Bonus or Royalty Credits for Relinquishing Certain Leases Offshore Florida, 52917-52921 [E8-21135]
Download as PDF
Federal Register / Vol. 73, No. 178 / Friday, September 12, 2008 / Rules and Regulations
DEPARTMENT OF THE INTERIOR
Minerals Management Service
30 CFR Part 256
[Docket ID: MMS–2007–OMM–0064]
RIN 1010–AD44
Bonus or Royalty Credits for
Relinquishing Certain Leases Offshore
Florida
Minerals Management Service
(MMS), Interior.
ACTION: Final rule.
AGENCY:
ebenthall on PROD1PC60 with RULES
SUMMARY: This final rule amends
regulations for oil and gas leases on the
Outer Continental Shelf to implement a
mandate in the Gulf of Mexico Energy
Security Act of 2006. These
amendments (1) provide a credit to
lessees who relinquish certain eligible
leases in the Gulf of Mexico; (2) define
eligible leases as those within 125 miles
of the Florida coast in the Eastern
Planning Area, and certain leases within
100 miles of the Florida coast in the
Central Planning Area; and (3) allow
lessees to use the credits in lieu of
monetary payment for either a lease
bonus bid or royalty due on oil and gas
production from most other leases in the
Gulf of Mexico, or to transfer the credits
to other Gulf of Mexico lessees for their
use.
DATES: Effective Date: This final rule
becomes effective on October 14, 2008.
FOR FURTHER INFORMATION CONTACT:
Marshall Rose, Chief, Economics
Division, at (703) 787–1536.
SUPPLEMENTARY INFORMATION:
Background and Summary of the Rule
On February 1, 2008, MMS published
a proposed rule in the Federal Register
(73 FR 6073) to implement section
104(c) of the Gulf of Mexico Energy
Security Act of 2006 (GOMESA), Public
Law 109–432. Section 104(c) of that
statute authorizes the Secretary of the
Interior (Secretary) to issue a bonus or
royalty credit for the exchange of certain
leases located offshore of the State of
Florida. The statute defines leases
eligible for the credit as those in
existence on the enactment date of the
GOMESA and located both within
specified Outer Continental Shelf (OCS)
planning areas and distances from the
Florida coastline. The statute sets the
size of the credit as equal to the bonus
and rental paid for the relinquished
eligible lease, and limits its use to
payments by lessees of bonuses and
royalties for leases in the Gulf of Mexico
(GOM) not subject to revenue sharing
under section 8(g) of the Outer
VerDate Aug<31>2005
14:19 Sep 11, 2008
Jkt 214001
Continental Shelf Lands Act (OCSLA)
(43 U.S.C. 1337(g)). Finally, the statute
mandates creation of a regulatory
process for notifying the Secretary of a
lessee’s decision to exchange a lease for
a credit, issuing the credit, allocating
the credit among multiple lease owners,
and transferring the credit to other
parties.
The MMS received 2 responses during
the 60-day comment period on this rule,
2 comments from ExxonMobil on March
20, 2008, and 2 comments from Chevron
on March 31, 2008. Our reply to these
four comments results in one change in
§ 256.92(a) from the proposed rule. In
addition, we changed the wording in the
title to this subpart and in §§ 256.94(c)
and 256.95(b) and (c)(5) for clarity, but
the title and these sections retain the
same meaning as they had in the
proposed rule.
Exxon asked for the following two
changes in the rule:
1. On a lease where MMS elects to
take royalty-in-kind (RIK), the lessee
should be allowed to notify MMS of its
intent to use credits for royalty, in
which case the RIK election is
postponed until credits are completed.
Otherwise the credits could be lost
because the company may choose not to
bid on new leases and MMS decides to
accept only RIK from the company’s
leases.
We decline to make this change to the
rule. It would create an unnecessary
interference with the RIK program just
to save a claimant from having to engage
in the sale of the credit to another party.
Section 256.95 explicitly authorizes
transfer of the credits to other parties.
Unless the potential uses of the credit
are inadequate to absorb all the value
represented by the credit, this limitation
will not inhibit realization of full value
from a transfer of the credit. Potential
uses of the credit are clearly not
inadequate. For example, in FY 2006,
the non-8(g), non-RIK royalty revenue
from the GOM was over $2 billion while
bonus revenue was $0.8 billion. Thus,
ample opportunity exists for use of
credits by recipients themselves or
others to whom recipients may transfer
the credits, which are only $60 million
in total.
2. Do not give MMS discretion to
apply lessee’s unused credits 5 years
after MMS issues them however MMS
chooses. Lessees holding credits for a
longer period is to the financial
advantage of the government and
computerized recordkeeping obviates
any burden this continued holding
would create.
Again, we decline to make this change
to the rule. Although it is undeniably
true that it is to the financial advantage
PO 00000
Frm 00015
Fmt 4700
Sfmt 4700
52917
of the government for the lessee to hold
on to the credits, there remains concern
about recordkeeping issues and
administrative costs. Computerization of
records facilitates keeping track of
unused credits, but does not completely
eliminate the monitoring burden and
cost of that activity. Also, a company
would not likely relinquish its lease to
obtain the credit, and then not timely
use the credit. Regardless, we will not
void the credit after 5 years, but simply
apply it to outstanding obligations of the
lessee.
Chevron raised the following two
objections to the rule:
3. The proposed credit amounts, equal
to bonuses and rentals, do not make the
parties whole; they should also include
a reasonable interest rate for the time
value of those payments and
compensation for any investments made
in exploration activities on the leases.
We decline to make this change to the
rule because the GOMESA would not
permit us to do so. The statute explicitly
values an existing lease for exchange
purposes at the amount of bonus and
rentals paid until exchange. While we
acknowledge that some lessees have
spent large sums beyond the original
bonus and subsequent rentals and
discovered at least one prospect,
GOMESA does not authorize
reimbursement of either interest or
exploration costs through the credits.
Lessees retain the option not to
relinquish their lease if they feel the
compensation is inadequate.
4. The 1-year period to claim the
credit is not enforceable. Chevron
interprets the absence of a specific time
period in the law to claim the credit as
meaning that MMS does not have the
authority to use a rule implementing a
statute to set an expiration date that
Congress did not include in the statute.
In response to this comment, the final
rule extends the claim period of 1 year
in the proposed rule to 2 years. But, we
believe a firm deadline is both within
our authority and appropriate as an
efficient way to design this rulemaking.
We have the authority to set a deadline
because the statute (section 104(c)(4))
directs the Secretary to ‘‘promulgate
regulations that shall provide a process
for * * * issuance of bonus or royalty
credits in exchange for relinquishment
of the existing lease * * *’’. A time
component is often an integral part of
any such process, in this case one
designed to resolve the issue of preexisting leases in an area now
designated as off-limits to new oil and
gas leasing. Further, the statute does not
preclude use of an expiration date and
general rulemaking authority permits
setting a reasonable expiration date
E:\FR\FM\12SER1.SGM
12SER1
ebenthall on PROD1PC60 with RULES
52918
Federal Register / Vol. 73, No. 178 / Friday, September 12, 2008 / Rules and Regulations
when it contributes to the purpose of
the regulation. A 2-year deadline for
acting on the exchange offer is
reasonable and appropriate in this
process because it provides ample time
for lessees to consider and reach a
decision about relinquishing their leases
in return for the credits, while at the
same time not prolonging revelation of
that decision and its potential effects in
this sensitive area. The deadline serves
the statutory policy of assuring a timely
approach for addressing outstanding
concerns on the part of Florida residents
relating to development of the affected
leases by encouraging accelerated
relinquishment of the leases. In return,
lessees qualify for a reimbursement that
would not be forthcoming normally for
leases that will eventually expire on
their own with no reimbursement. Also,
the timing constraint serves to terminate
rental payments after a reasonable time,
thereby mitigating the amount of
accrued rentals that would otherwise
become part of the credits due if the
lease is relinquished.
Both Exxon and Chevron object to the
moratoria provisions in the statute.
Exxon laments increasing barriers to oil
and gas development that could
diversify our Nation’s sources of supply
and notes that energy development and
environmental protection can and
should continue to co-exist. Chevron
notes that the extension of moratoria is
contrary to the GOMESA title. The
company says that this provision will
actually harm energy security by
perpetuating the status quo (off-limits to
exploration and production activities) in
areas of the GOM that are known to
contain significant oil and gas resources.
Regardless of the accuracy of these
assertions, they are not germane to the
rule. Rather, they are more about the
concept behind the moratoria language
and the requirement for MMS to
promulgate a rule encouraging the
relinquishment of certain leases offshore
Florida as contained in GOMESA. In
this case, we are simply drafting the
implementation language for a policy
decreed by Congress. Moreover, the rule
does not force relinquishment of the
eligible leases—it just provides an
incentive for lessees to do so. Finally,
we note that the moratoria period is
finite and known resources in the area
could be developed fairly quickly if
policy should change in the future.
The proposed rule listed all the leases
MMS records show as being in the area
eligible for exchange for a credit, along
with the bonus and rental amounts
received from each of those leases and
asked whether lessees had any
information not consistent with this list.
No comments were received on this
VerDate Aug<31>2005
14:19 Sep 11, 2008
Jkt 214001
published list and no one registered a
claim that eligible leases were omitted
or that the bonus and rental amounts
which determine the value of the credits
were incorrect.
Procedural Matters
Regulatory Planning and Review
(Executive Order (E.O.) 12866)
This final rule 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 final 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. The total value of the
credit is defined by statute as bonuses
and rental paid on the leases in the
eligible area. The MMS records show 79
leases are eligible. Total bonuses and
rentals paid in connection with these
leases is about $60 million.
(2) This final rule will not create a
serious inconsistency or otherwise
interfere with an action taken or
planned by another agency. In fact, it
endeavors to end leases whose
operations are restricted to
accommodate activity carried out by
another Federal agency and whose
potential activities are opposed by State
and local officials in the area.
(3) This final rule will not alter the
budgetary effects of entitlements, grants,
user fees or loan programs, or the rights
or obligations of their recipients.
(4) This final rule will not raise novel
legal or policy issues. The final rule will
implement a statutory program that
exchanges a credit against future
obligations for the return of old, largely
inactive leases in an area deemed
sensitive by statute.
Regulatory Flexibility Act
The Department of the Interior
certifies that this final rule will 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 final rule applies to the lessees
holding record title interests in the 79
offshore leases located near the
coastline of the State of Florida. These
lessees fall under the Small Business
Administration’s North American
Industry Classification System (NAICS)
code 211111, Crude Petroleum and
Natural Gas Extraction. Under this
NAICS code, companies with less than
500 employees are considered small
businesses. Only 1 of the current record
PO 00000
Frm 00016
Fmt 4700
Sfmt 4700
title owners of these 79 leases has less
than 500 employees. Moreover, this rule
provides a clear benefit to the lessees. It
specifies a valuable credit and a simple
process for claiming a benefit for
relinquishing a lease which the owners
have had trouble operating due to access
limitations.
This final rule will create a relatively
small amount of total credits in
exchange for certain leases through a
longstanding relinquishment process.
The credits could be used to fulfill any
of a relatively large pool of routine
bonus or royalty in-value OCS
obligations under leases located in the
GOM. The credits also will be freely
transferable or assignable. Thus, should
a small entity obtain a credit through a
transfer, it will be able to use the credit
for routine obligations or it could
exchange the credit for approximately
equivalent value in a potentially large
market of other users. The provisions of
this final rule will not have a significant
adverse economic effect on offshore
lessees and operators, including those
that are classified as small businesses.
Your comments are important. The
Small Business and Agriculture
Regulatory Enforcement Ombudsman
and 10 Regional Fairness Boards were
established to receive comments from
small businesses 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 Small Business
Administration 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
This final rule is not a major rule
under 5 U.S.C. 804(2) of the Small
Business Regulatory Enforcement
Fairness Act. This final rule:
a. Will not have an annual effect on
the economy of $100 million or more.
This final rule will offer credits worth
approximately $60 million for the
exchange of 79 leases in a sensitive area.
Not all companies may choose to
relinquish their leases for the credit
offered. Even if all the credits were
redeemed in 1 year, it will not have an
annual effect on the economy of $100
million.
b. Will not cause a major increase in
costs or prices for consumers,
individual industries, Federal, State,
local government agencies, or
geographic regions. The credit
E:\FR\FM\12SER1.SGM
12SER1
Federal Register / Vol. 73, No. 178 / Friday, September 12, 2008 / Rules and Regulations
represents only a transfer of previous
payments back to lessees. The relatively
small amount returned by these credits
will have little effect on markets,
agencies, or 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.
Productive activities have been
restricted on the leases that will be
returned, and the monetary credit
received in exchange will be too small
to have a perceptible effect.
Unfunded Mandates Reform Act
This final 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
final 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 Unfunded Mandates
Reform Act (2 U.S.C. 1531 et seq.) is not
required.
Takings Implication Assessment (E.O.
12630)
Under the criteria in E.O. 12630, this
final rule does not have significant
takings implications as participation is
voluntary. The final rule is not a
governmental action capable of
interference with constitutionally
protected property rights. A Takings
Implication Assessment is not required.
Federalism (E.O. 13132)
Under the criteria in E.O. 13132, this
final rule does not have sufficient
federalism implications to warrant the
preparation of a Federalism Assessment.
As noted in the proposed rule, the
potential revenue sharing effects are
excluded either explicitly or implicitly
by virtue of the treatment of the
expected credit redemptions. This final
rule 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 final
rule will not affect that role. A
Federalism Assessment is not required.
Civil Justice Reform (E.O. 12988)
This final rule complies with the
requirements of E.O. 12988.
Specifically, this rule:
(a) Meets the criteria of section 3(a)
requiring that all regulations be
reviewed to eliminate errors and
ambiguity and be written to minimize
litigation; and
(b) Meets the criteria of section 3(b)(2)
requiring that all regulations be written
in clear language and contain clear legal
standards.
Consultation With Indian Tribes (E.O.
13175)
Under the criteria in E.O. 13175, we
have evaluated this final rule and
determined that it has no potential
effects on federally recognized Indian
tribes. There are no Indian or tribal
lands on the OCS.
Paperwork Reduction Act (PRA) of 1995
This rule contains new information
collection requirements, and therefore
MMS has submitted an information
collection request to OMB for review
and approval, as required under the
PRA. The OMB has approved the new
requirements and assigned OMB Control
Number 1010–0174 (expiration 09–30–
2011, 45 hours). This rule also refers to,
but does not change, information
Citation
30 CFR part 256
subpart N
Reporting & recordkeeping requirement
92(a) ....................
Submit a request to relinquish lease according to § 256.76 .....................
95 ........................
collection burdens already covered and
approved under OMB Control Number
1010–0006 (expiration 5/31/10). There
were no changes in the information
collection requirements from the
proposed rule to the final rule. The
rulemaking imposes no new non-hour
cost burdens.
The title of the collection of
information for the rule is ‘‘30 CFR Part
256, Bonus or Royalty Credits for
Relinquishing Certain Leases Offshore
Florida.’’ It should be noted that this
rulemaking concerns only 79 current
leases and will not affect future leases.
Therefore, the associated information
collection would be a one-time only
hour burden should respondents
holding eligible leases elect to take
advantage of the bonus or royalty credits
for relinquishing these leases.
Responses to this collection are required
to obtain or retain a benefit and are
mandatory. The MMS will protect
proprietary information according to
section 26 of the OCS Lands Act, the
Freedom of Information Act (5 U.S.C.
552) and its implementing regulations
(43 CFR part 2), and § 256.10(d). The
information collection does not include
questions of a sensitive nature.
The OMB approved the collection of
information required by the current 30
CFR part 256 regulations under OMB
Control Number 1010–0006 (17,058
burden hours, $603,125 non-hour cost
burdens, expiration 5/31/2010).
The final regulation will allow lessees
to request a bonus or royalty credit, and
to transfer this same bonus or credit to
another party. We estimate a total of 45
burden hours, including the time for
gathering the information and
submitting the request to MMS for
review. Refer to the chart for the burden.
Request a bonus or royalty credit and submit supporting documentation
92(a)(5) ...............
52919
Request approval to transfer bonus or credit to another party with supporting information.
Average number of annual
responses
Hour burden
1
Annual burden
hours
30
30
Burden currently approved under 1010–0006.*
1
15
15
Total Burden .....................................................................................................................................................
45
45
ebenthall on PROD1PC60 with RULES
* 240 hours for this requirement are already approved under 1010–0006.
A Federal 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. The public may
comment, at any time, on the accuracy
of the information collection burden of
our regulations and may submit
VerDate Aug<31>2005
14:19 Sep 11, 2008
Jkt 214001
comments to the Department of the
Interior; Minerals Management Service;
Attention: Regulations and Standards
Branch; MS–4024; 381 Elden Street;
Herndon, Virginia 20170–4817.
PO 00000
Frm 00017
Fmt 4700
Sfmt 4700
National Environmental Policy Act
(NEPA) of 1969
We determined this final rule is
categorically excluded from
requirements for analysis under the
National Environmental Policy Act and
the Department Manual at 516 DM. This
E:\FR\FM\12SER1.SGM
12SER1
52920
Federal Register / Vol. 73, No. 178 / Friday, September 12, 2008 / Rules and Regulations
rule deals with financial matters and
has no direct effect on MMS decisions
on oil and gas operations with the
potential to affect the environment;
hence, an Environmental Impact
Statement is not required. Pursuant to
Department Manual 516 DM 2.3A (2),
section 1.10 of 516 DM 2, Appendix 1
excludes from documentation in an
environmental assessment or impact
statement ‘‘policies, directives,
regulations and guidelines of an
administrative, financial, legal,
technical or procedural nature; or the
environmental effects of which are too
broad, speculative or conjectural to lend
themselves to meaningful analysis and
will be subject later to the NEPA
process, either collectively or case-bycase.’’ Section 1.3 of the same appendix
clarifies that royalties and audits are
considered routine financial
transactions that are subject to
categorical exclusion from the NEPA
process. None of the exceptional
circumstances set forth in 516 DM 2
Appendix 2 apply.
2. Section 256.5 is amended by adding
paragraphs (m) through (s) to read as
follows:
■
§ 256.5
Definitions.
For the reasons stated in the preamble,
the Minerals Management Service
(MMS) proposes to amend 30 CFR part
256 as follows:
*
*
*
*
(m) Bonus or royalty credit means a
legal instrument or other written
documentation, or an entry in an
account managed by the Secretary that
a bidder or lessee may use in lieu of any
other monetary payment for—
(1) A bonus due for a lease on the
Outer Continental Shelf; or
(2) A royalty due on oil or gas
production from any lease located on
the Outer Continental Shelf.
(n) Central planning area means the
Central Gulf of Mexico Planning Area of
the Outer Continental Shelf, as
designated in the document entitled
‘‘Draft Proposed Program Outer
Continental Shelf Oil and Gas Leasing
Program 2007–2012,’’ dated February
2006.
(o) Coastline means the line of
ordinary low water along that portion of
the coast in direct contact with the open
sea and the line marking the seaward
limit of inland waters.
(p) Desoto Canyon OPD means the
official protraction diagram designated
as Desoto Canyon which has a western
edge located at the universal transverse
mercator (UTM) X coordinate 1,346,400
in the North American Datum of 1927
(NAD 27).
(q) Destin Dome OPD means the
official protraction diagram designated
as Destin Dome which has a western
edge located at the universal transverse
mercator (UTM) X coordinate 1,393,920
in the NAD 27.
(r) Eastern planning area means the
Eastern Gulf of Mexico Planning Area of
the Outer Continental Shelf, as
designated in the document entitled
‘‘Draft Proposed Program Outer
Continental Shelf Oil and Gas Leasing
Program 2007–2012,’’ dated February
2006.
(s) Pensacola OPD means the official
protraction diagram designated as
Pensacola which has a western edge
located at the universal transverse
mercator (UTM) X coordinate 1,393,920
in the NAD 27.
■ 3. Add a new subpart N consisting of
§§ 256.90 through 256.95 to read as
follows:
PART 256—LEASING OF SULPHUR OR
OIL AND GAS IN THE OUTER
CONTINENTIAL SHELF
Subpart N—Bonus or Royalty Credits
for Exchange of Certain Leases
Offshore Florida
1. The authority citation for part 256
is revised to read as follows:
Sec.
256.90 Which leases may I exchange for a
bonus or royalty credit?
256.91 How much bonus or royalty credit
will MMS grant in exchange for a lease?
Data Quality Act
In developing this final rule we did
not conduct or use a study, experiment,
or survey requiring peer review under
the Data Quality Act (Pub. L. 106–554,
app. C section 515, 114 Stat. 2763,
2763A–153–154).
Effects on the Energy Supply (E.O.
13211)
This final rule is not a significant
energy action under the definition in
E.O. 13211. A Statement of Energy
Effects is not required.
List of Subjects in 30 CFR Part 256
Administrative practice and
procedure, Continental shelf,
Government contracts, Mineral
royalties, Oil and gas exploration,
Public lands—mineral resources,
Reporting and recordkeeping
requirements.
Dated: August 8, 2008.
C. Stephen Allred,
Assistant Secretary—Land and Minerals
Management.
ebenthall on PROD1PC60 with RULES
■
■
Authority: 31 U.S.C. 9701, 42 U.S.C. 6213,
43 U.S.C. 1334, Pub. L. 109–432.
VerDate Aug<31>2005
14:19 Sep 11, 2008
Jkt 214001
*
PO 00000
Frm 00018
Fmt 4700
Sfmt 4700
256.92 What must I do to obtain a bonus or
royalty credit?
256.93 How is the bonus or royalty credit
allocated among multiple lease owners?
256.94 How may I use the bonus or royalty
credit?
256.95 How do I transfer a bonus or royalty
credit to another person?
§ 256.90 Which leases may I exchange for
a bonus or royalty credit?
You may exchange a lease for a bonus
or royalty credit if it:
(a) Was in effect on December 20,
2006, and
(b) Is located in:
(1) The Eastern planning area and
within 125 miles of the coastline of the
State of Florida, or
(2) The Central planning area and
within the Desoto Canyon OPD, the
Destin Dome OPD, or the Pensacola
OPD, and within 100 miles of the
coastline of the State of Florida.
§ 256.91 How much bonus or royalty credit
will MMS grant in exchange for a lease?
The amount of the bonus or royalty
credit for an exchanged lease equals the
sum of:
(a) The amount of the bonus payment;
and
(b) All rent paid for the lease as of the
date the lessee submits the request to
exchange the lease under § 256.92 to
MMS.
§ 256.92 What must I do to obtain a bonus
or royalty credit?
(a) To obtain the bonus or royalty
credit, all of the record title interest
owners in the lease must submit the
following to the MMS Regional
Supervisor for Leasing and Environment
for the Gulf of Mexico on or before
October 14, 2010.
(1) A written request to exchange the
lease for the bonus or royalty credit,
signed by all record title interest owners
in the lease.
(2) The name and contact information
for a person who will act as a contact
for each record title interest owner.
(3) Documentation of each record title
interest owner’s percentage share in the
lease.
(4) A list of all bonus and rental
payments for that lease made by, or on
behalf of, each of the current record title
owners.
(5) A written relinquishment of the
lease as described in § 256.76.
Notwithstanding § 256.76, the
relinquishment will become effective
when the credit becomes effective under
paragraph (b) of this section.
(b) The credit becomes effective when
MMS issues a certification to the record
title interest owners that the lease has
qualified for the credit.
E:\FR\FM\12SER1.SGM
12SER1
Federal Register / Vol. 73, No. 178 / Friday, September 12, 2008 / Rules and Regulations
§ 256.93 How is the bonus or royalty credit
allocated among multiple lease owners?
DEPARTMENT OF THE INTERIOR
The MMS will allocate the bonus or
royalty credit for an exchanged lease to
the current record title interest owners
in the same percentage share as each
owner has in the lease as of the date of
the request to exchange the lease.
Office of Surface Mining Reclamation
and Enforcement
§ 256.94 How may I use the bonus or
royalty credit?
North Dakota Regulatory Program
(a) You may use a credit issued under
this part in lieu of a monetary payment
due under any lease in the Gulf of
Mexico not subject to the revenue
distribution provisions of section 8(g)(2)
of the OCSLA (43 U.S.C. 1337(g)(2)) for
either:
(1) A bonus for acquisition of an
interest in a new lease; or
(2) Royalty due on oil and gas
production after October 14, 2008.
(b) You may not use a bonus or
royalty credit in lieu of delivering oil or
gas taken as royalty-in-kind.
(c) If you have any credit that remains
unused after 5 years from the date MMS
issued the credit, MMS reserves the
right to apply the remaining credit to
any of your obligations.
ebenthall on PROD1PC60 with RULES
§ 256.95 How do I transfer a bonus or
royalty credit to another person?
(a) You may transfer your bonus or
royalty credit to any other person by
submitting to the MMS Adjudication
Unit for the Gulf of Mexico two
originally executed transfer letters of
agreement.
(b) Authorized officers indicated on
the qualification card filed with MMS of
all companies involved in transferring
and receiving the credit must sign the
transfer letters of agreement.
(c) A transfer letter of agreement must
include:
(1) The effective date of the transfer,
(2) The OCS–G number for the lease
that originally qualified for the credit,
(3) The amount of the credit being
transferred,
(4) Company names punctuated
exactly as filed on the qualification card
at MMS, and
(5) A corporate seal, if you used a
corporate seal in your initial
qualification to hold OCS leases.
(d) The transferee of a credit
transferred under this section may use
it in accordance with § 256.94 as soon
as MMS sends a confirmation of the
transfer to the transferee.
[FR Doc. E8–21135 Filed 9–11–08; 8:45 am]
BILLING CODE 4310–MR–P
VerDate Aug<31>2005
14:19 Sep 11, 2008
Jkt 214001
30 CFR Part 934
[SATS No: ND–050–FOR; Docket ID No.
OSM–2008–0004]
Office of Surface Mining
Reclamation and Enforcement, Interior.
ACTION: Final rule; approval of
amendment.
AGENCY:
SUMMARY: We are approving an
amendment to the North Dakota
regulatory program (the ‘‘North Dakota
program’’) under the Surface Mining
Control and Reclamation Act of 1977
(‘‘SMCRA’’ or ‘‘the Act’’). North Dakota
proposed minor revisions to its rules
concerning self-bonding requirements,
and updating terminology used for
describing native grasslands, and
correcting a cross reference error. North
Dakota intended to revise its program to
clarify ambiguities and improve
operational efficiency.
DATES: Effective Date: September 12,
2008.
FOR FURTHER INFORMATION CONTACT:
Jeffrey Fleischman, Casper Field Office
Director Telephone: 307/261–6550,
Internet address:
JFleischman@osmre.gov.
SUPPLEMENTARY INFORMATION:
I. Background on the North Dakota Program
II. Submission of the Proposed Amendment
III. Office of Surface Mining Reclamation and
Enforcement’s (OSM) Findings
IV. Summary and Disposition of Comments
V. OSM Decision
VI. Procedural Determinations
I. Background on the North Dakota
Program
Section 503(a) of the Act permits a
State to assume primacy for the
regulation of surface coal mining and
reclamation operations on non-Federal
and non-Indian lands within its borders
by demonstrating that its State program
includes, among other things, ‘‘a State
law which provides for the regulation of
surface coal mining and reclamation
operations in accordance with the
requirements of this Act * * *; and
rules and regulations consistent with
regulations issued by the Secretary
pursuant to this Act.’’ See 30 U.S.C.
1253(a)(1) and (7). On the basis of these
criteria, the Secretary of the Interior
conditionally approved the North
Dakota program on December 15, 1980.
You can find background information
on the North Dakota program, including
the Secretary’s findings, the disposition
PO 00000
Frm 00019
Fmt 4700
Sfmt 4700
52921
of comments, and conditions of
approval in the December 15, 1980,
Federal Register (45 FR 82214). You can
also find later actions concerning North
Dakota’s program and program
amendments at 30 CFR 934.15, and
934.30.
II. Submission of the Proposed
Amendment
By letter dated March 12, 2008, North
Dakota sent us an amendment to its
program (North Dakota Amendment
number XXXVII, SATS No. ND–050–
FOR, Administrative Record No. ND–
LL–01) under SMCRA (30 U.S.C. 1201 et
seq.). North Dakota sent the amendment
to include changes made at its own
initiative.
We announced receipt of the
proposed amendment in the April 18,
2008, Federal Register (73 FR 21087). In
the same document, we opened the
public comment period and provided an
opportunity for a public hearing or
meeting on the amendment’s adequacy.
We did not hold a public hearing or
meeting because no one requested one.
The public comment period ended on
May 5, 2008. We received a ‘‘no
inconsistency with this agency’s
regulations’’ comment from the U.S.
Department of Labor’s Mine Safety and
Health Administration (MSHA), ‘‘no
comments’’ from the State Historical
Society of North Dakota (SHPO), and a
‘‘we agree’’ comment from the North
Dakota State University Extension
Service (NDSU Extension Service).
III. OSM’s Findings
Following are the findings we made
concerning the amendment under
SMCRA and the Federal regulations at
30 CFR 732.15 and 732.17. We are
approving the amendment.
A. Minor Revisions to North Dakota’s
Rules
1. North Dakota proposed a crossreference change under its previously
approved permit approval criteria Rule
NDAC 69–05.2–10–03. The crossreference is being changed from Section
69–05.2–04–01 to Section 69–05.2–04–
01.1 and is due to a Rule numbering
revision that was made several years ago
when some new rules were adopted by
North Dakota.
2. In NDAC 69–05.2–08–08, (pre-mine
land use and vegetation data
requirements), North Dakota proposed
to update the terminology used to
describe native grasslands to reflect the
terminology now used by USDA’s
Natural Resource Conservation Service
(NRCS).
Because these changes are minor, we
find that they will not make North
E:\FR\FM\12SER1.SGM
12SER1
Agencies
[Federal Register Volume 73, Number 178 (Friday, September 12, 2008)]
[Rules and Regulations]
[Pages 52917-52921]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-21135]
[[Page 52917]]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE INTERIOR
Minerals Management Service
30 CFR Part 256
[Docket ID: MMS-2007-OMM-0064]
RIN 1010-AD44
Bonus or Royalty Credits for Relinquishing Certain Leases
Offshore Florida
AGENCY: Minerals Management Service (MMS), Interior.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule amends regulations for oil and gas leases on
the Outer Continental Shelf to implement a mandate in the Gulf of
Mexico Energy Security Act of 2006. These amendments (1) provide a
credit to lessees who relinquish certain eligible leases in the Gulf of
Mexico; (2) define eligible leases as those within 125 miles of the
Florida coast in the Eastern Planning Area, and certain leases within
100 miles of the Florida coast in the Central Planning Area; and (3)
allow lessees to use the credits in lieu of monetary payment for either
a lease bonus bid or royalty due on oil and gas production from most
other leases in the Gulf of Mexico, or to transfer the credits to other
Gulf of Mexico lessees for their use.
DATES: Effective Date: This final rule becomes effective on October 14,
2008.
FOR FURTHER INFORMATION CONTACT: Marshall Rose, Chief, Economics
Division, at (703) 787-1536.
SUPPLEMENTARY INFORMATION:
Background and Summary of the Rule
On February 1, 2008, MMS published a proposed rule in the Federal
Register (73 FR 6073) to implement section 104(c) of the Gulf of Mexico
Energy Security Act of 2006 (GOMESA), Public Law 109-432. Section
104(c) of that statute authorizes the Secretary of the Interior
(Secretary) to issue a bonus or royalty credit for the exchange of
certain leases located offshore of the State of Florida. The statute
defines leases eligible for the credit as those in existence on the
enactment date of the GOMESA and located both within specified Outer
Continental Shelf (OCS) planning areas and distances from the Florida
coastline. The statute sets the size of the credit as equal to the
bonus and rental paid for the relinquished eligible lease, and limits
its use to payments by lessees of bonuses and royalties for leases in
the Gulf of Mexico (GOM) not subject to revenue sharing under section
8(g) of the Outer Continental Shelf Lands Act (OCSLA) (43 U.S.C.
1337(g)). Finally, the statute mandates creation of a regulatory
process for notifying the Secretary of a lessee's decision to exchange
a lease for a credit, issuing the credit, allocating the credit among
multiple lease owners, and transferring the credit to other parties.
The MMS received 2 responses during the 60-day comment period on
this rule, 2 comments from ExxonMobil on March 20, 2008, and 2 comments
from Chevron on March 31, 2008. Our reply to these four comments
results in one change in Sec. 256.92(a) from the proposed rule. In
addition, we changed the wording in the title to this subpart and in
Sec. Sec. 256.94(c) and 256.95(b) and (c)(5) for clarity, but the
title and these sections retain the same meaning as they had in the
proposed rule.
Exxon asked for the following two changes in the rule:
1. On a lease where MMS elects to take royalty-in-kind (RIK), the
lessee should be allowed to notify MMS of its intent to use credits for
royalty, in which case the RIK election is postponed until credits are
completed. Otherwise the credits could be lost because the company may
choose not to bid on new leases and MMS decides to accept only RIK from
the company's leases.
We decline to make this change to the rule. It would create an
unnecessary interference with the RIK program just to save a claimant
from having to engage in the sale of the credit to another party.
Section 256.95 explicitly authorizes transfer of the credits to other
parties. Unless the potential uses of the credit are inadequate to
absorb all the value represented by the credit, this limitation will
not inhibit realization of full value from a transfer of the credit.
Potential uses of the credit are clearly not inadequate. For example,
in FY 2006, the non-8(g), non-RIK royalty revenue from the GOM was over
$2 billion while bonus revenue was $0.8 billion. Thus, ample
opportunity exists for use of credits by recipients themselves or
others to whom recipients may transfer the credits, which are only $60
million in total.
2. Do not give MMS discretion to apply lessee's unused credits 5
years after MMS issues them however MMS chooses. Lessees holding
credits for a longer period is to the financial advantage of the
government and computerized recordkeeping obviates any burden this
continued holding would create.
Again, we decline to make this change to the rule. Although it is
undeniably true that it is to the financial advantage of the government
for the lessee to hold on to the credits, there remains concern about
recordkeeping issues and administrative costs. Computerization of
records facilitates keeping track of unused credits, but does not
completely eliminate the monitoring burden and cost of that activity.
Also, a company would not likely relinquish its lease to obtain the
credit, and then not timely use the credit. Regardless, we will not
void the credit after 5 years, but simply apply it to outstanding
obligations of the lessee.
Chevron raised the following two objections to the rule:
3. The proposed credit amounts, equal to bonuses and rentals, do
not make the parties whole; they should also include a reasonable
interest rate for the time value of those payments and compensation for
any investments made in exploration activities on the leases.
We decline to make this change to the rule because the GOMESA would
not permit us to do so. The statute explicitly values an existing lease
for exchange purposes at the amount of bonus and rentals paid until
exchange. While we acknowledge that some lessees have spent large sums
beyond the original bonus and subsequent rentals and discovered at
least one prospect, GOMESA does not authorize reimbursement of either
interest or exploration costs through the credits. Lessees retain the
option not to relinquish their lease if they feel the compensation is
inadequate.
4. The 1-year period to claim the credit is not enforceable.
Chevron interprets the absence of a specific time period in the law to
claim the credit as meaning that MMS does not have the authority to use
a rule implementing a statute to set an expiration date that Congress
did not include in the statute.
In response to this comment, the final rule extends the claim
period of 1 year in the proposed rule to 2 years. But, we believe a
firm deadline is both within our authority and appropriate as an
efficient way to design this rulemaking. We have the authority to set a
deadline because the statute (section 104(c)(4)) directs the Secretary
to ``promulgate regulations that shall provide a process for * * *
issuance of bonus or royalty credits in exchange for relinquishment of
the existing lease * * *''. A time component is often an integral part
of any such process, in this case one designed to resolve the issue of
pre-existing leases in an area now designated as off-limits to new oil
and gas leasing. Further, the statute does not preclude use of an
expiration date and general rulemaking authority permits setting a
reasonable expiration date
[[Page 52918]]
when it contributes to the purpose of the regulation. A 2-year deadline
for acting on the exchange offer is reasonable and appropriate in this
process because it provides ample time for lessees to consider and
reach a decision about relinquishing their leases in return for the
credits, while at the same time not prolonging revelation of that
decision and its potential effects in this sensitive area. The deadline
serves the statutory policy of assuring a timely approach for
addressing outstanding concerns on the part of Florida residents
relating to development of the affected leases by encouraging
accelerated relinquishment of the leases. In return, lessees qualify
for a reimbursement that would not be forthcoming normally for leases
that will eventually expire on their own with no reimbursement. Also,
the timing constraint serves to terminate rental payments after a
reasonable time, thereby mitigating the amount of accrued rentals that
would otherwise become part of the credits due if the lease is
relinquished.
Both Exxon and Chevron object to the moratoria provisions in the
statute. Exxon laments increasing barriers to oil and gas development
that could diversify our Nation's sources of supply and notes that
energy development and environmental protection can and should continue
to co-exist. Chevron notes that the extension of moratoria is contrary
to the GOMESA title. The company says that this provision will actually
harm energy security by perpetuating the status quo (off-limits to
exploration and production activities) in areas of the GOM that are
known to contain significant oil and gas resources.
Regardless of the accuracy of these assertions, they are not
germane to the rule. Rather, they are more about the concept behind the
moratoria language and the requirement for MMS to promulgate a rule
encouraging the relinquishment of certain leases offshore Florida as
contained in GOMESA. In this case, we are simply drafting the
implementation language for a policy decreed by Congress. Moreover, the
rule does not force relinquishment of the eligible leases--it just
provides an incentive for lessees to do so. Finally, we note that the
moratoria period is finite and known resources in the area could be
developed fairly quickly if policy should change in the future.
The proposed rule listed all the leases MMS records show as being
in the area eligible for exchange for a credit, along with the bonus
and rental amounts received from each of those leases and asked whether
lessees had any information not consistent with this list. No comments
were received on this published list and no one registered a claim that
eligible leases were omitted or that the bonus and rental amounts which
determine the value of the credits were incorrect.
Procedural Matters
Regulatory Planning and Review (Executive Order (E.O.) 12866)
This final rule 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 final 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. The total value of the credit is defined by statute as
bonuses and rental paid on the leases in the eligible area. The MMS
records show 79 leases are eligible. Total bonuses and rentals paid in
connection with these leases is about $60 million.
(2) This final rule will not create a serious inconsistency or
otherwise interfere with an action taken or planned by another agency.
In fact, it endeavors to end leases whose operations are restricted to
accommodate activity carried out by another Federal agency and whose
potential activities are opposed by State and local officials in the
area.
(3) This final rule will not alter the budgetary effects of
entitlements, grants, user fees or loan programs, or the rights or
obligations of their recipients.
(4) This final rule will not raise novel legal or policy issues.
The final rule will implement a statutory program that exchanges a
credit against future obligations for the return of old, largely
inactive leases in an area deemed sensitive by statute.
Regulatory Flexibility Act
The Department of the Interior certifies that this final rule will
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 final rule applies to the lessees holding record title
interests in the 79 offshore leases located near the coastline of the
State of Florida. These lessees fall under the Small Business
Administration's North American Industry Classification System (NAICS)
code 211111, Crude Petroleum and Natural Gas Extraction. Under this
NAICS code, companies with less than 500 employees are considered small
businesses. Only 1 of the current record title owners of these 79
leases has less than 500 employees. Moreover, this rule provides a
clear benefit to the lessees. It specifies a valuable credit and a
simple process for claiming a benefit for relinquishing a lease which
the owners have had trouble operating due to access limitations.
This final rule will create a relatively small amount of total
credits in exchange for certain leases through a longstanding
relinquishment process. The credits could be used to fulfill any of a
relatively large pool of routine bonus or royalty in-value OCS
obligations under leases located in the GOM. The credits also will be
freely transferable or assignable. Thus, should a small entity obtain a
credit through a transfer, it will be able to use the credit for
routine obligations or it could exchange the credit for approximately
equivalent value in a potentially large market of other users. The
provisions of this final rule will not have a significant adverse
economic effect on offshore lessees and operators, including those that
are classified as small businesses.
Your comments are important. The Small Business and Agriculture
Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards were
established to receive comments from small businesses 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 Small Business Administration 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
This final rule is not a major rule under 5 U.S.C. 804(2) of the
Small Business Regulatory Enforcement Fairness Act. This final rule:
a. Will not have an annual effect on the economy of $100 million or
more. This final rule will offer credits worth approximately $60
million for the exchange of 79 leases in a sensitive area. Not all
companies may choose to relinquish their leases for the credit offered.
Even if all the credits were redeemed in 1 year, it will not have an
annual effect on the economy of $100 million.
b. Will not cause a major increase in costs or prices for
consumers, individual industries, Federal, State, local government
agencies, or geographic regions. The credit
[[Page 52919]]
represents only a transfer of previous payments back to lessees. The
relatively small amount returned by these credits will have little
effect on markets, agencies, or 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.
Productive activities have been restricted on the leases that will be
returned, and the monetary credit received in exchange will be too
small to have a perceptible effect.
Unfunded Mandates Reform Act
This final 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 final 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 Unfunded Mandates
Reform Act (2 U.S.C. 1531 et seq.) is not required.
Takings Implication Assessment (E.O. 12630)
Under the criteria in E.O. 12630, this final rule does not have
significant takings implications as participation is voluntary. The
final rule is not a governmental action capable of interference with
constitutionally protected property rights. A Takings Implication
Assessment is not required.
Federalism (E.O. 13132)
Under the criteria in E.O. 13132, this final rule does not have
sufficient federalism implications to warrant the preparation of a
Federalism Assessment. As noted in the proposed rule, the potential
revenue sharing effects are excluded either explicitly or implicitly by
virtue of the treatment of the expected credit redemptions. This final
rule 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 final rule will
not affect that role. A Federalism Assessment is not required.
Civil Justice Reform (E.O. 12988)
This final rule complies with the requirements of E.O. 12988.
Specifically, this rule:
(a) Meets the criteria of section 3(a) requiring that all
regulations be reviewed to eliminate errors and ambiguity and be
written to minimize litigation; and
(b) Meets the criteria of section 3(b)(2) requiring that all
regulations be written in clear language and contain clear legal
standards.
Consultation With Indian Tribes (E.O. 13175)
Under the criteria in E.O. 13175, we have evaluated this final rule
and determined that it has no potential effects on federally recognized
Indian tribes. There are no Indian or tribal lands on the OCS.
Paperwork Reduction Act (PRA) of 1995
This rule contains new information collection requirements, and
therefore MMS has submitted an information collection request to OMB
for review and approval, as required under the PRA. The OMB has
approved the new requirements and assigned OMB Control Number 1010-0174
(expiration 09-30-2011, 45 hours). This rule also refers to, but does
not change, information collection burdens already covered and approved
under OMB Control Number 1010-0006 (expiration 5/31/10). There were no
changes in the information collection requirements from the proposed
rule to the final rule. The rulemaking imposes no new non-hour cost
burdens.
The title of the collection of information for the rule is ``30 CFR
Part 256, Bonus or Royalty Credits for Relinquishing Certain Leases
Offshore Florida.'' It should be noted that this rulemaking concerns
only 79 current leases and will not affect future leases. Therefore,
the associated information collection would be a one-time only hour
burden should respondents holding eligible leases elect to take
advantage of the bonus or royalty credits for relinquishing these
leases. Responses to this collection are required to obtain or retain a
benefit and are mandatory. The MMS will protect proprietary information
according to section 26 of the OCS Lands Act, the Freedom of
Information Act (5 U.S.C. 552) and its implementing regulations (43 CFR
part 2), and Sec. 256.10(d). The information collection does not
include questions of a sensitive nature.
The OMB approved the collection of information required by the
current 30 CFR part 256 regulations under OMB Control Number 1010-0006
(17,058 burden hours, $603,125 non-hour cost burdens, expiration 5/31/
2010).
The final regulation will allow lessees to request a bonus or
royalty credit, and to transfer this same bonus or credit to another
party. We estimate a total of 45 burden hours, including the time for
gathering the information and submitting the request to MMS for review.
Refer to the chart for the burden.
----------------------------------------------------------------------------------------------------------------
Average number
Citation 30 CFR part 256 subpart N Reporting & recordkeeping Hour burden of annual Annual burden
requirement responses hours
----------------------------------------------------------------------------------------------------------------
92(a).............................. Request a bonus or royalty 1 30 30
credit and submit
supporting documentation.
-----------------------------------------------
92(a)(5)........................... Submit a request to Burden currently approved under 1010-0006.*
relinquish lease according
to Sec. 256.76.
----------------------------------------------------------------------------------------------------------------
95................................. Request approval to 1 15 15
transfer bonus or credit
to another party with
supporting information.
----------------------------------------------------------------------------------------------------------------
Total Burden................................................................ 45 45
----------------------------------------------------------------------------------------------------------------
* 240 hours for this requirement are already approved under 1010-0006.
A Federal 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. The public may comment, at any
time, on the accuracy of the information collection burden of our
regulations and may submit comments to the Department of the Interior;
Minerals Management Service; Attention: Regulations and Standards
Branch; MS-4024; 381 Elden Street; Herndon, Virginia 20170-4817.
National Environmental Policy Act (NEPA) of 1969
We determined this final rule is categorically excluded from
requirements for analysis under the National Environmental Policy Act
and the Department Manual at 516 DM. This
[[Page 52920]]
rule deals with financial matters and has no direct effect on MMS
decisions on oil and gas operations with the potential to affect the
environment; hence, an Environmental Impact Statement is not required.
Pursuant to Department Manual 516 DM 2.3A (2), section 1.10 of 516 DM
2, Appendix 1 excludes from documentation in an environmental
assessment or impact statement ``policies, directives, regulations and
guidelines of an administrative, financial, legal, technical or
procedural nature; or the environmental effects of which are too broad,
speculative or conjectural to lend themselves to meaningful analysis
and will be subject later to the NEPA process, either collectively or
case-by-case.'' Section 1.3 of the same appendix clarifies that
royalties and audits are considered routine financial transactions that
are subject to categorical exclusion from the NEPA process. None of the
exceptional circumstances set forth in 516 DM 2 Appendix 2 apply.
Data Quality Act
In developing this final rule we did not conduct or use a study,
experiment, or survey requiring peer review under the Data Quality Act
(Pub. L. 106-554, app. C section 515, 114 Stat. 2763, 2763A-153-154).
Effects on the Energy Supply (E.O. 13211)
This final rule is not a significant energy action under the
definition in E.O. 13211. A Statement of Energy Effects is not
required.
List of Subjects in 30 CFR Part 256
Administrative practice and procedure, Continental shelf,
Government contracts, Mineral royalties, Oil and gas exploration,
Public lands--mineral resources, Reporting and recordkeeping
requirements.
Dated: August 8, 2008.
C. Stephen Allred,
Assistant Secretary--Land and Minerals Management.
0
For the reasons stated in the preamble, the Minerals Management Service
(MMS) proposes to amend 30 CFR part 256 as follows:
PART 256--LEASING OF SULPHUR OR OIL AND GAS IN THE OUTER
CONTINENTIAL SHELF
0
1. The authority citation for part 256 is revised to read as follows:
Authority: 31 U.S.C. 9701, 42 U.S.C. 6213, 43 U.S.C. 1334, Pub.
L. 109-432.
0
2. Section 256.5 is amended by adding paragraphs (m) through (s) to
read as follows:
Sec. 256.5 Definitions.
* * * * *
(m) Bonus or royalty credit means a legal instrument or other
written documentation, or an entry in an account managed by the
Secretary that a bidder or lessee may use in lieu of any other monetary
payment for--
(1) A bonus due for a lease on the Outer Continental Shelf; or
(2) A royalty due on oil or gas production from any lease located
on the Outer Continental Shelf.
(n) Central planning area means the Central Gulf of Mexico Planning
Area of the Outer Continental Shelf, as designated in the document
entitled ``Draft Proposed Program Outer Continental Shelf Oil and Gas
Leasing Program 2007-2012,'' dated February 2006.
(o) Coastline means the line of ordinary low water along that
portion of the coast in direct contact with the open sea and the line
marking the seaward limit of inland waters.
(p) Desoto Canyon OPD means the official protraction diagram
designated as Desoto Canyon which has a western edge located at the
universal transverse mercator (UTM) X coordinate 1,346,400 in the North
American Datum of 1927 (NAD 27).
(q) Destin Dome OPD means the official protraction diagram
designated as Destin Dome which has a western edge located at the
universal transverse mercator (UTM) X coordinate 1,393,920 in the NAD
27.
(r) Eastern planning area means the Eastern Gulf of Mexico Planning
Area of the Outer Continental Shelf, as designated in the document
entitled ``Draft Proposed Program Outer Continental Shelf Oil and Gas
Leasing Program 2007-2012,'' dated February 2006.
(s) Pensacola OPD means the official protraction diagram designated
as Pensacola which has a western edge located at the universal
transverse mercator (UTM) X coordinate 1,393,920 in the NAD 27.
0
3. Add a new subpart N consisting of Sec. Sec. 256.90 through 256.95
to read as follows:
Subpart N--Bonus or Royalty Credits for Exchange of Certain Leases
Offshore Florida
Sec.
256.90 Which leases may I exchange for a bonus or royalty credit?
256.91 How much bonus or royalty credit will MMS grant in exchange
for a lease?
256.92 What must I do to obtain a bonus or royalty credit?
256.93 How is the bonus or royalty credit allocated among multiple
lease owners?
256.94 How may I use the bonus or royalty credit?
256.95 How do I transfer a bonus or royalty credit to another
person?
Sec. 256.90 Which leases may I exchange for a bonus or royalty
credit?
You may exchange a lease for a bonus or royalty credit if it:
(a) Was in effect on December 20, 2006, and
(b) Is located in:
(1) The Eastern planning area and within 125 miles of the coastline
of the State of Florida, or
(2) The Central planning area and within the Desoto Canyon OPD, the
Destin Dome OPD, or the Pensacola OPD, and within 100 miles of the
coastline of the State of Florida.
Sec. 256.91 How much bonus or royalty credit will MMS grant in
exchange for a lease?
The amount of the bonus or royalty credit for an exchanged lease
equals the sum of:
(a) The amount of the bonus payment; and
(b) All rent paid for the lease as of the date the lessee submits
the request to exchange the lease under Sec. 256.92 to MMS.
Sec. 256.92 What must I do to obtain a bonus or royalty credit?
(a) To obtain the bonus or royalty credit, all of the record title
interest owners in the lease must submit the following to the MMS
Regional Supervisor for Leasing and Environment for the Gulf of Mexico
on or before October 14, 2010.
(1) A written request to exchange the lease for the bonus or
royalty credit, signed by all record title interest owners in the
lease.
(2) The name and contact information for a person who will act as a
contact for each record title interest owner.
(3) Documentation of each record title interest owner's percentage
share in the lease.
(4) A list of all bonus and rental payments for that lease made by,
or on behalf of, each of the current record title owners.
(5) A written relinquishment of the lease as described in Sec.
256.76. Notwithstanding Sec. 256.76, the relinquishment will become
effective when the credit becomes effective under paragraph (b) of this
section.
(b) The credit becomes effective when MMS issues a certification to
the record title interest owners that the lease has qualified for the
credit.
[[Page 52921]]
Sec. 256.93 How is the bonus or royalty credit allocated among
multiple lease owners?
The MMS will allocate the bonus or royalty credit for an exchanged
lease to the current record title interest owners in the same
percentage share as each owner has in the lease as of the date of the
request to exchange the lease.
Sec. 256.94 How may I use the bonus or royalty credit?
(a) You may use a credit issued under this part in lieu of a
monetary payment due under any lease in the Gulf of Mexico not subject
to the revenue distribution provisions of section 8(g)(2) of the OCSLA
(43 U.S.C. 1337(g)(2)) for either:
(1) A bonus for acquisition of an interest in a new lease; or
(2) Royalty due on oil and gas production after October 14, 2008.
(b) You may not use a bonus or royalty credit in lieu of delivering
oil or gas taken as royalty-in-kind.
(c) If you have any credit that remains unused after 5 years from
the date MMS issued the credit, MMS reserves the right to apply the
remaining credit to any of your obligations.
Sec. 256.95 How do I transfer a bonus or royalty credit to another
person?
(a) You may transfer your bonus or royalty credit to any other
person by submitting to the MMS Adjudication Unit for the Gulf of
Mexico two originally executed transfer letters of agreement.
(b) Authorized officers indicated on the qualification card filed
with MMS of all companies involved in transferring and receiving the
credit must sign the transfer letters of agreement.
(c) A transfer letter of agreement must include:
(1) The effective date of the transfer,
(2) The OCS-G number for the lease that originally qualified for
the credit,
(3) The amount of the credit being transferred,
(4) Company names punctuated exactly as filed on the qualification
card at MMS, and
(5) A corporate seal, if you used a corporate seal in your initial
qualification to hold OCS leases.
(d) The transferee of a credit transferred under this section may
use it in accordance with Sec. 256.94 as soon as MMS sends a
confirmation of the transfer to the transferee.
[FR Doc. E8-21135 Filed 9-11-08; 8:45 am]
BILLING CODE 4310-MR-P