Debt Collection and Administrative Offset for Monies Due the Federal Government, 32343-32349 [2010-13646]

Agencies

• DEPARTMENT OF THE INTERIOR
• Minerals Management Service

[Federal Register Volume 75, Number 109 (Tuesday, June 8, 2010)]
[Proposed Rules]
[Pages 32343-32349]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-13646]





[[Page 32343]]



=======================================================================

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



DEPARTMENT OF THE INTERIOR



Minerals Management Service



30 CFR Part 218



[Docket No. MMS-2009-MRM-0005]

RIN 1010-AD36




Debt Collection and Administrative Offset for Monies Due the 

Federal Government



AGENCY: Minerals Management Service (MMS), Interior.



ACTION: Proposed rule.



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



SUMMARY: The MMS is proposing to promulgate regulations establishing 

procedures to implement the provisions governing collection of 

delinquent royalties, rentals, bonuses, and other amounts due under 

leases and other agreements for the production of oil, natural gas, 

coal, geothermal energy, other minerals, and renewable energy from 

Federal lands onshore, Indian tribal and allotted lands, and the Outer 

Continental Shelf. The proposed regulations would include provisions 

for administrative offset and would clarify and codify the provisions 

of the Debt Collection Act of 1982 (DCA) and the Debt Collection 

Improvement Act of 1996 (DCIA).



DATES: Comments must be submitted on or before August 9, 2010.



ADDRESSES: You may submit comments on the rulemaking by any of the 

following methods. Please use the Regulation Identifier Number (RIN) 

1010-AD36 as an identifier in your message. See also Public 

Availability of Comments under Procedural Matters.

     Federal eRulemaking Portal: https://www.regulations.gov. In 

the entry titled ``Enter Keyword or ID,'' enter MMS-2009-MRM-0005, then 

click search. Follow the instructions to submit public comments and 

view supporting and related materials available for this rulemaking. 

The MMS will post all comments.

     Mail comments to Hyla Hurst, Regulatory Specialist, 

Minerals Management Service, Minerals Revenue Management, P.O. Box 

25165, MS 61013B, Denver, Colorado 80225.

     Hand-carry comments or use an overnight courier service. 

Our courier address is Building 85, Room A-614, Denver Federal Center, 

West 6th Ave. and Kipling St., Denver, Colorado 80225.



FOR FURTHER INFORMATION CONTACT: For comments or questions on 

procedural issues, contact Hyla Hurst, Regulatory Specialist, Minerals 

Revenue Management (MRM), MMS, telephone (303) 231-3495. For questions 

on technical issues, contact Sarah Inderbitzin, Office of Enforcement, 

MRM, MMS, telephone (303) 231-3748.



SUPPLEMENTARY INFORMATION:



I. Background



    The MMS is responsible for the collection, accounting, and 

disbursement of billions of dollars per year in bonus, rental, royalty, 

and other revenues derived from leases and other agreements for the 

production of oil, natural gas, coal, geothermal energy, other 

minerals, and renewable energy from Federal lands onshore, Indian 

tribal and allotted lands, and the Outer Continental Shelf (OCS). The 

MMS also is responsible for enforcement of royalty and other payment 

obligations under applicable statutes, regulations, leases, agreements, 

and contracts.

    The MMS undertakes current debt collection activities under the DCA 

(Pub. L. 97-365), as amended by the DCIA (Pub. L. 104-134), (codified 

at 31 U.S.C. 3711, 3716-18, and 3720A). The DCIA was enacted primarily 

to increase collection of nontax debts owed to the Federal Government. 

Among other provisions, the DCIA centralized the administrative 

collection of most delinquent nontax debt at the U.S. Department of the 

Treasury's Financial Management Service to increase the efficiency of 

collection efforts. Government agencies are now required to transfer 

nontax debt that has been delinquent for 180 days or less to Treasury 

for further collection action, including administrative offset.

    This proposed rule is intended to implement statutory provisions of 

the DCA and DCIA, and to adopt the Government-wide debt collection 

standards promulgated by the Departments of the Treasury and Justice, 

known as the Federal Claims Collection Standards (FCCS) (31 CFR parts 

900-904). This proposed rule would supplement the FCCS by prescribing 

procedures necessary and appropriate for MMS operations. The DCIA 

grants MMS discretionary authority in many aspects of debt collection, 

and this proposed rule would define the parameters of this authority.

    Under current debt collection practice:

     For Federal and Indian delinquent debts and civil penalty 

notices, MMS sends a written notice to debtors either (1) With an 

invoice; (2) after the due date of an invoice; or (3) after the receipt 

date of an unpaid Form MMS-2014, Report of Sales and Royalty Remittance 

(OMB Control Number 1010-0140).

     For Federal oil and gas leases, if MMS sends a written 

notice to the payor, then MMS also sends written notice to the lessees 

and operating rights owners.

    The MMS allows the debtor 60 days from the date of the written 

notification to either pay the debt or enter into a payment agreement 

with MMS. A debtor may also appeal the debt to MMS under 30 CFR part 

290 or part 241. If the debtor fails to take one of these actions, MMS 

refers the delinquent debt to Treasury within 180 days of when the debt 

became delinquent.



II. Explanation of Proposed Amendments



    Before reading the explanatory information below, please turn to 

the proposed rule language, which immediately follows the List of 

Subjects in 30 CFR part 218 and signature page in this proposed rule. 

This language will be codified in the Code of Federal Regulations (CFR) 

if this rule is finalized as written.

    After you have read the proposed rule language, please return to 

the preamble discussion below. The preamble contains additional 

information about the proposed rule, such as why we defined a term in a 

certain manner, why we chose a certain procedure, and how we interpret 

the laws this rule implements.

    We are proposing to add a new subpart to codify and enhance current 

MMS debt collection practices. The new subpart is proposed at 30 CFR 

part 218, subpart J--Debt Collection and Administrative Offset. 

Following is a section-by-section explanation of the new subpart 

(omitting sections that require no further explanation):



A. 30 CFR 218.700 What definitions apply to the regulations in this 

subpart?



    Subsection (a) would define ``administrative offset'' in a manner 

essentially identical to its definition in the DCIA (31 U.S.C. 

3701(a)(1)).

    Subsection (b) would define ``agency'' in a manner essentially 

identical to its definition in the DCIA (31 U.S.C. 3701(a)(4)).

    Subsection (e) would clarify that ``day'' means a calendar day. The 

MMS further clarifies that, in determining the ending date for a 

particular period of time, the last day of the period must be counted 

unless it is a Saturday, Sunday, or Federal holiday.

    Subsection (f) would define ``debt'' and ``claim'' in a manner 

similar to the definition in the DCIA (31 U.S.C. 3701(b)). However, 

subsection (f) omits the examples of types of debts or claims included 

in 31 U.S.C. 3701(b) as



[[Page 32344]]



unnecessary and potentially confusing. It is our intention that 

``debt'' and ``claim'' be read synonymously and broadly to encompass 

any and all amounts that are determined to be due the United States 

from any entity, other than a Federal Agency. For example, ``debt'' or 

``claim'' would include, but is not limited to, royalties and other 

lease revenues and monies due under (1) A royalty-in-kind purchase 

agreement; (2) a Bureau of Land Management (BLM) storage agreement; or 

(3) a Department of Interior (DOI) contract, agreement, license, 

easement, permit, or right-of-way. With two changes, subsection (f) 

essentially would adopt verbatim the 31 U.S.C. 3701(b)(2) definition of 

``debt'' or ``claim'' in relation to administrative offsets. The word 

``money'' would be included in subsection (f) to ensure that the scope 

of definition of ``debt'' and ``claim'' is not inadvertently limited by 

31 U.S.C. 3701(b)(2)'s reference only to ``funds or property.'' The 

phrase ``by a person'' would be struck from this portion of subsection 

(f) because it is redundant and potentially limiting to the first 

sentence of subsection (f).

    Subsection (g) would broadly define ``debtor.'' Thus, subsection 

(g) would encompass not only lessees and payors, but also any entity 

covered by the definition of ``person'' in subsection (s), and any 

contractor or other entity that owes a debt to the Department related 

to Federal or Indian energy or mineral resources.

    Subsection (n) would define ``legally enforceable'' to mean that 

there has been a final agency determination that the debt, in the 

amount stated, is due, and there are no legal bars to collection by 

offset consistent with the definition at 31 CFR 285.5. A final agency 

determination may include, but is not limited to, a bill, order, MMS 

Director's decision, or Interior Board of Land Appeals decision that 

you neither pay nor appeal.

    Subsection (o) would broadly define ``lessee'' to cover any record 

title holder, assignee, operating rights owner, or any other person or 

entity who holds an interest in a lease, easement, right-of-way, 

contract, or other agreement, regardless of form, for the development 

or use of Federal or Indian minerals or other resources for which MMS 

collects monies or other compensation. The definition in subsection (o) 

is broader than the definition of ``lessee'' in 30 CFR part 206 because 

it is intended to apply to holders of leases and other contracts and 

agreements for any type of Federal and Indian minerals and resources.

    Subsection (r) would include ``payors'' within the scope of debtors 

subject to this rulemaking. Therefore, subsection (r) would define a 

``payor'' as a person responsible for payment obligations on all Indian 

mineral leases, as well as Federal solid and geothermal leases, 

regardless of whether the payor is also a lessee.

    Subsection (s) would broadly define ``person'' as, effectively, any 

person or entity of any kind that owes a debt to the United States, 

other than the United States.

    Subsection (t) would define ``tax refund offset.'' The DCA 

authorizes this type of offset under 31 U.S.C. 3720A. Section 3720A 

allows an agency to notify Treasury of certain delinquent debts and 

have the amount of the debt withheld from any tax refund to which the 

debtor would otherwise be entitled.



B. 30 CFR 218.701 What is MMS's authority to issue these regulations?



    Subsection (a) would identify and cite the statutory and regulatory 

authority for this proposed regulation.

    Subsection (b) would specifically adopt the FCCS and would clarify 

that this proposed regulation supplements the FCCS. Supplementation is 

necessary to adapt portions of the FCCS to better meet the needs of 

MMS, to comply with certain provisions of the FCCS requiring agency-

specific regulation (i.e., 31 CFR 901.9(h)), and to exercise certain 

discretionary authorities granted MMS by the DCIA and FCCS. To the 

degree that a matter is addressed in both the FCCS and this proposed 

regulation, we will follow this proposed regulation in lieu of the FCCS 

parallel provision.



C. 30 CFR 218.702 What happens to delinquent debts a debtor owes MMS?



    Subsection (a) specifies that MMS would follow the procedures 

contained in this proposed regulation in its debt collection 

activities. Subsection (a) is not intended to imply that the proposed 

rule would be the sole source of debt collection procedures available 

to MMS. As noted above and in proposed section 218.701(b), MMS adopts 

the provisions of the FCCS and is governed by the FCCS collection 

standards to the extent that one of those standards is not specifically 

addressed in this proposed regulation.

    Subsection (b) would implement 31 U.S.C. 3711(g)(1), which requires 

Federal agencies to transfer nontax delinquent debt to Treasury within 

180 days of when the debt becomes delinquent. This would allow Treasury 

to take appropriate action to collect the debt or terminate the 

collection action in accordance with 5 U.S.C. 5514, 26 U.S.C. 6402, 31 

U.S.C. 3711 and 3716, the FCCS, 5 CFR 550.1108, and 31 CFR part 285.

    Transferring debts to Treasury advances the statutory goal of the 

DCIA to centralize the administrative collection of nontax debt with 

Treasury's Financial Management Service. This centralization allows us 

to focus our efforts on collecting more recent debt and on working with 

willing debtors to reach agreements to repay their debts. It also 

ensures consistent application of debt collection procedures regardless 

of which Federal Agency is owed the debt.



D. 30 CFR 218.703 What notice will MMS give to a debtor of our intent 

to collect a debt?



    Subsection (a) would implement 31 U.S.C. 3716(a), under which an 

agency must give notice to the debtor of certain matters before 

collecting a claim by administrative offset. Subsection (a) would 

explain that we will (1) Provide notice to a debtor of the type and 

amount of the claim, the methods of offset we may employ, and the 

availability of opportunities for the debtor to inspect and copy 

records related to the debt; (2) obtain internal agency review of our 

decision regarding the debt; and (3) describe how the debtor may 

request to enter into a written agreement with MMS to repay the debt.

    Subsection (a) also would explain that the notice we send the 

debtor will include (1) our policy concerning the interest, penalty 

charges, and administrative costs MMS may assess against the debtor; 

and (2) the date by which the debtor must pay the debt to avoid added 

late charges and enforced collection activities. In addition, 

subsection (a) would explain that the notice MMS gives the debtor will 

provide contact information for the appropriate MMS employee or office 

for the debtor to contact regarding the debt. It is our intent to 

provide the debtor with notice of these additional factors to ensure 

the debtor is fully informed of the financial consequences of continued 

failure to pay. It is further intended that, by providing the debtor 

with contact information for the appropriate personnel and office, the 

debtor will be encouraged to work with us voluntarily to pay the debt, 

and thus to lessen the need to refer debt to Treasury for 

administrative offset and additional collection activities.

    Subsection (b) would clarify that 218.703(a)(8) does not allow a 

debtor to reopen matters pertaining to orders and demands, notices of 

violations, or civil penalties, which are subject to MMS appeals 

regulations at 30 CFR part 290 or part 241. The procedures under part 

290 and part 241, and the



[[Page 32345]]



complementary procedures specified in 43 CFR part 4, establish a 

comprehensive system by which certain MMS decisions may be appealed to 

the MMS Director, Interior Board of Land Appeals, or Office of Hearings 

and Appeals Hearings Division. This system includes time limits for 

filing an appeal and an explanation of when a party has exhausted its 

administrative remedies. These provisions are essential to establishing 

when an MMS decision becomes final and determining the legal rights of 

both MMS and the entity that is the subject of our decision. By 

including subsection (b), we ensure part 290 and part 241, and the 

important purposes they serve, are not circumvented by an appeal of an 

MMS decision on debt.



E. 30 CFR 218.704 What is MMS's policy on interest, penalty charges, 

and administrative costs?



    Subsection (a)(1) would ensure conformance with 31 U.S.C. 

3717(a)(1) and 31 CFR 901.9(a), both of which require Federal agencies 

to charge interest on all outstanding debts owed to the United States.

    Subsection (a)(2) would clarify 31 CFR 901.9(b)(1), which specifies 

that ``[i]nterest shall accrue from the date of delinquency, or as 

otherwise specified by law.'' We are specifying that interest begins to 

accrue from the date that the debt becomes delinquent unless otherwise 

specified by law or lease terms. Our intent in including this language 

is to assure that we comply with the unique requirements of law, such 

as the interest provisions of the Royalty Simplification and Fairness 

Act (RSFA), which states that a royalty obligation on Federal oil and 

gas leases becomes due the end of the month after the month of 

production (30 U.S.C. 1724(c)(2)). In such instances, although the 

principal royalties may be due 60 days after the order is issued, 

interest would accrue from the end of the month following the month of 

production until the debt is paid, not from 60 days after the order 

until the debt was paid. The same holds true for all mineral leases, 

which may have unique interest requirements that would dictate when 

interest begins to accrue.

    Subsection (a)(3) specifies that MMS would use the interest and 

late payment charge calculation and other provisions contained in 30 

CFR 218.54 and 218.102 to assess interest due on debts involving 

Federal and Indian oil and gas leases. However, the rule would provide 

that this is the case unless otherwise specified by lease terms because 

some non-standard mineral leases have unique interest requirements. In 

such cases, the lease terms regarding interest would apply.

    Subsection (a)(4) explains that MMS would apply the interest 

provisions for Federal and Indian solid mineral (including coal) and 

geothermal leases found in 30 CFR 218.202 and 218.302.

    Subsection (b) explains that MMS would assess a penalty of 6 

percent on any delinquent debt that is more than 90 days from the date 

of delinquency that it refers to Treasury consistent with the DCIA (31 

U.S.C. 3717(e)(2)) and FCCS (31 CFR 901.9(d)). The penalty would accrue 

from the date of delinquency through the date MMS refers the debt to 

Treasury. It is important to note that penalties and interest will 

continue to accrue on any debt referred to Treasury. However, Treasury 

will assess and collect those amounts.

    The penalty would accrue not only on the delinquent debt, but also 

on any interest accrued through the date of referral and on the $436 in 

administrative costs we would assess under paragraph (c) of this 

section explained below. For example, assume you receive an order to 

pay $1,000 in additional royalties due on Federal oil and gas leases, 

and the order gives you 60 days to pay the bill (due date), but you do 

not pay. Assuming accrued interest is $100 on the day the debt is 

referred to Treasury, we will refer $1,628 to Treasury, calculated as 

follows:

    $1,000 royalties + $100 interest + $436 administrative costs = 

$1,536 +

    $92 penalty charge (6 percent x $1,536 = $92.16, rounded to $92) = 

$1,628.

    Like Federal Oil and Gas Royalty Management Act (FOGRMA) civil 

penalties (30 U.S.C. 1719), the DCIA does not designate where MMS 

should deposit penalties collected. Therefore, as in the case of FOGRMA 

civil penalties, MMS would deposit such monies in the Treasury General 

Fund. Unlike FOGRMA, the DCIA does not provide that civil penalties can 

be shared with states and tribes in certain circumstances (30 U.S.C. 

1736). Because we have no such statutory authority, we will not share 

penalties collected under this rule with any state, county, or tribe.

    Subsection (c) explains that MMS would assess $436 in fees for 

administrative costs for each referral of debt to Treasury incurred 

because of the debtor's failure to pay the debt. Consistent with the 

FCCS (31 CFR 901.9(c)), we calculated the $436 administrative cost we 

propose to assess in this rule based on our estimate of the average 

actual costs we incur to refer debts to Treasury. Administrative costs 

include (1) the cost of providing a copy of the file to the debtor; and 

(2) the costs incurred in processing and handling the debt because it 

became delinquent; e.g., costs incurred in obtaining a credit report or 

in using a private collection contractor or service fees charged by a 

Federal Agency for collection activities undertaken on our behalf.

    The debt referral tasks are currently performed by employees paid 

at the United States 2009 General Schedule, Grade 12 pay-scale level, 

and at the Grade 13 pay-scale level. On average, the current time it 

takes for these employees to refer debts to Treasury is an MMS burden 

of 2 hours for the Grade 13 employee, plus 5 hours for the Grade 12 

employee(s) for each referral. The hourly labor cost is calculated as 

follows:

    $39.35 per hour (2009 GS-12, Step 5) x 1.5 (benefits factor) = 

$59.03; and

    $46.80 per hour (2009 GS-13, Step 5) x 1.5 (benefits factor) = 

$70.20.

    We calculated the estimated administrative costs proposed under 

this rule as follows:

    5 hours x $59.03 (GS-12, Step 5) + 2 hours x $70.20 (GS-13, Step 5) 

= $435.55, rounded to $436 (which includes the benefits factor), per 

referral.



Because our administrative costs will increase with time, paragraph (c) 

would also provide that MMS may publish a notice of any such increase 

in the Federal Register.

    Subsection (d) would meet the requirement of 31 CFR 901.9(h), that 

agency regulations address the imposition of interest and related 

charges during periods in which debts are under appeal. Subsection (d) 

does so by specifying that an appeal would not toll the accrual of 

interest, penalties, or administrative costs.

    Subsection (e) explains how MMS would apply partial or installment 

payments a debtor makes on delinquent debts sent to Treasury. We would 

apply any such partial or installment payments first to outstanding 

penalty assessments, second to administrative costs, third to accrued 

interest, and fourth to the outstanding debt principal.

    Subsection (f) would remove any ambiguity regarding our authority 

and intent to impose interest, penalty charges, and administrative 

costs for debt not subject to 31 U.S.C. 3717. We impose a variety of 

charges on outstanding obligations under other statutory or regulatory 

authority.

    Subsection (g) would implement and define the discretionary 

authority granted to MMS in 31 U.S.C. 3717(h) for the Director to waive 

collection of accrued interest, penalty charges, or



[[Page 32346]]



administrative costs. Consistent with 31 CFR 901.9(g), subsection (g) 

would provide that MMS may decide to waive collection of all or 

portions of these costs as part of a compromise, or if we determine 

that collection would be against equity and good conscience, or not in 

``the Government's best interest.'' In determining what constitutes 

``the Government's best interest,'' we will consider the interests of 

the Federal Government, Indian tribes, states, and the United States as 

a whole, consistent with our mission to collect, account for, and 

disburse revenues. This approach is consistent with 31 CFR 901.9(g), 

which qualifies ``best interest'' as being the best interest of the 

United States. ``Equity,'' ``good conscience,'' and ``best interests'' 

are all inherently subjective.

    In keeping with the discretionary nature of our authority to 

collect and waive collection of charges, subsection (h) would specify 

that our decision to collect or waive is final for the Department and 

not subject to administrative review.



F. 30 CFR 218.705 What is MMS's policy on revoking the ability to 

engage in Federal or Indian leasing, licensing, or granting of 

easements, permits, or rights-of-way?



    Section 218.705 would explain MMS's discretion, consistent with 31 

CFR 901.6(b), to recommend suspension or revocation of a debtor's 

ability to engage in Federal or Indian leasing activities when a debtor 

inexcusably or willfully fails to pay a debt. This section is intended 

to give debtors an incentive to take diligent and prompt action to pay 

their debts. For offshore leases that MMS issues, MMS may directly use 

the authority provided in 31 CFR 901.6(b) to revoke a debtor's ability 

to engage in leasing activities. The MMS may not itself revoke a 

debtor's ability to engage in leasing activities conducted by BLM and 

the Bureau of Indian Affairs (BIA); we are constrained to making 

recommendations to these bureaus. This section would ensure debtors are 

aware that certain failures to pay may have significant consequences 

that are not directly related to the specific debt.



G. 30 CFR 218.706 What debts can MMS refer to Treasury for collection 

by administrative and tax refund offset?



    Subsection (a) would incorporate the pertinent requirements of 

regulations governing the referral to Treasury of debt for collection 

through administrative and tax refund offset in 31 CFR 901.3, 285.2, 

and 285.5. Thus, this subsection would limit the claims that MMS may 

refer for offset to claims that are (1) Past due, (2) legally 

enforceable, and (3) at least $25.00 or another amount established by 

Treasury, provided that the debtor has had notice for at least 60 days 

and that the debt or claim has not been delinquent for more than 10 

years. Subsection (a) also would exclude from referral any claims for 

offset of any Federal oil and gas lease obligations for which offset is 

precluded under 30 U.S.C. 1724(b)(3).

    Subsection (b) clarifies that the time restrictions noted in 

subsection (a) would not limit our authority to refer to Treasury, for 

tax refund offset, those debts that have been included in court-ordered 

judgments.



III. Procedural Matters



1. Summary Cost and Royalty Impact Data



    This is a technical rule formalizing and enhancing current MMS debt 

collection practices and procedures consistent with the statutory 

mandates under the DCA and DCIA. The proposed changes explained above 

would have no royalty impacts on industry, state and local governments, 

Indian tribes and individual Indian mineral owners, and the Federal 

Government. Industry would incur additional administrative costs and 

penalties under this proposed rulemaking.

A. Industry

    (1) Royalty Impacts. None.

    (2) Administrative Costs. The MMS would assess $436 for recovery of 

administrative costs for each referral of debt to Treasury. We 

calculated the $436 administrative costs proposed in this rule based on 

our estimate of the average actual costs we incur to refer debts to 

Treasury.

    (3) Penalties. The MMS would assess a penalty of 6 percent on the 

principal, interest, and administrative costs on any delinquent debt 

that is more than 90 days from the date of delinquency consistent with 

the DCIA (31 U.S.C. 3717(e)(2)), and FCCS (31 CFR 901.9(d)). (See 

Section II Explanation of Proposed Amendments.)

B. State and Local Governments

    (1) Royalty Impacts. None.

    (2) Administrative Costs--State and Local Governments. The MMS 

determined that this proposed rule would have no administrative costs 

for state and local governments.

    (3) Penalties. None.

C. Indian Tribes and Individual Indian Mineral Owners

    (1) Royalty Impacts. None.

    (2) Administrative Costs. The MMS determined that this proposed 

rule would have no administrative costs to Indian tribes and individual 

Indian mineral owners.

    (3) Penalties. None.

D. Federal Government

    (1) Royalty Impacts. None.

    (2) Administrative Costs. The proposed rule would have no net 

administrative costs to the Federal Government. All administrative 

costs to the Government incurred as a result of collection activities 

would be recovered from industry.

    (3) Penalties. Based on historical data, we estimate that 

approximately $79,380 in penalties would be referred annually to 

Treasury. We estimate the annual penalties as follows:

     The average number of delinquent debts referred annually = 

300.

     The average amount referred (principal and interest) 

annually = $2,569,214.

     Administrative costs recovered of $436 x 300 debts = 

$130,800.

     Amount on which to base 6 percent penalty = $2,700,014 

($2,569,214 (royalties plus interest) + $130,800 (administrative 

costs)).

     Assuming all debts were 179 days past due at the time of 

referral (because MMS has 180 days to refer the debt), penalties 

referred annually = $79,380 (179/365 x 6 percent = 0.0294 x $2,700,014 

= $79,380).



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



    This document is not a significant rule, and the Office of 

Management and Budget (OMB) has not reviewed this proposed rule under 

Executive Order 12866. We have made the assessments required by E.O. 

12866, and the results are given below.

    a. This proposed rule would not have an effect of $100 million or 

more on the economy. It would not adversely affect in a material way 

the economy, productivity, competition, jobs, the environment, public 

health or safety, or state, local, or tribal governments or 

communities. This is a technical rule formalizing and enhancing current 

MMS debt collection practices and procedures consistent with the 

statutory mandates under the DCA and DCIA. The impact to industry would 

be additional administrative costs, including penalties. We estimate 

administrative costs, including penalties, to be less than $500,000 per 

year.

    b. This proposed rule would not create a serious inconsistency or 

otherwise interfere with an action taken or planned by another agency.

    c. This proposed rule would not alter the budgetary effects of 

entitlements,



[[Page 32347]]



grants, user fees, or loan programs or the rights or obligations of 

their recipients.

    d. This proposed rule would not raise novel legal or policy issues.



3. Regulatory Flexibility Act



    The Department of the Interior certifies that this proposed rule 

would not have a significant economic effect on a substantial number of 

small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et 

seq.). This proposed rule would affect large and small entities but 

would not have a significant economic effect on either. Based on 

historical data, we estimate that the proposed rule would affect 

approximately 85 small entities per year.



4. Small Business Regulatory Enforcement Fairness Act (SBREFA)



    This proposed rule is not a major rule under 5 U.S.C. 804(2), the 

Small Business Regulatory Enforcement Fairness Act. This proposed rule:

    a. Would not have an annual effect on the economy of $100 million 

or more. This is a technical rule formalizing and enhancing current MMS 

debt collection practices and procedures consistent with the statutory 

mandates under the DCA and DCIA. Industry would incur fees for 

administrative costs and penalties for failure to pay a delinquent debt 

to the Federal Government. These administrative costs and penalties 

would be avoided by paying delinquent debts owed to the Federal 

Government accurately and timely.

    b. Would not cause a major increase in costs or prices for 

consumers, individual industries, Federal, state, or local government 

agencies, or geographic regions.

    c. Would 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.



5. Unfunded Mandates Reform Act



    This proposed rule would not impose an unfunded mandate on state, 

local, or tribal governments, or the private sector of more than $100 

million per year. This proposed rule would not have a significant or 

unique effect on state, local, or tribal governments, or the private 

sector. A statement containing the information required by the Unfunded 

Mandates Reform Act (2 U.S.C. 1531 et seq.) is not required.

    This is a technical rule formalizing and enhancing current MMS debt 

collection practices and procedures consistent with the statutory 

mandates under the DCA and DCIA. This proposed rule would allow MMS to 

assess a 6-percent penalty on delinquent debts and impose fees to cover 

the administrative costs of recovering a delinquent debt. These 

penalties and recovery of administrative costs are mandated by the DCA 

and DCIA.



6. Takings (E.O. 12630)



    Under the criteria in Executive Order 12630, this proposed rule 

would not have any significant takings implications. This proposed rule 

would apply to Federal and Indian leases only. It would not apply to 

private property. A takings implication assessment is not required.



7. Federalism (E.O. 13132)



    Under the criteria in Executive Order 13132, this proposed rule 

would not have sufficient federalism implications to warrant the 

preparation of a Federalism Assessment. This is a technical rule 

formalizing and enhancing current MMS debt collection practices and 

procedures. A Federalism Assessment is not required.



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



    This proposed rule would comply with the requirements of Executive 

Order 12988. Specifically, this rule:

    a. Would meet 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. Would meet the criteria of section 3(b)(2) requiring that all 

regulations be written in clear language and contain clear legal 

standards.



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



    Under the criteria in Executive Order 13175, we have evaluated this 

proposed rule and determined that it would have no potential effects on 

federally recognized Indian tribes.



10. Paperwork Reduction Act



    This proposed rule does not contain information collection 

requirements, and a submission to OMB is not required under the 

Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).



11. National Environmental Policy Act



    This proposed rule would not constitute a major Federal action 

significantly affecting the quality of the human environment. A 

detailed statement under the National Environmental Policy Act of 1969 

is not required.



12. Data Quality Act



    In developing this proposed rule, we did not conduct or use a 

study, experiment, or survey requiring peer review under the Data 

Quality Act (Pub. L. 106-554).



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



    This proposed rule would not be a significant energy action under 

the definition in Executive Order 13211. A Statement of Energy Effects 

would not be required.



14. Clarity of This Regulation



    We are required by Executive Orders 12866 and 12988 and by the 

Presidential Memorandum of June 1, 1998, to write all rules in plain 

language. This means that each rule we publish must: (a) Be logically 

organized; (b) Use the active voice to address readers directly; (c) 

Use clear language rather than jargon; (d) Be divided into short 

sections and sentences; and (e) Use lists and tables wherever possible.

    If you feel that we have not met these requirements, send us 

comments by one of the methods listed in the ADDRESSES section. To 

better help us revise the rule, your comments should be as specific as 

possible. For example, you should tell us the numbers of the sections 

or paragraphs that are unclearly written, which sections or sentences 

are too long, the sections where you feel lists or tables would be 

useful, etc.



15. Public Availability of Comments



    Before including your address, phone number, e-mail address, or 

other personal identifying information in your comment, you should be 

aware that your entire comment--including your personal identifying 

information--may be made publicly available at any time. While you can 

ask us in your comment to withhold your personal identifying 

information from public view, we cannot guarantee that we will be able 

to do so.



List of Subjects in 30 CFR part 218



    Administrative offset, Debt Collection Act of 1982 and Debt 

Collection Improvement Act of 1996, royalties, rentals, bonuses, 

Federal and Indian mineral leases, Administrative Procedure Act, 

collections.



    Dated: May 24, 2010.

Ned Farquhar,

Deputy Assistant Secretary for Land and Minerals Management.

    For the reasons stated in the preamble, the Minerals Management 

Service proposes to amend 30 CFR part 218 as set forth below:



[[Page 32348]]



PART 218--COLLECTION OF MONIES AND PROVISION FOR GEOTHERMAL CREDITS 

AND INCENTIVES



    1. The authority citation for part 218 is revised to read as 

follows:



    Authority:  5 U.S.C. 301 et seq.; 25 U.S.C. 396 et seq., 396a et 

seq., 2101 et seq.; 30 U.S.C. 181 et seq., 351 et seq., 1001 et 

seq., 1701 et seq.; 31 U.S.C. 3335, 3711, 3716-18, 3720A, 9701; 43 

U.S.C. 1301 et seq., 1331 et seq., and 1801 et seq.



    2. Add subpart J to read as follows:

Subpart J--Debt Collection and Administrative Offset

Sec.

218.700 What definitions apply to the regulations in this subpart?

218.701 What is MMS's authority to issue these regulations?

218.702 What happens to delinquent debts a debtor owes MMS?

218.703 What notice will MMS give to a debtor of our intent to 

collect a debt?

218.704 What is MMS's policy on interest, penalty charges, and 

administrative costs?

218.705 What is MMS's policy on revoking the ability to engage in 

Federal or Indian leasing, licensing, or granting of easements, 

permits, or rights-of-way?

218.706 What debts can MMS refer to Treasury for collection by 

administrative and tax refund offset?



Subpart J--Debt Collection and Administrative Offset





Sec.  218.700  What definitions apply to the regulations in this 

subpart?



    As used in this subpart:

    (a) Administrative offset means the withholding of funds payable by 

the United States (including funds payable by the United States on 

behalf of a state government) to any person, or the withholding of 

funds held by the United States for any person, in order to satisfy a 

debt owed to the United States.

    (b) Agency means a department, agency, court, court administrative 

office, or instrumentality in the executive, judicial, or legislative 

branch of government, including a government corporation.

    (c) BIA means the Bureau of Indian Affairs.

    (d) BLM means the Bureau of Land Management.

    (e) Day means calendar day. To count days, include the last day of 

the period unless it is a Saturday, Sunday, or Federal legal holiday.

    (f) Debt and claim are synonymous and interchangeable. They refer 

to, among other things, royalties, rentals, and any other monies due to 

the United States or MMS, as well as fines, fees, and penalties that a 

Federal Agency has determined are due to the United States from any 

person, organization, or entity, except another Federal Agency. For the 

purposes of administrative offset under 31 U.S.C. 3716 and this 

subpart, the terms ``debt'' and ``claims'' include money, funds, or 

property owed to the United States, a state, the District of Columbia, 

American Samoa, Guam, the U.S. Virgin Islands, the Commonwealth of the 

Northern Mariana Islands, or the Commonwealth of Puerto Rico.

    (g) Debtor means a lessee, payor, person, contractor, or other 

entity that owes a debt to the United States, MMS, or from whom MMS 

collects debts on behalf of the United States, the Department, or an 

Indian lessor.

    (h) Delinquent debt means a debt that has not been paid within the 

time limit prescribed by the applicable Act, law, regulation, lease, 

order, demand, notice of noncompliance, and/or assessment of civil 

penalties, contract, or any other agreement to pay the Department 

money, funds, or property.

    (i) Department means the Department of the Interior, and any of its 

bureaus.

    (j) Director means the Director of Minerals Management Service, or 

his or her designee.

    (k) DOJ means the U.S. Department of Justice.

    (l) FCCS means the Federal Claims Collection Standards, which are 

published at 31 CFR parts 900-904.

    (m) FMS means the Financial Management Service, a bureau of the 

U.S. Department of the Treasury.

    (n) Legally enforceable means that there has been a final agency 

determination that the debt, in the amount stated, is due, and there 

are no legal bars to collection by offset.

    (o) Lessee means any person to whom the United States or an Indian 

tribe or individual Indian mineral owner issues a Federal or Indian 

mineral or other resource lease, easement, right-of-way, or other 

agreement, regardless of form, an assignee of all or a part of the 

record title interest, or any person to whom operating rights have been 

assigned.

    (p) MMS means the Minerals Management Service, a bureau of the 

Department.

    (q) OCS means Outer Continental Shelf.

    (r) Payor means any person who reports and pays royalties on Indian 

mineral leases, or Federal oil and gas, solid, or geothermal leases, 

regardless of whether they are also a lessee.

    (s) Person includes a natural person or persons, profit or non-

profit corporation, partnership, association, trust, estate, 

consortium, or other entity that owes a debt to the United States, 

excluding the United States.

    (t) Tax refund offset means the reduction of a tax refund by the 

amount of a past-due legally enforceable debt.





Sec.  218.701  What is MMS's authority to issue these regulations?



    (a) The MMS is issuing the regulations in this subpart under the 

authority of the FCCS; the Debt Collection Act of 1982, and the Debt 

Collection Improvement Act of 1996, 31 U.S.C. 3711, 3716-3718, and 

3720A.

    (b) The MMS hereby adopts the provisions of the FCCS (31 CFR parts 

900-904). The MMS regulations supplement the FCCS as necessary.





Sec.  218.702  What happens to delinquent debts a debtor owes MMS?



    (a) The MMS will collect debts from debtors in accordance with the 

regulations in this subpart.

    (b) The MMS will transfer to the U.S. Department of the Treasury 

any past due, legally enforceable nontax debt that is delinquent within 

180 days from the date the debt becomes delinquent so that Treasury may 

take appropriate action to collect the debt or terminate the collection 

action in accordance with 5 U.S.C. 5514, 26 U.S.C. 6402, 31 U.S.C. 3711 

and 3716, the FCCS, 5 CFR 550.1108, and 31 CFR part 285.





Sec.  218.703  What notice will MMS give to a debtor of our intent to 

collect a debt?



    (a) When the Director determines that a debt is owed to MMS, the 

Director will send a written notice (Notice), also known as a Demand 

Letter. The Notice will be sent by facsimile or mail to the most 

current address known to us. The Notice will inform the debtor of the 

following:

    (1) The amount, nature, and basis of the debt;

    (2) The methods of offset that may be employed;

    (3) The debtor's opportunity to inspect and copy agency records 

related to the debt;

    (4) The debtor's opportunity to enter into a written agreement with 

us to repay the debt;

    (5) Our policy concerning interest, penalty charges, and 

administrative costs, as set out in Sec.  218.704, including a 

statement that such assessments must be made against the debtor unless 

excused in accordance with the FCCS and this part;

    (6) The date by which payment should be made to avoid additional 

late charges and enforced collection;

    (7) The name, address, and telephone number of a contact person (or 

office) at MMS who is available to discuss the debt; and

    (8) The debtor's opportunity for review under 30 CFR part 290 or 

part



[[Page 32349]]



241, if any. See paragraph (b) of this section.

    (b) A debtor, whose delinquent debt:

    (1) Has not been paid within the time limit prescribed by the 

applicable Act, law, regulation, lease, order, demand, notice of 

noncompliance, and/or assessment of civil penalties, contract, or any 

other agreement to pay the Department money, funds, or property; and

    (2) Was the subject of an order, demand, notice of noncompliance, 

and/or assessment of civil penalties that was appealable under 30 CFR 

part 290 or part 241, may not re-litigate matters that were the subject 

of the final order or appeal decision. This subsection applies whether 

or not the debtor appealed the order, demand, notice of noncompliance, 

and/or assessment of civil penalties under 30 CFR part 290 or part 241.





Sec.  218.704  What is MMS's policy on interest, penalty charges, and 

administrative costs?



    (a) Interest.

    (1) The MMS will assess interest on all delinquent debts unless 

prohibited by statute, regulation, or contract.

    (2) Interest begins to accrue on all debts from the date that the 

debt becomes delinquent unless otherwise specified by law or lease 

terms.

    (3) The MMS will assess interest on debts involving Federal and 

Indian oil and gas leases under 30 CFR 218.54 and 218.102 unless 

otherwise specified by lease terms.

    (4) The MMS will assess interest on debts involving Federal and 

Indian solid mineral and geothermal leases under 30 CFR 218.202 and 

218.302 unless otherwise specified by lease terms.

    (b) Penalties. We will assess a penalty charge of 6 percent a year 

on any delinquent debt, interest, and administrative costs assessed 

under paragraph (c) of this section on any debt we refer to Treasury at 

the time we refer the debt to Treasury:

    (1) After the debt has been delinquent for more than 90 days; and

    (2) The penalty will accrue from the date of delinquency.

    (c) Administrative costs. We will assess $436.00 for administrative 

costs incurred as a result of the debtor's failure to pay a delinquent 

debt. We will publish a notice of any increase in administrative costs 

assessed under this section in the Federal Register.

    (d) Interest, penalties, and administrative costs will continue to 

accrue throughout any appeal process.

    (e) Allocation of payments. The MMS will apply a partial or 

installment payment by a debtor on a delinquent debt sent to Treasury 

first to outstanding penalty assessments, second to administrative 

costs, third to accrued interest, and fourth to the outstanding debt 

principal.

    (f) Additional authority. The MMS may assess interest, penalty 

charges, and administrative costs on debts that are not subject to 31 

U.S.C. 3717 to the extent authorized under common law or other 

applicable statutory or regulatory authority.

    (g) Waiver. Regardless of the amount of the debt, the Director may 

decide to waive collection of all or part of the accrued penalty 

charges or administrative costs either in compromise of the delinquent 

debt or if the Director determines collection of these charges would be 

against equity and good conscience or not in the Government's best 

interest.

    (h) Our decision whether to collect or waive collection of 

penalties and administrative costs is the final decision for the 

Department and is not subject to administrative review.





Sec.  218.705  What is MMS' policy on revoking the ability to engage in 

Federal or Indian leasing, licensing, or granting of easements, 

permits, or rights-of-way?



    For OCS leases, the Director may decide to revoke a debtor's 

ability to engage in Federal OCS leasing, licensing, or granting of 

easements, permits, or rights-of-way if the debtor inexcusably or 

willfully fails to pay a debt. The Director may also recommend that BLM 

or BIA revoke a debtor's ability to engage in Federal onshore and 

Indian leasing, licensing, or granting of easements, permits, or 

rights-of-way if the debtor inexcusably or willfully fails to pay a 

debt. The Director will recommend that revocation of a debtor's ability 

to engage in Federal or Indian leasing, licensing, or granting of 

easements, permits, or rights-of-way should last only as long as the 

debtor's indebtedness.





Sec.  218.706  What debts can MMS refer to Treasury for collection by 

administrative and tax refund offset?



    (a) The MMS may refer any past due, legally enforceable debt of a 

debtor to Treasury for administrative and tax refund offset at least 60 

days after we give notice to the debtor under section 218.703 if the 

debt:

    (1) Will not have been delinquent more than 10 years at the time 

the offset is made;

    (2) Is at least $25.00 or another amount established by Treasury; 

and

    (3) Does not involve Federal oil and gas lease obligations for 

which offset is precluded under 30 U.S.C. 1724(b)(3).

    (b) Debts reduced to judgment may be referred to Treasury for tax 

refund offset at any time.



[FR Doc. 2010-13646 Filed 6-7-10; 8:45 am]

BILLING CODE 4310-MR-P