Oil, Gas, and Sulphur Operations and Leasing in the Outer Continental Shelf (OCS)-Cost Recovery, 49871-49877 [05-16854]

Download as PDF Federal Register / Vol. 70, No. 164 / Thursday, August 25, 2005 / Rules and Regulations (6) From subsection (e)(1) because it is often impossible to determine in advance if criminal law enforcement records contained in this system are relevant and necessary, but, in the interests of effective law enforcement, it is necessary to retain this information to aid in establishing patterns of activity and provide investigative leads. (7) From subsection (e)(2) because collecting information from the subject individual could serve notice that he or she is the subject of a criminal law enforcement matter and thereby present a serious impediment to law enforcement efforts. Further, because of the nature of criminal law enforcement matters, vital information about an individual frequently can be obtained only from other persons who are familiar with the individual and his or her activities and it often is not practicable to rely on information provided directly by the individual. (8) From subsection (e)(3) because informing individuals as required by this subsection could reveal the existence of a criminal law enforcement matter and compromise criminal law enforcement efforts. (9) From subsection (e)(5) because it is often impossible to determine in advance if criminal law enforcement records contained in this system are accurate, relevant, timely, and complete, but, in the interests of effective law enforcement, it is necessary to retain this information to aid in establishing patterns of activity and obtaining investigative leads. (10) From subsection (e)(8) because serving notice could give persons sufficient warning to evade criminal law enforcement efforts. (11) From subsection (g) to the extent that this system is exempt from other specific subsections of the Privacy Act. Dated: August 19, 2005. Paul R. Corts, Assistant Attorney General for Administration. [FR Doc. 05–16866 Filed 8–24–05; 8:45 am] BILLING CODE 4410–FB–P DEPARTMENT OF THE INTERIOR Minerals Management Service 30 CFR Parts 250 and 256 RIN 1010–AD16 Oil, Gas, and Sulphur Operations and Leasing in the Outer Continental Shelf (OCS)—Cost Recovery AGENCY: Minerals Management Service (MMS), Interior. VerDate jul<14>2003 15:45 Aug 24, 2005 Jkt 205001 ACTION: Final rule. SUMMARY: MMS is changing some existing fees and implementing several new fees to offset MMS’s costs of performing certain services relating to its minerals programs. EFFECTIVE DATE: This regulation is effective as of September 26, 2005. FOR FURTHER INFORMATION CONTACT: Angela Mazzullo, Offshore Minerals Management (OMM) Budget Office at (703) 787–1691. SUPPLEMENTARY INFORMATION: Background Legal Authority and Policy Guidance: The Independent Offices Appropriation Act of 1952 (IOAA), 31 U.S.C. 9701, is a general law applicable Governmentwide, that provides authority to MMS to recover the costs of providing services to the non-federal sector. It requires implementation through rulemaking. There are several policy documents that provide guidance on the process of charging applicants for service costs. These policy documents are found in the Office of Management and Budget (OMB) Circular A–25, ‘‘User Charges,’’ and the Department of the Interior (DOI) Departmental Manual (DM), 330 DM 1.3A and 6.4, ‘‘Cost Recovery’’ and ‘‘User Charges.’’ The general policy that governs charges for services provided states that a charge ‘‘will be assessed against each identifiable recipient for special benefits derived from federal activities beyond those received by the general public’’ (OMB Circular A–25). The DOI Manual mirrors this policy (330 DM 1.3 A.). Certain activities may be exempted from these fees under certain conditions set out at 330 DM 1.3A and 6.4.4. Cost Recovery Definition: In this rulemaking, cost recovery means reimbursement to MMS for its costs of performing a service by charging a fee to the identifiable applicant/beneficiary of the service. Further guidance is provided by Solicitor’s Opinion M– 36987, ‘‘BLM’s Authority to Recover Costs of Mineral Document Processing’’ (December 5, 1996). The DOI Office of Inspector General issued reports in 1988 and 1995 addressing BLM’s cost recovery responsibilities. Discussion of Comments Received MMS published a proposed rule to revise some existing fees and implement several new fees in the Federal Register on March 15, 2005. The comment period for the proposed rule closed on April 14, 2005. MMS received 23 sets of comments on the proposed rulemaking on 14 different issues. Respondents included: Anadarko, BP, Beacon PO 00000 Frm 00027 Fmt 4700 Sfmt 4700 49871 Exploration & Production, Chevron Texaco, the Domestic Petroleum Council (DPC), EOG Resources, Exxon Mobil, the Independent Petroleum Association of America (IPAA), the International Association of Drilling Contractors (IADC), the International Association of Geophysical Contractors (IAGC), Marathon Oil, NCX Company, the National Ocean Industries Association (NOIA), the Natural Gas Supply Association (NGSA), Newfield Exploration Company, the Offshore Operators Committee (OOC), Shell Exploration & Production Company (Shell), Spinnaker Exploration, Success Energy, the U.S. Oil & Gas Association (USOGA), Waring & Associates, and WJP. These respondents raised a number of important issues that are addressed immediately below. Issue No. 1: The comment period should be extended. MMS received seven requests to extend the comment period beyond 30 days on the proposed rule. MMS considers this rule to be fairly straightforward and not exceptionally complex, and the fees are not significant in terms of potential economic impact. Therefore, MMS considers thirty days to be sufficient time for comment. Issue No. 2: The implementation of the fees in this rule will discourage exploration activity on the OCS, particularly by small businesses. MMS received five comments on this issue. MMS disagrees with the comments. The current classification of a small business by the Small Business Administration (SBA) is a company with fewer than 500 employees. Over 70 percent of companies operating on the OCS meet that criterion. Most of these companies are financially sound and payment of cost recovery fees will not affect plans for exploratory drilling. In addition, the proposed fees represent a small percentage increase in operating costs when compared to the cost of drilling a well. For example, the proposed fees range from $150–$10,700 while well drilling costs range from $5 million–$23 million. Issue No. 3: The fees being implemented are too high. Can more information be provided as to how the fees were calculated? MMS received seven comments on this issue. Because this rule is implementing cost recovery authority, the fees were set at what it currently costs MMS to perform these services. The following example provides greater detail of how the costs were calculated. The Suspension of Operations/ Suspension of Production (SOO/SOP) request was broken down into five subprocesses, also shown in the table below E:\FR\FM\25AUR1.SGM 25AUR1 49872 Federal Register / Vol. 70, No. 164 / Thursday, August 25, 2005 / Rules and Regulations with the associated employee’s grade, time, and labor dollars. Employee’s grade/ step Sub-process Review application. .......................................................................................................... Perform necessary engineering, geological and/or geophysical assessment ................ Attend meetings and discussions (internal and with industry) ........................................ Draft/review/discuss/final decision letter distribution ....................................................... Follow-up monitoring of activity schedule deadlines ....................................................... Subtotal ..................................................................................................................... The labor dollars for the SOO/SOP request total $1,155. Given that this example was for the Gulf of Mexico Region (GOMR) only, the actual average benefit rate of 23.26 percent for that Region was applied, bringing the cost to $1,424. The benefit rate includes the Federal Government’s share of health insurance, life insurance, retirement, and social security and Medicare. To arrive at the final fee, the bureau-wide indirect cost rate of 21.5 percent is applied, for a new total of $1,730. As explained in the preamble of the proposed rule, the indirect cost rate includes costs such as rent, equipment, telephone service, etc. This same breakdown into sub-processes was done for the other two MMS Regions with a weighted average applied to establish the fee at $1,800. Since the same process was used to calculate all fees in this rule, and inclusion of all calculations would prove too voluminous and unwieldy, they are not included in this final rule. The preamble to the proposed rule provides greater detail on the process used to calculate all fees. Issue No. 4: MMS is already compensated for these services from the collection of bonus bids, rentals, and royalties. MMS received seven comments on this issue. When a lease is issued, the working interest is conveyed to the lessee(s) to whom it is issued. The government reserves a royalty interest, which is a cost free share of the production or the value of the production. Under the bidding system that is characteristic of most of the leases, the lessee pays a bonus to obtain the lease that is the result of competitive bidding. During the primary term of a lease and before the lease goes into production (in other words, during the time the lessor is not receiving any benefit from its retained royalty interest), the lessee must pay annual rentals. All of these obligations (royalties, bonus bids, and rentals) reflect the value of the lessor’s (i.e., the public’s) property interest in the leased VerDate jul<14>2003 15:45 Aug 24, 2005 Jkt 205001 13/3 13/3, 14/5, 14/5, 13/3 2 13 6 6 4 $74 490 242 200 149 .................................... ........................ 1,155 Section 4(b): ‘‘Significant energy action’’ means any action by an agency (normally published in the Federal Register) that promulgates or is expected to lead to the promulgation of a final rule or regulation, including notices of inquiry, advanced notices of proposed rulemaking, and notices of proposed rulemaking: (1)(i) that is a significant regulatory action under E.O.12866 or any successor order; and (ii) is likely to have a significant adverse effect on the supply, distribution, or use of energy; or Frm 00028 Fmt 4700 Sfmt 4700 Labor dollars ........................... 13/6 .................. 13/6, 13/3 ......... 13/3, 5/8 ........... ........................... minerals. None of these obligations were ever intended to compensate the government for administrative costs. Nor was the relevant mineral leasing law (the Outer Continental Shelf Lands Act (OCSLA)), which granted the Secretary the authority to issue leases, enacted as a cost recovery mechanism. The government’s authority to recover certain administrative costs of the type involved in this rulemaking is granted by a statute (the provision of IOAA) that predated the OCSLA and predated every lease issued under the OCSLA. The IOAA is not related to royalty, bonus, or rental obligations. Issue No. 5: The non-required document filing fee is too high, given that a single document can index to multiple leases, therefore multiplying the cost of a single submission. MMS agrees. The calculation of this fee was reexamined and an inconsistency was found in the cost data collected for this service. The commenter is correct and MMS has deleted the upward fee adjustment from the rule. The non-required document filing fee will remain at $25 per lease affected. MMS also reviewed all remaining cost calculations affecting fees in this rule. Issue No 6: MMS states that a ‘‘Statement of Energy Effects’’ is not needed, because it does not consider the rule to be a significant energy action; commenter challenges this statement. This rule meets none of the criteria for a significant energy action. Executive Order (E.O.) 13211 defines a significant energy action: PO 00000 Hours spent on task (2) that is designated by the Administrator of the Office of Information and Regulatory Affairs (OIRA) as a significant energy action. (c) ‘‘Agency’’ means any authority of the United States (U.S.) that is an ‘‘agency’’ under 44 U.S.C. 3502(1), other than those considered to be independent regulatory agencies, as defined in 44 U.S.C. 3502(5). Moreover, E.O. 12866 defines a significant regulatory action: (f) ‘‘Significant regulatory action’’ means any regulatory action that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way; the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President’s priorities, or the principles set forth in this E.O. Of the above-quoted thresholds, the only one that could potentially be at issue is section (f)(3), and MMS does not believe that this rule meets that threshold. We note again that compared to the costs of drilling a well, the fees established in this rule are not significant. Issue No. 7: The proposed rulemaking may violate the Administrative Procedure Act, because it does not disclose the basis of MMS’s assessment of the costs to be recovered, other than to give description of certain generic factors purportedly considered. See Issue No. 3 above for a more indepth description of how the fees were calculated. Issue No. 8: The proposed rule does not compare the proposed fees to the costs of similar services in the private sector. To the knowledge of MMS, none of these services is offered by the private sector. Even if some of these services were offered by the private sector, the E:\FR\FM\25AUR1.SGM 25AUR1 Federal Register / Vol. 70, No. 164 / Thursday, August 25, 2005 / Rules and Regulations fees are calculated based on the costs incurred by the Federal Government to provide the service. The costs of what other entities may charge for similar services are not relevant for purposes of this rule. Issue No. 9: It is only fair that MMS not accept a processing fee for requests that are not processed through the system, but are rejected early in the evaluation due to submittal of an incomplete request. How will MMS handle the payment for these denied requests, as well as verbal approvals? Will there be any refunds? Will credit card payment be accepted? All fees imposed by this rule are nonrefundable; however, if a request is deemed not complete, an additional fee will not be charged for its resubmission. Any verbal approvals that might occur must be preceded by payment for the service. MMS is currently considering the different payment options available, and will notify lessees of the available payment options via a Notice to Lessees. The Notice will be issued before the effective date of the fees in this rule. Issue No. 10: Commenter recommends that ‘‘Should there be multiple lessees, all designation of operator forms shall be collected by one lessee and submitted to MMS in a single submittal subject to only one filing fee.’’ MMS agrees with commenter, and that was the original intent. Section § 250.143(d) will be changed to incorporate this recommendation. Issue No. 11: Commenter does not agree that the agency’s legal authority and policy guidance require new fees or that the fees are required to fund the agency’s activities. The Solicitor’s Office has determined that the Department of the Interior Manual and OMB Circular A–25 require that cost recovery action be taken whenever possible. While the structure of MMS’ appropriation does not mandate collection of fees, the President’s Budget assumes that MMS will collect these fees and has offset its appropriated funds accordingly. Issue No. 12: A $10,000 fee is excessive for processing revisions, modifications or amendments to unit agreements once the original analysis conducted by MMS for the original unit application has been completed. The commenter has misinterpreted the fee table. The proposed fee for a revision to a unit agreement is $760, while the $10,700 fee is for the original voluntary unitization proposal or the expansion of a previously approved voluntary unit to include additional acreage. To prevent further confusion the term, ‘‘Unitization Revision and Modification’’ has been changed to just ‘‘Unitization Revision.’’ Issue No. 13: Eight commenters (one consolidated letter from eight trade groups) argue that because neither existing lease terms nor regulations in effect at the time of lease issuance contain provisions allowing the new cost recovery fees, regulations imposing such fees that are promulgated after lease issuance ‘‘are not within the scope of the contract.’’ The commenter cites Mobil Exploration and Producing Southeast, Inc. v. United States, 530 U.S. 604 (2000), as standing for the proposition that offshore leases are subject only to regulations in existence at the time of lease issuance and those promulgated thereafter that concern prevention of waste and conservation of resources. The comment fails to acknowledge that the Independent Offices Appropriation Act, the statute under whose authority MMS is promulgating this rule, was enacted in 1952, and predates the OCS Lands Act and the leases issued under the authority of that act. The comment also misinterprets the Mobil decision. In Mobil, the Supreme Court addressed a statute enacted by Congress years after lease issuance (the Outer Banks Protection Act) whose substantive effect was to prohibit exploration of a certain class of existing leases. The Supreme Court held the statute to be a breach of contract on the part of the United States. The Supreme Court in Mobil did not address the validity of regulations at all, including regulations implementing express statutory authority already in existence. Further, contrary to the commenters’ assertion, Solicitor’s Opinion M–36987 is not inconsistent with the Mobil decision. The commenters are arguing essentially that they should not be obligated to pay any costs that are not specified in the lease instrument itself. That is a policy argument that the lessees should direct to Congress, not to MMS. The commenters’ policy preference does not nullify the Government’s authority (or the lessee’s obligations) under the IOAA when the IOAA applies to the particular administrative function involved. Issue No. 14: Industry will be forced to pass along these new costs of doing business to consumers. MMS is fulfilling its obligation to recover the costs. As previously discussed, the fees are insignificant in relation to the overall costs of industry to explore for and produce crude oil. It would be inappropriate for MMS to anticipate or speculate on how the industry or the market will respond to the requirement to pay for fees. Summary of Changes to Proposed Rule In this final rule, MMS is removing two existing fee adjustments that were proposed. Due to the inconsistency that was found in the cost data collected in relation to the non-required document filing fee adjustment, the adjustment is being removed from this rule. The current fee amount of $25 per lease affected will remain in effect. MMS is also removing the adjustment of the Pipeline Right-of-Way (ROW) Grant Application. This fee was proposed to be lowered; however, further analysis proved that the current fee of $2,350 accurately reflects the cost to MMS to provide that service. Further, MMS is adding language to 30 CFR 250.171 to clarify what has always been implied; to obtain a suspension, ‘‘Your request must include:’’ the four factors currently listed in § 250.171(a)–(d). Finally, since the proposed rule was published, the bureau has updated its indirect cost rate from 15 to 21.5 percent. As required by OMB and Departmental guidance, indirect cost rates are to be included in the calculation of cost recovery fees. No specific comments addressing the indirect cost rate calculation were received. Shown below is the revised fee table. Fee amount Service Change in Designation of Operator ........................................................................................................................... Suspensions of Operations/Suspensions of Production (SOO/SOP) Request ........................................................ *Pipeline Right-of-Way (ROW) Grant Application ..................................................................................................... Pipeline Conversion of Lease Term to ROW ............................................................................................................ Pipeline ROW Assignment ........................................................................................................................................ 500 feet from Lease/Unit Line Production Request .................................................................................................. Gas Cap Production Request .................................................................................................................................... VerDate jul<14>2003 15:45 Aug 24, 2005 Jkt 205001 PO 00000 Frm 00029 Fmt 4700 Sfmt 4700 49873 E:\FR\FM\25AUR1.SGM 25AUR1 $150 1,800 2,350 200 170 3,300 4,200 30 CFR citation § 250.143 § 250.171 § 250.1015 § 250.1015 § 250.1018 § 250.1101 § 250.1101 49874 Federal Register / Vol. 70, No. 164 / Thursday, August 25, 2005 / Rules and Regulations Fee amount Service Downhole Commingling Request .............................................................................................................................. Voluntary Unitization Proposal or Unit Expansion .................................................................................................... Unitization Revision ................................................................................................................................................... Record Title/Operating Rights (Transfer) .................................................................................................................. *Non-required Document Filing ................................................................................................................................. * Indicates § 250.1106 § 250.1303 § 250.1303 § 256.64 § 256.64 no change to current amount. Procedural Matters Regulatory Planning and Review (E.O. 12866) This document is not a significant rule as determined by the Office of Management and Budget (OMB) and is not subject to review under E.O. 12866. (1) This rule will not have an annual effect of $100 million or more on the economy. It will 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. This rule establishes fees based on cost recovery principles. Based on historical filings, MMS projects the fees will raise revenue by approximately $1.65 million annually. (2) This rule will not create a serious inconsistency or otherwise interfere with an action taken or planned by another agency because the costs incurred are for specific MMS services and other agencies are not involved in these aspects of the OCS program. (3) This rule will not alter the budgetary effects of entitlements, grants, user fees, or loan programs or the rights or obligations of their recipients. This change will have no effect on the rights of the recipients of entitlements, grants, user fees, or loan programs. The fees established by this rule are service fees based on cost recovery, and not user fees. (4) This rule will not raise novel legal or policy issues. Regulatory Flexibility Act (RFA) MMS certifies that this rule will not have a significant economic effect on a substantial number of small entities under the RFA (5 U.S.C. 601 et seq.). This change will affect lessees and operators of leases in the OCS. This includes about 130 Federal oil and gas lessees and 115 holders of pipeline rights-of-way. Small lessees that operate under this rule will fall under the Small Business Administration’s (SBA) North American Industry Classification System Codes (NAICS) 211111, Crude Petroleum and Natural Gas Extraction and 213111, Drilling Oil and Gas Wells. For these NAICS code classifications, a small company is one with fewer than VerDate jul<14>2003 4,900 10,700 760 170 25 30 CFR citation 15:45 Aug 24, 2005 Jkt 205001 500 employees. Based on these criteria, an estimated 70 percent of these companies are considered small. This rule, therefore, affects a substantial number of small entities. The fees established in the rule will not have a significant economic effect on a substantial number of small entities because the fees are very small compared to normal costs of doing business on the OCS. For example, the fees range from $150 to $10,700 while the cost of drilling a well ranges from $5 million to $23 million. Additionally, the fees established in the rule will apply to both large and small firms in the same way. Applying for MMS services provides a benefit to the applicant (both large and small) if the applicant decides to operate in the OCS. Comments are important. The SBA Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards were established to receive comments from small business about federal agency enforcement actions. The Ombudsman will annually evaluate the enforcement activities and rate each agency’s responsiveness to small business. If you wish to comment on the actions of MMS, call 1–888–734–3247. You may comment to the SBA without fear of retaliation. Disciplinary action for retaliation by an MMS employee may include suspension or termination from employment with the DOI. Small Business Regulatory Enforcement Fairness Act (SBREFA) This is not a major rule under the SBREFA (5 U.S.C. 804(2)). This rule: (a) Does not have an annual effect on the economy of $100 million or more. (b) Will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions. (c) Will not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises. Leasing on the U.S. OCS is limited to residents of the U.S. or companies incorporated in the U.S. This rule does not change that requirement. PO 00000 Frm 00030 Fmt 4700 Sfmt 4700 Unfunded Mandate Reform Act (UMRA) of 1995 (E.O. 12866) This rule will not impose an unfunded mandate on State, local, or tribal governments or the private sector of more than $100 million per year. The rule will not have a significant or unique effect on State, local, or tribal governments or the private sector. A statement containing the information required by the UMRA (2 U.S.C. 1531 et seq.) is not required. This is because the rule will not affect State, local, or tribal governments, and the effect on the private sector is small. Takings Implication Assessment (E.O. 12630) With respect to E.O. 12630, the rule will not have significant takings implications. A Takings Implication Assessment is not required. The rulemaking is not a governmental action capable of interfering with constitutionally protected property rights. Federalism (E.O. 13132) With respect to E.O.13132, the rule will not have federalism implications. It will 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 change will not affect that role. Civil Justice Reform (E.O. 12988) With respect to E.O. 12988, the Office of the Solicitor has determined that this rule will not unduly burden the judicial system, and meets the requirements of Sections 3(a) and 3(b)(2) of the E.O. Paperwork Reduction Act (PRA) of 1995 This rulemaking relates to 30 CFR part 250, subparts A, J, K, and M, and to 30 CFR part 256, subpart J. The rulemaking affects the information collections for these regulations but will not change the approved burden hours, just the associated fees. Therefore, OMB has determined that there is no change in the information collection and that MMS does not need to make a formal submission by Form OMB 83-I for this rulemaking. When this rule becomes effective, MMS will submit Form OMB E:\FR\FM\25AUR1.SGM 25AUR1 49875 Federal Register / Vol. 70, No. 164 / Thursday, August 25, 2005 / Rules and Regulations 83–C to modify the fees in each collection. OMB has approved the information collections for the affected regulations as 30 CFR part 250, subpart A, OMB Control Number 1010–0114 (expiration 10/31/07); subpart J, 1010–0050 (expiration 1/31/06); subpart K, 1010– 0041 (expiration 7/31/06); and subpart M, 1010–0068 (expiration 8/31/05, currently in renewal); and as 30 CFR part 256, subpart J, 1010–0006, (expiration 3/31/07). An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. National Environmental Policy Act (NEPA) of 1969 The MMS has determined that this rule is administrative and involves changes addressing fee requirements. Therefore, it is categorically excluded from environmental review under section 102(2)(C) of the NEPA, pursuant to 516 DM 2.3A and 516 DM 2, Appendix 1, Item 1.10. In addition, the rule does not meet any of the 10 criteria for exceptions to categorical exclusions listed in 516 DM 2, Appendix 2. Pursuant to Council on Environmental Quality regulations (40 CFR 1508.4) and the environmental policies and procedures of the Department of the Interior, the term ‘‘categorical exclusions’’ means categories of actions which do not individually or cumulatively have a significant effect on the human environment and which have no such effect in procedures adopted by a Federal agency and therefore require neither an environmental assessment nor an environmental impact statement. Effects on the Nation’s Energy Supply (E.O. 13211) E.O. 13211 requires the agency to prepare a Statement of Energy Effects when it takes a regulatory action that is identified as a significant energy action. This rule is not a significant energy action, and therefore does not require a Statement of Energy Effects, because it: (1) Is not a significant regulatory action under E.O. 12866, (2) Is not likely to have a significant adverse effect on the supply, distribution, or use of energy, and (3) Has not been designated by the Administrator of the OIRA, OMB, as a significant energy action. Consultation and Coordination with Indian Tribal Governments (E.O. 13175) In accordance with E.O. 13175, this rule will not have tribal implications that impose substantial direct compliance costs on Indian tribal governments. Clarity of This Regulation E.O. 12866 requires each agency to write regulations that are easy to understand. We invite your comments on how to make this proposed rule easier to understand, including answers to questions such as the following: (1) Are the requirements in the rule clearly stated? (2) Does the rule contain technical language or jargon that interferes with its clarity? (3) Does the format of the rule (grouping and order of sections, use of headings, paragraphing, etc.) aid or reduce its clarity? (4) Is the description of the rule in the SUPPLEMENTARY INFORMATION section of this preamble helpful in understanding the rule? What else can we do to make the rule easier to understand? Send a copy of any comments that concern how we could make this rule easier to understand to: Office of Regulatory Affairs, Department of the Interior, Room 7229, 1849 C Street, NW., Washington, DC 20240. You may also e-mail the comments to this address: Exsec@ios.doi.gov. List of Subjects 30 CFR Part 250 Continental shelf, Environmental impact statements, Environmental protection, Government contracts, Investigations, Mineral royalties, Oil and gas development and production, Oil and gas exploration, Oil and gas reserves, Penalties, Pipelines, Public lands-mineral resources, Public landsrights-of-way, Reporting and recordkeeping requirements, Sulphur development and production, Sulphur exploration, Surety bonds. 30 CFR Part 256 Administrative practice and procedure, Continental shelf, Environmental protection, Government contracts, Intergovernmental relations, Minerals Management Service, Oil and gas exploration, Public lands-mineral resources, Public lands-rights-of-way, Reporting and recordkeeping requirements, Surety bonds. Dated: August 5, 2005. Chad Calvert, Acting Assistant Secretary, Land and Minerals Management. For the reasons stated in the preamble, the Minerals Management Service (MMS) amends 30 CFR parts 250 and 256 as follows: n PART 250—OIL AND GAS AND SULPHUR OPERATIONS IN THE OUTER CONTINENTAL SHELF 1. Revise the authority citation for part 250 to read as follows: n Authority: 43 U.S.C. 1331 et seq., 31 U.S.C. 9701. 2. In 30 CFR part 250, subpart A, add a new § 250.125 and add a new undesignated center heading preceding the new § 250.125 to read as follows: n Subpart A—General * * * * * Fees § 250.125 Service fees. (a) The table in this paragraph (a) shows the fees that you must pay to MMS for the services listed. The fees will be adjusted periodically according to the Implicit Price Deflator for Gross Domestic Product by publication of a document in the Federal Register. If a significant adjustment is needed to arrive at the new actual cost for any reason other than inflation, then a proposed rule containing the new fees will be published in the Federal Register for comment. SERVICE FEE TABLE [Effective September 26, 2005] Fee amount Service (1) (2) (3) (4) (5) (6) Change In Designation of Operator ..................................................................................................................... Suspension of Operations/Suspension of Production (SOO/SOP) Request ...................................................... Pipeline Right-of-Way (ROW) Grant Application ................................................................................................. Pipeline Conversion of Lease Term to ROW ...................................................................................................... Pipeline ROW Assignment ................................................................................................................................... 500 feet from Lease/Unit Line Production Request ............................................................................................ VerDate jul<14>2003 15:45 Aug 24, 2005 Jkt 205001 PO 00000 Frm 00031 Fmt 4700 Sfmt 4700 E:\FR\FM\25AUR1.SGM 25AUR1 $150 1,800 2,350 200 170 3,300 30 CFR citation § 250.143 § 250.171 § 250.1015 § 250.1015 § 250.1018 § 250.1101 49876 Federal Register / Vol. 70, No. 164 / Thursday, August 25, 2005 / Rules and Regulations SERVICE FEE TABLE—Continued [Effective September 26, 2005] Fee amount Service (7) Gas Cap Production Request .............................................................................................................................. (8) Downhole Commingling Request ......................................................................................................................... (9) Voluntary Unitization Proposal or Unit Expansion ............................................................................................... (10) Unitization Revision ............................................................................................................................................ (b) Once a fee is paid, it is nonrefundable, even if an application or other request is withdrawn. If your application is returned to you as incomplete, you are not required to submit a new fee with the amended application. n 3. In § 250.143, add a new paragraph (d) to read as follows: § 250.143 How do I designate an operator? * * * * * (d) If you change the designated operator on your lease, you must pay the service fee listed in § 250.125 of this subpart with your request for a change in designation of operator. Should there be multiple lessees, all designation of operator forms must be collected by one lessee and submitted to MMS in a single submittal, which is subject to only one filing fee. n 4. Revise § 250.171 to read as follows: § 250.171 How do I request a suspension? You must submit your request for a suspension to the Regional Supervisor, and MMS must receive the request before the end of the lease term (i.e., end of primary term, end of the 180-day period following the last leaseholding operation, and end of a current suspension). Your request must include: (a) The justification for the suspension including the length of suspension requested; (b) A reasonable schedule of work leading to the commencement or restoration of the suspended activity; (c) A statement that a well has been drilled on the lease and determined to be producible according to §§ 250.115, 250.116, or 250.1603 (SOP only); (d) A commitment to production (SOP only); and (e) The service fee listed in § 250.125 of this subpart. n 5. In § 250.1015, revise paragraph (a) to read as follows: § 250.1015 Applications for pipeline rightof-way grants. (a) You must submit an original and three copies of an application for a new or modified pipeline ROW grant to the Regional Supervisor. The application VerDate jul<14>2003 15:45 Aug 24, 2005 Jkt 205001 must address those items required by § 250.1007(a) or (b) of this subpart, as applicable. It must also state the primary purpose for which you will use the ROW grant. If the ROW has been used before the application is made, the application must state the date such use began, by whom, and the date the applicant obtained control of the improvement. When you file your application, you must pay the rental required under § 250.1012 of this subpart, as well as the service fees listed in § 250.125 of this part for a pipeline ROW grant to install a new pipeline, or to convert an existing lease term pipeline into a ROW pipeline. An application to modify an approved ROW grant must be accompanied by the additional rental required under § 250.1012 if applicable. You must file a separate application for each ROW. * * * * * n 6. In § 250.1018, revise paragraph (b) to read as follows: § 250.1018 Assignment of pipeline right-ofway grants. * * * * * (b) Any application for approval for an assignment, in whole or in part, of any right, title, or interest in a right-ofway grant must be accompanied by the same showing of qualifications of the assignees as is required of an applicant for a ROW in § 250.1015 of this subpart and must be supported by a statement that the assignee agrees to comply with and to be bound by the terms and conditions of the ROW grant. The assignee must satisfy the bonding requirements in § 250.1011 of this subpart. No transfer will be recognized unless and until it is first approved, in writing, by the Regional Supervisor. The assignee must pay the service fee listed in § 250.125 of this part for a pipeline ROW assignment request. n 7. In § 250.1101, add a new paragraph (f) to read as follows: § 250.1101 General requirements and classification of reservoirs. * * * * * (f) The lessee must pay the service fee listed in § 250.125 of this part with its PO 00000 Frm 00032 Fmt 4700 Sfmt 4700 4,200 4,900 10,700 760 30 CFR citation § 250.1101 § 250.1106 § 250.1303 § 250.1303 request for either a 500 feet from lease/ unit line production interval or to produce from a completion in an associated gas cap of a sensitive reservoir under this section. 8. In § 250.1106, add a new paragraph (d) to read as follows: n § 250.1106 Downhole commingling. * * * * * (d) The applicant must pay the service fee listed in § 250.125 of this part with its request for downhole commingling. 9. In § 250.1303, add a new paragraph (d) to read as follows: n § 250.1303 How do I apply for voluntary unitization? * * * * * (d) You must pay the service fee listed in § 250.125 of this part with your request for a voluntary unitization proposal or the expansion of a previously approved voluntary unit to include additional acreage. Additionally, you must pay the service fee listed in § 250.125 with your request for unitization revision. PART 256—LEASING OF SULPHUR OR OIL AND GAS IN THE OUTER CONTINENTAL SHELF 10. Revise the authority citation for part 256 to read as follows: n Authority: 43 U.S.C. 1331 et seq., 42 U.S.C. 6213, 31 U.S.C. 9701. 11. Add a new § 256.63 to read as follows: n § 256. 63 Service fees. (a) The table in this paragraph (a) shows the fees that you must pay to MMS for the services listed. The fees will be adjusted periodically according to the Implicit Price Deflator for Gross Domestic Product by publication of a document in the Federal Register. If a significant adjustment is needed to arrive at the new actual cost for any reason other than inflation, then a proposed rule containing the new fees will be published in the Federal Register for comment. E:\FR\FM\25AUR1.SGM 25AUR1 Federal Register / Vol. 70, No. 164 / Thursday, August 25, 2005 / Rules and Regulations 49877 SERVICE FEE TABLE [Effective September 26, 2005] Fee amount Service (1) Record Title/Operating Rights (Transfer) ............................................................................................................. (2) Non-required Document Filing ............................................................................................................................. (b) Once a fee is paid, it is nonrefundable, even if an application or other request is withdrawn. If your application is returned to you as incomplete, you are not required to submit a new fee with the amended application. n 12. In § 256.64, revise paragraph (a)(8) to read as follows: § 256.64 How to file transfers. * * * * * (a) * * * (8) You must pay the service fee listed in § 256.63 of this subpart with your application for approval of any instrument of transfer you are required to file (Record Title/Operating Rights (Transfer) Fee). Where multiple transfers of interest are included in a single instrument, a separate fee applies to each individual transfer of interest. For any document you are not required to file by these regulations but which you submit for record purposes per lease affected, you must also pay the service fee listed in § 256.63 (Nonrequired Document Filing Fee). Such documents may be rejected at the discretion of the authorized officer. * * * * * [FR Doc. 05–16854 Filed 8–24–05; 8:45 am] BILLING CODE 4310–MR–P DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 117 [CGD08–05–025] RIN 1625–AA09 Drawbridge Operation Regulation; Mississippi River, Rock Island, IL AGENCY: Coast Guard, DHS. ACTION: Temporary rule. SUMMARY: The Coast Guard is temporarily changing the regulation governing the Rock Island Railroad & Highway Drawbridge, across the Upper Mississippi River at Mile 482.9, at Rock Island, Illinois. The drawbridge need not open for river traffic and may remain in the closed-to-navigation VerDate jul<14>2003 15:45 Aug 24, 2005 Jkt 205001 position from 8 a.m. to 11 a.m. on September 25, 2005. This rule allows the drawbridge be maintained in the closed-to-navigation position to allow the annually scheduled running of a foot race as part of a local community event. DATES: This rule is effective 8 a.m. to 11 a.m., September 25, 2005. ADDRESSES: Comments and material received from the public, as well as documents indicated in this preamble as being available in the docket, are part of this docket (CGD08–05–025) and are available for inspection or copying at room 2.107f in the Robert A. Young Federal Building, Eighth Coast Guard District, 1222 Spruce Street, Saint Louis, MO 63103, between 8 a.m. and 4 p.m., Monday through Friday, except Federal holidays. Commander (obr), Eighth Coast Guard District, maintains the public docket for this rulemaking. FOR FURTHER INFORMATION CONTACT: Mr. Roger K. Wiebusch, Bridge Administrator, (314) 539–3900, extension 2378. SUPPLEMENTARY INFORMATION: Regulatory History On June 2, 2005, we published a notice of proposed rulemaking (NPRM) entitled Drawbridge Operation Regulation; Mississippi River, Iowa and Illinois in the Federal Register (70 FR 32276). We received no comment letters on the proposed rule. No public meeting was requested, and none was held. Background and Purpose On March 29, 2005, the Department of the Army, Rock Island Arsenal, requested a temporary change to the operation of the Rock Island Railroad & Highway Drawbridge, across the Upper Mississippi River, Mile 482.9, at Rock Island, Illinois to allow the drawbridge to remain in the closed-to-navigation position for a three hour period while a foot race is held in the city of Davenport, IA. The drawbridge has a vertical clearance of 23.8 feet above normal pool in the closed-to-navigation position. Navigation on the waterway consists primarily of commercial tows and recreational watercraft that will be minimally impacted by the limited closure period of three hours. Presently, PO 00000 Frm 00033 Fmt 4700 Sfmt 4700 $170 25 30 CFR citation § 256.64 § 256.64 the draw opens on signal for the passage of river traffic. The Rock Island Arsenal requested the drawbridge be permitted to remain closed-to-navigation from 8 a.m. until 11 a.m. on Sunday, September 25, 2005. Discussion of Comments and Changes The Coast Guard received no comment letters. No changes will be made to this temporary rule. Regulatory Evaluation This rule is not a ‘‘significant regulatory action’’ under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. It is not ‘‘significant’’ under the regulatory policies and procedures of the Department of Homeland Security (DHS). The Coast Guard expects that this temporary change to operation of the Rock Island Railroad & Highway Drawbridge will have minimal economic impact on commercial traffic operating on the Upper Mississippi River. This temporary change has been written in such a manner as to allow for minimal interruption of the drawbridge’s regular operation. Small Entities Under the Regulatory Flexibility Act (5 U.S.C. 601–612), we have considered whether this rule would have a significant economic impact on a substantial number of small entities. The term ‘‘small entities’’ comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule would not have a significant economic impact on a substantial number of small entities. Assistance for Small Entities Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Public Law 104– 121), we want to assist small entities in E:\FR\FM\25AUR1.SGM 25AUR1

Agencies

[Federal Register Volume 70, Number 164 (Thursday, August 25, 2005)]
[Rules and Regulations]
[Pages 49871-49877]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-16854]


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DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR Parts 250 and 256

RIN 1010-AD16


Oil, Gas, and Sulphur Operations and Leasing in the Outer 
Continental Shelf (OCS)--Cost Recovery

AGENCY: Minerals Management Service (MMS), Interior.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: MMS is changing some existing fees and implementing several 
new fees to offset MMS's costs of performing certain services relating 
to its minerals programs.

EFFECTIVE DATE: This regulation is effective as of September 26, 2005.

FOR FURTHER INFORMATION CONTACT: Angela Mazzullo, Offshore Minerals 
Management (OMM) Budget Office at (703) 787-1691.

SUPPLEMENTARY INFORMATION:

Background

    Legal Authority and Policy Guidance: The Independent Offices 
Appropriation Act of 1952 (IOAA), 31 U.S.C. 9701, is a general law 
applicable Government-wide, that provides authority to MMS to recover 
the costs of providing services to the non-federal sector. It requires 
implementation through rulemaking. There are several policy documents 
that provide guidance on the process of charging applicants for service 
costs.
    These policy documents are found in the Office of Management and 
Budget (OMB) Circular A-25, ``User Charges,'' and the Department of the 
Interior (DOI) Departmental Manual (DM), 330 DM 1.3A and 6.4, ``Cost 
Recovery'' and ``User Charges.'' The general policy that governs 
charges for services provided states that a charge ``will be assessed 
against each identifiable recipient for special benefits derived from 
federal activities beyond those received by the general public'' (OMB 
Circular A-25). The DOI Manual mirrors this policy (330 DM 1.3 A.). 
Certain activities may be exempted from these fees under certain 
conditions set out at 330 DM 1.3A and 6.4.4.
    Cost Recovery Definition: In this rulemaking, cost recovery means 
reimbursement to MMS for its costs of performing a service by charging 
a fee to the identifiable applicant/beneficiary of the service. Further 
guidance is provided by Solicitor's Opinion M-36987, ``BLM's Authority 
to Recover Costs of Mineral Document Processing'' (December 5, 1996). 
The DOI Office of Inspector General issued reports in 1988 and 1995 
addressing BLM's cost recovery responsibilities.

Discussion of Comments Received

    MMS published a proposed rule to revise some existing fees and 
implement several new fees in the Federal Register on March 15, 2005. 
The comment period for the proposed rule closed on April 14, 2005. MMS 
received 23 sets of comments on the proposed rulemaking on 14 different 
issues. Respondents included: Anadarko, BP, Beacon Exploration & 
Production, Chevron Texaco, the Domestic Petroleum Council (DPC), EOG 
Resources, Exxon Mobil, the Independent Petroleum Association of 
America (IPAA), the International Association of Drilling Contractors 
(IADC), the International Association of Geophysical Contractors 
(IAGC), Marathon Oil, NCX Company, the National Ocean Industries 
Association (NOIA), the Natural Gas Supply Association (NGSA), Newfield 
Exploration Company, the Offshore Operators Committee (OOC), Shell 
Exploration & Production Company (Shell), Spinnaker Exploration, 
Success Energy, the U.S. Oil & Gas Association (USOGA), Waring & 
Associates, and WJP. These respondents raised a number of important 
issues that are addressed immediately below.
    Issue No. 1: The comment period should be extended.
    MMS received seven requests to extend the comment period beyond 30 
days on the proposed rule. MMS considers this rule to be fairly 
straightforward and not exceptionally complex, and the fees are not 
significant in terms of potential economic impact. Therefore, MMS 
considers thirty days to be sufficient time for comment.
    Issue No. 2: The implementation of the fees in this rule will 
discourage exploration activity on the OCS, particularly by small 
businesses.
    MMS received five comments on this issue. MMS disagrees with the 
comments. The current classification of a small business by the Small 
Business Administration (SBA) is a company with fewer than 500 
employees. Over 70 percent of companies operating on the OCS meet that 
criterion. Most of these companies are financially sound and payment of 
cost recovery fees will not affect plans for exploratory drilling. In 
addition, the proposed fees represent a small percentage increase in 
operating costs when compared to the cost of drilling a well. For 
example, the proposed fees range from $150-$10,700 while well drilling 
costs range from $5 million-$23 million.
    Issue No. 3: The fees being implemented are too high. Can more 
information be provided as to how the fees were calculated?
    MMS received seven comments on this issue. Because this rule is 
implementing cost recovery authority, the fees were set at what it 
currently costs MMS to perform these services. The following example 
provides greater detail of how the costs were calculated.
    The Suspension of Operations/Suspension of Production (SOO/SOP) 
request was broken down into five sub-processes, also shown in the 
table below

[[Page 49872]]

with the associated employee's grade, time, and labor dollars.

----------------------------------------------------------------------------------------------------------------
                                                                                  Hours spent on
               Sub-process                         Employee's grade/step               task        Labor dollars
----------------------------------------------------------------------------------------------------------------
Review application......................  13/3..................................               2             $74
Perform necessary engineering,            13/3, 13/6............................              13             490
 geological and/or geophysical
 assessment.
Attend meetings and discussions           14/5, 13/6, 13/3......................               6             242
 (internal and with industry).
Draft/review/discuss/final decision       14/5, 13/3, 5/8.......................               6             200
 letter distribution.
Follow-up monitoring of activity          13/3..................................               4             149
 schedule deadlines.
                                         -----------------------------------------
    Subtotal............................  ......................................  ..............           1,155
----------------------------------------------------------------------------------------------------------------

    The labor dollars for the SOO/SOP request total $1,155. Given that 
this example was for the Gulf of Mexico Region (GOMR) only, the actual 
average benefit rate of 23.26 percent for that Region was applied, 
bringing the cost to $1,424. The benefit rate includes the Federal 
Government's share of health insurance, life insurance, retirement, and 
social security and Medicare. To arrive at the final fee, the bureau-
wide indirect cost rate of 21.5 percent is applied, for a new total of 
$1,730. As explained in the preamble of the proposed rule, the indirect 
cost rate includes costs such as rent, equipment, telephone service, 
etc. This same breakdown into sub-processes was done for the other two 
MMS Regions with a weighted average applied to establish the fee at 
$1,800.
    Since the same process was used to calculate all fees in this rule, 
and inclusion of all calculations would prove too voluminous and 
unwieldy, they are not included in this final rule. The preamble to the 
proposed rule provides greater detail on the process used to calculate 
all fees.
    Issue No. 4: MMS is already compensated for these services from the 
collection of bonus bids, rentals, and royalties.
    MMS received seven comments on this issue. When a lease is issued, 
the working interest is conveyed to the lessee(s) to whom it is issued. 
The government reserves a royalty interest, which is a cost free share 
of the production or the value of the production. Under the bidding 
system that is characteristic of most of the leases, the lessee pays a 
bonus to obtain the lease that is the result of competitive bidding. 
During the primary term of a lease and before the lease goes into 
production (in other words, during the time the lessor is not receiving 
any benefit from its retained royalty interest), the lessee must pay 
annual rentals. All of these obligations (royalties, bonus bids, and 
rentals) reflect the value of the lessor's (i.e., the public's) 
property interest in the leased minerals. None of these obligations 
were ever intended to compensate the government for administrative 
costs.
    Nor was the relevant mineral leasing law (the Outer Continental 
Shelf Lands Act (OCSLA)), which granted the Secretary the authority to 
issue leases, enacted as a cost recovery mechanism. The government's 
authority to recover certain administrative costs of the type involved 
in this rulemaking is granted by a statute (the provision of IOAA) that 
predated the OCSLA and predated every lease issued under the OCSLA. The 
IOAA is not related to royalty, bonus, or rental obligations.
    Issue No. 5: The non-required document filing fee is too high, 
given that a single document can index to multiple leases, therefore 
multiplying the cost of a single submission.
    MMS agrees. The calculation of this fee was reexamined and an 
inconsistency was found in the cost data collected for this service. 
The commenter is correct and MMS has deleted the upward fee adjustment 
from the rule. The non-required document filing fee will remain at $25 
per lease affected. MMS also reviewed all remaining cost calculations 
affecting fees in this rule.
    Issue No 6: MMS states that a ``Statement of Energy Effects'' is 
not needed, because it does not consider the rule to be a significant 
energy action; commenter challenges this statement.
    This rule meets none of the criteria for a significant energy 
action. Executive Order (E.O.) 13211 defines a significant energy 
action:

    Section 4(b): ``Significant energy action'' means any action by 
an agency (normally published in the Federal Register) that 
promulgates or is expected to lead to the promulgation of a final 
rule or regulation, including notices of inquiry, advanced notices 
of proposed rulemaking, and notices of proposed rulemaking:
    (1)(i) that is a significant regulatory action under E.O.12866 
or any successor order; and
    (ii) is likely to have a significant adverse effect on the 
supply, distribution, or use of energy; or
    (2) that is designated by the Administrator of the Office of 
Information and Regulatory Affairs (OIRA) as a significant energy 
action.
    (c) ``Agency'' means any authority of the United States (U.S.) 
that is an ``agency'' under 44 U.S.C. 3502(1), other than those 
considered to be independent regulatory agencies, as defined in 44 
U.S.C. 3502(5). Moreover, E.O. 12866 defines a significant 
regulatory action:
    (f) ``Significant regulatory action'' means any regulatory 
action that is likely to result in a rule that may:
    (1) Have an annual effect on the economy of $100 million or more 
or adversely affect in a material way; the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with 
an action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, 
grants, user fees, or loan programs or the rights and obligations of 
recipients thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
this E.O.

    Of the above-quoted thresholds, the only one that could potentially 
be at issue is section (f)(3), and MMS does not believe that this rule 
meets that threshold. We note again that compared to the costs of 
drilling a well, the fees established in this rule are not significant.
    Issue No. 7: The proposed rulemaking may violate the Administrative 
Procedure Act, because it does not disclose the basis of MMS's 
assessment of the costs to be recovered, other than to give description 
of certain generic factors purportedly considered.
    See Issue No. 3 above for a more in-depth description of how the 
fees were calculated.
    Issue No. 8: The proposed rule does not compare the proposed fees 
to the costs of similar services in the private sector.
    To the knowledge of MMS, none of these services is offered by the 
private sector. Even if some of these services were offered by the 
private sector, the

[[Page 49873]]

fees are calculated based on the costs incurred by the Federal 
Government to provide the service. The costs of what other entities may 
charge for similar services are not relevant for purposes of this rule.
    Issue No. 9: It is only fair that MMS not accept a processing fee 
for requests that are not processed through the system, but are 
rejected early in the evaluation due to submittal of an incomplete 
request. How will MMS handle the payment for these denied requests, as 
well as verbal approvals? Will there be any refunds? Will credit card 
payment be accepted?
    All fees imposed by this rule are non-refundable; however, if a 
request is deemed not complete, an additional fee will not be charged 
for its resubmission. Any verbal approvals that might occur must be 
preceded by payment for the service. MMS is currently considering the 
different payment options available, and will notify lessees of the 
available payment options via a Notice to Lessees. The Notice will be 
issued before the effective date of the fees in this rule.
    Issue No. 10: Commenter recommends that ``Should there be multiple 
lessees, all designation of operator forms shall be collected by one 
lessee and submitted to MMS in a single submittal subject to only one 
filing fee.''
    MMS agrees with commenter, and that was the original intent. 
Section Sec.  250.143(d) will be changed to incorporate this 
recommendation.
    Issue No. 11: Commenter does not agree that the agency's legal 
authority and policy guidance require new fees or that the fees are 
required to fund the agency's activities.
    The Solicitor's Office has determined that the Department of the 
Interior Manual and OMB Circular A-25 require that cost recovery action 
be taken whenever possible. While the structure of MMS' appropriation 
does not mandate collection of fees, the President's Budget assumes 
that MMS will collect these fees and has offset its appropriated funds 
accordingly.
    Issue No. 12: A $10,000 fee is excessive for processing revisions, 
modifications or amendments to unit agreements once the original 
analysis conducted by MMS for the original unit application has been 
completed.
    The commenter has misinterpreted the fee table. The proposed fee 
for a revision to a unit agreement is $760, while the $10,700 fee is 
for the original voluntary unitization proposal or the expansion of a 
previously approved voluntary unit to include additional acreage. To 
prevent further confusion the term, ``Unitization Revision and 
Modification'' has been changed to just ``Unitization Revision.''
    Issue No. 13: Eight commenters (one consolidated letter from eight 
trade groups) argue that because neither existing lease terms nor 
regulations in effect at the time of lease issuance contain provisions 
allowing the new cost recovery fees, regulations imposing such fees 
that are promulgated after lease issuance ``are not within the scope of 
the contract.'' The commenter cites Mobil Exploration and Producing 
Southeast, Inc. v. United States, 530 U.S. 604 (2000), as standing for 
the proposition that offshore leases are subject only to regulations in 
existence at the time of lease issuance and those promulgated 
thereafter that concern prevention of waste and conservation of 
resources.
    The comment fails to acknowledge that the Independent Offices 
Appropriation Act, the statute under whose authority MMS is 
promulgating this rule, was enacted in 1952, and predates the OCS Lands 
Act and the leases issued under the authority of that act. The comment 
also misinterprets the Mobil decision. In Mobil, the Supreme Court 
addressed a statute enacted by Congress years after lease issuance (the 
Outer Banks Protection Act) whose substantive effect was to prohibit 
exploration of a certain class of existing leases. The Supreme Court 
held the statute to be a breach of contract on the part of the United 
States. The Supreme Court in Mobil did not address the validity of 
regulations at all, including regulations implementing express 
statutory authority already in existence. Further, contrary to the 
commenters' assertion, Solicitor's Opinion M-36987 is not inconsistent 
with the Mobil decision.
    The commenters are arguing essentially that they should not be 
obligated to pay any costs that are not specified in the lease 
instrument itself. That is a policy argument that the lessees should 
direct to Congress, not to MMS. The commenters' policy preference does 
not nullify the Government's authority (or the lessee's obligations) 
under the IOAA when the IOAA applies to the particular administrative 
function involved.
    Issue No. 14: Industry will be forced to pass along these new costs 
of doing business to consumers.
    MMS is fulfilling its obligation to recover the costs. As 
previously discussed, the fees are insignificant in relation to the 
overall costs of industry to explore for and produce crude oil. It 
would be inappropriate for MMS to anticipate or speculate on how the 
industry or the market will respond to the requirement to pay for fees.

Summary of Changes to Proposed Rule

    In this final rule, MMS is removing two existing fee adjustments 
that were proposed. Due to the inconsistency that was found in the cost 
data collected in relation to the non-required document filing fee 
adjustment, the adjustment is being removed from this rule. The current 
fee amount of $25 per lease affected will remain in effect.
    MMS is also removing the adjustment of the Pipeline Right-of-Way 
(ROW) Grant Application. This fee was proposed to be lowered; however, 
further analysis proved that the current fee of $2,350 accurately 
reflects the cost to MMS to provide that service.
    Further, MMS is adding language to 30 CFR 250.171 to clarify what 
has always been implied; to obtain a suspension, ``Your request must 
include:'' the four factors currently listed in Sec.  250.171(a)-(d).
    Finally, since the proposed rule was published, the bureau has 
updated its indirect cost rate from 15 to 21.5 percent. As required by 
OMB and Departmental guidance, indirect cost rates are to be included 
in the calculation of cost recovery fees. No specific comments 
addressing the indirect cost rate calculation were received. Shown 
below is the revised fee table.

------------------------------------------------------------------------
                  Service                   Fee amount   30 CFR citation
------------------------------------------------------------------------
Change in Designation of Operator.........        $150    Sec.   250.143
Suspensions of Operations/Suspensions of         1,800    Sec.   250.171
 Production (SOO/SOP) Request.............
*Pipeline Right-of-Way (ROW) Grant               2,350   Sec.   250.1015
 Application..............................
Pipeline Conversion of Lease Term to ROW..         200   Sec.   250.1015
Pipeline ROW Assignment...................         170   Sec.   250.1018
500 feet from Lease/Unit Line Production         3,300   Sec.   250.1101
 Request..................................
Gas Cap Production Request................       4,200   Sec.   250.1101

[[Page 49874]]

 
Downhole Commingling Request..............       4,900   Sec.   250.1106
Voluntary Unitization Proposal or Unit          10,700   Sec.   250.1303
 Expansion................................
Unitization Revision......................         760   Sec.   250.1303
Record Title/Operating Rights (Transfer)..         170     Sec.   256.64
*Non-required Document Filing.............          25    Sec.   256.64
------------------------------------------------------------------------
* Indicates no change to current amount.

Procedural Matters

Regulatory Planning and Review (E.O. 12866)

    This document is not a significant rule as determined by the Office 
of Management and Budget (OMB) and is not subject to review under E.O. 
12866.
    (1) This rule will not have an annual effect of $100 million or 
more on the economy. It will 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. This rule establishes fees based on cost recovery 
principles. Based on historical filings, MMS projects the fees will 
raise revenue by approximately $1.65 million annually.
    (2) This rule will not create a serious inconsistency or otherwise 
interfere with an action taken or planned by another agency because the 
costs incurred are for specific MMS services and other agencies are not 
involved in these aspects of the OCS program.
    (3) This rule will not alter the budgetary effects of entitlements, 
grants, user fees, or loan programs or the rights or obligations of 
their recipients. This change will have no effect on the rights of the 
recipients of entitlements, grants, user fees, or loan programs. The 
fees established by this rule are service fees based on cost recovery, 
and not user fees.
    (4) This rule will not raise novel legal or policy issues.

Regulatory Flexibility Act (RFA)

    MMS certifies that this rule will not have a significant economic 
effect on a substantial number of small entities under the RFA (5 
U.S.C. 601 et seq.).
    This change will affect lessees and operators of leases in the OCS. 
This includes about 130 Federal oil and gas lessees and 115 holders of 
pipeline rights-of-way. Small lessees that operate under this rule will 
fall under the Small Business Administration's (SBA) North American 
Industry Classification System Codes (NAICS) 211111, Crude Petroleum 
and Natural Gas Extraction and 213111, Drilling Oil and Gas Wells. For 
these NAICS code classifications, a small company is one with fewer 
than 500 employees. Based on these criteria, an estimated 70 percent of 
these companies are considered small. This rule, therefore, affects a 
substantial number of small entities.
    The fees established in the rule will not have a significant 
economic effect on a substantial number of small entities because the 
fees are very small compared to normal costs of doing business on the 
OCS. For example, the fees range from $150 to $10,700 while the cost of 
drilling a well ranges from $5 million to $23 million.
    Additionally, the fees established in the rule will apply to both 
large and small firms in the same way. Applying for MMS services 
provides a benefit to the applicant (both large and small) if the 
applicant decides to operate in the OCS.
    Comments are important. The SBA Regulatory Enforcement Ombudsman 
and 10 Regional Fairness Boards were established to receive comments 
from small business about federal agency enforcement actions. The 
Ombudsman will annually evaluate the enforcement activities and rate 
each agency's responsiveness to small business. If you wish to comment 
on the actions of MMS, call 1-888-734-3247. You may comment to the SBA 
without fear of retaliation. Disciplinary action for retaliation by an 
MMS employee may include suspension or termination from employment with 
the DOI.

Small Business Regulatory Enforcement Fairness Act (SBREFA)

    This is not a major rule under the SBREFA (5 U.S.C. 804(2)). This 
rule:
    (a) Does not have an annual effect on the economy of $100 million 
or more.
    (b) Will not cause a major increase in costs or prices for 
consumers, individual industries, Federal, State, or local government 
agencies, or geographic regions.
    (c) Will not have significant adverse effects on competition, 
employment, investment, productivity, innovation, or the ability of 
U.S.-based enterprises to compete with foreign-based enterprises. 
Leasing on the U.S. OCS is limited to residents of the U.S. or 
companies incorporated in the U.S. This rule does not change that 
requirement.

Unfunded Mandate Reform Act (UMRA) of 1995 (E.O. 12866)

    This rule will not impose an unfunded mandate on State, local, or 
tribal governments or the private sector of more than $100 million per 
year. The rule will not have a significant or unique effect on State, 
local, or tribal governments or the private sector. A statement 
containing the information required by the UMRA (2 U.S.C. 1531 et seq.) 
is not required. This is because the rule will not affect State, local, 
or tribal governments, and the effect on the private sector is small.

Takings Implication Assessment (E.O. 12630)

    With respect to E.O. 12630, the rule will not have significant 
takings implications. A Takings Implication Assessment is not required. 
The rulemaking is not a governmental action capable of interfering with 
constitutionally protected property rights.

Federalism (E.O. 13132)

    With respect to E.O.13132, the rule will not have federalism 
implications. It will 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 
change will not affect that role.

Civil Justice Reform (E.O. 12988)

    With respect to E.O. 12988, the Office of the Solicitor has 
determined that this rule will not unduly burden the judicial system, 
and meets the requirements of Sections 3(a) and 3(b)(2) of the E.O.

Paperwork Reduction Act (PRA) of 1995

    This rulemaking relates to 30 CFR part 250, subparts A, J, K, and 
M, and to 30 CFR part 256, subpart J. The rulemaking affects the 
information collections for these regulations but will not change the 
approved burden hours, just the associated fees. Therefore, OMB has 
determined that there is no change in the information collection and 
that MMS does not need to make a formal submission by Form OMB 83-I for 
this rulemaking. When this rule becomes effective, MMS will submit Form 
OMB

[[Page 49875]]

83-C to modify the fees in each collection.
    OMB has approved the information collections for the affected 
regulations as 30 CFR part 250, subpart A, OMB Control Number 1010-0114 
(expiration 10/31/07); subpart J, 1010-0050 (expiration 1/31/06); 
subpart K, 1010-0041 (expiration 7/31/06); and subpart M, 1010-0068 
(expiration 8/31/05, currently in renewal); and as 30 CFR part 256, 
subpart J, 1010-0006, (expiration 3/31/07). An agency may not conduct 
or sponsor, and a person is not required to respond to, a collection of 
information unless it displays a currently valid OMB control number.

National Environmental Policy Act (NEPA) of 1969

    The MMS has determined that this rule is administrative and 
involves changes addressing fee requirements. Therefore, it is 
categorically excluded from environmental review under section 
102(2)(C) of the NEPA, pursuant to 516 DM 2.3A and 516 DM 2, Appendix 
1, Item 1.10.
    In addition, the rule does not meet any of the 10 criteria for 
exceptions to categorical exclusions listed in 516 DM 2, Appendix 2. 
Pursuant to Council on Environmental Quality regulations (40 CFR 
1508.4) and the environmental policies and procedures of the Department 
of the Interior, the term ``categorical exclusions'' means categories 
of actions which do not individually or cumulatively have a significant 
effect on the human environment and which have no such effect in 
procedures adopted by a Federal agency and therefore require neither an 
environmental assessment nor an environmental impact statement.

Effects on the Nation's Energy Supply (E.O. 13211)

    E.O. 13211 requires the agency to prepare a Statement of Energy 
Effects when it takes a regulatory action that is identified as a 
significant energy action. This rule is not a significant energy 
action, and therefore does not require a Statement of Energy Effects, 
because it:
    (1) Is not a significant regulatory action under E.O. 12866,
    (2) Is not likely to have a significant adverse effect on the 
supply, distribution, or use of energy, and
    (3) Has not been designated by the Administrator of the OIRA, OMB, 
as a significant energy action.

Consultation and Coordination with Indian Tribal Governments (E.O. 
13175)

    In accordance with E.O. 13175, this rule will not have tribal 
implications that impose substantial direct compliance costs on Indian 
tribal governments.

Clarity of This Regulation

    E.O. 12866 requires each agency to write regulations that are easy 
to understand. We invite your comments on how to make this proposed 
rule easier to understand, including answers to questions such as the 
following:
    (1) Are the requirements in the rule clearly stated?
    (2) Does the rule contain technical language or jargon that 
interferes with its clarity?
    (3) Does the format of the rule (grouping and order of sections, 
use of headings, paragraphing, etc.) aid or reduce its clarity?
    (4) Is the description of the rule in the SUPPLEMENTARY INFORMATION 
section of this preamble helpful in understanding the rule? What else 
can we do to make the rule easier to understand?
    Send a copy of any comments that concern how we could make this 
rule easier to understand to: Office of Regulatory Affairs, Department 
of the Interior, Room 7229, 1849 C Street, NW., Washington, DC 20240. 
You may also e-mail the comments to this address: Exsec@ios.doi.gov.

List of Subjects

30 CFR Part 250

    Continental shelf, Environmental impact statements, Environmental 
protection, Government contracts, Investigations, Mineral royalties, 
Oil and gas development and production, Oil and gas exploration, Oil 
and gas reserves, Penalties, Pipelines, Public lands-mineral resources, 
Public lands-rights-of-way, Reporting and recordkeeping requirements, 
Sulphur development and production, Sulphur exploration, Surety bonds.

30 CFR Part 256

    Administrative practice and procedure, Continental shelf, 
Environmental protection, Government contracts, Intergovernmental 
relations, Minerals Management Service, Oil and gas exploration, Public 
lands-mineral resources, Public lands-rights-of-way, Reporting and 
recordkeeping requirements, Surety bonds.

    Dated: August 5, 2005.
Chad Calvert,
Acting Assistant Secretary, Land and Minerals Management.

0
For the reasons stated in the preamble, the Minerals Management Service 
(MMS) amends 30 CFR parts 250 and 256 as follows:

PART 250--OIL AND GAS AND SULPHUR OPERATIONS IN THE OUTER 
CONTINENTAL SHELF

0
1. Revise the authority citation for part 250 to read as follows:

    Authority: 43 U.S.C. 1331 et seq., 31 U.S.C. 9701.


0
2. In 30 CFR part 250, subpart A, add a new Sec.  250.125 and add a new 
undesignated center heading preceding the new Sec.  250.125 to read as 
follows:

Subpart A--General

* * * * *

Fees


Sec.  250.125  Service fees.

    (a) The table in this paragraph (a) shows the fees that you must 
pay to MMS for the services listed. The fees will be adjusted 
periodically according to the Implicit Price Deflator for Gross 
Domestic Product by publication of a document in the Federal Register. 
If a significant adjustment is needed to arrive at the new actual cost 
for any reason other than inflation, then a proposed rule containing 
the new fees will be published in the Federal Register for comment.

                            Service Fee Table
                     [Effective September 26, 2005]
------------------------------------------------------------------------
                  Service                   Fee amount   30 CFR citation
------------------------------------------------------------------------
(1) Change In Designation of Operator.....        $150    Sec.   250.143
(2) Suspension of Operations/Suspension of       1,800    Sec.   250.171
 Production (SOO/SOP) Request.............
(3) Pipeline Right-of-Way (ROW) Grant            2,350   Sec.   250.1015
 Application..............................
(4) Pipeline Conversion of Lease Term to           200   Sec.   250.1015
 ROW......................................
(5) Pipeline ROW Assignment...............         170   Sec.   250.1018
(6) 500 feet from Lease/Unit Line                3,300   Sec.   250.1101
 Production Request.......................

[[Page 49876]]

 
(7) Gas Cap Production Request............       4,200   Sec.   250.1101
(8) Downhole Commingling Request..........       4,900   Sec.   250.1106
(9) Voluntary Unitization Proposal or Unit      10,700   Sec.   250.1303
 Expansion................................
(10) Unitization Revision.................         760   Sec.   250.1303
------------------------------------------------------------------------

    (b) Once a fee is paid, it is nonrefundable, even if an application 
or other request is withdrawn. If your application is returned to you 
as incomplete, you are not required to submit a new fee with the 
amended application.

0
3. In Sec.  250.143, add a new paragraph (d) to read as follows:


Sec.  250.143  How do I designate an operator?

* * * * *
    (d) If you change the designated operator on your lease, you must 
pay the service fee listed in Sec.  250.125 of this subpart with your 
request for a change in designation of operator. Should there be 
multiple lessees, all designation of operator forms must be collected 
by one lessee and submitted to MMS in a single submittal, which is 
subject to only one filing fee.

0
4. Revise Sec.  250.171 to read as follows:


Sec.  250.171  How do I request a suspension?

    You must submit your request for a suspension to the Regional 
Supervisor, and MMS must receive the request before the end of the 
lease term (i.e., end of primary term, end of the 180-day period 
following the last leaseholding operation, and end of a current 
suspension). Your request must include:
    (a) The justification for the suspension including the length of 
suspension requested;
    (b) A reasonable schedule of work leading to the commencement or 
restoration of the suspended activity;
    (c) A statement that a well has been drilled on the lease and 
determined to be producible according to Sec. Sec.  250.115, 250.116, 
or 250.1603 (SOP only);
    (d) A commitment to production (SOP only); and
    (e) The service fee listed in Sec.  250.125 of this subpart.

0
5. In Sec.  250.1015, revise paragraph (a) to read as follows:


Sec.  250.1015  Applications for pipeline right-of-way grants.

    (a) You must submit an original and three copies of an application 
for a new or modified pipeline ROW grant to the Regional Supervisor. 
The application must address those items required by Sec.  250.1007(a) 
or (b) of this subpart, as applicable. It must also state the primary 
purpose for which you will use the ROW grant. If the ROW has been used 
before the application is made, the application must state the date 
such use began, by whom, and the date the applicant obtained control of 
the improvement. When you file your application, you must pay the 
rental required under Sec.  250.1012 of this subpart, as well as the 
service fees listed in Sec.  250.125 of this part for a pipeline ROW 
grant to install a new pipeline, or to convert an existing lease term 
pipeline into a ROW pipeline. An application to modify an approved ROW 
grant must be accompanied by the additional rental required under Sec.  
250.1012 if applicable. You must file a separate application for each 
ROW.
* * * * *

0
6. In Sec.  250.1018, revise paragraph (b) to read as follows:


Sec.  250.1018  Assignment of pipeline right-of-way grants.

* * * * *
    (b) Any application for approval for an assignment, in whole or in 
part, of any right, title, or interest in a right-of-way grant must be 
accompanied by the same showing of qualifications of the assignees as 
is required of an applicant for a ROW in Sec.  250.1015 of this subpart 
and must be supported by a statement that the assignee agrees to comply 
with and to be bound by the terms and conditions of the ROW grant. The 
assignee must satisfy the bonding requirements in Sec.  250.1011 of 
this subpart. No transfer will be recognized unless and until it is 
first approved, in writing, by the Regional Supervisor. The assignee 
must pay the service fee listed in Sec.  250.125 of this part for a 
pipeline ROW assignment request.

0
7. In Sec.  250.1101, add a new paragraph (f) to read as follows:


Sec.  250.1101  General requirements and classification of reservoirs.

* * * * *
    (f) The lessee must pay the service fee listed in Sec.  250.125 of 
this part with its request for either a 500 feet from lease/unit line 
production interval or to produce from a completion in an associated 
gas cap of a sensitive reservoir under this section.

0
8. In Sec.  250.1106, add a new paragraph (d) to read as follows:


Sec.  250.1106  Downhole commingling.

* * * * *
    (d) The applicant must pay the service fee listed in Sec.  250.125 
of this part with its request for downhole commingling.

0
9. In Sec.  250.1303, add a new paragraph (d) to read as follows:


Sec.  250.1303  How do I apply for voluntary unitization?

* * * * *
    (d) You must pay the service fee listed in Sec.  250.125 of this 
part with your request for a voluntary unitization proposal or the 
expansion of a previously approved voluntary unit to include additional 
acreage. Additionally, you must pay the service fee listed in Sec.  
250.125 with your request for unitization revision.

PART 256--LEASING OF SULPHUR OR OIL AND GAS IN THE OUTER 
CONTINENTAL SHELF

0
10. Revise the authority citation for part 256 to read as follows:

    Authority: 43 U.S.C. 1331 et seq., 42 U.S.C. 6213, 31 U.S.C. 
9701.

0
11. Add a new Sec.  256.63 to read as follows:


Sec.  256. 63  Service fees.

    (a) The table in this paragraph (a) shows the fees that you must 
pay to MMS for the services listed. The fees will be adjusted 
periodically according to the Implicit Price Deflator for Gross 
Domestic Product by publication of a document in the Federal Register. 
If a significant adjustment is needed to arrive at the new actual cost 
for any reason other than inflation, then a proposed rule containing 
the new fees will be published in the Federal Register for comment.

[[Page 49877]]



                            Service Fee Table
                     [Effective September 26, 2005]
------------------------------------------------------------------------
                  Service                   Fee amount   30 CFR citation
------------------------------------------------------------------------
(1) Record Title/Operating Rights                 $170     Sec.   256.64
 (Transfer)...............................
(2) Non-required Document Filing..........          25     Sec.   256.64
------------------------------------------------------------------------

    (b) Once a fee is paid, it is nonrefundable, even if an application 
or other request is withdrawn. If your application is returned to you 
as incomplete, you are not required to submit a new fee with the 
amended application.

0
12. In Sec.  256.64, revise paragraph (a)(8) to read as follows:


Sec.  256.64  How to file transfers.

* * * * *
    (a) * * *
    (8) You must pay the service fee listed in Sec.  256.63 of this 
subpart with your application for approval of any instrument of 
transfer you are required to file (Record Title/Operating Rights 
(Transfer) Fee). Where multiple transfers of interest are included in a 
single instrument, a separate fee applies to each individual transfer 
of interest. For any document you are not required to file by these 
regulations but which you submit for record purposes per lease 
affected, you must also pay the service fee listed in Sec.  256.63 
(Non-required Document Filing Fee). Such documents may be rejected at 
the discretion of the authorized officer.
* * * * *
[FR Doc. 05-16854 Filed 8-24-05; 8:45 am]
BILLING CODE 4310-MR-P