
and producing oil or natural gas resources, issued on or after December 
20, 2006, and located fully or partially in either the 181 Area in the 
Eastern Planning Area or in the 181 South Area.
    Central Planning Area means the Central Gulf of Mexico Planning 
Area of the Outer Continental Shelf, as designated in the document 
entitled, ``Revised Outer Continental Shelf Oil and Gas Leasing Program 
2007-2012,'' approved December 2010.
    Coastal political subdivision means a political subdivision of a 
Gulf producing State, any part of which is:
    (1) Within the coastal zone (as defined in section 304 of the 
Coastal Zone Management Act of 1972 (16 U.S.C. 1453)) of the Gulf 
producing State as of December 20, 2006; and
    (2) Not more than 200 nautical miles from the geographic center of 
any leased tract.
    Coastline means the line of ordinary low water along that portion 
of the coast which is in direct contact with the open sea and the line 
marking the seaward limit of inland waters. This is the same definition 
used in section 2 of the Submerged Lands Act (43 U.S.C. 1301).
    Distance means the minimum great circle distance.
    Eastern Planning Area means the Eastern Gulf of Mexico Planning 
Area of the Outer Continental Shelf, as designated in the document 
entitled, ``Revised Outer Continental Shelf Oil and Gas Leasing Program 
2007-2012,'' approved December 2010.
    Gulf producing State means each of the States of Alabama, 
Louisiana, Mississippi, and Texas.
    Leased tract means any tract that is subject to a lease under 
section 6 or 8 of the Outer Continental Shelf Lands Act for the purpose 
of drilling for, developing, and producing oil or natural gas 
resources.
    Military Mission Line means the north-south line at 86[deg]41' W. 
longitude.
    Qualified OCS revenues (Phase I) means--
    (1) In the case of each of the fiscal years 2007 through 2016, all 
rentals, royalties, bonus bids, and other sums due and payable to the 
United States from leases issued on or after December 20, 2006, 
located:
    (i) In the 181 Area in the Eastern Planning Area; and
    (ii) In the 181 South Area.
    (2) For applicable leased tracts intersected by the planning area 
administrative boundary line (e.g., separating the GOM Central Planning 
Area from the Eastern Planning Area), only the percent of revenues 
equivalent to the percent of surface acreage in the 181 Area in the 
Eastern Planning Area will be considered qualified OCS revenues (Phase 
I).
    (3) Exclusions from the term qualified OCS revenues (Phase I) are:
    (i) Revenues from the forfeiture of a bond or other surety securing 
obligations other than royalties;
    (ii) Civil penalties;
    (iii) Royalties taken by the Secretary in-kind and not sold;
    (iv) User fees; and
    (v) Lease revenues explicitly excluded from GOMESA revenue sharing 
by statute or appropriations law.


Sec.  1219.412  How will ONRR divide the qualified OCS revenues (Phase 
I)?

    For each of the fiscal years 2007 through 2016, the Secretary of 
the Treasury will deposit 50 percent of the qualified OCS revenues 
(Phase I) into a special U.S. Treasury account, from which ONRR will 
disburse 75 percent to the Gulf producing States and 25 percent to the 
Land and Water Conservation Fund (LWCF). Of the revenues disbursed to a 
Gulf producing State, we will disburse 20 percent directly to the CPSs 
within that State. Each Gulf producing State will receive at least 10 
percent of the qualified OCS revenues (Phase I) available for 
allocation to the Gulf producing States each fiscal year. The following 
table summarizes the resulting revenue shares (adding to 100 percent):

   Revenue Distribution of Qualified OCS Revenues Under GOMESA Phase I
------------------------------------------------------------------------
                                                         Percentage of
         Recipient of qualified OCS revenues             qualified OCS
                                                            revenues
------------------------------------------------------------------------
U.S. Treasury (General Fund).........................                 50
Land and Water Conservation Fund.....................               12.5
Gulf Producing States................................                 30
Gulf Producing State Coastal Political Subdivisions..                7.5
------------------------------------------------------------------------

Sec.  1219.413  How will ONRR determine each Gulf producing State's 
share of the qualified OCS revenues (Phase I) from leases in the 181 
Area in the Eastern Planning Area and the 181 South Area?

    (a) ONRR will determine the great circle distance between:
    (1) The geographic center of each applicable leased tract (Phase 
I); and
    (2) The point on the coastline of each Gulf producing State that is 
closest to the geographic center of each applicable leased tract (Phase 
I).
    (b) Based on these distances, we will calculate the qualified OCS 
revenues (Phase I) to disburse to each Gulf producing State as follows:
    (1) For each Gulf producing State, we will calculate and total, 
over all applicable leased tracts (Phase I), the mathematical inverses 
of the distances between the points on the State's coastline that are 
closest to the geographic centers of the applicable leased tracts 
(Phase I), and the geographic centers of the applicable leased tracts 
(Phase I). For applicable

[[Page 17962]]

leased tracts intersected by the planning area administrative boundary 
line, we will use the geographic center of the entire lease for the 
inverse distance determination.
    (2) For each Gulf producing State, we will divide the sum of each 
State's inverse distances from all applicable leased tracts (Phase I), 
by the sum of the inverse distances from all applicable leased tracts 
(Phase I) across all four Gulf producing States. In the formulas below, 
IAL, ILA, IMS, and ITX represent the sum of the inverses of the 
shortest distances between Alabama, Louisiana, Mississippi, and Texas 
and all applicable leased tracts (Phase I), respectively. We will 
multiply the result by the amount of shareable, qualified OCS revenues 
(Phase I).

Alabama Share = (IAL / (IAL + ILA + IMS + ITX)) x qualified OCS 
revenues (Phase I)

Louisiana Share = (ILA / (IAL + ILA + IMS + ITX)) x qualified OCS 
revenues (Phase I)

Mississippi Share = (IMS / (IAL + ILA + IMS + ITX)) x qualified OCS 
revenues (Phase I)

Texas Share = (ITX / (IAL + ILA + IMS + ITX)) x qualified OCS revenues 
(Phase I)

    (3) If, in any fiscal year, this calculation results in less than a 
10-percent allocation of the qualified OCS revenues (Phase I) to any 
Gulf producing State, we will recalculate the distribution. We will 
allocate 10 percent of the qualified OCS revenues (Phase I) to the 
affected State and recalculate the other States' shares of the 
remaining qualified OCS revenues (Phase I), omitting from the 
calculation the State receiving the 10-percent minimum share.


Sec.  1219.414  How will ONRR allocate the qualified OCS revenues 
(Phase I) to coastal political subdivisions within the Gulf producing 
States?

    (a) Of the qualified OCS revenues (Phase I) allocated to a Gulf 
producing State's CPSs, ONRR will allocate 25 percent based on the 
proportion that each CPS's population bears to the population of all 
CPSs in the State.
    (b) Of the qualified OCS revenues (Phase I) allocated to a Gulf 
producing State's CPSs, we will allocate 25 percent based on the 
proportion that each CPS's miles of coastline bears to the total miles 
of coastline across all CPSs in the State. However, for the State of 
Louisiana, we will deem CPSs without a coastline to each have a 
coastline one-third the average length of the coastline of all CPSs 
within Louisiana that have a coastline.
    (c) Of the qualified OCS revenues (Phase I) allocated to a Gulf 
producing State's CPSs, we will allocate 50 percent in amounts that are 
inversely proportional to the respective distances between the point in 
each CPS that is closest to the geographic center of each applicable 
leased tract (Phase I) and the geographic center of each applicable 
leased tract (Phase I); except that we will exclude amounts collected 
for an applicable leased tract (Phase I) from this calculation if any 
portion of the tract is located in a geographic area that was subject 
to a leasing moratorium on January 1, 2005, unless the leased tract was 
in production on that date.


Sec.  1219.415  How will ONRR allocate qualified OCS revenues (Phase I) 
to the coastal political subdivisions if, during any fiscal year, there 
are no applicable leased tracts in the 181 Area in the Eastern Gulf of 
Mexico Planning Area?

    If, during any fiscal year, there are no applicable leased tracts 
in the 181 Area in the Eastern Gulf of Mexico Planning Area, ONRR will 
allocate revenues to the CPSs in accordance with the following 
criteria:
    (a) Of the qualified OCS revenues (Phase I) allocated to a Gulf 
producing State's CPSs, we will allocate 50 percent based on the 
proportion that each CPS's population bears to the population of all 
CPSs in the State.
    (b) Of the qualified OCS revenues (Phase I) allocated to a Gulf 
producing State's CPSs, we will allocate 50 percent based on the 
proportion that each CPS's miles of coastline bears to the total miles 
of coastline across all CPSs within the State. However, for the State 
of Louisiana, we will deem CPSs without a coastline to each have a 
coastline one-third the average length of the coastline of all CPSs 
within Louisiana having a coastline.


Sec.  1219.416  When will ONRR disburse funds to Gulf producing States 
and coastal political subdivisions?

    (a) ONRR will disburse GOMESA funds in the fiscal year after we 
collect the qualified OCS revenues (Phase I).
    (b) We intend to disburse revenues within the first half of the 
fiscal year following the year that we collect qualified OCS revenues 
(Phase I).

Subpart E--Oil and Gas, Offshore, GOMESA Phase II Revenue Sharing


Sec.  1219.510  What does this subpart contain?

    (a) GOMESA directs the Secretary of the Interior to disburse a 
portion of the rentals, royalties, bonus bids, and other sums derived 
from certain OCS leases in the GOM to the States of Alabama, Louisiana, 
Mississippi, and Texas (collectively identified as the Gulf producing 
States); to eligible CPSs within those States; and to the LWCF. GOMESA 
directs the Gulf producing States and CPSs to use the shared revenues 
for the following purposes:
    (1) Projects and activities for the purposes of coastal protection, 
including conservation, coastal restoration, hurricane protection, and 
infrastructure directly affected by coastal wetland losses;
    (2) Mitigation of damage to fish, wildlife, or natural resources;
    (3) Implementation of a federally-approved marine, coastal, or 
comprehensive conservation management plan;
    (4) Mitigation of the impact of OCS activities through the funding 
of onshore infrastructure projects; and
    (5) Planning assistance and administrative costs not-to-exceed 3 
percent of the amounts received.
    (b) This subpart sets forth the formula and methodology ONRR will 
use to determine the amount of revenues allocated and disbursed to each 
Gulf producing State and each eligible CPS for fiscal year 2017 and 
each fiscal year thereafter. Leasing revenues disbursed under this 
subpart (also referred to as GOMESA Phase II) originate from leases 
issued on or after December 20, 2006, in the 181 Area, the 181 South 
Area, and the GOM 2002-2007 Planning Area subject to restrictions and 
caps identified in GOMESA. For questions related to the revenue-sharing 
provisions in this subpart, please contact: Program Manager, Financial 
Management, Office of Natural Resources Revenue, P.O. Box 25165, Denver 
Federal Center, Building 85, Denver, CO 80225-0165, or at (303) 231-
3217.


Sec.  1219.511  What definitions apply to this subpart?

    For purposes of this subpart:
    181 Area is defined at Sec.  1219.411.
    181 South Area is defined at Sec.  1219.411.
    ``181 Area in the Central Planning Area'' is comprised of the area 
of overlap of the two geographic areas defined at Sec.  1219.411 as the 
``181 Area'' and the ``Central Planning Area.''
    2002-2007 Planning Area means any area--
    (1) Located in--
    (i) The Eastern Planning Area, as designated in the ``Proposed 
Final Outer Continental Shelf Leasing Program 2002-2007,'' dated April 
2002;
    (ii) The Central Planning Area, as designated in the ``Proposed 
Final Outer Continental Shelf Leasing Program 2002-2007,'' dated April 
2002; or

[[Page 17963]]

    (iii) The Western Planning Area, as designated in the ``Proposed 
Final Outer Continental Shelf Leasing Program 2002-2007,'' dated April 
2002; and
    (2) Not located in--
    (i) An area in which no funds may be expended to conduct offshore 
preleasing, leasing, and related activities under sections 104 through 
106 of the Department of the Interior, Environment, and Related 
Agencies Appropriations Act, 2006 (Pub. L. 109-54; 119 Stat. 521) (as 
in effect on August 2, 2005);
    (ii) An area withdrawn from leasing under the ``Memorandum on 
Withdrawal of Certain Areas of the United States Outer Continental 
Shelf from Leasing Disposition,'' from 34 Weekly Comp. Pres. Doc. 1111, 
dated June 12, 1998; or
    (iii) The 181 Area or 181 South Area.
    Applicable leased tract (Phase II) means a tract that is subject to 
a lease under section 8 of the OCSLA, for the purpose of drilling for, 
developing, and producing oil or natural gas resources, issued on or 
after December 20, 2006, and located fully or partially in either the 
181 Area or the 181 South Area.
    Central Planning Area is defined at Sec.  1219.411.
    Coastal political subdivision is defined at Sec.  1219.411.
    Coastline is defined at Sec.  1219.411.
    Distance is defined at Sec.  1219.411.
    Eastern Planning Area is defined at Sec.  1219.411.
    Gulf producing State is defined at Sec.  1219.411.
    Historical lease site means any tract leased on or after October 1, 
1982, under section 8 of the OCSLA, for the purpose of drilling for, 
developing, and producing oil or natural gas resources in the 2002-2007 
Planning Area.
    Leased tract is defined at Sec.  1219.411.
    Military Mission Line is defined at Sec.  1219.411.
    Qualified OCS revenues (Phase II) means--
    (1) In the case of fiscal year 2017 and each fiscal year 
thereafter, all rentals, royalties, bonus bids, and other sums due and 
payable to the United States from leases that lessees enter(ed) into on 
or after December 20, 2006, located:
    (i) In the 181 Area.
    (ii) In the 181 South Area.
    (iii) In the 2002-2007 Planning Area.
    (2) Exclusions from the term ``Qualified OCS revenues (Phase II)'' 
are:
    (i) Revenues from the forfeiture of a bond or other surety 
instrument securing obligations other than royalties;
    (ii) Civil penalties;
    (iii) Royalties ``taken by the Secretary in-kind and not sold.'' 
(Pub. L. 109-432, Dec 20, 2006);
    (iv) Revenues generated from leases subject to section 8(g) of the 
Outer Continental Shelf Lands Act (43 U.S.C. 1337(g));
    (v) User fees; and
    (vi) Lease revenues explicitly excluded from GOMESA revenue sharing 
by statute or appropriations law.
    (3) The term ``Qualified OCS revenues (Phase II)'' consists wholly 
of the two subsets defined as ``Qualified OCS revenues (Phase II-
capped)'' and ``Qualified OCS revenues (Phase II-uncapped).''
    (i) Qualified OCS revenues (Phase II--capped) means, in the case of 
fiscal year 2017 and each fiscal year thereafter, the subset of 
qualified OCS revenues (Phase II) due and payable to the United States 
from leases that lessees enter(ed) into on or after December 20, 2006, 
located:
    (A) In the 181 Area in the Central Planning Area.
    (B) In the 2002-2007 Planning Area.
    (ii) Qualified OCS revenues (Phase II--uncapped) means, in the case 
of fiscal year 2017 and each fiscal year thereafter, the subset of 
qualified OCS revenues (Phase II) due and payable to the United States 
from leases that lessees enter(ed) into on or after December 20, 2006, 
located:
    (A) In the 181 Area in the Eastern Planning Area.
    (B) In the 181 South Area.


Sec.  1219.512  How will ONRR divide the qualified OCS revenues (Phase 
II)?

    (a) For fiscal year 2017 and each fiscal year thereafter, the 
Secretary of the Treasury will deposit 50 percent of the qualified OCS 
revenues (Phase II--uncapped) into a special U.S. Treasury account, 
from which ONRR will disburse 75 percent to the Gulf producing States 
and 25 percent to the LWCF. Of the revenues disbursed to a Gulf 
producing State, we will disburse 20 percent directly to the CPSs 
within that State. Each Gulf producing State will receive at least 10 
percent of the qualified OCS revenues (Phase II--uncapped) available 
for allocation to the Gulf producing States each fiscal year. The 
following table summarizes the resulting revenue shares (adding to 100 
percent):

   Revenue Distribution of Qualified OCS Revenues (Phase II--Uncapped)
                          Under Gomesa Phase II
------------------------------------------------------------------------
                                                         Percentage of
         Recipient of qualified OCS revenues             qualified OCS
                                                            revenues
------------------------------------------------------------------------
U.S. Treasury (General Fund).........................                 50
Land and Water Conservation Fund.....................               12.5
Gulf Producing States................................                 30
Gulf Producing State Coastal Political Subdivisions..                7.5
------------------------------------------------------------------------

    (b) For fiscal year 2017 and each fiscal year thereafter, the 
Secretary of the Treasury will deposit 50 percent of the qualified OCS 
revenues (Phase II--capped) into a special U.S. Treasury account. The 
total amount of qualified OCS revenues (Phase II--capped) deposited in 
the special U.S. Treasury account and available for allocation to the 
Gulf producing States, the CPSs and the LWCF, under this subpart, 
cannot exceed $500,000,000 for each of the fiscal years 2017 through 
2055. After applying the cap, if applicable, ONRR will disburse 75 
percent to the Gulf producing States and 25 percent to the LWCF. Of the 
revenues disbursed to a Gulf producing State, we will disburse 20 
percent directly to the CPSs within that State. Each Gulf producing 
State will receive at least 10 percent of the qualified OCS revenues 
(Phase II--capped) available for allocation to the Gulf producing 
States each fiscal year.


Sec.  1219.513  How will ONRR determine each Gulf producing State's 
share of the qualified OCS revenues (Phase II) from leases in the 181 
Area, the 181 South Area and the 2002-2007 Planning Area?

    (a) ONRR will determine the great circle distance between:
    (1) The geographic center of each tract or site; and
    (2) The point on the coastline of each Gulf producing State that is 
closest to the geographic center of each applicable leased tract (Phase 
II) or historical lease site.
    (b) Based on these distances, we will calculate the qualified OCS 
revenues (Phase II) to disburse to each Gulf producing State as 
follows:
    (1) For each Gulf producing State, we will calculate and total, 
over all applicable leased tracts (Phase II) and historical lease 
sites, the mathematical inverses of the distances between the points on 
the State's coastline that are closest to the geographic centers of the 
applicable leased tracts (Phase II) and historical lease sites, and the 
geographic centers of the applicable leased tracts (Phase II) and 
historical lease sites.
    (2) For each Gulf producing State, we will divide the sum of each 
State's

[[Page 17964]]

inverse distances from all applicable leased tracts (Phase II) and 
historical lease sites, by the sum of the inverse distances from all 
applicable leased tracts (Phase II) and historical lease sites across 
all four Gulf producing States. In the formulas below, IAL, ILA, IMS, 
and ITX represent the sum of the inverses of the shortest distances 
between Alabama, Louisiana, Mississippi, and Texas and all applicable 
leased tracts (Phase II) and historical lease sites, respectively. We 
will multiply the result by the amount of shareable, qualified OCS 
revenues (Phase II).

Alabama Share = (IAL / (IAL + ILA + IMS + ITX)) x qualified OCS 
revenues (Phase II)

    Louisiana Share = (ILA / (IAL + ILA + IMS + ITX)) x qualified OCS 
revenues (Phase II)

    Mississippi Share = (IMS / (IAL + ILA + IMS + ITX)) x qualified OCS 
revenues (Phase II)

    Texas Share = (ITX / (IAL + ILA + IMS + ITX)) x qualified OCS 
revenues (Phase II)

    (3) If, in any fiscal year, this calculation results in less than a 
10-percent allocation of the qualified OCS revenues (Phase II) to any 
Gulf producing State, we will recalculate the distribution. We will 
allocate 10 percent of the qualified OCS revenues (Phase II) to the 
affected State and recalculate the other States' shares of the 
remaining qualified OCS revenues (Phase II), omitting from the 
calculation the State receiving the 10-percent minimum share.


Sec.  1219.514  How will ONRR allocate the qualified OCS revenues 
(Phase II) to coastal political subdivisions within the Gulf producing 
States?

    (a) Of the qualified OCS revenues (Phase II) allocated to a Gulf 
producing State's CPSs, ONRR will allocate 25 percent based on the 
proportion that each CPS's population bears to the population of all 
CPSs in the State.
    (b) Of the qualified OCS revenues (Phase II) allocated to a Gulf 
producing State's CPSs, we will allocate 25 percent based on the 
proportion that each CPS's miles of coastline bears to the total miles 
of coastline across all CPSs in the State. However, for the State of 
Louisiana, we will deem CPSs without a coastline to each have a 
coastline one-third the average length of the coastline of all CPSs 
within Louisiana that have a coastline.
    (c)(1) Of the qualified OCS revenues (Phase II) allocated to a Gulf 
producing State's CPSs, we will allocate 50 percent in amounts that are 
inversely proportional to the respective distances between:
    (i) The point in each CPS that is closest to the geographic center 
of the applicable leased tract (Phase II) or historical lease site; and
    (ii) The geographic center of each applicable leased tract (Phase 
II) or historical lease site.
    (2) However, we will exclude an applicable leased tract (Phase II) 
from this calculation if any portion of the tract is located in a 
geographic area that was subject to a leasing moratorium on January 1, 
2005, unless the leased tract was in production on that date.


Sec.  1219.515  How will ONRR update the group of ``historical lease 
sites'' and ``applicable leased tracts (Phase II)'' used for 
determining the allocation of shared revenues?

    (a) As GOMESA directs, ONRR will update the group of historical 
lease sites in the 2002-2007 Planning Area as follows:
    (1) On December 31, 2015, we will freeze the group of historical 
lease sites, subject to the adjustment under paragraph (a)(2) of this 
section.
    (2) Beginning January 1, 2022, and every fifth year thereafter, we 
will extend the ending date for determining the group of historical 
lease sites for an additional five calendar years by adding any new 
historical lease sites to the existing group.
    (b) Each year we will update the group of applicable leased tracts 
(Phase II) to include only leases that were in effect at any time 
during the fiscal year.


Sec.  1219.516  When will ONRR disburse funds to Gulf producing States 
and coastal political subdivisions?

    (a) ONRR will disburse GOMESA funds in the fiscal year after we 
collect the qualified OCS revenues (Phase II).
    (b) We intend to disburse revenues within the first half of the 
fiscal year following the year that we collect qualified OCS revenues 
(Phase II).

[FR Doc. 2014-06848 Filed 3-27-14; 11:15 am]
BILLING CODE 4310-T2-P