ONRR 2020 Valuation Reform and Civil Penalty Rule: Delay of Effective Date; Request for Public Comment, 9286-9289 [2021-03052]
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Federal Register / Vol. 86, No. 28 / Friday, February 12, 2021 / Rules and Regulations
partial paragraph, the language
‘‘Accordingly,’’ is corrected to read
‘‘Therefore,’’.
9. On page 77968, the first column,
the first full paragraph of the first and
second sentences, the language
‘‘Furthermore, allowing an exempt
organization to elect to treat the debtfinanced income as part of a 2-digit
NAICS code, instead of including such
income as part of an organization’s
investment activities, would not reduce
the burden upon the exempt
organization or the burden on the IRS.
Such income would still need to be
identified as debt-financed income and
an additional determination of the
underlying activity would also need to
be made to determine a 2-digit NAICS
code.’’ is corrected to read
‘‘Furthermore, allowing an exempt
organization to elect to treat the debtfinanced income as part of a NAICS 2digit code, instead of including such
income as part of an organization’s
investment activities, would not reduce
the burden on the exempt organization
or the burden on the IRS. Such income
would still need to be identified as debtfinanced income and an additional
determination of the underlying activity
would also need to be made to
determine a NAICS 2-digit code.’’
10. On page 77968, the second
column, the fourth line from the bottom
of the last partial paragraph, the
language ‘‘(Form 1120S)’’ is corrected to
read ‘‘(Form1120–S)’’.
11. On page 77968, the third column,
the fourth line from the bottom of the
first paragraph, the language ‘‘1120S) is
needed’’ is corrected to read ‘‘1120–S) is
necessary’’.
12. On page 77970, the third column,
the tenth line from the top of the first
full paragraph, the language ‘‘describe’’
is corrected to read ‘‘described’’.
13. On page 77971, the first column,
the fifth and sixth line from the top of
the first full paragraph, the language
‘‘Hospitality’’ is corrected to read ‘‘the
Hospitality’’ and ‘‘and Club’’ is
corrected to read ‘‘and the Club’’.
14. On page 77971, the third column,
removing the language, ‘‘in the
proposed regulations’’ in the third and
fourth line from the top of the partial
paragraph.
15. On page 77972, the third column,
the second line of the second paragraph,
the language ‘‘an organization’’ is
corrected to read ‘‘an exempt
organization’’.
16. On page 77978, the first column,
the third line from the top of the last
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partial paragraph, the language ‘‘rules
are’’ is corrected to read ‘‘rules is’’.
Crystal Pemberton,
Senior Federal Register Liaison, Publications
and Regulations Branch, Legal Processing
Division, Associate Chief Counsel (Procedure
and Administration).
Editorial note: This document was
received for publication by the Office of the
Federal Register on January 6, 2021.
Correction of Publication
Accordingly, 26 CFR part 1 is
corrected by making the following
correcting amendments:
PART 1—INCOME TAXES
Paragraph 1. The authority citation
for part 1 continues to read in part as
follows:
■
Authority: 26 U.S.C. 7805 * * *
[FR Doc. 2021–00342 Filed 2–11–21; 8:45 am]
BILLING CODE 4830–01–P
§ 1.512(a)–6
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9933]
[Amended]
Par. 2. Section 1.512(a)–6 is amended:
a. In paragraph (a)(3)(i) by adding a
semicolon after the word ‘‘year’’.
■ b. In the third sentence of paragraph
(h)(2) by removing the language ‘‘trade
or business’’ and adding in its place
‘‘trades or businesses’’.
■
■
Crystal Pemberton,
Senior Federal Register Liaison, Legal
Processing Division, Associate Chief Counsel,
(Procedure and Administration).
RIN 1545–BO79
Unrelated Business Taxable Income
Separately Computed for Each Trade
or Business; Correction
Editorial Note: This document was
received for publication by the Office of the
Federal Register on January 6, 2021.
Internal Revenue Service (IRS),
Treasury.
ACTION: Correcting amendment.
[FR Doc. 2021–00341 Filed 2–11–21; 8:45 am]
This document contains
corrections to the final regulations
(Treasury Decision 9933) that published
in the Federal Register on Wednesday,
December 2, 2020. The final regulations
provide guidance on how an exempt
organization subject to the unrelated
business income tax determines if it has
more than one unrelated trade or
business, and, if so, how the exempt
organization calculates unrelated
business taxable income.
DATES: These corrections are effective
on February 12, 2021 and are applicable
on December 2, 2020.
FOR FURTHER INFORMATION CONTACT:
Jonathan A. Carter at (202) 317–5800 or
Stephanie N. Robbins at (202) 317–4086
(not toll-free numbers).
SUPPLEMENTARY INFORMATION:
DEPARTMENT OF THE INTERIOR
AGENCY:
SUMMARY:
Background
The final regulations (TD 9933) that
are the subject of this correction are
issued under section 512 of the Internal
Revenue Code.
Need for Correction
As published on December 2, 2020
(85 FR 77952), the final regulations (TD
9933) contain errors that needs to be
corrected.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and
recordkeeping requirements.
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BILLING CODE 4830–01–P
Office of Natural Resources Revenue
30 CFR Parts 1206 and 1241
[Docket No. ONRR–2020–0001; DS63644000
DRT000000.CH7000 212D1113RT]
RIN 1012–AA27
ONRR 2020 Valuation Reform and Civil
Penalty Rule: Delay of Effective Date;
Request for Public Comment
Office of Natural Resources
Revenue (‘‘ONRR’’), Interior.
ACTION: Final rule; delay of effective
date and opening of comment period.
AGENCY:
In accordance with the
January 20, 2021 White House
Memorandum on Regulatory Freeze
Pending Review and the Office of
Management and Budget Memorandum
M–21–14 of the same date, this action
delays the effective date of the final rule
entitled ‘‘ONRR 2020 Valuation Reform
and Civil Penalty Rule’’ that published
in the Federal Register on January 15,
2021 (‘‘2020 Rule’’). In addition, this
action opens a 30-day comment period
to allow interested parties to comment
on the impact of the delay to the 2020
Rule’s effective date as well as issues of
fact, law, and policy raised by that rule.
DATES: Effective date: This action is
effective February 12, 2021. The
SUMMARY:
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Federal Register / Vol. 86, No. 28 / Friday, February 12, 2021 / Rules and Regulations
effective date of the 2020 Rule,
published in the Federal Register at 86
FR 4612, is delayed for 60 days, from
February 16, 2021 to April 16, 2021.
Comment Period: To be assured
consideration, comments must be
received at one of the addresses
provided below, by 11:59 p.m. EST on
March 15, 2021.
ADDRESSES: You may submit comments
to ONRR using either of the following
methods. Please reference the
Regulation Identifier Number (‘‘RIN’’)
for this action, ‘‘RIN 1012–AA27’’ in
your comment:
• Electronically via the Federal
eRulemaking Portal: Please visit https://
www.regulations.gov. In the Search Box,
enter Docket ID ‘‘ONRR–2020–0001’’
and click ‘‘search’’ to view the
publications associated with the docket
folder. Locate the document with an
open comment period and then click
‘‘Search.’’ Follow the instructions to
submit your public comments prior to
the close of the comment period.
• Email Submissions: For comments
sent via email, please address them to
Dane Templin, Regulations Supervisor,
at Dane.Templin@onrr.gov and Luis
Aguilar, Regulatory Specialist, at
Luis.Aguilar@onrr.gov with ‘‘RIN 1012–
AA27’’ listed in the subject line of your
message. Email submissions must be
postmarked on or before the close of the
comment period.
Instructions: All comments must
include the agency name and docket
number or RIN for this rulemaking. All
comments, including any personal
identifying information or confidential
business information contained in a
comment, will be posted without
change to https://www.regulations.gov.
Docket: For access to the docket to
read background documents or
comments received, go to https://
www.regulations.gov and locate the
docket folder by searching the Docket ID
(ONRR–2020–0001) or RIN number (RIN
1012–AA27).
FOR FURTHER INFORMATION CONTACT: For
questions on procedural issues, contact
Dane Templin, Regulations Supervisor,
at (303) 231–3149 or Dane.Templin@
onrr.gov.
SUPPLEMENTARY INFORMATION:
I. Background
On January 15, 2021, ONRR published
a final rule in the Federal Register, at
86 FR 4612, to amend certain
regulations that inform the manner in
which ONRR values oil and gas
produced from Federal leases for royalty
purposes; values coal produced from
Federal and Indian leases for royalty
purposes; and assesses civil penalties
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for violations of certain statutes,
regulations, leases, and orders
associated with mineral leases. In
addition, the rule, referred to as the
2020 Rule, made some minor, nonsubstantive corrections to ONRR’s
regulations. The 2020 Rule had an
effective date of February 16, 2021, and,
for amendments to 30 CFR part 1206, a
compliance date of May 1, 2021.
II. Purpose of This Action
On January 20, 2021, the Assistant to
the President and Chief of Staff issued
a memorandum entitled ‘‘Regulatory
Freeze Pending Review’’ (‘‘Regulatory
Freeze Memorandum’’) which, along
with the guidance on implementation of
the memorandum issued by the Office
of Management and Budget (‘‘OMB’’) in
Memorandum M–21–14 dated January
20, 2021, directs agencies to consider
delaying the effective date of rules
published in the Federal Register that
have not yet become effective,
consistent with applicable law, for the
purpose of reviewing any questions of
fact, law, and policy the rules may raise.
The OMB memorandum directed that
the decision to delay should include
consideration of whether:
(1) The rulemaking process was
procedurally adequate;
(2) the rule reflected proper
consideration of all relevant facts;
(3) the rule reflected due
consideration of the agency’s statutory
or other legal obligations;
(4) the rule is based on a reasonable
judgment about the legally relevant
policy considerations;
(5) the rulemaking process was open
and transparent;
(6) objections to the rule were
adequately considered, including
whether interested parties had fair
opportunities to present contrary facts
and arguments;
(7) interested parties had the benefit
of access to the facts, data, or other
analyses on which the agency relied;
and
(8) the final rule found adequate
support in the rulemaking record.
In light of the withdrawal of existing
and issuance of new Executive Orders
relevant to the matters addressed in the
2020 Rule after its publication date,
which are discussed further below, and
protracted litigation over ONRR’s recent
rulemakings, ONRR concludes that
postponement of the 2020 Rule and
invitation for public comment is
appropriate under criteria three and four
above. Further, ONRR appreciates the
strong public interest in its rulemakings
and is especially interested in public
comments on each of the eight decision
criteria with respect to the 2020 Rule.
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Accordingly, this action delays the
effective date of the 2020 Rule and
opens a 30-day comment period on the
facts, law, and policy underlying the
rule as well as the effect of the delay.
ONRR is delaying the effective date of
its 2020 Rule from February 16, 2021, to
April 16, 2021.
The 60-day delay of the 2020 Rule’s
effective date—based on the good cause
articulated below—is for the purpose of
reviewing any questions of fact, law,
and policy that are raised by that rule
as well as the effect of the delay,
consistent with the Regulatory Freeze
Memorandum and OMB Memorandum
M–21–14. To that end, ONRR invites the
public to submit comment on any issue
of fact, law, or policy raised by the 2020
Rule, including, without limitation,
comment on the following:
1. The 2020 Rule was premised, in
part, on certain Executive Orders that
are no longer in effect, including
Executive Orders 13783 ‘‘Promoting
Energy Independence and Economic
Growth,’’ 13795 ‘‘Implementing an
America-First Offshore Energy
Strategy,’’ and 13892 ‘‘Promoting the
Rule of Law Through Transparency and
Fairness in Civil Administrative
Enforcement and Adjudication.’’ Also,
new Executive Orders, including
Executive Orders 13990 ‘‘Protecting
Public Health and the Environment and
Restoring Science to Tackle the Climate
Crisis,’’ 13992 ‘‘Revocation of Certain
Executive Orders Concerning Federal
Regulation,’’ and 14008 ‘‘Tackling the
Climate Crisis at Home and Abroad,’’
have been issued from and after January
20, 2021. Does the repeal of prior
Executive Orders and issuance of new
Executive Orders demonstrate a change
in policy meriting or requiring
reconsideration of some or all of the
2020 Rule?
2. The 2020 Rule reinstituted an
allowance for certain deepwater oil and
gas gathering costs based, at least in
part, on declining oil and gas
production and revenues from the Gulf
of Mexico, which allowance is
estimated to reduce royalty due the
United States by $32.9 million per year.
Is this allowance consistent with the
current law and policy of the United
States?
3. The 2020 Rule reinstituted
extraordinary processing allowances,
which allowances are estimated to
reduce royalty due the United States by
$11.1 million per year. Are
extraordinary processing allowances
consistent with the current law and
policy of the United States in the
limited circumstances described in the
2020 Rule?
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4. Should the Department of the
Interior (‘‘the Department’’) consider
science on the source and impacts of
climate change in setting royalty and
revenue management policy?
5. The 2020 Rule extended an option
given to oil and gas lessees under an
ONRR 2016 rulemaking to use an indexbased valuation method to value gas and
natural gas liquids for royalty purposes.
The option—previously only available
for non-arm’s-length transactions—was
extended to arm’s-length transactions.
The economic analysis of the extension
of the option to arm’s-length
transactions assumed as fact that onehalf of eligible lessees would elect the
option and that one-half would not. As
a result, the rule concluded that those
lessees that elect the index-based
valuation option may pay an additional
$26.76 million per year in royalties,
though the election could save those
lessees approximately $1.35 million in
administrative costs. ONRR assumed as
fact that a significant number of lessees
will elect the index-based valuation
option even though doing so would
result in their paying royalties
exceeding the administrative cost
savings they would realize. If that
assumption of fact is flawed, is the
resulting conclusion still appropriate
and supported by current law and
policy?
6. Does the index-based valuation
option adopted in the 2020 Rule support
ONRR’s goals of clarity, early certainty,
and transparency in royalty valuation?
7. The Department has long viewed
the gross proceeds received under an
arm’s-length contract between
independent persons who are not
affiliates and who have opposing
economic interests to be the best
indicator of value in most
circumstances. See, e.g., 53 FR 1186
(Jan. 15, 1988); 81 FR 43338 (July 1,
2016). Should ONRR have given lessees
the option to substitute an index-based
value for one based on arm’s-length
sales, including in situations where that
election may reduce the royalties owed
to the United States?
8. OMB Memorandum M–21–14
requires agencies to consider, among
other things, whether the rulemaking
process was procedurally adequate and
whether interested parties had a fair
opportunity to present contrary facts
and arguments. Do you believe
procedural issues exist in the 2020
Rule’s rulemaking process and, if so,
what are those issues and what could
ONRR do to remedy those issues?
9. What would be the impact of a
potential further delay of 60 to 120 days
in the effective date of the 2020 Rule?
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10. Should the 2020 Rule be
amended, rescinded, delayed pending
further review by the agency, or allowed
to go into effect?
III. Good Cause Under the
Administrative Procedure Act
This rule’s delay of the 2020 Rule’s
effective date, without prior opportunity
for public comment, will become
effective immediately upon publication
in the Federal Register. The immediate
effective date is based on the good cause
exceptions in 5 U.S.C. 553(b)(B) and
(d)(3), in that seeking public comment is
impractical and contrary to the public
interest.
The 60-day delay in the effective date
of the 2020 Rule is necessary to allow
opportunity for further review and
consideration of that rule, consistent
with the January 20, 2021 White House
Memorandum on Regulatory Freeze
Pending Review and the Office of
Management and Budget Memorandum
M–21–14 of same date on
implementation of the White House
Memorandum, as well as the
withdrawal of the Executive Orders on
which the 2020 Rule was, in part, based
and the issuance of new Executive
Orders. Given the imminence of the
2020 Rule’s effective date, seeking prior
public comment on this short delay
would interfere with the public’s
interest in the orderly promulgation and
implementation of regulations. A period
of public notice and comment of any
appreciable length would mean that the
rule would go into effect before the
agency was able to undertake a
meaningful review of the 2020 Rule.
Subsequent action to modify or rescind
an effective rule would then create
further confusion among regulated
entities and other interested parties.
In the questions posed for comment in
this document, the Department has
identified several factors illustrating
potential weaknesses of the 2020 Rule
and the need for additional public
participation. Delaying the effective date
provides certainty for the regulated
industry while ONRR reconsiders the
2020 Rule, and prevents a situation
wherein regulated entities would update
their reporting systems in anticipation
of compliance with a rule that may be
subject to further revision, following
notice and comment. The extensive
litigation on prior ONRR’s rulemakings
further highlights the need for ONRR to
take steps that ensure transparency and
provide certainty in the adequacy and
finality of the 2020 Rule. Thus, ONRR
finds that it would be contrary to the
public interest for the 2020 Rule to
become effective, with its accompanying
changes in reporting and payment
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requirements, which require extensive
IT system, accounting, and other
business process modifications, until it
is certain that all public comments,
including any additional comments that
are submitted in the new comment
period, are received and considered. To
do otherwise could potentially result in
uncertainty and confusion regarding
reporting and payment requirements
that could lead to duplication of effort,
an unnecessary increase in
administrative costs, and strain placed
on lessees and recipient states as ONRR
and the public struggle with application
and interpretation of the valuation and
payment rules.
This action delays the effective date of
the 2020 Rule that was promulgated
through notice and comment
rulemaking. A delay in the effective date
and opening of a new 30-day comment
period is necessary to ensure that ONRR
has the opportunity to receive and is
able to consider additional public
comments to fully inform its decisions
in light of current law and policy before
the 2020 Rule becomes effective.
The White House memorandum also
recommends that, for rules postponed
for further review, agencies consider
opening a 30-day comment period to
allow interested parties to provide
comments about issues of fact, law, and
policy raised by those rules, and
consider any requests for
reconsideration involving such rules.
Consistent with this guidance, after
reviewing comments received pursuant
to this notice, ONRR may determine
there is a need to postpone the effective
date further to allow additional time to
consider issues of fact, law, and policy
or to reconsider the 2020 Rule.
This rule provides notice and invites
public comments on a potential further
extension and requests interested
parties to provide comments about
issues of fact, law, and policy raised by
the rule, so that ONRR can consider any
requests for reconsideration involving
the rule. As part of a further delay,
ONRR may also invite additional public
comments on whether the rule should
be amended, rescinded, delayed
pending further review by the agency, or
allowed to go into effect.
For the reasons stated above, ONRR
finds that there is good cause under 5
U.S.C. 553(b)(B) and (d)(3) to publish
this action without prior notice and
comment, and for this action to become
effective immediately upon publication
in the Federal Register.
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Federal Register / Vol. 86, No. 28 / Friday, February 12, 2021 / Rules and Regulations
List of Subjects
LIBRARY OF CONGRESS
30 CFR Part 1206
36 CFR Part 701
Coal, Continental shelf, Geothermal
energy, Government contracts, Indianslands, Mineral royalties, Oil and gas
exploration, Public lands-mineral
resources, Reporting and recordkeeping
requirements.
30 CFR Part 1241
Administrative practice and
procedure, Coal, Geothermal energy,
Indians-lands, Mineral royalties, Natural
gas, Oil and gas exploration, Penalties,
Public lands-mineral resources.
Rachael S. Taylor,
Senior Advisor to the Secretary and exercising
the delegated authority of the Assistant
Secretary—Policy, Management, and Budget.
[FR Doc. 2021–03052 Filed 2–10–21; 4:15 pm]
BILLING CODE 4335–30–P
DEPARTMENT OF THE INTERIOR
National Park Service
36 CFR Part 7
[Docket ID: NPS–2018–0001; NPS–GLCA–
27587; PPIMGLCAS1; PPMPSAS1Z.YP0000]
RIN 1024–AD93
Glen Canyon National Recreation Area;
Motor Vehicles
Correction
In rule document 2020–28464,
appearing on pages 3804–3815 in the
issue of the January 15, 2021, make the
following corrections:
1. On page 3804, in the first column,
DATES should read:
‘‘DATES: This rule is effective on
February 16, 2021.’’
§ 7.70
[Corrected]
2. On page 3813, in the second
column, paragraph (f)(2)(i) should read:
‘‘(i) The provisions in this paragraph
(f)(2) are effective beginning on May 17,
2021.’’
■
§ 7.70
[Corrected]
3. On same page, in the third column,
paragraph (f)(3)(ii) introductory text
should read:
‘‘(ii) Motor vehicles may be used off
GMP roads at the locations and subject
to the management prescriptions in the
table below, except for vehicle-free
zones where off-road vehicle use is
prohibited. Permit requirements in
Table 1 to paragraph (f)(3)(ii) are
effective beginning on May 17, 2021.’’
■
[FR Doc. C1–2020–28464 Filed 2–11–21; 8:45 am]
BILLING CODE 1301–00–D
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[Docket No. 2021–2]
Loans of Library Materials for Blind
and Other Print-Disabled Persons
Library of Congress.
Final rule.
AGENCY:
ACTION:
The Library of Congress is
adopting amendments to its regulations
regarding loans of library materials for
blind and other print-disabled persons,
as authorized by Title XIV of the Library
of Congress Technical Corrections Act
of 2019, to amend terminology, the
description of services, and certification
requirements, and to memorialize
existing practices in the Library of
Congress’s National Library Service for
the Blind and Print Disabled (NLS).
DATES: Effective February 12, 2021.
FOR FURTHER INFORMATION CONTACT:
Emily Vartanian, Senior Counsel,
Library of Congress Office of the General
Counsel, 202–707–7205, evar@loc.gov.
SUPPLEMENTARY INFORMATION: The
Librarian of Congress is authorized to
make regulations with respect to the
Library of Congress (2 U.S.C. 136). Since
neither the Federal Register Act nor the
Administrative Procedure Act has
binding effect on the legislative branch,
the Library of Congress is not required
to publish its regulations in the CFR.
However, because the purpose of the
CFR is to ‘‘notify industry, general
business, and the people’’ (Toledo, P &
W.R.R. v. Stover, 60 F. Supp. 587 (S.D.
Ill. 1945)), it is appropriate for the
Library to continue publishing those
regulations which affect the rights and
responsibilities of, and restrictions on,
the public.
The Library of Congress is amending
this regulation for the following reasons:
• To amend the regulation consistent
with Title XIV of the Library of Congress
Technical Corrections Act of 2019.
• To amend the terminology to refer
to ‘‘blind and print-disabled’’ persons
rather than ‘‘blind and other physically
handicapped’’ persons.
• To amend the terminology to refer
to ‘‘eligible persons’’ consistent with the
Marrakesh Treaty Implementation Act
amending 17 U.S.C. 121.
• To amend the description of
services to include internet-enabled/
electronic services.
• To memorialize the existing
practice under which persons seeking
approval to use NLS’s services must
certify eligibility using a form provided
by NLS or by network libraries.
• To include certified psychologists,
educators, certified reading specialists,
SUMMARY:
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9289
and school psychologists in the list of
persons who may certify eligibility for
the program.
• To remove the requirement for
certification by a medical doctor for
those with reading disabilities, who may
now be certified for participation in the
program by the same persons who are
authorized to certify other printdisabled individuals for participation in
the program.
List of Subjects in 36 CFR Part 701
Libraries, Seals and insignia.
Final Regulation
For the reasons set forth in the
preamble, the Library of Congress
amends 36 CFR part 701 as follows:
PART 701—PROCEDURES AND
SERVICES
1. The authority citation for part 701
continues to read as follows:
■
Authority: 2 U.S.C. 136; 18 U.S.C. 1017.
■
2. Revise § 701.6 to read as follows:
§ 701.6 Loans of library materials for blind
and other print-disabled persons.
(a) Program. Under the Act of March
3, 1931 (46 Stat. 1487), as amended (2
U.S.C. 135a), the Library of Congress’s
National Library Service for the Blind
and Print Disabled (NLS) provides
accessible reading material for the use of
blind and other print-disabled residents
of the United States, including the
several States, Insular Possessions, and
the District of Columbia, and United
States citizens domiciled abroad. NLS
loans literary works and specialized
music materials in raised characters
(braille), on sound reproduction
recordings, or in any other accessible
format. NLS also loans devices
necessary to reproduce accessible
formats, including sound reproducers
and refreshable braille displays, and
makes audio and braille reading
material available for electronic
download.
(b) Eligibility. (1) Individuals who
meet the definition of ‘‘eligible person’’
in 17 U.S.C. 121 are eligible for NLS’s
loan services. An ‘‘eligible person’’ thus
means an individual who, regardless of
any other disability—
(i) Is blind;
(ii) Has a visual impairment or
perceptual or reading disability that
cannot be improved to give visual
function substantially equivalent to that
of a person who has no such
impairment or disability and so is
unable to read printed works to
substantially the same degree as a
person without an impairment or
disability; or
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]]>Agencies
[Federal Register Volume 86, Number 28 (Friday, February 12, 2021)]
[Rules and Regulations]
[Pages 9286-9289]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-03052]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE INTERIOR
Office of Natural Resources Revenue
30 CFR Parts 1206 and 1241
[Docket No. ONRR-2020-0001; DS63644000 DRT000000.CH7000 212D1113RT]
RIN 1012-AA27
ONRR 2020 Valuation Reform and Civil Penalty Rule: Delay of
Effective Date; Request for Public Comment
AGENCY: Office of Natural Resources Revenue (``ONRR''), Interior.
ACTION: Final rule; delay of effective date and opening of comment
period.
-----------------------------------------------------------------------
SUMMARY: In accordance with the January 20, 2021 White House Memorandum
on Regulatory Freeze Pending Review and the Office of Management and
Budget Memorandum M-21-14 of the same date, this action delays the
effective date of the final rule entitled ``ONRR 2020 Valuation Reform
and Civil Penalty Rule'' that published in the Federal Register on
January 15, 2021 (``2020 Rule''). In addition, this action opens a 30-
day comment period to allow interested parties to comment on the impact
of the delay to the 2020 Rule's effective date as well as issues of
fact, law, and policy raised by that rule.
DATES: Effective date: This action is effective February 12, 2021. The
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effective date of the 2020 Rule, published in the Federal Register at
86 FR 4612, is delayed for 60 days, from February 16, 2021 to April 16,
2021.
Comment Period: To be assured consideration, comments must be
received at one of the addresses provided below, by 11:59 p.m. EST on
March 15, 2021.
ADDRESSES: You may submit comments to ONRR using either of the
following methods. Please reference the Regulation Identifier Number
(``RIN'') for this action, ``RIN 1012-AA27'' in your comment:
Electronically via the Federal eRulemaking Portal: Please
visit https://www.regulations.gov. In the Search Box, enter Docket ID
``ONRR-2020-0001'' and click ``search'' to view the publications
associated with the docket folder. Locate the document with an open
comment period and then click ``Search.'' Follow the instructions to
submit your public comments prior to the close of the comment period.
Email Submissions: For comments sent via email, please
address them to Dane Templin, Regulations Supervisor, at
[email protected] and Luis Aguilar, Regulatory Specialist, at
[email protected] with ``RIN 1012-AA27'' listed in the subject line
of your message. Email submissions must be postmarked on or before the
close of the comment period.
Instructions: All comments must include the agency name and docket
number or RIN for this rulemaking. All comments, including any personal
identifying information or confidential business information contained
in a comment, will be posted without change to https://www.regulations.gov.
Docket: For access to the docket to read background documents or
comments received, go to https://www.regulations.gov and locate the
docket folder by searching the Docket ID (ONRR-2020-0001) or RIN number
(RIN 1012-AA27).
FOR FURTHER INFORMATION CONTACT: For questions on procedural issues,
contact Dane Templin, Regulations Supervisor, at (303) 231-3149 or
[email protected].
SUPPLEMENTARY INFORMATION:
I. Background
On January 15, 2021, ONRR published a final rule in the Federal
Register, at 86 FR 4612, to amend certain regulations that inform the
manner in which ONRR values oil and gas produced from Federal leases
for royalty purposes; values coal produced from Federal and Indian
leases for royalty purposes; and assesses civil penalties for
violations of certain statutes, regulations, leases, and orders
associated with mineral leases. In addition, the rule, referred to as
the 2020 Rule, made some minor, non-substantive corrections to ONRR's
regulations. The 2020 Rule had an effective date of February 16, 2021,
and, for amendments to 30 CFR part 1206, a compliance date of May 1,
2021.
II. Purpose of This Action
On January 20, 2021, the Assistant to the President and Chief of
Staff issued a memorandum entitled ``Regulatory Freeze Pending Review''
(``Regulatory Freeze Memorandum'') which, along with the guidance on
implementation of the memorandum issued by the Office of Management and
Budget (``OMB'') in Memorandum M-21-14 dated January 20, 2021, directs
agencies to consider delaying the effective date of rules published in
the Federal Register that have not yet become effective, consistent
with applicable law, for the purpose of reviewing any questions of
fact, law, and policy the rules may raise.
The OMB memorandum directed that the decision to delay should
include consideration of whether:
(1) The rulemaking process was procedurally adequate;
(2) the rule reflected proper consideration of all relevant facts;
(3) the rule reflected due consideration of the agency's statutory
or other legal obligations;
(4) the rule is based on a reasonable judgment about the legally
relevant policy considerations;
(5) the rulemaking process was open and transparent;
(6) objections to the rule were adequately considered, including
whether interested parties had fair opportunities to present contrary
facts and arguments;
(7) interested parties had the benefit of access to the facts,
data, or other analyses on which the agency relied; and
(8) the final rule found adequate support in the rulemaking record.
In light of the withdrawal of existing and issuance of new
Executive Orders relevant to the matters addressed in the 2020 Rule
after its publication date, which are discussed further below, and
protracted litigation over ONRR's recent rulemakings, ONRR concludes
that postponement of the 2020 Rule and invitation for public comment is
appropriate under criteria three and four above. Further, ONRR
appreciates the strong public interest in its rulemakings and is
especially interested in public comments on each of the eight decision
criteria with respect to the 2020 Rule.
Accordingly, this action delays the effective date of the 2020 Rule
and opens a 30-day comment period on the facts, law, and policy
underlying the rule as well as the effect of the delay. ONRR is
delaying the effective date of its 2020 Rule from February 16, 2021, to
April 16, 2021.
The 60-day delay of the 2020 Rule's effective date--based on the
good cause articulated below--is for the purpose of reviewing any
questions of fact, law, and policy that are raised by that rule as well
as the effect of the delay, consistent with the Regulatory Freeze
Memorandum and OMB Memorandum M-21-14. To that end, ONRR invites the
public to submit comment on any issue of fact, law, or policy raised by
the 2020 Rule, including, without limitation, comment on the following:
1. The 2020 Rule was premised, in part, on certain Executive Orders
that are no longer in effect, including Executive Orders 13783
``Promoting Energy Independence and Economic Growth,'' 13795
``Implementing an America-First Offshore Energy Strategy,'' and 13892
``Promoting the Rule of Law Through Transparency and Fairness in Civil
Administrative Enforcement and Adjudication.'' Also, new Executive
Orders, including Executive Orders 13990 ``Protecting Public Health and
the Environment and Restoring Science to Tackle the Climate Crisis,''
13992 ``Revocation of Certain Executive Orders Concerning Federal
Regulation,'' and 14008 ``Tackling the Climate Crisis at Home and
Abroad,'' have been issued from and after January 20, 2021. Does the
repeal of prior Executive Orders and issuance of new Executive Orders
demonstrate a change in policy meriting or requiring reconsideration of
some or all of the 2020 Rule?
2. The 2020 Rule reinstituted an allowance for certain deepwater
oil and gas gathering costs based, at least in part, on declining oil
and gas production and revenues from the Gulf of Mexico, which
allowance is estimated to reduce royalty due the United States by $32.9
million per year. Is this allowance consistent with the current law and
policy of the United States?
3. The 2020 Rule reinstituted extraordinary processing allowances,
which allowances are estimated to reduce royalty due the United States
by $11.1 million per year. Are extraordinary processing allowances
consistent with the current law and policy of the United States in the
limited circumstances described in the 2020 Rule?
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4. Should the Department of the Interior (``the Department'')
consider science on the source and impacts of climate change in setting
royalty and revenue management policy?
5. The 2020 Rule extended an option given to oil and gas lessees
under an ONRR 2016 rulemaking to use an index-based valuation method to
value gas and natural gas liquids for royalty purposes. The option--
previously only available for non-arm's-length transactions--was
extended to arm's-length transactions. The economic analysis of the
extension of the option to arm's-length transactions assumed as fact
that one-half of eligible lessees would elect the option and that one-
half would not. As a result, the rule concluded that those lessees that
elect the index-based valuation option may pay an additional $26.76
million per year in royalties, though the election could save those
lessees approximately $1.35 million in administrative costs. ONRR
assumed as fact that a significant number of lessees will elect the
index-based valuation option even though doing so would result in their
paying royalties exceeding the administrative cost savings they would
realize. If that assumption of fact is flawed, is the resulting
conclusion still appropriate and supported by current law and policy?
6. Does the index-based valuation option adopted in the 2020 Rule
support ONRR's goals of clarity, early certainty, and transparency in
royalty valuation?
7. The Department has long viewed the gross proceeds received under
an arm's-length contract between independent persons who are not
affiliates and who have opposing economic interests to be the best
indicator of value in most circumstances. See, e.g., 53 FR 1186 (Jan.
15, 1988); 81 FR 43338 (July 1, 2016). Should ONRR have given lessees
the option to substitute an index-based value for one based on arm's-
length sales, including in situations where that election may reduce
the royalties owed to the United States?
8. OMB Memorandum M-21-14 requires agencies to consider, among
other things, whether the rulemaking process was procedurally adequate
and whether interested parties had a fair opportunity to present
contrary facts and arguments. Do you believe procedural issues exist in
the 2020 Rule's rulemaking process and, if so, what are those issues
and what could ONRR do to remedy those issues?
9. What would be the impact of a potential further delay of 60 to
120 days in the effective date of the 2020 Rule?
10. Should the 2020 Rule be amended, rescinded, delayed pending
further review by the agency, or allowed to go into effect?
III. Good Cause Under the Administrative Procedure Act
This rule's delay of the 2020 Rule's effective date, without prior
opportunity for public comment, will become effective immediately upon
publication in the Federal Register. The immediate effective date is
based on the good cause exceptions in 5 U.S.C. 553(b)(B) and (d)(3), in
that seeking public comment is impractical and contrary to the public
interest.
The 60-day delay in the effective date of the 2020 Rule is
necessary to allow opportunity for further review and consideration of
that rule, consistent with the January 20, 2021 White House Memorandum
on Regulatory Freeze Pending Review and the Office of Management and
Budget Memorandum M-21-14 of same date on implementation of the White
House Memorandum, as well as the withdrawal of the Executive Orders on
which the 2020 Rule was, in part, based and the issuance of new
Executive Orders. Given the imminence of the 2020 Rule's effective
date, seeking prior public comment on this short delay would interfere
with the public's interest in the orderly promulgation and
implementation of regulations. A period of public notice and comment of
any appreciable length would mean that the rule would go into effect
before the agency was able to undertake a meaningful review of the 2020
Rule. Subsequent action to modify or rescind an effective rule would
then create further confusion among regulated entities and other
interested parties.
In the questions posed for comment in this document, the Department
has identified several factors illustrating potential weaknesses of the
2020 Rule and the need for additional public participation. Delaying
the effective date provides certainty for the regulated industry while
ONRR reconsiders the 2020 Rule, and prevents a situation wherein
regulated entities would update their reporting systems in anticipation
of compliance with a rule that may be subject to further revision,
following notice and comment. The extensive litigation on prior ONRR's
rulemakings further highlights the need for ONRR to take steps that
ensure transparency and provide certainty in the adequacy and finality
of the 2020 Rule. Thus, ONRR finds that it would be contrary to the
public interest for the 2020 Rule to become effective, with its
accompanying changes in reporting and payment requirements, which
require extensive IT system, accounting, and other business process
modifications, until it is certain that all public comments, including
any additional comments that are submitted in the new comment period,
are received and considered. To do otherwise could potentially result
in uncertainty and confusion regarding reporting and payment
requirements that could lead to duplication of effort, an unnecessary
increase in administrative costs, and strain placed on lessees and
recipient states as ONRR and the public struggle with application and
interpretation of the valuation and payment rules.
This action delays the effective date of the 2020 Rule that was
promulgated through notice and comment rulemaking. A delay in the
effective date and opening of a new 30-day comment period is necessary
to ensure that ONRR has the opportunity to receive and is able to
consider additional public comments to fully inform its decisions in
light of current law and policy before the 2020 Rule becomes effective.
The White House memorandum also recommends that, for rules
postponed for further review, agencies consider opening a 30-day
comment period to allow interested parties to provide comments about
issues of fact, law, and policy raised by those rules, and consider any
requests for reconsideration involving such rules. Consistent with this
guidance, after reviewing comments received pursuant to this notice,
ONRR may determine there is a need to postpone the effective date
further to allow additional time to consider issues of fact, law, and
policy or to reconsider the 2020 Rule.
This rule provides notice and invites public comments on a
potential further extension and requests interested parties to provide
comments about issues of fact, law, and policy raised by the rule, so
that ONRR can consider any requests for reconsideration involving the
rule. As part of a further delay, ONRR may also invite additional
public comments on whether the rule should be amended, rescinded,
delayed pending further review by the agency, or allowed to go into
effect.
For the reasons stated above, ONRR finds that there is good cause
under 5 U.S.C. 553(b)(B) and (d)(3) to publish this action without
prior notice and comment, and for this action to become effective
immediately upon publication in the Federal Register.
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List of Subjects
30 CFR Part 1206
Coal, Continental shelf, Geothermal energy, Government contracts,
Indians-lands, Mineral royalties, Oil and gas exploration, Public
lands-mineral resources, Reporting and recordkeeping requirements.
30 CFR Part 1241
Administrative practice and procedure, Coal, Geothermal energy,
Indians-lands, Mineral royalties, Natural gas, Oil and gas exploration,
Penalties, Public lands-mineral resources.
Rachael S. Taylor,
Senior Advisor to the Secretary and exercising the delegated authority
of the Assistant Secretary--Policy, Management, and Budget.
[FR Doc. 2021-03052 Filed 2-10-21; 4:15 pm]
BILLING CODE 4335-30-P
