[Federal Register Volume 64, Number 7 (Tuesday, January 12, 1999)]
[Proposed Rules]
[Pages 1930-1991]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-37]
[[Page 1929]]
_______________________________________________________________________
Part III
Department of the Interior
_______________________________________________________________________
Office of Hearings and Appeals
Minerals Management Service
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30 CFR Part 208, et al.
43 CFR Part 4
Appeals of MMS Orders; Proposed Rules
Federal Register / Vol. 64, No. 7 / Tuesday, January 12, 1999 /
Proposed Rules
[[Page 1930]]
DEPARTMENT OF THE INTERIOR
Office of Hearings and Appeals
Minerals Management Service
30 CFR Parts 208, 241, 242, 243, 250, and 290
43 CFR Part 4
RIN 1010-AC21
Appeals of MMS Orders
AGENCIES: Office of Hearings and Appeals (OHA) and Minerals Management
Service (MMS), Interior.
ACTION: Proposed rulemaking.
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SUMMARY: The Office of Hearings and Appeals and the Minerals Management
Service propose to amend their rules governing the appeal of orders
from both the MMS's Royalty Management Program and MMS's Offshore
Minerals Management Program. Also included in this proposed rulemaking
are new regulations governing the issuance of royalty orders and the
ability of appellants in royalty appeals to demonstrate financial
solvency in lieu of posting a surety in accordance with the Federal Oil
and Gas Royalty Simplification and Fairness Act of 1996, and new
regulations to collect processing fees.
DATES: Comments must be submitted on or before March 15, 1999. MMS will
publish a separate document notice in the Federal Register indicating
date and location of a workshop regarding this proposed rulemaking.
ADDRESSES: Written comments regarding this proposed rule should be sent
to David S. Guzy, Chief, Rules and Publications Staff, at the following
addresses.
For comments sent via the U.S. Postal Service use: Minerals
Management Service, Royalty Management Program, Rules and Publications
Staff, P.O. Box 25165 MS 3021, Denver, CO 80225-0165. Courier or
overnight delivery address is: Building 85, Room A-613, Denver Federal
Center, Denver, CO 80225; or e-mail RMP.comments@mms.gov.
FOR FURTHER INFORMATION CONTACT: David S. Guzy, Chief, Rules and
Publications Staff, telephone (303) 231-3432, FAX (303) 231-3385, e-
Mail David.Guzy@mms.gov.
SUPPLEMENTARY INFORMATION: We will post public comments after the
comment period closes on the Internet at http://www.rmp.mms.gov or
contact David S. Guzy, Chief, Rules and Publications Staff, telephone
(303) 231-3432, FAX (303) 231-3385.
I. General Background
In May 1994, MMS began a comprehensive review of its administrative
appeals process, particularly as it relates to appeals involving orders
or decisions issued by the Royalty Management Program (RMP). As part of
that review, MMS held several informal meetings with State, tribal, and
industry representatives to discuss the problems and possible solutions
within the appeals process. The principal problems identified included
the length of the appeals process, sometimes taking several years to
resolve a case, and the excessive costs of the process to both MMS and
appellants.
On August 13, 1996, the President signed the Federal Oil and Gas
Royalty Simplification and Fairness Act, Pub. L. 104-185, as corrected
by Pub. L. 104-200 (RSFA). Section 4 of RSFA amended the Federal Oil
and Gas Royalty Management Act of 1982 (FOGRMA), 30 U.S.C. 1701 et
seq., and added a new FOGRMA Sec. 115(h), 30 U.S.C. 1724(h), governing
the Department's process for resolving appeals of MMS orders or
decisions involving royalties and other payments due on Federal oil and
gas leases. For appeals involving Federal oil and gas leases covered by
this new provision, the Department has 33 months from the date a
proceeding is commenced to complete all levels of administrative
review. If the Department does not decide the appeal within 33 months,
the appeal is deemed decided either for or against the Department,
depending on the type of order and the monetary amount at issue in the
appeal. The 33-month deadline does not apply to appeals involving
Indian leases or Federal leases for minerals other than oil and gas. As
a result of this MMS review and the new legislation, MMS announced a
proposed rule in the Federal Register on October 28, 1996. The proposed
regulation provided for amendments to 30 CFR part 290. On December 31,
1997, MMS announced that it intended to withdraw the October 28, 1996,
proposed rule when it published a revised notice of proposed rule
responding to the Royalty Policy Committee (RPC) report. 62 FR 68244.
Accordingly we hereby withdraw the October 28, 1996, proposed rule.
In 1995, the Department of the Interior (DOI) established a RPC
under the Minerals Management Advisory Board. The RPC's purpose is to
provide advice to the Secretary on the Department's management of
Federal and Indian mineral leases, revenues, and other minerals-related
policies. The RPC includes representatives from States, Indian tribes
and allottee organizations, minerals industry associations, Federal
agencies and the public. At the RPC's first meeting in September 1995,
it established eight Subcommittees, including the Appeals and
Alternative Dispute Resolution (ADR) Subcommittee (Subcommittee). The
Subcommittee was created to make recommendations to the RPC to improve
the processes involving appeals and alternative dispute resolution.
Membership in the Subcommittee included eleven representatives from
industry, five representatives from States, and two representatives
from Indian tribes. In addition to the voting members, the Subcommittee
benefitted from the participation of several other persons as non-
voting members and of two employees of MMS as staff to the
Subcommittee. The Subcommittee agreed that the principal purpose of the
MMS administrative appeals process should be the expeditious and
independent review of appeals.
The Subcommittee recognized that the MMS appeals process had been
under criticism and serious review since 1994 and believed that
substantial reform was needed. Some of the problems the Subcommittee
identified in the existing appeals process were:
1. Lack of timely resolution;
2. Lack of clarity in some orders;
3. Perceived lack of independence and unfairness of MMS Director-
level appeals decisions due to the internal clearance process and
communication within the Department between those involved in making
the initial decision and those involved in making the decision on
appeal;
4. Policy uncertainty--some orders issued without MMS having
clearly decided and explained policy issues;
5. Inability of the appellant to determine what the administrative
record for the order contains;
6. Allegedly conflicting roles of the Solicitor's Office in
satisfying institutional needs (assisting in setting policy and overall
litigation strategy) and acting as a legal advocate for MMS; and
7. Duplication of effort between the MMS Director and Interior
Board of Land Appeals (IBLA) levels of review.
Throughout its review of the appeals process, the Subcommittee
insisted that its recommendations needed to meet certain principles.
Any changes in the process:
1. Could not substantially harm the position of MMS;
2. Would need to ensure that the process would be completed within
33 months;
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3. Should encourage the parties to develop the facts, clarify the
issues, and resolve disputes at the earliest possible opportunity;
4. Would have to reduce the costs of the process to the
participants;
5. Would clarify the role of Indian lessors as parties; and
6. Would clarify delegated State participation.
The RPC unanimously adopted and approved the recommendation of the
RPC Appeals and ADR Subcommittee and submitted a report (RPC Report) to
the Secretary of the Interior on March 27, 1997. The RPC Report
recommended a number of specific steps involving both appeals and ADR
processes. The RPC recommended changing the current two-stage appeals
process into a one-stage IBLA administrative appeal process designed to
solve the problems and meet the principles identified above. The
Subcommittee recommended that:
1. MMS resolve all fundamental policy questions before it or a
delegated State issues an order;
2. DOI encourage the resolution of disputes without completing the
formal administrative appeals process;
3. DOI clarify the standing of Indian lessors and ``States
concerned'' with respect to the administrative appeals process;
4. DOI change the structure of the administrative appeals process,
so that appeals of MMS, State, or tribal orders are taken to the IBLA,
under a special set of rules applicable to royalty appeals; and
5. DOI specify the differences in appeals involving Indian leases
and Federal leases for minerals other than oil and gas because the
provisions of RSFA do not apply to those leases.
On September 22, 1997, the Secretary accepted the RPC Report for
implementation with some changes and clarifications. This proposed rule
is based primarily on the RPC Report and the changes and clarifications
identified in the Secretary's letter dated September 22, 1997.
To implement the RPC recommendations, as modified by the
Secretary's letter, MMS formed a regulation writing team comprised of
representatives from MMS, the IBLA, the Office of the Solicitor, and
State audit offices. That team drafted the proposed rule with the goal
of developing an appeals process implementing the RPC's recommendations
in accordance with the Secretary's changes and clarifications.
During the drafting process, the team members heard concerns about
whether the result of the recommendations of the RPC will actually
advance the RPC's primary goal: namely, timely and efficient resolution
of appeals. The pre-briefing procedures in the proposed rule are
complex in order to meet the following goals:
(1) Implement RSFA provisions setting time limits on appeals and
requiring at least one settlement conference for each appeal;
(2) Respond to other RSFA provisions regarding orders and the roles
of lessees when their designees receive orders;
(3) Coordinate RSFA time limits with other provisions of the rule;
and
(4) Respond to recommendations of the RPC involving enhanced
participation of Indian lessors and delegated States in the appeals
process; continued ability of the MMS Director to recommend whether to
concur with, modify or rescind orders; and continued ability of
Assistant Secretaries to decide appeals.
An example of a scenario illustrating the complexity of the
proposed rule would be when the MMS Director modifies an order and the
delegated State disagrees with the modification and intervenes. Assume
in the example that both the appellant and MMS wish to file documents
not contained in the record they certified under Sec. 4.919 or to add
issues not contained in the ``Joint Statement of Facts and Issues''
(this is often the case under the current process and is possible under
the proposed appeals process). As a result of the expedited briefing
process under the proposed rule, in the example, MMS and the delegated
State would each file up to seven substantive documents (i.e. briefs,
replies, responses, requests, surreplies), and the appellant would file
up to six substantive documents, all in less than four months. The IBLA
may have to issue two orders regarding the record prior to its final
decision, and to consider up to twenty substantive pleadings in order
to arrive at its final decision. (The current process usually involves
three or four substantive pleadings and a single decision by the IBLA.)
While this example does not reflect the proposed process in its
simplest form, even more complicated processes are possible. Therefore,
in cases such as this example, the pre-briefing procedures and more
formal IBLA processes described in this proposed rulemaking will add
expense to the appeal process for both appellants and MMS.
In recent years under the existing process the MMS Director has
been deciding an average of approximately 213 appeals per year.
Approximately 75 of these (35%) are appealed to IBLA. Thus, under the
current process, a minority of MMS Director's decisions are appealed to
IBLA.
Also, in recent years, we estimate that it has taken the IBLA, on
average, about 18 months to issue a decision (counting from the date an
MMS royalty appeal is fully briefed and ripe for decision). This number
is based on data from the IBLA's docketing system.
The proposed rule is likely to increase the IBLA's workload, on
average, for individual royalty appeals. Under the proposed rule, the
IBLA would have to issue a decision in every appeal that is not
resolved or settled by MMS and the appellant or decided by an Assistant
Secretary. Even assuming that the IBLA's docket load does not increase
under the proposed rule, the IBLA will have to issue a decision in a
royalty appeal every 6 days in order to meet the 33-month deadline.
This figure is based on 75 royalty appeals per year to the IBLA and 430
days to decide those appeals (20 months less weekends and holidays). It
does not include the 130 royalty appeals currently pending before the
IBLA, of which 81 are subject to RSFA's 33-month deadline.
Any additional workload also could affect IBLA's ability to timely
decide appeals affecting Bureau of Land Management (BLM) and Office of
Surface Mining programs, as well as appeals of royalty issues which are
not subject to RSFA's 33-month deadline. The Department's Office of the
Inspector General (OIG) is currently conducting an audit that is
expected to address the timeliness of IBLA's disposition of MMS royalty
appeals. OIG is expected to issue a draft audit report before this rule
becomes final, and its report may provide information that would be
useful in evaluating the implications of this proposed rule as well as
any possible alternative proposals.
We recognize that there are deficiencies in the current process. We
encourage comments on whether and how the procedures recommended in the
RPC Report might serve to, or be modified to, make the appeal process
more efficient and effective. We invite comment on whether alternatives
to the proposed rule might reach the goal of the Royalty Policy
Committee by a simpler route than the processes set forth in the
proposed rulemaking.
We specifically request comment on whether, as an alternative to
the procedures described in this proposed rulemaking, the current two-
level administrative appeal process should be retained, with
amendments. These amendments would:
(a) Implement the RSFA requirements for settlement conferences and
default
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decisions if appeals are not resolved within 33 months of their
commencement (similar to those contained in this rulemaking under
Secs. 4.906, 4.907, 4.911-4.913, 4.924-4.926, 4.950, 4.951, 4.954,
4.956, 4.957, and 4.970-4.972);
(b) Establish procedures for lessees to appeal notices sent to
designees; and
(c) Incorporate internal time constraints for appeals pending
before the MMS Director to ensure that the Department decides appeals
within the RSFA 33-month deadline, such as those previously proposed,
see 61 FR 33607 (1996).
However, retaining the current process, with amendments, might not
address other goals of the RPC.
Several portions of this proposed rule would implement the RPC
recommendations. First, the new proposed 43 CFR part 4, subpart J would
establish a new procedure for appeals of royalty orders. The current
regulations at 30 CFR part 290 and 43 CFR part 4, subpart E would no
longer apply to appeals of royalty orders. Under the new proposed
process, MMS's role would be limited to record development and
settlement discussions at an early stage of the process and to deciding
whether to modify or rescind orders prior to argument at the IBLA or to
an Assistant Secretary. The IBLA (or an Assistant Secretary) would
decide cases under a new, modified IBLA appeals process, and RSFA time
limits would be imposed on appeals that are subject to that Act.
Second, the new proposed 30 CFR part 242 would establish procedures
for orders that MMS and delegated States issue. The new part 242 would
respond to the RPC recommendations on how MMS and delegated States
should communicate their preliminary audit findings and issue orders.
See RPC Recommendations at paragraphs 5-7. The general principle behind
this part is that MMS and delegated States should clearly communicate
specific information about the basis for orders. This part also would
establish procedures for Indian lessors to request formally that MMS
take actions with respect to their leases. That would help to implement
the RPC recommendation that the new regulations clarify the standing
and role of Indian lessors in the appeals process. See RPC Report at
page 10. In addition, this part would incorporate certain RSFA
provisions regarding orders and orders to perform restructured
accounting and regarding notifying lessees when orders are sent to the
persons designated by the lessees to pay their royalties. Finally, this
part would incorporate appeals and service requirements that currently
are found at 30 CFR part 243.
Third, the proposed revision of 30 CFR part 243 would implement
changes that RSFA made to requirements for staying orders pending
appeal. RSFA Sec. 4(a) amended FOGRMA to add a new Sec. 115(l), 30
U.S.C. 1724(l), ``Stay of Payment Obligation Pending Review.'' Section
115(l) allows any person (as that term is defined by FOGRMA Sec. 102
(12)), who MMS or a delegated State orders to pay any obligation (other
than an ``assessment'') subject to RSFA, to demonstrate that the person
is ``financially solvent.'' Under the proposed rule, if MMS determines
that the person is financially solvent, the person is entitled to a
stay of an order (other than one to pay an assessment) without posting
a bond or other surety instrument pending an administrative or judicial
proceeding. If the person is unable to demonstrate financial solvency,
the Secretary will require a bond or other surety instrument
satisfactory to cover the obligation. The proposed regulations would
explain the process and standards for demonstrating financial solvency.
As part of those proposed regulations, MMS also is rewriting 30 CFR
part 243 in ``plain language'' and revising it to eliminate references
to 30 CFR part 290.
Because MMS is eliminating appeals to the MMS Director under 30 CFR
part 290 for RMP orders, MMS rewrote that part to only refer to appeals
of the MMS Offshore Minerals Management Program (OMM). MMS determined
that it would be advantageous to amend its process for appeals from
decisions by officials of OMM at the same time it proposes the
revisions to the RMP appeals process. The proposed OMM appeals process
is patterned after the process the BLM uses for appeals of BLM
officials' decisions because they have similar responsibilities with
respect to onshore Federal and Indian trust lands. We request comments
on whether we should adopt this process for offshore appeals or whether
we should retain the current process.
The Departmental team that drafted the proposed appeals rule
received public input initially from the Royalty Policy Committee, as
described above, and also conducted two public workshops and five
outreach sessions with Indian tribes and individual Indian mineral
owners. The two public workshops were held in Denver, Colorado on
January 27, 1998, and March 30, 1998. These workshops were announced in
the Federal Register (62 FR 68244, December 31, 1997, and 63 FR 11634,
March 10, 1998) and were attended primarily by representatives of
natural gas, oil, and coal producers, including representatives both of
large integrated producers and of smaller independent producers. The
team distributed to workshop participants copies of preliminary drafts
of the proposed rule prior to the sessions, thereby providing
participants an opportunity to prepare specific questions, suggestions,
and comments.
The five outreach sessions with Indian lessors were as follows:
April 29, 1998, Canadian, Oklahoma, Muskogee Area Office.
This outreach meeting was attended by representatives of the Cherokee
Nation, Choctaw Nation, and Creek Nation, as well as many individual
Indian mineral owners and heirs. BIA Area Office and Agency staff also
attended;
May 19, 1998, Bismarck, North Dakota, Aberdeen and
Billings Area Offices. BIA Agency representatives from Cheyenne River,
Fort Berthold and Standing Rock attended this meeting. In addition,
tribal members from the Three Affiliated Tribes (Mandan, Arikara, and
Hidatsa) from Fort Berthold attended;
May 20, 1998, El Reno, Oklahoma, Concho Agency. This
outreach meeting was attended by individual Indian mineral owners from
the Concho and Anadarko areas. BIA Area Office and Agency staff also
attended;
June 12, 1998, Scottsdale, Arizona, tribal members of the
State and Tribal Audit Committee. This outreach meeting was attended by
representatives of the Blackfeet Nation, Navajo Nation, Shoshone and
Arapaho Tribe, Southern Ute Indian Tribe, and Ute Mountain Ute Tribe;
and
July 7, 1998, Denver, Colorado, Indian Energy and Minerals
Conference. Attendees included representatives from various BIA Area
Offices and Agencies, as well as representatives of the following
Tribes: Alabama and Coushatta Tribes, Assiniboine and Sioux Tribes,
Burns Paiute Reservation Tribe, Choctaw Nation of Oklahoma, Eastern
Shoshone Tribe, Jicarilla Apache Tribe, Navajo Nation, Osage Tribe,
Shoshone Nation, Southern Ute Tribe, Three Affiliated Tribes, and Ute
Mountain Ute Tribe.
At these sessions, the team members described the rule and its
anticipated effects on Indian lessors and received comments from
individual Indian mineral owners, tribal representatives, and MMS and
BIA representatives about how best to structure the rule to protect
Indian trust resources.
As discussed below in the applicable Section-by-Section analysis,
this rulemaking also would propose to
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charge reasonable processing fees where appropriate.
II. Section-by-Section Analysis, 43 CFR Part 4, Subpart J
Section 4.901 What is the Purpose of This Subpart?
This section would state that the purpose of this subpart is to
explain the procedures for appeals of MMS or delegated State orders,
and MMS decisions not to issue orders under 30 CFR part 242, concerning
reporting to the MMS RMP and the payment of royalties and other
payments due under leases subject to this subpart. This subpart would
replace 30 CFR part 290 with respect to appeals of RMP and delegated
State actions regarding royalties and other payments. The regulation at
30 CFR part 290 would only apply to appeals of MMS OMM actions
regarding offshore lease operational obligations, not to actions
regarding royalties and other payments.
Section 4.902 What Leases are Subject to This Subpart?
This section would explain that this subpart applies to all Federal
mineral leases onshore and on the Outer Continental Shelf (OCS), and to
all federally-administered mineral leases on Indian tribal and
individual Indian mineral owners' lands regardless of the statutory
authority under which the lease was issued or maintained. See Section-
by-Section analysis for Sec. 4.903 for an explanation of the definition
of ``lease.'' However, some procedures under this rule would apply only
to Federal oil and gas leases because the RSFA requirement for deciding
appeals within 33 months, 30 U.S.C. 1724(h), applies only to such
leases. Accordingly, those procedures would specifically state that
they do not apply to Federal solid mineral and geothermal leases, or
Indian leases.
Section 4.903 What Definitions Apply to This Subpart?
This section would explain the definitions that you will need to
know for this subpart. However, other definitions in this part, or 30
CFR Chapter II, which are not specifically defined in this proposed
rule, and do not conflict with definitions in this proposed rule, also
would apply.
Affected would mean, with respect to delegated States and States
concerned, that the appeal concerns an order regarding a Federal
onshore or Outer Continental Shelf lease, within a State's borders or
offshore of the State, from which the State, or a political subdivision
of the State, receives a statutorily-prescribed portion of the
royalties; and, with respect to Indian lessors, that the appeal
concerns an order regarding the Indian lessor's federally-administered
mineral lease. This definition is intended to distinguish between
States concerned, delegated States, and Indian lessors that are
directly affected by the action (or inaction) under appeal, and those
that are either only indirectly affected or that are merely interested
in the appeal's outcome.
Assessment would mean any fee or charge levied or imposed by the
Secretary or a delegated State other than: (1) the principal amount of
any royalty, minimum royalty, rental, bonus, net profit share or
proceed of sale; (2) any interest; or (3) any civil or criminal
penalty.
Delegated State would mean a State to which MMS has delegated
authority to perform royalty management functions pursuant to an
agreement or agreements under regulations at 30 CFR part 227. This
definition is essentially the same as that under RSFA Sec. 2(1), adding
FOGRMA Sec. 3, 30 U.S.C. 1702(22).
Designee would mean the person designated by a lessee under 30 CFR
218.52 to make all or part of the royalty or other payments due on a
lease on the lessee's behalf. This definition is essentially the same
as that under RSFA Sec. 2(1), adding FOGRMA Sec. 3(24), 30 U.S.C.
1702(24). Accordingly, the definition would cite the rule implementing
the requirements of RSFA Sec. 6(g), amending FOGRMA Sec. 102(a), 30
U.S.C. 1712(a), which allows lessees to designate another person to pay
royalties on their behalf by written notice filed with MMS. Thus, this
definition would apply only to appeals involving royalties and other
payments due on production from Federal oil and gas leases after
September 1, 1996, because RSFA applies only to such payments.
IBLA would mean the Interior Board of Land Appeals.
Indian lessor would mean an Indian tribe or individual Indian
mineral owner with a beneficial or restricted interest in a property
that is subject to a lease issued or administered by the Secretary on
behalf of the tribe or individual Indian mineral owner.
Lease would mean any contract, net profit share arrangement, joint
venture, or other agreement authorizing exploration for or extraction
of any mineral, regardless of whether the instrument is expressly
denominated as a ``lease.'' This would include all agreements the
Secretary approves under the Indian Mineral Development Act, 25 U.S.C.
2101 et seq.
Lessee would mean any person to whom the United States, or the
United States on behalf of an Indian tribe or individual Indian mineral
owner, issues a lease subject to this subpart, or any person to whom
all or part of the lessee's interest or operating rights in a lease
subject to this subpart has been assigned. This definition is
essentially the same as that under RSFA Sec. 2(1), amending FOGRMA
Sec. 3(7), 30 U.S.C. 1702(7), and would include owners of operating
rights. RSFA defines ``lessees'' to include holders of operating
rights. However, RSFA does not apply to Federal oil and gas leases for
production prior to September 1, 1996, other Federal solid mineral and
geothermal leases, and Indian leases. Therefore, we did not separately
define operating rights owners or operators because recipients of
orders not subject to RSFA may appeal under this rule regardless of
whether they are a ``lessee'' under RSFA.
Monetary obligation would mean any requirement to pay or to compute
and pay any obligation in any order. We included this definition
because Congress did not define ``monetary obligation'' in RSFA for
purposes of the default decision rule in 30 U.S.C. 1724(h), which
Secs. 4.956 and 4.972 would implement. Under this definition,
``monetary obligation'' would include amounts that MMS or delegated
States assert that lessees, designees, and payors owe, as well as
amounts that lessees, designees, and payors assert are owed to them
(for example refunds of alleged overpayments). The definition of
``monetary obligation'' would include amounts due as a result of orders
to compute and pay because there is no indication that Congress
intended to restrict its meaning to only an ``order to pay'' a
specifically stated amount. Moreover, orders to compute and pay usually
contain an ``order to pay'' additional royalty amounts due based on the
test leases and months.
This definition also would clarify what constitutes a single
monetary obligation as opposed to separate monetary obligations when an
order covers multiple issues. Paragraph (1) would state that if an
order asserts a monetary obligation arising from one issue or type of
underpayment that covers multiple leases or production months, the
total obligation for all leases or production months involved
constitutes a single monetary obligation. For example, assume MMS
issued an order to you determining that you underpaid royalties on
Lease Nos. A, B, and C, for production months January 1, 1996, through
December 31, 1996, because you failed to pay royalties on
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tax reimbursements that are part of your gross proceeds. The amount
owed under that order would constitute one monetary obligation, not
three (one for each lease), or twelve (one for each production month),
or thirty-six (one for each production month for each lease).
Paragraph (2) would state that if an order asserts monetary
obligations arising from different issues or types of underpayments for
one or more leases, the obligations arising from each separate issue,
subject to paragraph (1), constitute separate monetary obligations. For
example, assume the same facts as described under paragraph (1).
However, also assume that the order determines that you underpaid
royalties on the same leases for the same production months because you
improperly calculated a gas processing allowance. In that situation,
the gross proceeds issue described in paragraph (1) would constitute
one monetary obligation, and the processing allowance issue would
constitute another monetary obligation.
Subparagraph (3) would state that if an order asserts a monetary
obligation with a stated amount of additional royalties due, plus an
order to perform a restructured accounting arising from the same issue
or cause as the specifically stated underpayment, the stated amount of
royalties due plus the estimated amount due under the restructured
accounting, subject to paragraphs (1) and (2), together constitute a
single monetary obligation. For example, assume the same facts as
described under paragraph (1). Also assume that the order requires you
to perform a restructured accounting on all of your leases to determine
whether you underpaid royalties on those leases because you failed to
pay royalties on tax reimbursements. That order would constitute one
monetary obligation. However, assuming the same facts as described
under paragraphs (1) and (2), if the order also required you to perform
a restructured accounting on all of your leases to determine whether
you calculated the proper processing allowance, then the gross proceeds
issue described in paragraph (1), together with the requirements to
perform a restructured accounting on tax reimbursements, would
constitute one monetary obligation, and the processing allowance issue,
together with the order to perform a restructured accounting on the
processing allowance issue, would constitute another monetary
obligation.
Nonmonetary obligation would mean only any duty of a lessee or its
designee to deliver oil and gas in kind, or any duty of the Secretary
to take oil and gas royalty in kind. This definition is consistent with
the definition of ``obligation'' under RSFA Sec. 2(1), adding FOGRMA
Sec. 3(25), 30 U.S.C. 1702(25), because these obligations are the only
two under the statutory definition that are ``nonmonetary.'' Thus, for
example, orders to report or produce information and denials of
requests for exceptions from various reporting requirements would not
be ``nonmonetary obligations'' because they are not defined as
``obligations'' under RSFA.
Notice of order would mean the notice under 30 CFR part 242 that
MMS or a delegated State would provide to a lessee stating that MMS or
the delegated State has issued an order to the lessee's designee. As
stated above, RSFA allows lessees to designate another person to pay
royalties on their behalf by written notice filed to MMS. 30 U.S.C.
1712(a). However, only lessees, not their ``designees,'' are liable for
any payment obligations. Id. Thus, if MMS issues a written order to pay
to a designee, RSFA's definition of ``order to pay'' requires MMS to
serve a notice of that order on that designee's lessee. 30 U.S.C.
1702(26), as added by RSFA Sec. 2(1).
Obligation would mean:
(1) A lessee's, designee's or payor's duty to:
(i) Deliver royalty-in-kind; or
(ii) Make a lease-related payment, including royalty, minimum
royalty, rental, bonus, net profit share, proceeds of sale, interest,
penalty, civil penalty, or assessment; and
(2) The Secretary's duty to:
(i) Take oil or gas royalty in kind; or
(ii) Make a lease-related payment, refund, offset, or credit,
including royalty, minimum royalty, rental, bonus, net profit share,
proceeds of sale, or interest. This definition is essentially the same
as that under RSFA Sec. 2(1), adding FOGRMA Sec. 3(25), 30 U.S.C.
1702(25).
Order would mean any document issued by the MMS Director, officials
of the MMS RMP, or a delegated State that contains mandatory or
ordering language that requires the recipient of an order to do any of
the following for any lease subject to this subpart: report, compute or
pay royalties or other obligations, report production, or provide other
information. The proposed rule would refer to 30 CFR part 242, which is
being proposed in this same Federal Register Notice, to refer
appellants to the standards for issuing orders contained in that part.
The purpose of this definition is to establish the types of orders
that are appealable under this subpart. This section would define what
actions are appealable orders and what actions are not appealable
orders. Only certain written orders, instructions or other actions by
the MMS Director, RMP officials, or a delegated State concerning the
reporting and payment of royalties and other payments due under leases
subject to this proposed subpart would be appealable ``orders'' under
this proposed rule.
Orders would have to include mandatory or ordering language. For
example, if you received a written instruction or other action by the
MMS Director, RMP, or a delegated State that contained language such as
``you must pay,'' ``you must recalculate and pay,'' ``you are ordered
to pay,'' ``you are ordered to recalculate and pay,'' ``you may not
take this credit,'' or ``you may not use this exception,'' that would
be considered mandatory or ordering language and the order would be
appealable under this proposed rule.
Under paragraph (1), orders would include but not be limited to:
(i) An order to pay. Order to pay would be defined under 30 CFR
part 242, proposed in this same rulemaking, and that definition would
essentially be the same as that under RSFA Sec. 2(1), adding FOGRMA
Sec. 3(26), 30 U.S.C. 1702(26);
(ii) An MMS or delegated State decision to deny a lessee's,
designee's, or payor's written request that MMS make a payment, refund,
offset, or credit of money to the lessee or designee related to the
principal amount of any royalty, minimum royalty, rental, bonus, net
profit share, proceeds of sale, or any interest or assessment related
to a lease obligation. These are MMS's ``obligations'' as defined under
RSFA, Sec. 2(1), adding FOGRMA Sec. 3(25)(A), 30 U.S.C. 1702(25)(A).
Thus, for example, if a lessee or designee believes MMS has improperly
denied a refund of a claimed overpayment, the lessee or designee may
appeal that denial. However, although a lessee would have standing to
file an administrative appeal concerning an MMS decision not to take
royalty-in-kind, we do not believe that the lessee would have any
substantive basis for the appeal because the decision whether to take
royalty-in-kind is committed to the Secretary's discretion by law. 30
U.S.C. 192;
(iii) A denial of a request for an exception from any valuation and
reporting requirement;
(iv) An order to perform restructured accounting. Orders to perform
restructured accounting would be defined under 30 CFR part 242,
proposed in this same rulemaking, and that definition would be
consistent with the description in RSFA Sec. 4(a), adding FOGRMA
Sec. 115(d)(4)(B)(i), 30 U.S.C.
[[Page 1935]]
1724(d)(4)(B)(i). However, an order to perform a restructured
accounting that requires the recipient to provide schedules of
recalculations would not be considered an order to provide documents or
information under this proposed rulemaking. See RSFA, Sec. 4(a), adding
FOGRMA Sec. 115(d)(4)(C), 30 U.S.C. 1724(d)(4)(C), which provides that
``[a]n order to perform a restructured accounting shall not mean or be
construed to include any other action by or on behalf of the Secretary
or a delegated State;''
(v) An order to file a report related to any royalty or other lease
obligation under 30 CFR part 210 or 216; and
(vi) An order to provide documents or information. This section
also would make clear that orders to perform a restructured accounting
are not ``orders to provide documents or information.'' As discussed
below, under proposed Sec. 4.905, an order to provide documents or
information is not appealable under this subpart if it is issued by the
Associate Director for Royalty Management or by someone to whom that
Associate Director has delegated the authority to issue orders to
provide documents or information that are final for the Department.
This section also would state what MMS or delegated State actions
would not constitute ``orders.'' As a threshold matter, actions that
the MMS OMM takes regarding offshore lease operational obligations
would not be appealable ``orders'' under this proposed rule. For
example, OMM actions that allocate production or otherwise affect
production volume would not be appealable ``orders'' under this subpart
even if they could affect royalty calculations. Those orders would be
appealable under 30 CFR part 290.
Under paragraph (2)(i), orders would not include non-binding
requests, information, and guidance such as:
(A) A Preliminary Determination Letter issued under proposed 30 CFR
242.102. These are commonly called ``issue letters'' and do not contain
mandatory or ordering language. Rather, they inform the recipient that
MMS has made a preliminary determination, and invite responses to that
determination prior to issuance of an appealable ``order'';
(B) Advice or guidance on how to report or pay, including a
valuation determination, unless it contains mandatory or ordering
language. For example, assume that you have asked MMS whether it
believes that you are properly valuing your production under a
particular regulation. Also assume that MMS responds that under its
interpretation of the regulations, it does not believe that you are
properly valuing your production. That guidance would not be
appealable. However, if you ignored MMS's guidance, and continued
valuing your production using your valuation method, MMS could later
issue an order stating that you must pay additional royalty because MMS
has determined that you improperly valued that production. In such
instances, you could appeal that order; and
(C) A policy determination. For example, a general letter to
royalty payors advising them of RMP's interpretation regarding a
particular issue--such as the RMP May 3, 1993, ``Dear Payor Letter'' on
the royalty consequences of gas contract settlements--would not be
appealable.
The Department does not consider such documents ``orders'' because
they do not require anyone to take any specific action. However, if a
valuation determination or a letter to payors includes mandatory
language requiring a person to take a specific action with respect to a
mineral lease administered by the Secretary, then it is an order. In
addition, a person's failure to follow guidance or policy
determinations would not preclude that person from later appealing an
``order'' with mandatory language requiring the person to follow such
guidance.
Paragraph (ii) would state that subpoenas also would not be
considered ``orders.'' Subpoenas are enforceable directly by the United
States Government in federal district court under 30 U.S.C. 1717(b),
and are not subject to administrative appeal. Therefore, they are not
appealable ``orders.''
Under paragraph (2)(iii), orders to pay that MMS issues to refiners
or other persons involved in disposition of royalty taken in kind would
not be classified as ``orders'' under this subpart, because those
orders arise out of contracts for sale of royalty-in-kind (RIK)
production and not out of obligations under leases subject to this
subpart. See related changes to 30 CFR part 208 in this same notice.
Party would mean MMS, any person who files a Notice of Appeal, and
any person who files a Notice of Joinder or Intervention Brief in an
appeal under this subpart. This definition is necessary because
``parties'' have certain rights and obligations under this proposed
rulemaking that other participants in the appeals process do not.
Payor would mean any person responsible for reporting and paying
royalties for:
(1) Federal oil and gas leases for production before September 1,
1996;
(2) Federal mineral leases other than oil and gas leases; and
(3) Leases on Indian lands subject to this Subpart. This definition
is necessary because the term ``designee'' is used for Federal oil and
gas leases subject to RSFA, and ``payor'' is used for leases not
subject to RSFA. In addition, designees have certain requirements under
this proposed rulemaking, such as serving their Notice of Appeal on
their lessee(s) under Sec. 4.907(d).
Reporter would mean a person who submits reports for leases subject
to this subpart regardless of whether that person has payment
responsibility.
State concerned would mean the State that receives a statutorily-
prescribed portion of the royalties from a Federal onshore or Outer
Continental Shelf lease. This definition is modeled after the
corresponding definition under RSFA, Sec. 2(1), adding FOGRMA
Sec. 3(31), 30 U.S.C. 1702(31).
Section 4.904 Who May File an Appeal?
Under paragraph (a), if you receive an order, as defined under this
subpart, you could appeal that order if the order adversely affects
you, except as provided under Sec. 4.905.
Under paragraph (b), if you are a lessee and you receive a Notice
of Order, you would have three options under this proposed rule
regarding appealing the order issued to your designee. First, you could
appeal the order yourself. If you chose to appeal the order yourself,
you could make your own arguments in the appeal as an appellant,
regardless of whether your designee also appeals the order or makes
those arguments.
Second, you could join in your designee's appeal under Sec. 4.908.
We added the joinder provision to protect lessees should the designee
decide during some part of the appeals process that it no longer wishes
to pursue the appeal. If you chose to join your designee's appeal under
Sec. 4.908, you would be deemed to appeal the order jointly with the
designee, but the designee would have to fulfill all requirements
imposed on appellants under this subpart. Thus, you could not file any
submissions or pleadings separately from the designee. The purpose of
limiting pleadings to designees is to prevent numerous duplicative
submissions by multiple lessees of a single designee.
Third, you could neither appeal nor join, but instead rely on your
designee's appeal. However, if you chose this option, your designee's
actions with
[[Page 1936]]
respect to the appeal, and any decisions in the appeal, would bind you.
In other words, if your designee lost the appeal, you could not
reappeal the same order. Likewise, if your designee discontinued its
appeal, you could not reappeal the same order or continue the appeal
for the designee.
Under paragraph (c), if you are an Indian lessor, you could file an
appeal of any MMS decision not to issue an order under 30 CFR part 242
that adversely affects you. Part 242, also proposed in this Federal
Register Notice, would explain the process for Indian lessors to
request that MMS issue an order. This paragraph would implement the RPC
Report's recommendation that we clarify the appeal rights of Indian
lessors. RPC Report, page 10. Note, however, that States could not
appeal orders or decisions not to issue orders. Delegated States could
intervene under Sec. 4.934 in an appeal of an order. We decided not to
allow States to appeal orders or decisions not to issue orders because,
unlike Indian lessors, States do not have a property interest in
leases. In addition, States can request authority to issue orders
pursuant to an agreement or agreements under MMS's regulations at 30
CFR part 227.
Section 4.905 What May I Not Appeal Under This Subpart?
This section would state that you could not appeal:
(a) An action that is not an order, as defined in this subpart;
(b) An order to provide documents or information issued under 30
CFR 242.104(b)(4) by the Associate Director for Royalty Management, or
any person to whom that Associate Director has delegated the authority
to issue such orders that are final for the Department. We propose to
make these orders final for the Department because: (1) courts have
consistently upheld MMS's authority to issue orders to produce
documents and information, see Shell Oil Co. (On Reconsideration, 132
IBLA 354 (overruling Shell Oil Co., 130 IBLA 93), aff'd, Shell Oil Co.
v. Babbitt, 945 F. Supp 792 (D. Del. 1996), aff'd, 125 F.3d 172 (3d
Cir. 1997); Santa Fe Energy Products Co., 127 IBLA 265 (1993), aff'd
Santa Fe Energy Products Co. v. McCutcheon, No. 94-C-535, slip op., (D.
Colo. Mar. 30, 1995), aff'd, 90 F.3d 409 (10th Cir. 1996); and (2) it
would avoid the delay caused by administrative appeals of such orders.
Delays associated with these types of orders are particularly
detrimental because they interfere with MMS's and delegated States'
ability to determine whether additional royalties or other payments may
be due. Accordingly, we propose to make such orders subject to judicial
review directly. However, if the order is issued by a person other than
the Associate Director for Royalty Management, or a person delegated
the authority to issue such final orders, then it would be appealable
under this subpart.
(c) A determination of the surety amount or financial solvency
under 30 CFR part 243, subparts B or C. These determinations are final
for the Department and are not subject to administrative appeal.
Section 4.906 When Must I File an Appeal?
You would have to file your appeal with MMS as required under
Sec. 4.960 within 60 days after MMS or a delegated State serves the
order or Notice of Order, or MMS serves a decision not to issue an
order under 30 CFR part 242. An order, Notice of Order, or decision not
to issue an order would be considered served as provided under 30 CFR
242.305.
Formerly, appeals of MMS RMP orders had to be filed within 30 days
of the person's receipt of the order. This rule extends the time in
which to appeal to 60 days from receipt, as the RPC Report recommended.
The 60 day time frame also implements the requirement under RSFA,
Sec. 4(a), adding FOGRMA Sec. 115(d)(4)(B)(ii)(V), 30 U.S.C.
1724(d)(4)(B)(ii)(V), that orders to perform a restructured accounting
``provide the lessee or its designee 60 days within which to file an
administrative appeal of the order. * * *.''
Unlike other appeals to IBLA, which are filed with the office that
issued the decision being appealed (see 43 CFR 4.411), these appeals
would be filed with a centralized office in MMS called the MMS Dispute
Resolution Division (DRD). We chose this centralized approach to ensure
accurate documentation of receipt, to facilitate collection of
processing fees, and to minimize delays in initiating record
development and settlement efforts. In effect, the DRD would receive
the appeals on behalf of the MMS or delegated State office that issued
the order being appealed.
We would eliminate the grace period for filing formerly included
under 30 CFR 290.5(b) (mailed within the 30 day appeal period and
received within 10 days of the 30th day). Instead, we would extend the
time period within which to file to 60 days, with no exceptions or
grace periods. However, to make filing easier, we would allow filing by
telefax, and we plan to centralize the docketing function to ensure
that employees are present during business hours to receive appeals. We
specifically request comments on what methods of filing we should
accept and ways we could provide appellants with documentation of the
receipt date other than a return receipt card.
Section 4.907 How Must I File an Appeal?
Under paragraph (a) of this proposed section, for an appeal to be
considered filed, the MMS DRD would have to receive the appellant's
Notice of Appeal, Preliminary Statement of Issues, and Processing Fee
within the time required under Sec. 4.906.
The written Notice of Appeal would have to include a copy of the
order, or MMS decision not to issue an order, that the appellant is
appealing. Appellants would not be allowed to extend the 60-day period
for MMS to receive their Notice of Appeal.
The written Preliminary Statement of Issues would have to state the
issues the appellant will raise on appeal. The RPC Report recommended
requiring a Preliminary Statement of Issues. The Secretary, in his
September 22, 1997, letter to the RPC, modified that RPC Report
recommendation to state that appellants must ``specifically identify
their legal and factual disagreements with the MMS action.'' However,
he stated that it need not be a legal brief or include the level of
detail appellants currently provide in a Statement of Reasons to the
MMS Director. The Secretary stated that the purpose of the Preliminary
Statement of Issues is to ``ensure productive, well-informed record
development and settlement efforts.'' Moreover, MMS or the delegated
State will have stated the facts and law or regulations relied upon in
issuing the order. Thus, it is imperative that the appellant
specifically identify the factual and legal disagreements the appellant
has with an order so that MMS can properly evaluate the appellant's
position. For example, a blanket statement that the appellant disagrees
with the order, without stating the legal or factual basis for the
disagreement, would not be sufficient information for MMS to determine
whether the appellant's position has merit, or to respond to the
appellant. Nor would a list of issues, without some explanation of how
the facts of the appeal raise those issues, be sufficient. Therefore,
the proposed rule would require appellants to specifically identify the
legal and factual disagreements they have with the order, or MMS
decision not to issue an order, they are appealing. See Appendix A for
[[Page 1937]]
an example of a Preliminary Statement of Issues.
In addition to helping MMS and the appellant prepare for the record
development and settlement conferences, this requirement would would
help highlight those appeals in which it would be appropriate for the
MMS Director to take action to rescind or modify the order. This is
particularly important because appellants would not be required to
provide a Statement of Reasons which comprehensively briefs their legal
position until after the MMS Director has the opportunity to rescind,
modify, or concur with the order. Accordingly, it is in the appellant's
best interest to set out the issues and disagreements specifically,
because it will help to save litigation time and expense before the
IBLA.
The nonrefundable processing fee would be $150. You would have to
pay the processing fee as required under Sec. 4.965 or seek a fee
waiver or reduction under Sec. 4.966. Our analysis leading to the
choice of $150 as the processing fee at this stage of the appeal is in
the Section-by-Section analysis for Sec. 4.965 of this proposed rule.
Indian lessors would not have to pay the processing fee.
Unlike the Notice of Appeal, you would be allowed to request an
automatic extension of time of up to 60 days to file the Preliminary
Statement of Issues and to pay the processing fee. Any such request
would have to be in writing and be received by MMS within the time
allowed for filing the appeal. After the automatic extension, you could
request additional extensions subject to agreement by MMS.
Under paragraph (b), you would have to serve your Notice of Appeal,
Preliminary Statement of Issues, and any attached documents as required
under Sec. 4.962.
Under paragraph (d), if you are a designee, when you file your
appeal under paragraph (a), you would have to serve your Notice of
Appeal on the lessees who MMS identifies under proposed 30 CFR
242.105(a)(5)(i) in the order you appealed. We included this
requirement because lessees would have to join an appeal under
Sec. 4.908(a) within 30 days after they receive the designee's Notice
of Appeal. Thus, it is imperative that designees timely serve lessees
with the Notice of Appeal.
Section 4.908 If I am a Lessee, Can I Join a Designee's Appeal?
Under this section, if you are a lessee, and your designee files an
appeal under Sec. 4.904, you could join in that appeal within 30 days
after you received your designee's Notice of Appeal. You could join
that appeal by filing a Notice of Joinder with the MMS DRD as required
under Sec. 4.960. We added the joinder provision to protect lessees by
giving them the ability to continue the appeal if the designee decides
during some part of the appeals process that it no longer wishes to
pursue the appeal. As stated above, we included a requirement under
Sec. 4.907(c) that designees timely serve lessees with the Notice of
Appeal to facilitate the joinder process. Lessees also would be
required to serve their Notice of Joinder on all parties to the appeal
and other persons as required under Sec. 4.962.
Finally, lessees that neither appeal nor join in their designee's
appeal would be bound by their designee's actions with respect to the
appeal and any decisions in the appeal. In other words, if a lessee
neither appealed nor joined its designee's appeal, and the designee did
not pursue the appeal, or lost the appeal, the lessee could not
continue that appeal either in the Department or in district court.
Section 4.909 What is the Effect of Joining an Appeal?
Under this section, if you joined in an appeal under Sec. 4.908,
you would be deemed to appeal the order jointly with the designee.
However, as discussed in the Section-by-Section analysis for
Sec. 4.904, the designee would have to fulfill all requirements imposed
on appellants under this subpart. Thus, if you joined in your
designee's appeal, you could not file submissions or pleadings
separately from the designee. As discussed above, we limited the
submission of pleadings to designees to prevent numerous duplicative
submissions by multiple lessees of a single designee.
Finally, a lessee who has joined an appeal under Sec. 4.908 could
continue an appeal as an appellant if the designee notified the lessee
under Sec. 4.910(a) that it no longer wanted to pursue the appeal. If
the lessee wanted to continue the appeal, then it would become the
``appellant'' and would have to meet all requirements of this subpart.
Section 4.910 What Must a Designee do if it Decides to Discontinue an
Appeal?
Under this section, if you are a designee and you decide to
discontinue participation in the appeal at any time, you would have to
serve written notice on all lessees who have joined in the appeal under
Sec. 4.908, and on the office or officer with whom any subsequent
submissions or pleadings must be filed, no later than 30 days before
the next submission or pleading is due. The purpose of serving your
lessee if you wish to discontinue the appeal is to give the lessee
notice to allow the lessee to continue the appeal in your place under
Sec. 4.909(d). You also would have to serve the office where the next
pleading is due to allow that office to close the appeal if a lessee
does not continue the appeal under Sec. 4.909(d). Additionally, you
would have to serve your notice on all parties to the appeal and other
persons as required under Sec. 4.962.
Section 4.911 When Does My Appeal Commence?
This section would explain when your appeal commences for purposes
of the period in which the Department must issue a final decision in
your appeal under 30 U.S.C. 1724(h)(1) and Sec. 4.956 of this proposed
rule, or which the Department uses as guidance to track your appeal
under Sec. 4.948.
As explained above, under Sec. 4.907(a), the date your appeal would
be considered filed would be the date the MMS DRD receives all three
items you must file under Sec. 4.907(a)--the Notice of Appeal,
Preliminary Statement of Issues, and processing fee. Thus, paragraph
(a) of this section would provide that your appeal commences on the
date the MMS DRD receives the last of all the items you must file under
Sec. 4.907(a).
RSFA did not define ``commencement'' for purposes of the required
time for the Department to issue a final decision under RSFA Sec. 4(a),
adding FOGRMA Sec. 115(h), 30 U.S.C. 1724(h). RSFA states that:
The Secretary shall issue a final decision in any administrative
proceeding, including any administrative proceeding pending on the
date of enactment of this section, within 33 months from the date
such proceeding was commenced or 33 months from the date of such
enactment, whichever is later.
RSFA Sec. 4(a), 30 U.S.C. 1724(h)(1). An ``administrative proceeding''
is defined under RSFA as ``any Department of the Interior agency
process in which a demand, decision or order issued by the Secretary or
a delegated State is subject to appeal or has been appealed.'' RSFA
Sec. 2, adding FOGRMA Sec. 3(18), 30 U.S.C. 1702(18). RSFA did define
``commence'' ``with respect to a judicial proceeding'' and ``with
respect to a demand.'' 30 U.S.C. 1702(20). However, the definition of
``commence'' under 1702(20) clearly does not encompass ``administrative
proceedings'' under 30 U.S.C. 1724(h)(1) or 1702(18). Rather,
``commence'' under Sec. 1702(20) deals with the ``commencement'' of
judicial proceedings or demands for purposes of the RSFA seven-year
limitations period under RSFA Sec. 4(a), adding FOGRMA
[[Page 1938]]
Sec. 115(b), 30 U.S.C. 1724(b). Accordingly, it is necessary for us to
define ``commencement'' in this proposed rule for purposes of
Sec. 1724(h).
We believe it is more efficient to define ``commencement'' as the
date all three items are filed, rather than defining ``commencement''
as the date when the appellant files the Notice of Appeal and then
requiring the appellant to seek extensions for all other items required
to actually commence the appeal. In addition, we cannot begin to
process an appeal until the appellant tells us what issues the
appellant is raising on appeal in its Preliminary Statement of Issues.
Thus, if you requested an automatic extension of time of 60 days within
which to file your Preliminary Statement of Issues, even though you
filed your Notice of Appeal and paid your processing fee, your appeal
would not ``commence'' until we received your Preliminary Statement of
Issues. The same would be true for processing fees so that if you
requested an automatic extension of time of 60 days within which to pay
your fee, your appeal would not commence until the date we received
your processing fee.
Paragraph (c) would tell you when your appeal commences if you
requested a fee waiver or reduction under Sec. 4.966. In such
instances, your appeal would not commence (assuming you already filed
your Preliminary Statement of Issues) until the date the MMS DRD
either: (1) grants your request for a waiver; (2) receives the reduced
fee if the MMS DRD grants your request for a reduction in the fee; or
(3) receives the entire fee if the MMS DRD denies your request for a
reduction in the fee.
Section 4.912 When Does My Appeal End?
This section would explain that your appeal ends on the same day of
the month of the 33rd calendar month after your appeal commenced under
Sec. 4.911, plus the number of days of any applicable time extensions.
Thus, if your appeal commenced on January 1, 1998, and you requested an
extension of time under Sec. 4.958 of 60 days within which to file your
Statement of Reasons, your appeal would ``end'' on November 30, 2000
(January 1, 1998 to October 1, 2000 (33 months), plus 60 days).
If the 33rd calendar month after your appeal commenced does not
have the same day of the month as the day of the month your appeal
commenced, then the initial 33-month period ends on the last day of the
33rd calendar month. For example, if your appeal commenced on the 31st
of a month, but would end 33 months later in a month with only 30 days,
your appeal would end on the 30th day of the 33rd month, not on the
first day of the 34th month.
Section 4.913 What if a Due Date Falls on a Day the Department or
Relevant Office is Not Open for Business?
This section would explain that if a due date required under this
subpart falls on a day the relevant office is not open for business
(such as a weekend, Federal holiday, or shutdown), then due date would
be the next day the relevant office is open for business. Thus, if your
Statement of Reasons was due on December 25, 1998, a Federal holiday
falling on a Friday, you would be required to file it at the latest on
Monday, December 28, 1998. Likewise, if the IBLA is required to issue a
decision on December 25, 1998, the IBLA would be required to issue the
decision on Monday, December 28, 1998.
Section 4.914 What Will MMS Do After It Receives My Appeal?
This section would explain what the MMS DRD will do with your
appeal after it is received.
Paragraph (a) would explain that when MMS receives your appeal, it
will date stamp each document received (e.g., your Notice of Appeal and
Preliminary Statement of Issues, or request(s) for extension of time to
file your Preliminary Statement of Issues and/or processing fee). Date
stamping would document whether the appeal is timely filed and be used
to calculate the commencement and ending of the appeal. The MMS DRD
also would document receipt of your processing fee using any method it
deems appropriate for the method of payment. Payments by check would be
date stamped on the day received unless received after normal business
hours, in which case the date received would be the next business day.
For payments by Electronic Funds Transfer, MMS could rely on reports,
statements, or online inquiries through an Automated Clearing House or
Federal Reserve Wire network.
Paragraph (b) would state that the MMS DRD will decide whether your
appeal is filed on time. If the MMS DRD did not receive your Notice of
Appeal, Preliminary Statement of Issues, and processing fee, or your
request for extension of time to file your Preliminary Statement of
Issues or processing fee, or your request for a waiver or fee
reduction, by 5:00 p.m. (local time of the MMS DRD) on the 60th day
after you received the order, Notice of Order, or MMS decision not to
issue an order, your appeal would not be timely filed and would not be
considered. In such instances, MMS would notify you under paragraph (c)
that your appeal was not timely filed.
The RPC Report recommended that we notify appellants whether their
appeal is timely filed within 10 days of the Department's receipt of an
appeal. However, we decided not to impose a time requirement in this
proposed rulemaking because, although we expect we would usually meet
such a 10-day time frame, problems could arise which need further
investigation to determine whether the appeal was timely filed. To
avoid disputes over the consequences of any such delay, and because
there is no significant consequence to any party, we decided to omit
the 10-day requirement.
Although appeals would not be under the jurisdiction of MMS, the
designated office in MMS would determine whether the appeal was timely
filed. This is consistent with other IBLA regulations where appeals are
initially filed with the office that issued the decision or order under
appeal, and those offices determine whether the appeals are timely
filed. See e.g., 43 CFR 4.470.
If your appeal was timely filed, MMS would provide you with a
docket number for you to use in future correspondence related to your
appeal. The docket number would not be an MMS docket number but,
instead, would be a Departmental number. Thus, unlike the past appeals
process wherein MMS assigned your appeal an MMS docket number, and the
IBLA assigned it an IBLA docket number, you would use the Departmental
docket number MMS assigns your appeal through the entire appeal
process. This is because it is administratively simpler for both MMS
and IBLA to track an appeal through a coordinated docketing system.
With its notification of your docket number, MMS would also include
instructions regarding scheduling a record development conference and
settlement conference.
Section 4.915 How Will MMS Schedule Record Development Conferences?
Paragraph (a) would provide that if you file an appeal under this
subpart, MMS will schedule you to attend at least one record
development conference within 60 days of the commencement of your
appeal under Sec. 4.911. You would be allowed to extend this 60-day
period under Sec. 4.958.
Paragraph (b) would provide that you may request that record
development conferences take place via telephone, video conference, or
in person.
Paragraph (c) would provide that MMS will determine the time and
[[Page 1939]]
location of record development conferences and whether record
development conferences will take place via telephone, video
conference, or in person. MMS would not require you to travel without
your agreement.
Section 4.916 Who Must and Who May Participate in Record Development
Conferences?
This section would explain who must and who may participate in
record development conferences. Our goal is to allow interested
affected persons that have an ability to provide useful information,
views, or insights to participate in record and issue development.
Paragraph (a) would state that appellants and relevant MMS offices
must participate in record development conferences. We believe that
those persons must participate because they are the ones with the facts
and documentation necessary to develop the record.
Because other interested persons may wish to participate in record
development conferences, paragraph (b) would state that an affected
delegated State or affected State concerned, an affected Indian lessor,
and a lessee, designee, payor, or reporter, if not an appellant, could
participate in the record development conferences.
Paragraph (c) would state that any person who refuses to
participate in any record development conference as required under
paragraph (a) could not file any documents and materials for the
record. Under paragraph (d), any person who may participate as allowed
under paragraph (b) but doesn't participate in any record development
conferences may not file any documents or materials for the record.
This means that those parties could not file any documents, at any
time, including under Sec. 4.923. The purpose of paragraphs (c) and (d)
is to ensure that the record is as complete as possible by the end of
the record development process, rather than to allow persons who could
or should have participated in that process to add to the record at a
later date.
Section 4.917 How Will I Receive Notification of Record Development
Conferences?
The purpose of this section would be to identify who in the
Department has responsibility for notifying the various participants of
the record development conferences. Because MMS would have such
information, it would have the primary notification responsibility.
Thus, paragraph (a) would explain that after MMS schedules any record
development conference under Sec. 4.915, MMS will notify the appellant,
lessees that joined under Sec. 4.908, the office that issued the order,
affected delegated States, the persons that affected States concerned
identify under Sec. 4.961, and affected Indian tribes or appropriate
BIA offices of any record development conference.
MMS would not be responsible for notifying individual Indian
mineral owners that they may attend record development conferences
because it does not have the information necessary to contact those
persons. However, BIA does have that information. Thus, paragraph (b)
would provide that the appropriate BIA office that MMS notifies under
paragraph (a) would make available whatever notice to individual Indian
mineral owners it deems appropriate by any method it deems appropriate.
This proposal was based on the assumption that area BIA offices are in
the best position to know what type of notice would be useful. For
example, such notice could be in the form of notice in a local paper,
or posting notice on the internet that individual Indian mineral owners
could access at their local BIA office. We request comments on the most
appropriate way to provide useful notice to individual Indian mineral
owners about matters that may affect their revenues.
Section 4.918 How Will the Parties to the Appeal Develop the Record
During the Record Development Conferences?
The goals of the record development conference would be to (1)
identify and narrow the facts and issues that are in dispute in the
appeal, (2) agree to the extent possible on the facts and issues, and
(3) provide both sides the opportunity to put into the record documents
and other evidence that are relevant to the disputed facts and issues.
Although the proposed rule requires a minimum of one record development
conference, MMS envisions a record development ``process,'' the goal of
which is to have a complete record that all parties can agree upon.
Accordingly, we used the plural ``conferences'' because we believe that
there may be several record development conferences in the more
factually complex cases as part of the entire record development
process.
At the record development conferences, the parties would have to
identify all documents and evidence that are relevant to disputed legal
or factual issues involved in the appeal or that demonstrate material
facts. The purpose of this provision is to make it clear that the
parties must bring forward relevant information at this stage of the
appeal, rather than waiting until later in the process.
Relevant information would include information adverse to the
party's position on appeal that the party is aware of, and that was
considered in determining the party's position, that is not privileged
or prohibited by law. However, this would not create an affirmative
duty to seek out information adverse to the party's position that was
not considered as part of determining its position.
The requirement to provide information would not, however, preclude
a party from adding to the record at a later date in circumstances
where the party reasonably would not have known about the information
or its relevance to the case. In such instances, the party could
request that the IBLA allow it to supplement the record later under
Sec. 4.923.
Section 4.919 What Will the Parties Do If They Agree on the Record
Contents?
This section would require the parties to compile for the record
all material information relevant to the appeal and to file a Joint
Statement of Facts and Issues and a certification that the record is
complete. We believe this section is largely consistent with the RPC
Report recommendations because: (1) parties would file a Joint
Statement of Facts and Issues (see RPC Report paragraph 19.d); (2) the
record would have to include ``evidence in the work papers or otherwise
in the control of either party that bears upon the disputed facts or
issues'' (see RPC Report at paragraph 19.e); and (3) parties would
attempt to agree on evidence to be provided as part of the record (see
RPC Report paragraph 19.f).
Although MMS would usually be responsible for assembling the record
and drafting a Joint Statement of Facts and Issues, all parties would
be expected to be actively involved in the process, and the parties
could agree to allocate the responsibility differently. Thus, the
appellant or a delegated State could assemble the record or draft the
Joint Statement of Facts and Issues. Accordingly, under paragraph (a),
if the parties to the appeal agree on the contents of the record and
the facts and issues on appeal, MMS would be responsible for (1)
compiling all documents and materials to be included in the record, (2)
drafting a Joint Statement of Facts and Issues, and (3) filing the
record, Joint Statement of Facts and Issues, and certification that the
record is complete, with the MMS DRD within 30 days after the end of
the record development conferences. The parties could file the
certification jointly
[[Page 1940]]
or individually, but the MMS DRD would have to receive all parties'
certifications before it will deem the record complete. When MMS deems
the record complete it would send notice to all parties that the record
is complete. Thus, under the proposed rule, parties would only be able
to add to the record at later stages of the process if they submit a
request to the IBLA under Sec. 4.923 to add to the record with an
explanation of why they did not add the information during the record
development process. The RPC recommended both certification, RPC Report
paragraph 19.d., and admission to the record of additional information
after certification only upon a showing of ``good cause'' to the IBLA.
RPC Report paragraph 25.
We believe that requiring certification of the record will increase
the incentive for appellants and MMS to take the record development
process seriously and to bring forward all evidence and issues during
record development. Having a complete record early in the process will
provide several benefits. First, we believe that this can help to
filter out many cases at an early stage before the process of briefing
to the IBLA begins. Facts and issues brought up early in the process
can help either or both sides to see any errors in their positions,
which can facilitate early resolution of the case. Second, identifying
facts and issues at the record development stage will facilitate
settlement discussions, which also can obviate the need for more costly
briefing to and decision by the IBLA. Third, for cases that proceed to
briefing before the IBLA, we think that the briefing will be faster and
more efficient if the parties are aware of the facts and issues on
appeal before briefing begins. Front-loading the record-development
process as proposed here is intended to support efforts to decide
appeals faster and to meet the time frames set out elsewhere in this
rule. However, we understand that there may be cases where parties
identify new issues or facts that are relevant to the case after they
have certified the record. In such cases, the parties could petition
IBLA under Sec. 4.923 to allow them to add the facts or issues to the
record. We believe that Sec. 4.923 will insure an opportunity to
supplement the record in cases where the party can show a good reason
for not identifying the facts or issues at an earlier stage.
We recognize that the proposed process for certifying the record at
the record development stage could slow down the appeals process
because the requirement to ask the IBLA for permission to make
additional submissions, and explain to the IBLA the reason for the
request, requires additional time and cost for the requesting party to
prepare the request, and for the IBLA to act on that request.
Additionally, the appeals process may become quite complicated and get
bogged down in collateral disputes if the IBLA denies a party's request
to add to the record, or if another party objects to the request. We
further recognize that there may be practical difficulties in being
able to assemble all the pertinent facts or materials in the time frame
envisioned for the record development conferences, and we request
comments on this question.
Moreover, one of the primary goals of the record development
process is to develop a complete administrative record for any
subsequent judicial review of the Department's ultimate decision.
Accordingly, certifying that the record is complete at this early
stage, and then requiring parties to ``request'' to add to the record,
may be too onerous and ultimately contrary to the goal of
administrative record development. Therefore, we specifically request
comments on whether we should require parties to ``certify'' the record
at this early stage, and then require the parties to separately request
to add to the record at later stages of the appeals process. We also
specifically request comments on other alternatives, including not
requiring any certification and permitting documentary submissions at
later stages of the appeals process.
Section 4.920 What Will the Parties Do If They Do Not Agree on the
Record Contents?
This section would establish procedures for completing the record
in the event the parties cannot agree on the record contents. If the
parties to the appeal cannot agree on the contents of the record and
the facts and issues on appeal, then under this section, in addition to
submitting the material required under Sec. 4.919, each party would
have to prepare an Additional Statement of Facts and Issues and
supporting documents for the record and file them with the MMS DRD
within 30 days after the end of the record development conferences. In
addition, each party would have to certify that the Additional
Statement of Facts and Issues and supporting documentation it filed
comprises the complete record, except as provided in Sec. 4.923 of this
subpart. The MMS DRD would have to receive all parties' certifications
before it would deem the record complete. When the MMS DRD deemed the
record complete it would send notice to all parties that the record is
complete.
The RPC Report did not address the process for record development
when parties cannot agree on the record and facts and issues in
dispute. However, we wanted the record development process to be
inclusive, rather than exclusive. We have included the process in this
section in the proposed rule because, although it would not accomplish
the goal of agreement on the record and issues, it would still
accomplish the objective of producing as complete a record as possible
as early as possible in the appeals process. This process also would
avoid lengthy disputes in which the parties to the appeal would be
arguing over what the appeal is about or what should be in the record.
Section 4.921 What Must MMS or I Do If the Record Contains Proprietary
or Confidential Information?
This section would explain that if a party considers any of the
documents or materials compiled under this subpart to contain
proprietary or confidential information, that party would have to
follow the procedures under 43 CFR 4.31 to have that information
treated as such. On August 4, 1997, MMS proposed a separate rule on
this subject (62 FR 16116), but MMS withdrew that proposal on December
31, 1997 (62 FR 68244). We decided to rely on existing procedures under
43 CFR 4.31 rather than create new procedures.
Section 4.922 What if MMS or I Need More time to Develop the Record?
As proposed, the time to complete the record development process
would be 120 days, unless a party requested to extend the process.
Thus, under this proposed section, if an appellant requires additional
record development conferences (or additional time for any other part
of the record development process, such as for filing a Joint or
Additional Statement of Facts and issues or for certifying that the
record is complete) after that time period, then the appellant would
have to follow the procedures set out in Sec. 4.958 to request an
extension. The purpose of this paragraph is to ensure that the record
development process is flexible enough to allow the parties to develop
as complete a record as possible at this stage of the appeals process.
We did not want to cut off the record development process but needed to
make sure that the 33-month period in which to decide Federal oil and
gas appeals did not continue to run if the appellant needed more time
to complete the process.
[[Page 1941]]
Section 4.923 May Parties Supplement the Record or Statement of Facts
and Issues After the Record is Deemed Complete?
As discussed above in the Section-by-Section analysis for
Sec. 4.919, although parties would have to certify that the record is
complete at the end of the record development process, they could
request to later add to the record under this section. The RPC Report
stated that ``[a]bsent good cause, [appellants could] not raise new
issues or facts that were not raised when the administrative record was
developed'' in their Statement of Reasons. RPC Report at paragraph
22.d. The proposed rule would make that provision applicable to all
parties with the objective of encouraging early record development.
We recognize that there will be situations where additional
information or issues are identified after the record development
conference. Thus, this section would allow parties to supplement the
record at a later stage, provided that they can demonstrate adequate
reasons to the IBLA. Accordingly, under paragraph (a), if you are a
party, and you want to supplement the record or the Joint or Additional
Statement of Facts and Issues at any time after MMS deems the record
complete under Secs. 4.919 or 4.920 through the time additional
responsive pleadings are filed under Sec. 4.944, you would have to file
any additional material together with a written request for permission
with the IBLA (or an Assistant Secretary who is deciding the appeal
under Sec. 4.937) to supplement the record or the Joint or Additional
Statement of Facts and Issues. Paragraph (b) would state that a party's
request would have to explain why the additional documents, evidence,
facts or issues were not available or provided in the certified record
or in the Joint or Additional Statement of Facts and Issues and why
they are material to a decision on the appeal.
As previously discussed in connection with the proposed Sec. 4.919,
we recognize that this approach's practical result may be inefficient
or counterproductive to the goal of administrative record development.
We specifically request comments on whether we should require parties
to request to add to the record, and explain that request, after the
record development conferences are complete.
Paragraph (c) would provide that if you are an appellant, you would
have to agree in writing to extend the period for the Department to
issue a final decision in your appeal under 30 U.S.C. 1724(h)(1) by 45
days, and include that agreement with your request. The purpose of this
paragraph is to ensure that the record development process is flexible
enough to allow the parties to develop as complete a record as possible
but make sure that the 33-month period in which to decide federal oil
and gas appeals does not continue to run if the appellant needs
additional time to add to the record.
We propose 45 days for the extension of time under paragraph (c)
because that time frame would allow the IBLA to act on the request and
other parties to respond to the additional submissions. Thus, paragraph
(d) would provide that you must serve your request on all parties to
the appeal. Paragraph (e) would provide that the IBLA would issue an
order either granting or denying your request to supplement the record
or Joint or Additional Statement of Facts and Issues under this section
within 30 days of its receipt of your request. If the IBLA did not
issue an order either granting or denying your request within 30 days
of its receipt of your request, your request would be deemed granted.
Then, under paragraph (f), if the IBLA granted a request or a request
was deemed granted under paragraph (e), any party to the appeal could
respond to a party's additional documents, evidence, facts or issues
within 15 days of its receipt of the IBLA's order, or, if the IBLA did
not issue an order, within 45 days of the party's receipt of the
request.
Section 4.924 How Will MMS Schedule a Settlement Conference?
RSFA Sec. 4(a), adding FOGRMA Sec. 115(i), 30 U.S.C. 1724(i),
requires that parties to disputed obligations under orders subject to
RSFA ``hold not less than one settlement consultation.'' However, the
RPC recommended we propose to make at least one settlement conference
mandatory for all appeals, not just appeals involving Federal oil and
gas production subject to RSFA. Our reason is that participation in a
settlement conference imposes little additional burden on any party but
may yield substantial benefits in terms of the time and expense of
resolving the dispute. We seek comments on whether we should extend
this RSFA requirement to all appeals. In particular we specifically
request comments on whether this requirement should be mandatory for
Indian appeals.
Accordingly, paragraph (a) would state that if you file an appeal
under this subpart, MMS will schedule you to attend a settlement
conference within 120 days of the commencement of your appeal under
Sec. 4.911. You would be allowed to extend this 120-day period under
Sec. 4.958. Thus, attendance at one settlement conference would be
mandatory for all appeals. However, we would encourage as many
settlement conferences as necessary to facilitate early resolution of
disputes. We included the provision requiring an extension of the 33-
month period because we did not want to cut off the settlement process,
but needed to make sure that the 33-month period in which to decide
federal oil and gas appeals did not continue to run if the appellant
needed more time to complete the process.
Under paragraph (b), you could request that the settlement
conference take place via telephone, video conference, or in person.
However, under paragraph (c), MMS ultimately would determine the time
and location of the settlement conference and whether the settlement
conference will take place via telephone, video conference, or in
person. MMS would not compel you to travel (i.e., MMS might suggest
that the conference be in person at a location remote from the
appellant, but if the appellant chose not to travel, MMS would
accommodate that choice).
To increase the flexibility and efficiency of the settlement and
appeals process, MMS added paragraph (d) to provide that the settlement
conference could be held as part of the record development conference
scheduled under Sec. 4.915 if you and MMS agree to do so. MMS believes
that, in many instances, the record development conference and
settlement conference would be concurrent because all necessary parties
would be present to discuss the issues, facts, and possible early
resolution of the dispute.
Section 4.925 Who Must and Who May Participate in the Settlement
Conference?
This section would explain who must and who may participate in
settlement conferences. Our goal is to allow interested affected
persons that have an ability to provide useful information, views, or
insights to participate in settlement conferences.
Paragraph (a) would state that appellants and relevant MMS offices
must participate in settlement conferences, as required under RSFA
Sec. 4(a), adding FOGRMA Sec. 115(i), 30 U.S.C. 1724(i).
Because States concerned and other interested persons may wish to
participate in settlement conferences, paragraph (b) would state that
affected delegated States or affected States concerned, affected Indian
lessors, and a lessee, designee, payor, or reporter (if
[[Page 1942]]
not an appellant) may participate in the settlement conferences.
RSFA Sec. 4(a), FOGRMA Sec. 115(i), provides that for royalties due
on production after September 1, 1996, ``the parties shall hold not
less than one settlement consultation and the Secretary and the State
concerned may take such action as is appropriate to compromise and
settle a disputed obligation * * *.'' However, that language does not
grant States authority to settle a dispute or give the State a ``veto''
over the Secretary settling a dispute. Rather, the Secretary must
determine what is the appropriate action and has determined that it is
not mandatory for States concerned to participate in settlement
conferences. Thus, if States concerned want to participate, they could
do so under paragraph (b).
Section 4.926 How will I Receive Notification of Settlement
Conferences?
The purpose of this section is to identify who in the Department
has responsibility for notifying the various persons of the settlement
conferences. Because MMS would have such information, it would have the
primary notification responsibility. Thus, paragraph (a) would explain
that after MMS schedules a settlement conference under Sec. 4.924, MMS
will notify the appellant, lessees that joined under Sec. 4.908, the
office that issued the order, affected delegated States, the persons
that affected States concerned identify under Sec. 4.961, and affected
Indian tribes or appropriate BIA offices of the settlement conference.
MMS would not be responsible for notifying individual Indian
mineral owners that they may attend settlement conferences because it
does not have the information necessary to contact those persons.
However, BIA does have that information. Thus, paragraph (b) would
provide that the appropriate BIA office that MMS notifies under
paragraph (a) would make available whatever notice to individual Indian
mineral owners it deems appropriate by any method it deems appropriate.
This proposal was based on the assumption that area BIA offices are in
the best position to know what type of notice would be useful. For
example, such notice could be in the form of notice in a local paper,
or posting notice on the Internet that individual Indian mineral owners
could access at their local BIA office. We request comments on the most
appropriate way to provide useful notice to individual Indian mineral
owners about matters that may affect their revenues.
Section 4.927 May Parties Resolve an Appeal by Settlement or Using
Third Party Neutrals After the Settlement Conference?
Although RSFA Sec. 4(a), adding FOGRMA Sec. 115(i), 30 U.S.C.
1724(i) requires at least ``one settlement consultation,'' MMS wants to
make clear that it will engage in settlement negotiations whenever
appropriate throughout the appeals process. Thus, paragraph (a) would
provide that parties may resolve any appeal by settlement at any time
before the Department has issued a final decision.
Under paragraph (b), any party could participate in settlement
negotiations at any stage of the appeal. Also, MMS could use any
personnel or officials it deems appropriate for settlement
negotiations, including representatives of tribes and delegated States.
Like the mandatory settlement conference, the Secretary has determined
under this proposed rulemaking that it is not mandatory for States
concerned to participate in settlement negotiations. However, MMS would
consult with States concerned regarding any settlement negotiations and
could invite States concerned to participate under this paragraph.
We are proposing paragraph (c) to provide for alternative dispute
resolution options other than settlement negotiations. Accordingly, in
addition to negotiated settlements, at any stage of the appeal, MMS
could use third party neutrals under the Administrative Dispute
Resolution Act, 5 U.S.C. 571 et seq., if both MMS and the other parties
to the appeal agreed to do so. Thus, parties would not be forced to
refer disputes to an arbitrator or mediator. If MMS used third party
neutrals, MMS could use the Alternative Dispute Resolution Official
from the OHA, or persons named on the roster of third party neutrals
that OHA maintains.
Section 4.928 What if I Need More Time to Consider Settlement?
This section would explain how to postpone any filing requirements
and the deadline for the Department to issue a final decision in your
appeal while settlement efforts are ongoing. To do this, you would have
to obtain an extension under Sec. 4.958. We included this provision
because we did not want to cut off the settlement process but needed to
make sure that the 33-month period in which to decide Federal oil and
gas appeals did not continue to run if the appellant needed more time
to complete the process.
Section 4.929 May the MMS Director Concur With, Rescind, or Modify an
Order or Decision Not to Issue an Order that I Appealed?
One of the goals of the RPC was elimination of the current two-step
royalty appeals process wherein an appellant must appeal to the MMS
Director, brief that appeal, and receive a decision that is then
appealable to the IBLA. Once at the IBLA, appellants must then brief
the appeal to the IBLA.
To eliminate the two-step briefing process, yet allow MMS the
opportunity to rescind or modify an order after record development, the
RPC Report recommended that MMS prepare an internal recommendation on
whether an order should be upheld, modified, or rescinded. RPC Report
paragraph 21. The RPC Report then recommended that after appropriate
consultation with States and tribes, the MMS Appeals Division could
rescind or modify an order. Id. However, this process would have
involved asking the IBLA to remand the appeal, which would be
burdensome and time consuming. Also, the internal memorandum would not
be shared with the appellant. In his letter of September 22, 1997, the
Secretary stated that rather than writing an internal memorandum MMS
would issue a letter decision to appellants with copies to appropriate
Indian lessors and delegated States stating whether the MMS Director
had modified or rescinded the order or decision not to issue an order.
Thus, under paragraph (a), although appeals are not to the MMS
Director, this rule is proposing that the MMS Director, within 60 days
of the date that the MMS DRD has received the record under Secs. 4.919
or 4.920, may concur with, rescind, or modify the order or decision not
to issue an order that you have appealed. We felt that MMS should have
up to this point to unilaterally act on an order without leave of the
IBLA. We also believe that the short 60-day time period within which
the MMS Director would have to act was necessary because of the RSFA
33-month period within which to decide Federal oil and gas appeals and
the Department's and RPC's desire to decide appeals more quickly than
the current process. Although neither the RPC report nor the Secretary
addressed the process for the MMS Director to concur with orders, we
believe that in addition to issuing letters modifying or rescinding
orders, as part of MMS's review practice, MMS should be authorized to
issue letters concurring with orders.
[[Page 1943]]
The purpose of allowing the MMS Director to rescind or modify the
order or decision not to issue an order would be to: (1) formally
communicate our reasons for rescission or modification to appellants;
(2) eliminate the need to request remand from the IBLA; (3) allow MMS
an opportunity to review orders for accuracy and conformity with MMS
policy prior to formal briefing to the IBLA; and (4) help resolve
appeals or issues prior to formal briefing to the IBLA. The early
resolution of appeals is particularly important given RSFA's 33-month
time constraint.
Moreover, under the current appeals process, MMS appeals decisions
and settlement agreements have resolved more than three-fourths of the
complex appeals filed with MMS prior to appeal to the IBLA. MMS hopes
that its ability to review and rescind or modify orders in this
proposed rule, together with the settlement conferences, will yield a
similar result.
The purpose of having the MMS Director affirmatively concur with
orders is to speed up the appeals process and give appellants clear
documentation of the concurrence (compared to ``deemed'' concurrences
under paragraph (e), described below).
Paragraph (b) would provide that MMS will consult informally with
the MMS office that issued the order or decision not to issue the
order, and with affected tribes or affected delegated States that
participated in the record development conference or the settlement
conference before the MMS Director rescinds or modifies an order or
decision not to issue an order under paragraph (a). This is
substantially what the RPC Report recommended, RPC Report paragraph
21.a, except that MMS would not have to consult with affected tribes or
affected delegated States that show no interest in the proceedings by
failing to participate in the early part of the appeals process. MMS
also would not be required to consult with States concerned. This would
conserve MMS resources by eliminating the need to inform persons that
did not issue the order, participate in the audit that resulted in the
order, or participate in the appeals process. This would also encourage
interested affected tribes and affected delegated States to participate
early in the process and thereby produce more meaningful record
development and settlement conferences. However, paragraph (c) would
give MMS discretion to consult informally with other relevant MMS
offices, States concerned, and affected Indian lessors before the MMS
Director rescinds or modifies an order or decision not to issue an
order.
Under the current appeals process, for appeals involving Indian
leases, MMS prepares the decision, and the Deputy Commissioner of
Indian Affairs signs the decision, after the Solicitor, Division of
Indian Affairs, reviews the decision. In this proposed rule, the MMS
Director would concur with, rescind or modify appeals involving Indian
leases. We specifically request comment on what the extent of BIA
involvement regarding such appeals should be. For example, should MMS
be required to ``consult informally'' with appropriate BIA officials
prior to acting on an order under paragraph (b), or should such
consultation be at MMS's discretion under paragraph (c)?
Under paragraph (d), MMS would notify appellants in writing that
the MMS Director has concurred with, rescinded or modified the order or
decision not to issue an order they appealed. A notice of rescission or
modification would state the reasons for the rescission or
modification. However, we anticipate that these letters would be
shorter and would include less written legal analysis than current MMS
appeals decisions.
We included paragraph (e) to explain what happens if the MMS
Director does not concur with, rescind or modify the order or decision
not to issue an order within the 60-day time frame provided in
paragraph (a). In such instances, the MMS Director would be deemed to
have concurred with the order or decision not to issue an order that
you have appealed.
Section 4.930 What Other Persons Will MMS Notify When the MMS Director
Concurs With, Rescinds, or Modifies an Order or Decision Not to Issue
an Order?
The purpose of this section is to identify the persons, other than
the appellant that the Department will notify when the MMS Director
concurs with, rescinds, or modifies an order or decision not to issue
an order. This would include persons who would not otherwise be aware
of such action because they did not receive an order, Notice of Order,
or Notice of Appeal. Because MMS would have such information, it would
have the primary notification responsibility.
Paragraph (a) would provide that, for appeals filed under
Sec. 4.904(a) or (b) (i.e., by parties other than Indian lessors), MMS
will send a copy of the notice that it issues under Sec. 4.929(d) to
the following persons: (1) the office that issued the order; (2) any
affected delegated State; (3) any affected Tribe; and (4) the
appropriate BIA office, if the order involves leases on individual
Indian lands. The BIA office may make available to individual Indian
mineral owners whatever notice it deems appropriate by any method it
deems appropriate. MMS would not be responsible for notifying
individual Indian mineral owners because it does not have the
information necessary to contact those persons. However, BIA does have
that information. This proposal was based on the assumption that BIA
area offices are in the best position to know what type of notice would
be useful. For example, such notice could be in the form of notice in a
local paper, or posting notice on the Internet that individual Indian
mineral owners could access at their local BIA office. We request
comments on the most appropriate way to provide useful notice to
individual Indian mineral owners about matters that may affect their
revenues.
Paragraph (b) would provide that for appeals filed by Indian
lessors under Sec. 4.904(c), MMS will send a copy of the notice it
issues under Sec. 4.929(d) to the office that decided not to issue the
order and to the lessee or its designee.
Section 4.931 If the MMS Director Rescinds or Modifies an Order, How
Does it Affect the Statutory Limitations Period?
RSFA Sec. 4(a), adding the new FOGRMA Sec. 115(b)(1), 30 U.S.C.
1724(b)(1), provides that MMS must commence a demand for an obligation
within seven years from the date the obligation becomes due. Thus,
orders subject to RSFA must be issued within seven years of the date
that additional royalties became due. For purposes of this rulemaking,
we needed to clarify the effect of the MMS Director's rescission or
modification of orders subject to the seven-year limitations period
under RSFA.
Accordingly, for purposes of determining whether an order is timely
under the limitations period prescribed in 30 U.S.C. 1724(b)-(d),
paragraph (a) of the proposed section would state that if the MMS
Director modifies an order under Sec. 4.929, the timeliness of the
order is not affected and the modified order is timely if the original
order was timely. For example, assume that MMS issued an order to pay
additional royalty of $10,000 on January 1, 1998, for royalties that
were due on January 1, 1991 from lease X.
Also assume that the designee appealed the order, and that the MMS
Director modified the order to find that the lessee underpaid royalties
on lease X for the same production by $15,000, not the $10,000 under
the order as issued, and to require the lessee to pay the higher
amount. In that instance,
[[Page 1944]]
because the original order was timely, the modification would be
timely, even though it increased the amount of royalties due. However,
the MMS Director's modification would not address production not
included in the original order. Thus, using the above example, the MMS
Director could not modify the order to include additional royalties on
production from lease Y, because that production was not included in
the original order. Similarly, the Director could not modify the order
to include production from lease X for a time period different than the
time period in the original order.
Paragraph (b) would provide that for purposes of determining
whether an order is timely under the limitations period prescribed in
30 U.S.C. 1724(b)-((d), if the MMS Director rescinded all or part of an
order under Sec. 4.929, and the IBLA, an Assistant Secretary, the
Director of OHA, the Secretary, or a court reinstates that order, in
whole or in part, the reinstated order relates back to the date the
order was originally issued, and the reinstated order would be timely
if the original order was timely. Thus, as long as an appeal (or
intervention) of the rescission was pending within the Department or in
federal court, an order would stay ``alive'' for purposes of the 7-year
limitations period even though the MMS Director rescinded that order.
Section 4.932 When Will MMS Send the Record to IBLA?
Under this section, the MMS DRD would transmit the record to the
IBLA within 45 days of the date MMS notifies the appellant under
Sec. 4.929(d). If the MMS Director is deemed to have concurred with an
order under Sec. 4.929(e), this section would require that the MMS
Dispute Resolution Division transmit the record to the IBLA within 105
days after MMS has received the record under Sec. 4.919 or 4.920. The
45-day deadline under this paragraph would merely be guidance for MMS
and would create no substantive rights in parties to the appeal or any
other persons.
Section 4.933 What Must I Do, or What May I Do, After the MMS Director
Concurs With, Rescinds or Modifies an Order or Decision Not To Issue an
Order That I Have Appealed?
This section would explain what an appellant could do regarding the
appeal of its order after the MMS Director concurs with, modifies or
rescinds an order under Sec. 4.929. Depending on the MMS Director's
action, and whether the appellant desires to continue the appeal, there
are several options for the appellant. First, under paragraph (a), if
the MMS Director concurred with the order or decision not to issue an
order that you appealed, and you wanted to continue your appeal, you
would have to file your Statement of Reasons under Sec. 4.939 with the
IBLA within 60 days after you received the MMS Director's concurrence
under Sec. 4.929. The 60-day time period is intended to provide
sufficient time for you to determine what action you intend to take and
to prepare your Statement of Reasons.
Second, under paragraph (b), if the MMS Director rescinded the
order that you appealed, and if an Indian lessor or delegated State
intervened under Sec. 4.934, because you would be bound by the
Department's final decision in the intervention in your appeal, you
could file an Answer to the Intervention Brief under Sec. 4.942 within
60 days after you receive the MMS Director's rescission under
Sec. 4.929(d). We assume that appellants would not appeal a recission
to IBLA. However, we realize that the substantive rights of appellants
may be affected if an Indian lessor or delegated State intervenes under
Sec. 4.934. Thus, we wanted to ensure that appellants have the
opportunity to address any arguments for reinstatement of a rescinded
order an Intervenor makes to IBLA in its Intervention Brief. But we
also wanted to make clear that if an appellant chooses not to answer an
Intervention Brief, it would still be bound by any IBLA decision
regarding the rescission.
Third, under paragraph (c), if the MMS Director modified the order
that you appealed, and if you still wanted to contest the order as
modified, you would have to file your Statement of Reasons under
Sec. 4.939, and any Answer to an Intervention Brief under Sec. 4.942,
within 60 days after you receive the MMS Director's modification under
Sec. 4.929. The 60-day time period is intended to provide sufficient
time for you to determine what action you intend to take and to prepare
your Statement of Reasons and any Answer to an Intervention Brief.
Finally, under paragraph (d), if the MMS Director was deemed under
Sec. 4.929(e) to have concurred with the order or decision not to issue
an order that you appealed, you would have to file your Statement of
Reasons under Sec. 4.939 within 120 days after the date the MMS DRD
receives the record forwarded under Secs. 4.919 or 4.920. Thus, if MMS
did not notify you of its concurrence, modification, or rescission of
the order within the time required under Sec. 4.929, then you would
have 60 days from the date that the notification should have been sent
to file a Statement of Reasons with the IBLA. This would give an
appellant sufficient time to determine whether the appeal was deemed
concurred with under Sec. 4.929(e), determine what action it intends to
take, and prepare its Statement of Reasons.
Section 4.934 Who May Intervene in an Appeal?
The purpose of this section is to provide a means for Indian
lessors and affected delegated States to object to an MMS Director's
rescission or modification of an order without having to make the
Indian lessor or State file a separate appeal of some kind. We felt it
would be too confusing and administratively difficult to track dual
appeals regarding the same order for purposes of the 33-month period
within which to decide appeals of orders concerning federal oil and gas
leases. The RPC Report, paragraph 21.e, recommended that delegated
States be allowed to ``continue'' an appeal. However, we believe that
Indian lessors and affected delegated States are not ``appellants''
when they disagree with an MMS rescission or modification because there
already is an ``appellant.'' Rather, they should be regarded as
intervenors because they did not appeal the order but challenge MMS's
action with respect to an order. See e.g., 43 CFR 4.471 and 4.1110.
This achieves the same effect as the RPC Report recommendation,
but, under the proposed rule, appellants have different substantive
rights and procedures than intervenors. For example, under various
sections of the proposed rule, if an appellant wants additional time to
comply with a filing deadline, hold additional record development or
settlement conferences, etc., then, under Sec. 4.958, the appellant
must request an extension of the period in which the Department must
issue a final decision in its appeal under Sec. 4.956, or which the
Department uses as guidance to track its appeal under Sec. 4.948. There
is no such requirement for Intervenors because they cannot extend the
33-month period. Thus, the Departmental office considering an extension
request from an Intervenor would have discretion whether to grant the
request considering, among other factors, whether the Intervenor
obtained a written agreement from the appellant to extend the 33-month
period. Accordingly, under paragraph (a), Indian lessors could
intervene in any appeal involving their leases by filing an
Intervention Brief under Sec. 4.939 within 30 days after receiving
notification of the MMS Director's concurrence, rescission or
modification of an order
[[Page 1945]]
under Sec. 4.930 that adversely affects them. Likewise, paragraph (b)
would provide that affected delegated States could intervene in an
appeal if the MMS Director modified or rescinded an order under
Sec. 4.929 that the recipient of the order or Notice of Order appealed,
by filing an Intervention Brief under Sec. 4.939 within 30 days after
the delegated State received MMS's notification of any rescission or
modification under Sec. 4.930, if MMS's rescission or modification of
the order adversely affected that State.
We believe that only Indian lessors and delegated States that are
adversely affected by the MMS Director's actions regarding an order
should be allowed to intervene. Thus, an Indian lessor whose leases are
not at issue in the appeal, or a delegated State that does not receive
revenues from the leases at issue in the appeal, could not intervene.
However, if an unaffected Indian lessor or delegated State wished to
express views about the merits of MMS's actions, it could file an
amicus brief under Sec. 4.943.
Section 4.935 What is the Record for an Appeal if a State or Indian
Lessor Intervenes?
Because a record already exists for an appeal when an Indian lessor
or a delegated State intervenes, this section would provide that if an
Indian lessor or delegated State intervenes under Sec. 4.934, the
record for the appeal that the IBLA must consider is the record
established under Secs. 4.919 or 4.920 before the MMS Director's
rescission or modification under Sec. 4.929, plus any additional
correspondence to the MMS Director and the MMS Director's notice of
modification or rescission under Sec. 4.929(d).
Section 4.936 If an Indian Lessor or Delegated State Intervenes, How
Does it Affect the Time Frame for Deciding an Appeal?
As explained above, we believe that Indian lessors and affected
delegated States are not ``appellants'' when they disagree with an MMS
rescission or modification because there already is an ``appellant.''
Thus, this section would provide that when an Indian lessor or
delegated State intervenes, the appeal commences on the appellant's
commencement date under Sec. 4.911, not on the date an intervening
party files its Intervention Brief. Thus, intervention would not
``recommence'' an appeal.
Section 4.937 May an Assistant Secretary Decide an Appeal?
Under the current two-step appeals process, an Assistant Secretary
may take jurisdiction of an appeal and issue a decision at any time
prior to an appeal to the IBLA. Marathon Oil Co., 108 IBLA 177 (1989),
Blue Star, Inc., 41 IBLA 333, 335-36 (1979). The RPC recommended that
if an Assistant Secretary wanted to decide an appeal, the Assistant
Secretary would have to petition the IBLA to relinquish jurisdiction of
the appeal. RPC Report, paragraph 30. However, in his letter of
September 22, 1997, the Secretary stated that the Department would
allow an Assistant Secretary to choose to decide an appeal without
leave from the IBLA, at any time prior to the Appellant's filing of its
Statement of Reasons or an Intervenor's filing of its Intervention
Brief with the IBLA. We believe that if policy-level officials in the
Department choose to make a decision in a case, there should be no need
for them to be granted permission. This also is similar to the
procedures for certain other Departmental appeals. See 43 CFR 4.332(b).
Accordingly, paragraph (a) of this section would provide that the
Assistant Secretary for Land and Minerals Management (or, the Assistant
Secretary for Indian Affairs for appeals involving an Indian lease)
could choose to decide an appeal by notifying the appellant, the MMS
Dispute Resolution Division, and the IBLA in writing that the Assistant
Secretary will decide the appeal, at any time up to 30 days before the
date the appellant must file its Statement of Reasons or an Intervenor
must file its Intervention Brief under Sec. 4.939. The 30-day
notification would give appellants and Intervenors time to prepare
their Statement of Reasons or Intervention Brief for filing with the
Assistant Secretary, rather than with the IBLA. The proposed rule does
not specify how an Assistant Secretary would determine to decide an
appeal, but we believe any party, including the appellant, could
request that an Assistant Secretary decide the appeal.
We believe that the appellant should argue its case to the
Assistant Secretary in much the same way as it would argue the matter
to the IBLA. Thus, paragraph (b) of this section would provide that,
after the Assistant Secretary notifies you of his or her decision to
decide your appeal, you must file all subsequent documents required
under this subpart with the Assistant Secretary under Sec. 4.960.
In a public meeting we held on earlier drafts of this proposed
rule, industry representatives expressed concern over the extent of ex
parte communications from the MMS and the Solicitor's office to the
Assistant Secretary when an Assistant Secretary decides an appeal.
Under the proposed procedure, appellants would be able to submit the
same arguments to the Assistant Secretary as they would submit to the
IBLA. While the procedures would differ from those before the IBLA
because there would be no bar on agency or Solicitor's office personnel
working with the Assistant Secretary on a decision, any Assistant
Secretary's decision would have the benefit of being subject to
immediate judicial review. Moreover, it is critical to the Assistant
Secretary's decision making process that he or she have available the
expertise of both the agency personnel and his or her attorneys. We
specifically request comments about any procedures that the Department
should consider regarding how it can maintain an efficient and fair
process, while providing adequate staff support to the Assistant
Secretary, and preserving the Assistant Secretary's prerogative to
consult with whomever he or she chooses within the Department.
Section 4.938 Who Will Notify Other Persons That an Assistant
Secretary Will Decide an Appeal or Has Decided an Appeal?
The purpose of this section is to identify who in the Department
has responsibility for notifying affected persons other than the
appellant that an Assistant Secretary will decide an appeal or has
decided an appeal, who would not otherwise be aware of such action.
Because MMS would be notified of such action, it would have the primary
notification responsibility.
Thus, paragraph (a) would explain that MMS will transmit a copy of
the Assistant Secretary's notice required under Sec. 4.937 to:
(1) Affected tribes;
(2) Affected delegated States;
(3) Lessees who join under Sec. 4.908;
(4) Intervenors; and
(5) Affected lessees or their designees if an Indian lessor files
an appeal under Sec. 4.904 of any MMS decision not to issue an order.
Paragraph (b) would provide that for appeals involving individual
Indian mineral owners' leases, in addition to notifying the persons
under paragraph (a), MMS would transmit a copy of the Assistant
Secretary's notice required under Sec. 4.937 to the appropriate BIA
office. That BIA office could make available to individual Indian
mineral owners whatever notice it deems appropriate by any method it
deems appropriate. MMS would not be responsible for notifying
individual Indian mineral owners because it does not have the
information necessary to contact those persons. However, BIA does have
that information. Thus, this
[[Page 1946]]
proposal was based on the assumption that area BIA offices are in the
best position to know what type of notice would be useful. For example,
such notice could be in the form of notice in a local paper, or posting
notice on the Internet that individual Indian mineral owners could
access at their local BIA office. We request comments on the most
appropriate way to provide useful notice to individual Indian mineral
owners about matters that may affect their revenues.
Section 4.939 How Do I File My Statement of Reasons or Intervention
Brief?
This section would explain how an appellant would file its
Statement of Reasons, and an Intervenor would file its Intervention
Brief, with the IBLA or an Assistant Secretary.
Under paragraph (a), you would have to file your Statement of
Reasons or Intervention Brief with the IBLA under Sec. 4.960 within the
times required under Secs. 4.933 and 4.934.
Under paragraph (b), if an Assistant Secretary will decide your
appeal under Sec. 4.937, you would have to file your Statement of
Reasons or Intervention Brief with that Assistant Secretary under
Sec. 4.960 within 60 days after the MMS DRD has received the record
under Secs. 4.919 or 4.920.
Under paragraph (c), appellants would have to pay a nonrefundable
processing fee of $150 with their Statement of Reasons as required
under Sec. 4.965 or seek a fee waiver or reduction under Sec. 4.966.
Our analysis leading to the choice of $150 as the processing fee at
this stage of the appeal is in the Section-by-Section analysis for
Sec. 4.965 of this proposed rule. Indian lessors and delegated States
would not have to pay the processing fee.
Under paragraph (d) you also would have to serve your Statement of
Reasons or Intervention Brief on all parties to the appeal, and on
other persons as required under Sec. 4.962. Section 4.962 requires
appellants to serve their Statement of Reasons on the office that
issued the order, affected tribes, and affected delegated States. The
current rules do not require appellants to serve the Statement of
Reasons on these entities. However, we added this requirement to ensure
that the office that issued the order, affected tribes, and affected
delegated States would be informed about the progress of the appeal and
to provide them with an opportunity to give the Solicitor's office
information they believe is responsive to the Statement of Reasons or
file an amicus brief under Sec. 4.943.
Section 4.940 What if I Do Not Timely File My Statement of Reasons,
Intervention Brief or Request for an Extension of Time to File Those
Documents?
This section would explain that if you do not file your Statement
of Reasons, Intervention Brief, or request for extension of time to
file either of those documents within the times prescribed in
Secs. 4.933, 4.934, or 4.939, or within any extension of time requested
and granted under Sec. 4.958, the IBLA or the Assistant Secretary will
dismiss your appeal, or will not allow you to intervene. Thus, the
filing of the Statement of Reasons would be jurisdictional. We would
like comments on whether this is the appropriate sanction for failure
to timely file, or whether we should have another sanction for not
filing timely. For example, the rule could provide that the IBLA or
Assistant Secretary would not consider Statements of Reasons or
Intervention Briefs that are filed late. This would tend to have a
similar substantive result as dismissal but might be more time
consuming.
Section 4.941 Who May File an Answer to a Statement of Reasons or
Intervention Brief?
This section would explain who may file an Answer to a Statement of
Reasons or Intervention Brief with the IBLA or an Assistant Secretary.
Like current practice, the Solicitor's office would file Answers on
behalf of MMS and Indian lessors.
Paragraph (a) would provide that if the recipient of an order or
Notice of Order files a Statement of Reasons under Sec. 4.939, MMS and
Indian lessors whose leases are affected may file Answers under
Sec. 4.942.
Paragraph (b) would provide that if an Indian lessor files a
Statement of Reasons or an Intervention Brief under Sec. 4.939, MMS and
any lessee, designee, or payor for the lease(s) involved in the appeal
may file Answers under Sec. 4.942. The proposed rule would allow
lessees or payors to answer Indian lessors' Statements of Reasons and
Intervention Briefs because, under Sec. 4.933(b), they would be bound
by the Department's final decision in the intervention in their appeal.
Also, if an Indian lessor appeals MMS's decision not to issue an order
regarding its leases, lessees or payors would likewise be bound by any
decision in that appeal. Thus, the substantive rights of lessee and
payor appellants could be affected if an Indian lessor intervenes under
Sec. 4.934 or appeals under Sec. 4.904(c). Accordingly, we wanted to
assure that those appellants have the opportunity to address any
arguments an Intervenor or Indian lessor appellant makes to the IBLA or
Assistant Secretary.
Paragraph (c) would provide that if a delegated State files an
Intervention Brief under Sec. 4.939, MMS, Indian lessors whose leases
are adversely affected, and any lessee, its designee, or the payor for
the lease(s) involved in the appeal may file Answers under Sec. 4.942.
The proposed rule would allow lessees, their designees, or the payor to
answer delegated States' Intervention Briefs because, under
Sec. 4.933(b), they would be bound by the Department's final decision
in the intervention in their appeal. Thus, the substantive rights of
lessee, designee, and payor appellants could be affected if a delegated
State intervenes under Sec. 4.934. Accordingly, we wanted to assure
that those appellants have the opportunity to address any arguments an
Intervenor makes to the IBLA or Assistant Secretary in its Intervention
Brief.
Indian lessors' leases could be adversely affected by the
Intervention of a delegated State only if the appeal involves an order
that addresses both Federal and Indian leases (a State could not file
an Intervention Brief in an appeal involving only Indian leases). While
we do not expect that the positions of Indian lessors and delegated
States would often conflict, because Indian lessors are the lease
owners, we thought they should have the opportunity to address
Intervention Briefs filed by delegated States in appeals that involve
both Federal and Indian leases.
Section 4.942 How Do I File an Answer to a Statement of Reasons or
Intervention Brief?
This section would explain that you would have to file your Answer
to a Statement of Reasons within 60 days after the date the Statement
of Reasons was served upon you, and an Answer to an Intervention Brief
within the time limit proposed in Sec. 4.933(b) (i.e., within 60 days
after you receive the MMS Director's rescission). This section also
would provide that you must file your Answer with the appropriate
office under Sec. 4.960 and serve your Answer on all parties to the
appeal.
Section 4.943 Who May File an Amicus Brief?
This section would explain that any person may file an Amicus Brief
with the appropriate office under Sec. 4.960 within 60 days after the
date the Statement of Reasons or Intervention Brief is filed with the
IBLA or Assistant Secretary. You would have to serve your
[[Page 1947]]
Amicus Brief on all parties to the appeal.
Section 4.944 May Parties File Additional Responsive Pleadings?
Under current IBLA practice, the IBLA can consider responsive
pleadings after an Answer is filed. See 43 CFR 4.414. Thus, as
proposed, this section would provide that if you filed a Statement of
Reasons or an Intervention Brief, and another person files an Answer or
an Amicus Brief, you could file a Reply to the Answer or a Response to
the Amicus Brief within 30 days after the date the Answer or Amicus
Brief was served upon you. In addition, if you filed an Answer and
another person filed a Reply or an Amicus Brief, you could file a
Surreply to that Reply to address new arguments or authorities raised
in the Reply, or a Response to the Amicus Brief, within 20 days after
the Reply or Response is served upon you. You would have to serve any
responsive pleadings under this section on all parties to the appeal.
The IBLA retains the right to limit the length of pleadings or the
number of pleadings beyond those specifically provided in this rule.
Section 4.945 May I Ask for a Hearing by an Administrative Law Judge?
This section would provide a way for the IBLA, at the request of
any party, to seek additional facts or arguments that the party
believes are necessary to help decide the appeal.
Any party could request in writing that the IBLA refer a matter to
an Administrative Law Judge of the Hearings Division under 43 CFR 4.415
for an evidentiary hearing if there are disputed issues of material
fact which could affect the decision on the appeal. The party's request
would have to specify the issues of fact that are in dispute. See,
e.g., W.J. and Betty Lo Wells, 122 IBLA 250, 252 (1992), in which IBLA
required that a party requesting a hearing in a case involving a BLM
land exchange explain what issues of material fact require a hearing.
In addition, appellants who request a hearing under this paragraph
would have to agree in writing to extend the period under Sec. 4.958 by
the additional amount of time necessary for the Hearings Division to
complete any action with respect to the referral request, including any
of the actions authorized under paragraph (c)(3). Thus, up to no later
than 30 days after all responsive pleadings are filed under Sec. 4.944,
parties could, at any time during the appeals process, including record
development, request that disputed issues of material fact be resolved
by an Administrative Law Judge. Parties could not, however, require
other parties to produce documents.
Paragraph (c) would provide that if the IBLA grants a party's
request, the IBLA could issue an order:
(1) Authorizing the Administrative Law Judge to specify additional
issues;
(2) Authorizing the parties to add additional relevant issues, with
the approval of the Administrative Law Judge; and
(3) Asking the Administrative Law Judge to issue:
(i) Proposed findings of fact;
(ii) A recommended decision that includes findings of fact and
conclusions of law; or
(iii) A decision that would be final for the Department absent an
appeal to IBLA.
Section 4.946 May IBLA Require Additional Evidence or Arguments From
Parties?
Paragraph (a) would provide that the IBLA may require additional
evidence or written arguments from parties by issuing an order:
(1) Requiring any party or all parties to the appeal to produce
additional evidence or written arguments or both. Thus, unlike parties,
the IBLA has authority to require parties to produce additional
information;
(2) Requiring the parties to appear before the IBLA for oral
argument; or
(3) Referring the matter to an Administrative Law Judge of the
Hearings Division under 43 CFR 4.415 for an evidentiary hearing if
there are disputed issues of material fact which could affect the
decision on the appeal.
Under paragraph (b), the IBLA's referral under paragraph (a)(3):
(1) Would have to specify the issues of fact upon which the hearing
is to be held;
(2) Could authorize the Administrative Law Judge to specify
additional issues;
(3) May authorize the parties to add additional relevant issues,
with the approval of the Administrative Law Judge; or
(4) Could request that the Administrative Law Judge issue:
(i) Proposed findings of fact;
(ii) A recommended decision that includes findings of fact and
conclusions of law; or
(iii) A decision that would be final for the Department absent an
appeal to IBLA.
Paragraph (c) would provide that failure of any party to comply
with an IBLA order issued under this section may result in any
contested fact being found against the party who does not comply.
Section 4.947 May IBLA Establish Deadlines for Matters Referred to
Administrative Law Judges?
This section would provide that the IBLA may establish appropriate
deadlines for any matter referred to an Administrative Law Judge under
Secs. 4.945 or 4.946.
Section 4.948 When Will the IBLA Decide My Appeal?
This section would provide in paragraph (a) that the IBLA would
decide your appeal by the date the appeal ends under Sec. 4.912.
Paragraph (b) would state that the IBLA will serve its decision on
all parties to the appeal, and other persons as required under
Sec. 4.963.
Paragraph (c) would provide that, if an Assistant Secretary will
decide your appeal under Sec. 4.937, the Assistant Secretary would
decide your appeal on or before the day your appeal ends under
Sec. 4.912. The Assistant Secretary would serve that decision on all
parties to the appeal and other persons as required under Sec. 4.963.
Section 4.949 When is an IBLA or an Assistant Secretary's Decision
Effective?
This section would explain that an IBLA or an Assistant Secretary's
decision is effective on the date it is issued, unless the IBLA or the
Assistant Secretary provides otherwise. The decision would be the final
action of the Department.
Section 4.950 What if IBLA Requires MMS or a Delegated State to
Recalculate Royalties or Other Payments?
The purpose of this section is to provide a mechanism for MMS to
correct calculations for orders within the 33-month time period in
which to decide appeals concerning Federal oil and gas leases subject
to RSFA when IBLA directs MMS to recalculate. Thus, we are proposing
this section in order to avoid the need for remands, which could be too
time consuming to take place within the RSFA 33-month period. Moreover,
we were concerned that if cases were remanded, appellants or
intervenors would argue that the order responding to the remand might
not be timely under the 7-year RSFA statute of limitations applicable
to Federal oil and gas leases under RSFA, Sec. 4(a), adding FOGRMA
Sec. 115(b), 30 U.S.C. 1724(b). To deal with these concerns, we decided
instead to devise a system to make factual adjustments that would be
final for the Department and not subject to administrative appeal when
IBLA orders such adjustments.
Under paragraph (a), because Indian leases and Federal leases other
than oil
[[Page 1948]]
and gas are not subject to RSFA, the time limits and finality
requirements in this section would not apply.
Paragraph (b) would provide that an IBLA decision modifying an
order and requiring MMS or a delegated State to recalculate royalties
or other payments, would be the final decision in the administrative
proceeding for purposes of the 33-month period under 30 U.S.C. 1724(h).
Thus, the IBLA decision on the merits would not be administratively
appealable, even if it ordered MMS to perform additional calculations.
Under paragraph (c), after MMS or the delegated State that
performed the audit received an IBLA order to recalculate, it would be
required to provide to IBLA, and all parties served with IBLA's
decision, any recalculation IBLA requires under paragraph (b) within 60
days of its receipt of IBLA's decision. We chose 60 days because if
IBLA issues its decision within the 30-month goal provided under
Sec. 4.948, MMS or the delegated State that performed the audit would
have 60 days to perform the recalculation, and IBLA would have
approximately 30 days to review the recalculation before the running of
the 33-month period under RSFA. There would be no further appeal within
the Department from MMS's or the delegated State's recalculation under
paragraph (c). Accordingly, the decision IBLA issues under paragraph
(b), together with MMS's or the delegated State's recalculation under
paragraph (c), would constitute the final action of the Department that
is judicially reviewable under 5 U.S.C. 704. In other words, appellants
and intervenors could not appeal the recalculation administratively,
nor object to it before IBLA between the time IBLA receives the
recalculation and the running of the 33-month period under RSFA.
Section 4.951 May a Party ask IBLA to Reconsider its Decision?
If you were a party, you could submit a request in writing to IBLA
that it reconsider its decision within 30 days of the date you receive
the decision. The party requesting reconsideration would have to
specifically explain to IBLA in its request what it believes the
extraordinary circumstances are that require reconsideration.
Like 43 CFR 4.403, paragraph (b) would provide that filing a
request for reconsideration would not suspend the effectiveness of
IBLA's decision. The purpose of maintaining the effectiveness of IBLA's
decision is to assure that IBLA's decision would be deemed the final
decision for the Department under the default rule of decision in
Sec. 4.956.
Paragraph (c) would provide that a request for reconsideration is
not necessary to exhaust administrative remedies.
Section 4.952 Under What Circumstances May IBLA Reconsider its
Decision?
The purpose of this section is to establish IBLA standards for
reconsideration of appeals subject to this subpart. The standards IBLA
would use to determine whether to reconsider a decision under this
proposed section would continue IBLA's practice of only reconsidering
its decisions ``in extraordinary circumstances.'' See 43 CFR 4.403. In
addition, unlike the current provision in 43 CFR 4.403 that provides
that there must be a ``sufficient reason'' for reconsideration, the
proposed rule would specifically state that the following reasons could
be sufficient for reconsideration:
(a) Discovery of evidence not before IBLA at the time the decision
was issued which demonstrates error in that decision. Accordingly, a
request for reconsideration would have to explain why such evidence was
not previously available or provided to IBLA;
(b) IBLA's misinterpretation of material facts;
(c) Clear error of law;
(d) Recent judicial development;
(e) Change in Departmental policy; or
(f) Inconsistent agency decisions.
These reasons codify IBLA practice.
Section 4.953 May Other Parties to the Appeal Respond to a Request for
Reconsideration?
The purpose of this section is to provide parties with an
opportunity to respond to requests for reconsideration. Thus, you could
answer a request for reconsideration within 15 days of your receipt of
a copy of the request. We believe that 15 days within which to respond
to a request for reconsideration is sufficient because the standards
for reconsideration under Sec. 4.952 should narrow the scope of
requests, and, likewise, any response. You would have to serve your
answer to a request for reconsideration on all parties to the appeal.
Section 4.954 On Whom Will IBLA Serve a Decision on Reconsideration?
This section would provide that IBLA will serve its decision on all
parties to the appeal, and other persons as required under Sec. 4.963.
Section 4.955 May the Secretary of the Interior or the Director of OHA
Take Jurisdiction of an Appeal or Review a Decision?
This section would state that the Secretary or the Director of OHA
may take jurisdiction of an appeal or review a decision issued under
this subpart.
Section 4.956 What if the Department Does Not Issue a Decision by the
Date My Appeal Ends?
This section of the rule is one the Department hopes it will never
use. Our intent was to draft a rule that will allow us to decide
appeals within the 33-month period RSFA mandates and avoid the
necessity of this section. RSFA states that:
The Secretary shall issue a final decision in any administrative
proceeding, including any administrative proceeding pending on the
date of enactment of this section, within 33 months from the date
such proceeding was commenced or 33 months from the date of such
enactment, whichever is later
* * * * *
RSFA Sec. 4(a), adding new FOGRMA Sec. 115(h)(1), 30 U.S.C. 1724(h)(1).
RSFA also tells us what happens if the Secretary does not issue a
decision within 33 months in appeals involving monetary or nonmonetary
``obligations.'' In such instances, under 30 U.S.C. 1724(h)(2):
(A) the Secretary shall be deemed to have issued and granted a
decision in favor of the appellant as to any nonmonetary obligation
and any monetary obligation the principal amount of which is less
than $10,000; and
(B) the Secretary shall be deemed to have issued a final
decision in favor of the Secretary, which decision shall be deemed
to affirm those issues for which the agency rendered a decision
prior to the end of such period, as to any monetary obligation the
principal amount of which is $10,000 or more, and the appellant
shall have a right to judicial review of such deemed final decision
in accordance with title 5 of the United States Code.
In paragraph (a), the Department makes clear that this section
would apply only to appeals of orders or portions of orders involving
monetary and nonmonetary obligations under Federal oil and gas leases
filed on or after the date this rule becomes effective. (Proposed
Sec. 4.972 applies to appeals subject to RSFA but filed before the
effective date of this rule.) For Indian leases and Federal mineral
leases other than oil and gas, the time limits in 30 U.S.C. 1724(h) and
the default rule of decision stated in this section would not apply
because those leases are not subject to RSFA. Thus, the default rule of
decision in this section also would not apply to appeals of orders or
portions of orders regarding Federal oil
[[Page 1949]]
and gas leases that do not involve a monetary or nonmonetary
obligation. Accordingly, the default rule of decision would not apply
to appeals of orders related to reporting of production or providing
information under Federal oil and gas leases (e.g., under the authority
for investigations under FOGRMA Sec. 107, 30 U.S.C. 1717) because the
definition of ``obligation'' under RSFA Sec. 2(1), adding FOGRMA
Sec. 3(25), 30 U.S.C. 1702(25), does not include such matters.
In our outreach meetings, representatives of the solid mineral
industry requested that we make appeals involving solid mineral leases
subject to the 33-month deadline under this section. Specifically,
those industry representatives asked the Department to deem solid
mineral appeals denied regardless of dollar amount if the Department
misses the 33-month time frame. However, the Department decided that
the proposed rule would only apply to appeals of orders regarding
monetary and nonmonetary obligations as defined under RSFA. Although we
plan to use the same time frames to process Indian, solid mineral, and
geothermal appeals, we do not plan to impose this section's default
rule of decision on those appeals. We believe that the benefits of
obtaining IBLA review and decisions outweighs industry's desire for a
quick, mandatory decision.
Paragraph (b) would implement the RSFA rule of decision for appeals
for which IBLA, an Assistant Secretary, the Secretary, or the Director
of OHA does not issue a final decision by the date the appeal ends
under Sec. 4.912. In such instances, under 30 U.S.C. 1724(h)(2), the
Secretary's default decision on an appeal would be:
(1) In favor of the appellant for any nonmonetary obligation or any
monetary obligation with a principal amount of less than $10,000;
(2) In favor of the Secretary for any monetary obligation with a
principal amount of $10,000 or more.
Because of the various changes to and dispositions of orders that
may occur during the appeals process, such as MMS Director modification
or rescission, or IBLA reconsideration, the proposed rule would clarify
the application of the RSFA default decision provision in such cases.
In essence, the default decision provisions would only apply to those
aspects of the appeal still under dispute between the appellant and the
Secretary. Thus, paragraph (c) would explain what is deemed decided for
orders which have been modified during the appeals process and which an
appellant has continued to appeal. Basically, the only portion of an
appeal that is subject to the default decision provision is that
portion of the original order that is still in dispute between the
appellant and MMS, not an intervenor and MMS.
Under paragraph (c)(1), if the MMS Director modified an order and
you continued your appeal of the modified order, the decision the
Secretary would be deemed to have made under paragraph (b) would apply
only to those aspects of the modified order that you continued to
contest. Accordingly, those aspects of the Director's modification that
you did not contest would stand, and the Secretary would be deemed to
have affirmed the modifications you did not contest, regardless of the
amount of any monetary obligation, or any nonmonetary obligation, that
you did not contest. For example, assume that you appeal an order
involving two separate monetary obligations, one worth $15,000, and one
worth $20,000. Assume also that MMS agrees with you on the first
monetary issue worth $15,000 and modifies the order accordingly to
decrease that obligation to $8,000. If you do not dispute that
modification, but continue to dispute only the second $20,000 monetary
obligation, and the Department does not issue a final decision within
33 months, then, the default decision provision of this section would
neither affirm the portion of the initial order that was removed by the
MMS Director's modification nor reverse the Director's determination
that you owed $8,000 (a monetary obligation less than $10,000). Rather,
the order as modified with respect to the $8,000 monetary obligation
would stand because there is no longer an administrative proceeding
pending with respect to that obligation. In addition, the $20,000
disputed portion of the order would be deemed decided in favor of the
Secretary under paragraph (b).
Under paragraph (c)(2), if the MMS Director modified an order and a
delegated State intervened in the appeal, and if neither the recipient
of the order or Notice of Order nor a joining lessee has continued the
appeal, the decision the Secretary would be deemed to have made under
paragraph (b) would be to affirm the order as modified by the MMS
Director regardless of the amount of any monetary obligation, or any
nonmonetary obligation, at issue in the lessee's or designee's appeal.
For example, assume that you appeal an order involving two separate
monetary obligations, one worth $15,000, and one worth $20,000. Assume
also that MMS agrees with the you on the first monetary issue worth
$15,000 and modifies the order accordingly to decrease that obligation
to $8,000, and that a delegated State intervenes to dispute the
modification of the first issue. If you do not dispute that
modification but continue to dispute only the second $20,000 monetary
obligation, and the Department does not issue a final decision within
33 months, then the order as modified with respect to the $8,000 at
issue would stand because there is no longer an administrative
proceeding pending with respect to that obligation. Thus, even though
the delegated State intervened to contest the modification, the
Secretary will be deemed to have affirmed the Director's determination,
even though the amount is less than $10,000, because the State is not
an appellant. In addition, the disputed portion of the order would be
deemed decided in favor of the Secretary under paragraph (b) because
the appellant continued to contest that aspect of the order and the
amount of the obligation was over $10,000.
Under paragraph (d), if the MMS Director rescinded an order and a
delegated State intervened in the appeal, the Secretary would be deemed
to have affirmed the MMS Director's rescission in all respects.
Although the intervening State disputes the Director's rescission, the
original order is no longer in dispute between the Secretary and the
appellant--it is in dispute between the Secretary and the delegated
State. Therefore, the rescission would be affirmed because the
intervening State is not an appellant. We do not believe that Congress
intended 30 U.S.C. 1724(h)(2) to operate to reinstate orders the
Director had rescinded.
Paragraph (e) would explain the relationship of requests for
reconsideration to the default decision provision. If the IBLA issues a
decision on or before the date the appeal ends under Sec. 4.912, that
decision is the final decision in the administrative proceeding for
purposes of 30 U.S.C. 1724(h)(1) and fulfills the requirements of that
provision. Thereafter, 30 U.S.C. 1724(h)(1) and (2) have no further
application. Section 1724(h)(2) would not apply because the IBLA has
already issued a final decision for the Department. Requests for
reconsideration do not change the fact that the Department has issued a
final decision in the administrative proceeding. IBLA decisions are
final for the Department and therefore meet the RSFA 1724(h) standard.
Therefore, if a party requests reconsideration of an IBLA decision,
the RSFA provision at 30 U.S.C. 1724(h) does not compel the IBLA to
issue a
[[Page 1950]]
further decision within the section 1724(h)(1) time frame. Beyond the
text of the statute itself, there are several additional reasons why
this is so.
First, when the IBLA issues a decision, that decision constitutes
final agency action under the Administrative Procedure Act, 5 U.S.C.
704, and the lessee may seek judicial review. If the lessee chooses to
seek reconsideration rather than sue for judicial review, it is
invoking a purely optional additional procedure within the Department
and can have no objection to the IBLA taking the time necessary to rule
on the request for reconsideration.
Second, the obvious intent of 30 U.S.C. 1724 (h) is to ensure that
the Department issues a judicially reviewable final agency action
within the prescribed time frame. When the IBLA issues a decision, it
has accomplished that objective and met the statutory purpose.
Third, 30 U.S.C. 1724(h) was not intended to provide lessees a tool
to try to thwart IBLA decisions that they don't like that involve
principal amounts of less than $10,000 by filing requests for
reconsideration. If the IBLA were compelled to issue a second decision
within the section 1724(h)(1) time frame, it would leave the IBLA with
very little time to act before the section 1724(h)(2) rule of decision
automatically reversed the first decision.
Paragraph (f) would provide that if the principal amount of a
monetary obligation is not specifically stated in an order and must be
computed to comply with the order, the principal amount referred to in
paragraph (b) means the principal amount the MMS estimates you would be
required to pay as a result of the order. Thus, if MMS issued an order
to perform a restructured accounting, MMS could provide an estimate of
the principal amount of the monetary obligation for purposes of this
section. This estimate normally would be made at the time of the order
and included in the order, but it might be done, or revised, later, as
more information becomes available during the appeals process,
particularly during record development. See proposed 30 CFR 242.105.
Section 4.957 What is the Administrative Record for My Appeal if it is
Deemed Decided?
This section would explain that if your appeal is deemed decided
under Secs. 4.956 or 4.972, regardless of what the deemed decision is
under those sections, the record for your appeal is the record
established under Secs. 4.919 or 4.920, or before the MMS Director in
an appeal under former 30 CFR part 290, plus any additional
correspondence to the MMS Director, the MMS Director's notice of
concurrence, modification, or rescission under Sec. 4.929(d), or MMS
Director's decision under 30 CFR part 290, any pleadings to the IBLA,
and any IBLA orders and decisions.
For example, assume that the MMS Director modified your order, and
you continued your appeal to the IBLA by filing a Statement of Reasons.
Assume also that MMS files an Answer. If the IBLA did not issue a
decision in your appeal by the end of the RSFA 33-month period, and the
MMS Director's modification is deemed decided in the Department's favor
under Sec. 4.956, the record would include not only the record
developed under Secs. 4.919 and 4.920, but also any additional
correspondence to the MMS Director, the MMS Director's notice of
modification, your Statement of Reasons, and MMS's Answer.
Section 4.958 How Do I Request an Extension of Time?
RSFA, Sec. 4(a), adding new FOGRMA Sec. 115(h)(1), 30 U.S.C.
1724(h)(1), allows extensions of the 33-month time period by any amount
``agreed upon in writing by the Secretary and the appellant.'' To
ensure careful tracking of time frames for all appeals, we are
proposing the same procedure regardless of whether RSFA applies to the
appeal. Regardless of who requests the extension, the Department has
sole discretion whether to agree to extensions. However, the time frame
cannot be extended without the agreement of the appellant. Thus, if a
delegated State Intervenor wanted more time to file its Intervention
Brief, the Department could choose not to agree to the extension
because the extension could jeopardize meeting the 33-month time frame.
However, the State could seek approval of the appellant to extend the
33-month time frame.
This section would explain the process for requesting an extension
of time. Parties would be required to follow the procedures in
paragraph (a)(1) whenever they needed: (i) additional time after their
appeal commenced to meet any filing requirement under this subpart;
(ii) additional time for the Department to issue a final decision in
their appeal; (iii) to stay their appeal pending settlement efforts; or
(iv) additional time for any other reasons. Under paragraph (a)(2),
parties would have to submit a written request for an extension of time
to the office or official with whom they must file the document before
the required filing date.
Paragraph (b) would require appellants to agree in writing in their
request to extend the period in which the Department must issue a final
decision in their appeal under Secs. 4.956 or 4.972, or which the
Department uses as guidance to track their appeal under Sec. 4.948, by
the amount of time for which they are requesting an extension.
Under paragraph (c), the Department could require any other party
seeking an extension of time to submit a written agreement signed by
the appellant to extend the period in which the Department must issue a
final decision in the appeal under Secs. 4.956 or 4.972, or which the
Department uses as guidance to track the appeal under Sec. 4.948, by
the amount of time for which the other party is requesting an
extension.
Section 4.959 May IBLA Consolidate Appeals?
The current IBLA rules do not provide a process for consolidation.
Thus, consolidation is at the discretion of IBLA. This section would
continue to give IBLA discretion to consolidate appeals when
consolidation would make the process more efficient both for parties
and the Department.
Paragraph (a) would allow IBLA to consolidate appeals that involve
the same order or decision not to issue an order, common issues of
disputed material fact, or common issues of law.
In order to prevent concerns about meeting the 33-month time frame
and encourage consolidation, proposed paragraph (b) would require
appellants that wish to consolidate to extend the 33-month time frame
so that all appeals being consolidated are put on the same track as the
latest of the appeals being consolidated. However, under paragraph
(b)(2)(ii) of this section, the parties and IBLA also could agree to
extend the time frame by a different amount.
Paragraph (c) would provide that IBLA will notify all parties to
the appeal of any consolidations under this section.
Section 4.960 Where Do I File Documents Required Under This Subpart?
This section departs from the current process whereby all documents
at the early stages of the appeals process are filed with the office
that issued the order. However, although you would no longer file your
documents with the office that issued the order, you could be required
to serve that office and other persons under Sec. 4.962.
Accordingly, the substantive sections of the rule would tell you
with whom you would have to file your document, and this section would
provide times
[[Page 1951]]
and addresses. Thus, this section would provide that you must file
documents required under this subpart in the appropriate office as
follows:
(a) With the MMS DRD between 9 a.m. and 5 p.m. local time at:
[address of MMS DRD], using the U.S. Postal Service, a private delivery
or courier service, hand delivery or telefax to (______) ______-______.
(b) With IBLA at: Interior Board of Land Appeals 4015 Wilson
Boulevard, Arlington, Virginia 22203, using the U.S. Postal Service, a
private delivery or courier service, hand delivery or telefax to (703)
235-9014; or
(c) With an Assistant Secretary at: [address of MMS DRD], using the
U.S. Postal Service, a private delivery or courier service, hand
delivery or telefax to (______) ______-______.
Currently, the Department does not allow filing by telefax. This
rule would allow filing by telefax. However, under paragraph (d), if
you filed a document by telefax, you would have to send an additional
copy of your document to the same office or official so that it is
received within 5 business days of your telefax transmission using the
U.S. Postal Service, a private delivery or courier service or hand
delivery. The Department added this provision to make filing easier for
parties, but wanted to assure that it had a legible hard copy for the
file. Because timing is critical, and in some instances jurisdictional,
we recommend that parties keep documentation that the proper office
received the telefax transmission.
Section 4.961 How Can a State Concerned Receive Notification of Record
Development and Settlement Conferences?
For many States concerned, the amount of their revenues from
Federal royalties is relatively small, and they therefore do not
actively participate in the collection process. Thus, we are not
proposing to seek the participation of all States concerned in all
record development and settlement conferences that could affect their
revenues. However, those States concerned without delegations that
would like to participate could inform MMS at any time of their
interest, and then MMS would begin notifying them of record development
and settlement conferences. Accordingly, if a State concerned wanted to
receive notification of record development conferences under Sec. 4.917
and settlement conferences under Sec. 4.924, then the State concerned
would have to provide the MMS DRD with the name, title, address, and
telephone number of the State official authorized to receive the
notifications.
Section 4.962 What Copies of Documents Filed Under This Subpart are
Appellants, Lessees, and Intervenors Required to Serve?
This proposal seeks to improve the process of providing appropriate
notification about pending appeals to States, Indian lessors, and all
parties and others interested in particular appeals. The tables
presented in this section and Sec. 4.963 of the proposed rule are an
attempt to provide a user-friendly means for each participant in the
appeals process to determine when and to whom they must serve copies of
documents filed in the appeals process. The requirements for filing the
original documents are contained in the sections of this rule
discussing each of those specific documents.
This section would apply to appellants, lessees, and intervenors--
the requirements for Department of the Interior offices are set out in
Sec. 4.963. Who you must serve would be different depending on who the
appellant is. The table in paragraph (a) would apply to appellants,
lessees, and intervenors participating in appeals filed by recipients
of orders or notices of orders involving leases on Federal or Indian
tribal lands (i.e., appellants other than Indian lessors).
The table in paragraph (b) would show service requirements for
appellants, lessees, and intervenors participating in appeals by
recipients of orders or notices of orders involving leases on Federal
or Indian tribal lands.
Section 4.963 What Copies of Documents Filed Under This Subpart is the
Department Required to Serve?
Who the Department must serve would be different depending on who
the appellant is. The table in paragraph (a) would apply to Department
of the Interior offices participating in appeals filed by recipients of
orders or notices of orders involving leases on Federal or Indian
tribal lands (i.e., appellants other than Indian lessors).
The table in paragraph (b) would show service requirements for
Department of the Interior offices participating in appeals by
recipients of orders or notices of orders involving leases on Federal
or Indian tribal lands.
Paragraph (c) would apply to appeals involving individual Indian
mineral owners' leases (i.e., leases that are not tribal leases),
regardless of who files the appeal.
We do not believe that it is possible or practical to serve copies
of all documents filed on individual Indian mineral owners. Instead,
the proposal is to serve copies on BIA area offices and for those
offices to provide appropriate notification. This could vary depending
on the interest of the individual Indian mineral owner and the relative
importance of the cases, as well as on other factors relevant to the
particular BIA area office and the individual Indian mineral owners.
Thus, such appeals, MMS would transmit a copy of the Notices of
Appeal, MMS notices of timely filing, Statements of Reasons, and IBLA
decisions required under this subpart to the appropriate BIA office.
That BIA office could make available to individual Indian mineral
owners whatever notice it deemed appropriate by any method it deemed
appropriate.
Section 4.964 What if I Don't Serve Documents as Required?
This section would provide that if you are an appellant, and you
fail to serve any person as required under this section, then IBLA
could dismiss your appeal if the person you did not serve or the
adverse party is prejudiced by your failure to serve.
Section 4.965 How Do I Pay the Processing fee?
This section would provide that you must pay your processing fees
to the MMS DRD. You would be required to pay the nonrefundable
processing fees required under Secs. 4.907(a)(3) and 4.939(a)(2) by
Electronic Funds Transfer, unless you requested, and MMS authorized,
payment by check or an alternative method before the date the
processing fee would be due. The payment would have to include various
specified forms of identification in order to properly account for the
fee. Indian lessors would not have to pay a processing fee. We request
comments on the amount of the processing fee, payment by electronic
transfer, and what form of identification should be included with fees.
The Department's authority to recover its costs for appeals
involving all leases is the Independent Offices Appropriations Act of
1952, 31 U.S.C. 9701 (originally codified at 31 U.S.C. 483a) (IOAA). In
addition, the Department is authorized to recover its costs related to
appeals of Federal onshore leases under the Federal Land Policy and
Management Act of 1976 (FLPMA), 43 U.S.C. 1701-84. Thus, as part of
this proposed rulemaking, we analyzed the proposed appeals rule's
processing fees for reasonableness according to the factors in FLPMA
Sec. 304(b), 43 U.S.C. 1734(b). Although the IOAA does not contain the
same
[[Page 1952]]
``reasonableness factors'' as FLPMA Sec. 304(b), the factors MMS
considered under FLPMA to determine reasonable fees led it to conclude
that the fees for offshore and Indian leases should be the same as for
onshore leases.
The October 28, 1996, proposed regulation on appeals also proposed
payment of a processing fee. 61 FR 33607 (1996). Several comments to
that rule questioned MMS's authority to impose such fees. However, in
addition to the authority under the IOAA and FLPMA, the United States
Court of Appeals for the District of Columbia Circuit has upheld
charging processing fees for administrative appeals. Ayuda, Inc. v.
Attorney General, 848 F.2d 1297 (D.C. Cir. 1988). See also United
Transportation Union-Illinois Legislative Board v. Surface
Transportation Board, No. 97-1038, 1997 U.S. App. LEXIS 37560, (D.C.
Cir. Nov. 10, 1997) (decision published in table case format without
opinion, reaffirming Ayuda) (reported in full text format at 1997 U.S.
App. LEXIS 37560). The Circuit Court held that processing fees for
administrative appeals ``are for a `service or thing of value' [under
the IOAA, 31 U.S.C. 9701(a),] which provides the recipients with a
special benefit.'' Ayuda, Inc. at 1301. Thus, MMS and OHA have properly
determined that under FLPMA and the IOAA they have authority to recover
the costs to process appeals because appeals provide ``special benefits
or privileges to an identifiable non-Federal recipient above and beyond
those which accrue to the public at large.'' 346 Departmental Manual
1.2.A.
The ``reasonableness factors'' set out in FLPMA are: (a) ``actual
costs (exclusive of management overhead)'; (b) ``the monetary value of
the rights or privileges sought by the applicant''; (c) ``the
efficiency to the government processing involved''; (d) ``that portion
of the cost incurred for the benefit of the general public interest
rather than for the exclusive benefit of the applicant''; (e) ``the
public service provided''; and (f) ``other factors relevant to
determining the reasonableness of the costs.''
MMS and the IBLA considered each of the FLPMA factors for appeals
processed under this proposed rule. We first estimated the actual cost
for processing the appeal, and then considered each of the other FLPMA
factors to see if any of them might cause the fee to be set at less
than actual cost. If so, we then considered whether any of the
remaining factors acted as an enhancing factor that would mitigate
against setting the fees at less than actual cost. We then decided the
amount of the fee, which cannot be more than the actual processing
cost. This method led to fees that are set well below the actual
processing costs. Accordingly, for royalty appeals, the fee was set at
$150 to be paid with your Notice of Appeal under Sec. 4.907, and at
$150 for filing your Statement of Reasons under Sec. 4.939(a)(2). This
analysis also applies to the single $150 fee proposed under 30 CFR part
290 for appeals of decisions and orders by the MMS OMM program.
Factor (a)--Actual Costs
Actual costs means the financial measure of resources expended or
used by MMS to process a Notice of Appeal, and by the IBLA to process
the Statement of Reasons, including, but not limited to the costs to:
conduct record development and settlement conferences; issue the MMS
Director's concurrence, modification or rescission; consider other
pleadings before the IBLA and issue IBLA decisions; or take any other
relevant action. Actual costs includes both direct and indirect costs,
exclusive of management overhead. Management overhead costs means costs
associated with the MMS and OHA directorate. For MMS, this means the
entire Washington office staff, except for any Appeals Division staff
required to perform work on appeals. For OHA, this means the OHA
Director, OHA Deputy Director, and associated staffs. Section 304(b) of
FLPMA requires that management overhead be excluded from chargeable
costs.
Direct costs include agency expenditures for labor, material, and
equipment usage connected with the performance of processing
responsibilities. For MMS's costs to process a Notice of Appeal, we
calculated actual costs by estimating the average time it would take
MMS personnel to perform various phases of the appeals process. That
estimate was based on the time it takes to complete current similar
processes. We then multiplied the total hours by $50, which is based on
an average of MMS's personnel, material and equipment usage costs.
MMS's indirect costs include items such as rent and overhead (excluding
management overhead). MMS determined its indirect cost rate and applied
the rate to direct costs to determine its total actual costs. MMS
calculated its indirect cost rate by dividing the indirect costs
described above by the total program cost to arrive at an indirect cost
percentage of 18.5%. MMS then multiplied the direct costs by the
indirect cost percentage and added that figure to its direct costs to
determine its total actual costs. This method of calculating costs is a
generally accepted practice in both the private and public sectors.
For IBLA's direct costs, we calculated IBLA's total appeals
personnel costs, then added costs for supplies and equipment for those
appeals. To calculate indirect costs, we determined from information
from OHA that 60% of OHA's indirect costs are related to IBLA appeals.
We therefore took 60% of OHA's indirect costs and added those to the
IBLA's total direct costs to determine total actual costs for all IBLA
appeals (not just royalty appeals). We then divided that total actual
cost by the average total number of appeals to the IBLA for the last
three fiscal years to arrive at an average cost per appeal. The
methodology used for determining IBLA's actual costs is different from
MMS's methodology because of the different way IBLA keeps and tracks
cost information. We believe both methods are reasonable.
Our method of establishing actual costs involved estimating the
average cost of processing an individual appeal. We concluded that
while it might be possible to track costs and consider the
reasonableness factors on a case-by-case basis, doing so would be so
inefficient and expensive as to be unreasonable.
As explained above, we propose having two fees for royalty appeals
under 43 CFR part 4, subpart J. An appellant would submit one fee with
its Notice of Appeal for the costs of processing by MMS. If the
appellant decides to file a Statement of Reasons with the IBLA, it
would submit a separate fee for the costs of processing by the IBLA.
This system would ensure that appellants only pay for the services they
receive. We recognized that one larger fee for the entire process would
not be fair to appellants who chose not to continue their appeal to the
IBLA because they would have ``paid'' for the entire process. For the
processing of OMM program appeals under 30 CFR part 290 there would be
one fee for the costs of processing by IBLA.
MMS's costs to process a royalty appeal under this proposed 43 CFR
part 4, subpart J, would include the cost to consider the Notice of
Appeal in various phases at MMS. The first phase would be the MMS DRD
performing the following functions:
(1) Receiving and date stamping each document;
(2) Reviewing each appeal for completeness and timeliness;
(3) Docketing the appeal by entering the information into a
computer-based tracking system;
(4) Preparing and sending an acknowledgment letter or a denial
letter as appropriate;
[[Page 1953]]
(5) Preparing an appeal file; and
(6) Copying and forwarding the appeal to the appropriate office.
We estimated based on current processes that the average time to
complete this phase would be 3 hours.
The second phase would be the record development process. This
would include the following steps:
(1) Preparation for the record development conference by the tribe,
delegated State, or MMS office that performed the audit or issued the
order under appeal;
(2) Participation in the record development conference by that
office as well as an average of three other MMS personnel;
(3) Compilation of the record;
(4) Preparation of the Joint Statement of Facts and Issues,
including circulation of a draft statement to all parties, obtaining
comments and signatures;
(5) Preparation of the certification of the record, including
circulation of a draft certification to all parties, obtaining comments
and signatures; and
(6) Submission of the record, statement and certification to the
MMS DRD.
We estimated based on current processes that the average time to
complete this phase would be 71 hours.
The third phase would consist of the settlement conference. This
would include the following steps:
(1) Preparation for the settlement conference by MMS and the tribe,
delegated State or MMS office that performed the audit or issued the
order under appeal; and
(2) Participation in the actual settlement by an average of four
MMS personnel (including a representative from the tribe, delegated
State or MMS office that performed the audit or issued the order under
appeal).
We estimated based on current processes that the average time to
complete this phase (assuming full settlement discussions separate from
the record development efforts) would be 64 hours. As discussed below,
the settlement conference could be combined with the record development
conference to reduce costs and time. However, it is likely that even
though the record development and settlement conferences could occur in
one meeting the settlement conference would require time in addition to
the time to conduct the record development conference. In such
instances, we estimate that the time involved for settlement
conferences would be 24 hours. Assuming that most appellants would
choose to combine the settlement and record development conferences, we
determined that 24 hours was a reasonable estimate for the settlement
conference.
The final phase of MMS's processing of the appeal would consist of
the MMS Director concurring with, modifying or rescinding an order.
This includes research for and preparation of the Director's action on
the order, as well as transmittal of that action to the appellant and
others MMS is required to notify under the proposed rule, and
transmittal of the record to the IBLA and Office of the Solicitor if a
party continues the appeal before the IBLA. We estimated the average
staff-hours the Appeals Division currently spends on each appeal that
results in a decision by the MMS Director to be 100 hours. However,
much of the work the Appeals Division currently performs would be done
during the record development process and would not have to be
repeated. For example, the appeals analyst would participate in
compiling the record and ensuring it is complete, and would analyze the
appeal prior to record development to help ensure all issues were
included in the Joint Statement of Facts and issues. Furthermore, under
the proposed process, MMS would no longer be writing lengthy decisions,
designed for publication. Nevertheless, MMS would spend some time
during the MMS Director's determinations to concur with, modify, or
rescind orders and documenting that determination (particularly in
cases where the order is modified or rescinded). We estimate the time
in addition to the record development process necessary to analyze the
appeal and draft the MMS Director's concurrence, modification or
recission will take 30 hours per appeal.
Thus, the total estimated average hours for MMS to spend on these
phases is 3 hours for the docketing of the appeal, 71 hours for the
record development process, 24 hours for the settlement conference, and
30 hours for the MMS Director's activity for a total of 128 hours per
appeal. This estimate is based on current MMS time requirements for
completing similar tasks. Using an estimate of $50 per hour based on an
average of MMS's personnel, material and equipment usage costs, we
estimate the average direct cost burden for these requests would be
$6,400 ($50/hour x 128 hours). MMS's indirect costs for the requests is
$1,184 per appeal (18.5% indirect cost rate x $6,400) resulting in
total estimated actual costs of $7,584 per average appeal.
After the MMS Director's action, if a party continues the appeal
before the IBLA under 43 CFR part 4, subpart J, additional phases would
be necessary to process the Statement of Reasons at the IBLA. The costs
of this phase at the IBLA would cover the following steps:
(1) Considering all substantive pleadings, requests to supplement
the record, and extension requests;
(2) Acting on any requests; and
(3) Researching, writing and issuing a final decision in the
appeal.
An additional phase may be necessary if a party requests
reconsideration. However, because this occurs infrequently, we have not
included any additional costs for the reconsideration request phase in
our actual cost estimate.
Rather than estimating IBLA costs by calculating the average number
of hours spent on an appeal, we instead added the total IBLA costs and
divided by the total number of appeals to the IBLA to arrive at an
average cost per appeal. We estimated that the IBLA's average total
costs over the last 3 years for all appeals to the IBLA was
approximately $3 million. The IBLA decided an average of 620 appeals
over that period at an average cost of $4,800 ($3 million divided by
620). Thus, we estimated that the IBLA's total average costs to decide
an MMS royalty appeal would be $4800. (This is about the same as the
current cost per appeal incurred by the MMS Appeals Division when it
renders decisions on appeals.)
Because we will have to modify both the MMS and IBLA docketing and
tracking systems we needed to add those costs to our actual costs. We
estimate that this will take approximately 3 staff months to complete
at a cost of $8,000 per month, for a total cost of $24,000. Moreover,
we may incur expenses as startup costs to establish the MMS Dispute
Resolution Division. We estimate that moving furniture, phones, data
connections and space preparation will cost approximately $24,000 based
on a similar reorganization and relocation. Therefore, we added $45 per
appeal ($48,000 in costs divided by an average of 213 appeals to the
MMS Director per year, spread over 5 years) to our actual cost
estimate.
Factor (b)--Monetary Value of the Rights and Privileges Sought
The monetary value of rights and privileges sought means the
objective worth of an appeal, in financial terms, to the appellant. The
value to an appellant is that of having an error corrected if there is
an error in an order. See Ayuda, Inc. versus Attorney General, 848 F.2d
1297, 1301 (1988). However, the monetary value of having
[[Page 1954]]
an error corrected will vary depending on the amount under appeal.
Moreover, many appeals will decide a legal question that imparts value
to all lessees so the monetary value is not merely equal to the amount
under appeal. Therefore, we rejected the idea of trying to calculate
monetary value on a case-by-case basis as too speculative, time-
consuming, wasteful of resources, and subject to disputes. Instead, we
have determined that consideration of this factor should include an
examination of equitable considerations related to monetary value,
rather than precise figures, which would be very difficult or
impossible to calculate.
A major equitable consideration is whether the level of cost
reimbursement could burden the applicant to such an extent that the
appeal would actually end up being of no monetary value to the
appellant whatsoever. An appeal with a small potential value to the
appellant, but which triggers high processing costs, would be an
example of an instance where the fee might reasonably be set at a
figure less than the actual cost of processing due to this factor.
Thus, we took into account the costs for an appellant to go through the
appeals process relative to the monetary value of the relief sought.
After considering this factor, MMS decided that it was reasonable to
set fees greatly below actual costs so as not to frustrate Congress'
intent under RSFA Sec. 4(a), adding FOGRMA Sec. 115(h), 33 U.S.C.
1724(h), regarding appeals of MMS orders. This is because lessees and
their designees would not appeal if our recovery costs are excessive.
In fact, during our public meetings on the draft proposed rule,
industry representatives expressed that concern. Thus, this factor did
cause fees to be set below actual costs.
Factor (c)--Efficiency to the Government Processing Involved
Efficiency to the Government processing means the ability of the
United States to process an appeal with a minimum of waste, expense,
and effort. Implicit in this factor is the establishment of a cost
recovery process that does not cost more to operate than we would
collect and does not unduly increase the costs to be recovered. As
noted in the above section on actual costs, we have determined that for
the appeals process proposed in this rulemaking, it would be
inefficient to determine actual cost data on a case-by-case basis. MMS
has thus used cost estimates derived from collected data.
The procedures that we would use to process an appeal would be
partially based on standardized steps for similar MMS transactions in
order to eliminate duplication and extraneous procedures. However, some
procedures would require processes in addition to those used under the
current appeals process. These additional processes were accounted for
under factor (a) above.
Factor (d)--Cost Incurred for the Benefit of the General Public
Interest
The cost incurred for the benefit of the general public interest
(public benefit) means funds the United States expends, in connection
with the processing of an appeal, for studies or data collection
determined to have value or utility to the United States or the general
public separate and apart from the document processing. It is important
to note that this factor addresses funds expended in connection with an
appeal. There is another level of public benefit that includes studies
which we are required, by statute or regulation, to perform regardless
of whether an appeal is received. The costs of such studies are
excluded from any cost recovery calculations from the outset.
Therefore, no additional reduction from costs recovered is necessary in
relation to these studies.
We concluded that the processing of an appeal did not as a rule
produce studies or data collection that might benefit the public to any
appreciable degree. Therefore, any possible benefits of such studies to
the public are balanced by their possible benefits to the appellant.
Accordingly, we made no adjustment to the fee recovered based on this
factor.
Factor (e)--Public Service Provided
Public service provided means direct benefits with significant
public value that are expected as a result of an administrative appeal.
This factor is thus concerned with the benefit resulting from the
ultimate decision in the appeal, while the previous factor related to
the benefits of the document processing itself. Deciding an appeal
provides a public service because the primary function of the appeals
process is to correct errors in an effort to ensure the ``fair and
proper administration of [our] operations . . . .'' Ayuda, 848 F.2d at
1301. Indeed, ``the public has a keen interest in the correctness of
administrative decisions.'' Ayuda, 848 F.2d at 1301. Although the
appellant invokes the appeals procedures in order to benefit from them,
and therefore receives a ``service or a thing of value,'' see Ayuda at
id., there also is a substantial benefit to the public. We therefore
decided that it was reasonable to set fees greatly below actual costs
on the basis of this factor, as well as the monetary value factor.
Factor (f)--Other Factors
The final reasonableness factor is other factors relevant to
determining the reasonableness of the costs. Under this factor, we
considered fees that other government entities charge for processing
administrative appeals (see October 28, 1996, proposed rulemaking, 61
FR at 55609).
After considering all of the reasonableness factors, we concluded
that the factors of monetary value and public service make it
reasonable to set the fees for royalty (for processing the Notice of
Appeal and Statement of Reasons) and OMM program appeals at $150
instead of at the actual costs. None of the other factors mitigated
against setting the fees at less than actual costs, and the proposed
fee of $150 is within the range of fees other agencies commonly charge.
Because these fees would meet the reasonableness factors of FLPMA, they
are thus also reasonable under the IOAA.
We invite comments concerning the proposed processing fees. We
further specifically request input concerning the value to lessees and
designees of using the appeals process.
Section 4.966 How Do I Request a Waiver or Reduction of My Fee?
Under this proposed section, to request a fee waiver or reduction,
you would have to submit a written request to the MMS DRD with your
Notice of Appeal or Statement of Reasons. In your request, you would
have to demonstrate that you are either unable to pay the fee or that
payment of the fee would impose an undue hardship upon you.
We invite comments regarding the advisability of including
procedures in the proposed rule for granting fee waivers or reductions.
We included the fee waiver and reduction provisions because, during our
outreach meetings, industry representatives stated that the processing
fee might be a hardship on small independent oil and gas producers and
feared that the fee would have a ``chilling'' effect on those
independents bringing appeals. However, we have already considered
hardship and a possible chilling effect in considering the
reasonableness factors discussed above, specifically the ``monetary
value'' factor. After considering the factors, we decided that it was
reasonable to reduce the fee for MMS's processing costs from $7,584 to
$150, and for IBLA's processing costs from $4,800 to $150. Thus, we
already addressed industry's concerns, and reduced the fee to a nominal
fee that
[[Page 1955]]
will not cause undue hardship even to small entities.
While waiver procedures for appeals do exist in some other
agencies, they may not be applicable in instances such as this where
nominal fees are charged. For example, waiver provisions in Department
of Transportation Surface of Transportation Board regulations apply to
a fee schedule that includes fees ranging up to $23,300 for the filing
of a formal complaint 49 CFR 1002.2(c)-(f). See United Transportation
Union-Illinois Legislative Board versus Surface Transportation Board,
No. 97-1038, 1997 U.S. App. LEXIS 37560, (D.C. Cir. Nov. 10, 1997)
(upheld a Surface Transportation Board fee for handling appeals, in
part, because it ``provided a waiver mechanism for fees that would
cause undue hardship''). Therefore, we invite comment on whether the
waiver and reduction provisions should be removed.
Section 4.967 When Will MMS Grant a Fee Waiver or Reduction?
Under the proposed rule, in extraordinary circumstances, MMS could
grant a fee waiver or fee reduction. Extraordinary circumstances would
include a demonstrable inability to pay or undue hardship to an entity
required to pay the fee.
The MMS DRD would send you a written decision granting or denying
your request.
Section 4.968 How Do I Pay My Processing fee if MMS Grants a Reduction
or Denies My Request for a Reduction or Waiver?
Under this section, if MMS granted your request for a fee
reduction, you would have to pay the reduced processing fee in
accordance with this part within 30 days of your receipt of the
decision to reduce your fee. If MMS denied your request, that decision
would be final for the Department and would not be appealable under
this part. Also, if MMS denied your request, you would have to pay the
processing fee in accordance with this part within 30 days of your
receipt of that denial.
Section 4.969 How Do I Appeal a Decision That My Appeal Was Not Filed
on Time?
Under this proposed section, you could appeal MMS's decision on
timeliness to the IBLA within 15 days of your receipt of MMS's
notification under Sec. 4.914(c)(1) that your appeal was not timely
filed. If you choose to appeal that decision to the IBLA, you would be
deemed to agree to extend all applicable time periods for deciding your
appeal on the merits by the amount of time the IBLA needs to decide
your appeal on the issue of timeliness. If the IBLA denied your appeal,
the IBLA's decision would be final for the Department, and you would
have failed to exhaust required administrative remedies as to the
merits of the order or MMS decision not to issue an order.
If you choose not to appeal an adverse timeliness decision to the
IBLA, the order, or MMS decision not to issue an order, would be final,
and you would have failed to exhaust required administrative remedies
as to the merits of the order or MMS decision not to issue an order.
Accordingly, neither the IBLA nor a Federal court would have
jurisdiction to decide the merits of your appeal. If you appealed an
adverse timeliness decision to the IBLA, and the IBLA ruled against
you, and if you then sought judicial review of the timeliness issue in
Federal court and prevailed in court, your appeal on the merits would
commence, and your Preliminary Statement of Issues and processing fee
would be due (if you did not already file them), 60 days after the date
a final non-appealable judgment was entered.
Section 4.970 What Rules Apply to Appeals Filed Before [Insert
Date When This Subpart Becomes Effective]?
Because the RSFA 33-month default decision rule applies to pending
appeals, it was necessary to make pending appeals subject to some of
the procedures under this subpart. In addition to the current versions
of 30 CFR parts 243 and 290, this section and the new 43 CFR 4.901,
4.902, 4.903, 4.911 to 4.913, 4.948, 4.950, 4.957, 4.958, 4.971, and
4.972 would apply to appeals pending on the date this rule becomes
effective.
We are placing these transition provisions at the end of the rule
so that they can easily be: (1) implemented as a final rule even
without the earlier part of this rule (if, for example, we decide not
to implement the rest of this rule as proposed or if the implementation
of the rest of the rule is delayed beyond May 1999); or (2) removed
once they are no longer necessary if this proposed rule becomes final.
This section would make clear that the rules that apply to appeals
pending either before the MMS Director or IBLA on the date this rule
becomes effective would be the versions of 30 CFR parts 243 and 290 in
effect prior to the effective date of this rule, as well as the
``transition'' provisions in this proposed rule. That is because
currently pending appeals are subject to a different process than
appeals that would be filed under this subpart.
Section 4.971 When Does My Appeal Commence and End if it Was Filed
Before [Insert Date This Subpart Becomes Effective]?
RSFA, Sec. 4(a), adding FOGRMA Sec. 115(h)(1), 30 U.S.C. 1724(h)(1)
provides, in part, that:
The Secretary shall issue a final decision in any administrative
proceeding, including any administrative proceeding pending on the
date of enactment of this section, within 33 months from the date
such proceeding was commenced or 33 months from the date of such
enactment, whichever is later.
As discussed above, RSFA does not define ``commence'' with respect to
appeals. Thus, for purposes of the period in which the Department must
issue a final decision in your appeal, paragraph (a) would provide that
if your Notice of Appeal and initial Statement of Reasons to MMS was
filed on the date RSFA was enacted, your appeal commenced on August 13,
1996.
If your Notice of Appeal or initial Statement of Reasons to MMS was
filed after August 13, 1996, paragraph (b) would provide that your
appeal commenced on the date MMS received your Notice of Appeal, or, if
later, your Statement of Reasons, under 30 CFR 290.3. This proposal is
consistent, to the extent possible, with the rules applicable to
appeals filed after the effective date of this rule. The current rule
provides that:
[T]he notice of appeal shall incorporate or be accompanied by
such written showing and arguments on the facts and laws as the
appellant may deem adequate to justify reversal or modification of
the order or decision. Within the same 30 day period [for filing the
notice of appeal], the appellant will be permitted to file in the
office of the official issuing the order or decision additional
statements of reasons and written arguments or briefs.
30 CFR 290.3 (1997). Thus, the rules currently in effect require
appellants to file their Statement of Reasons with their Notice of
Appeal. However, MMS practice, consistent with the current rules at 30
CFR 290.5, has been to allow appellants additional time to file their
Statement of Reasons after timely filing the Notice of Appeal, which
often contains little or no argument as to why the appellant believes
the MMS order or decision should be modified or rescinded. Since
enactment of RSFA, in most cases, appellants have agreed to extend the
33-month time period in exchange for MMS's extension of the time within
which to file the initial Statement of Reasons. Consistent with the
approach to accounting for extensions of time to file the processing
fee and Preliminary Statement of Issues
[[Page 1956]]
proposed in Sec. 4.907 above, we think the easiest way to account for
these extensions is simply to calculate the time frame from the date
the initial Statement of Reasons was received, if later than the Notice
of Appeal. We also think that this is the most reasonable
interpretation of ``commenced'' because an appeal cannot ``commence''
until the appellant tells us why it is appealing. Accordingly, a
perfunctory Notice of Appeal merely stating that an appellant is
appealing an order does not ``commence'' an appeal.
In some cases, appellants file a Supplemental Statement of Reasons
after their initial Statement of Reasons. This supplemental filing
would have no effect on the commencement date, but in most cases MMS
and the appellants would have agreed to an extension of the 33-month
time frame to allow time for such supplemental filings.
Paragraph (c) would state that your appeal ends on the same day of
the month of the 33rd calendar month after your appeal commenced under
paragraphs (a) or (b), plus the number of days of any applicable time
extensions under Sec. 4.958. If the 33rd calendar month after your
appeal commenced does not have the same day of the month as the day of
the month your appeal commenced, then the initial 33-month period ends
on the last day of the 33rd calendar month. See the example for
calculating the end of your appeal in the Section-by-Section analysis
for Sec. 4.912.
Section 4.972 What if the Department Does Not Issue a Decision by the
Date My Appeal Ends if I Filed my Appeal Before [Insert Effective Date
of This Proposed Subpart]?
This section would be much like Sec. 4.956 but would apply to
appeals filed before the effective date of this rule under the current
two-level administrative appeals structure.
Paragraph (a) would state that this section applies to appeals of
orders, or portions of orders, involving monetary and nonmonetary
obligations regarding Federal oil and gas leases pending on the date
this rule becomes effective. For orders and portions of orders that do
not involve monetary or nonmonetary obligations on Federal oil and gas
leases, the time limits in 30 U.S.C. 1724(h)(2) and the default rule of
decision stated in this section would not apply. See Section-by-Section
analysis for Sec. 4.956 for further explanation.
Like Sec. 4.956(b), paragraph (b) would provide that if the IBLA or
an Assistant Secretary (or the Secretary or Director of the Office of
Hearings and Appeals) does not issue a final decision in an appeal
pending on the date this rule became effective by the date the appeal
ends under Sec. 4.971(c), then under 30 U.S.C. 1724(h)(2), the
Secretary will be deemed to have decided the appeal:
(1) In favor of the appellant for any nonmonetary obligation at
issue in the appeal or any monetary obligation at issue in the appeal
with a principal amount of less than $10,000;
(2) In favor of the Secretary for any monetary obligation at issue
in the appeal with a principal amount of $10,000 or more. See Section-
by-Section analysis for Sec. 4.956 for further explanation.
Paragraph (c)(1) would state that if the MMS Director has not yet
issued a decision under 30 CFR 290.3(c) in your appeal of an order, or
portion of an order, under 30 CFR part 290, then the provisions of
paragraph (b) apply to the nonmonetary and monetary obligations in the
order that you contested in your appeal to the MMS Director. However,
under paragraph (2), if the MMS Director has issued a decision under 30
CFR 290.3(c) in your appeal of an order, or portion of an order, under
30 CFR part 290, and if you appealed the Director's decision to IBLA,
then the provisions of paragraph (b) apply to the nonmonetary and
monetary obligations in the Director's decision that you contested in
your appeal to IBLA. For example, assume that you appeal an order
involving two separate monetary obligations, one worth $15,000, and one
worth $20,000. Assume also that the MMS Director's decision agrees with
the you on the first monetary issue worth $15,000 and modifies the
order accordingly to decrease that obligation to $8,000. If you do not
dispute that modification, but continue to dispute the second $20,000
monetary obligation before IBLA, and the Department does not issue a
final decision within 33 months, then the default decision provision of
this section would neither affirm the portion of the initial order that
was changed by the MMS Director's modification nor reverse the
Directors' determination that you owed $8,000 (a monetary obligation
worth less than $10,000) that you did not contest. The $8,000 issue
would stand because there is no longer an administrative proceeding
pending with respect to that obligation. In addition, the disputed
portion of the order would be deemed decided in favor of the Secretary
under paragraph (b) because it is more than $10,000.
Under paragraph (c)(3), if the MMS Director issued a decision under
30 CFR 290.3(c) in your appeal of an order under 30 CFR part 290, and
if you did not appeal the Director's decision to IBLA within the time
required under the current version of 30 CFR 290.7 and 43 CFR part 4,
then the MMS Director's decision would be the final decision of the
Department and 30 U.S.C. 1724(h)(2) has no application.
Paragraph (d) would provide that if any party requests
reconsideration of an IBLA decision issued before the date the appeal
ends under Sec. 4.971(c), and if IBLA did not issue a decision on
reconsideration before the date the appeal ends, then 30 U.S.C.
1724(h)(2) would have no application and the decision the IBLA had
issued would be the final action of the Department. See Section-by-
Section analysis for Sec. 4.956 for further explanation.
Paragraph (e) would provide that if the principal amount is not
specifically stated in an order and must be computed to comply with the
order, the principal amount referred to in paragraph (b) means the
principal amount the MMS estimates you would be required to pay as a
result of the order. See Section-by-Section Analysis for Sec. 4.956 for
further explanation.
We also are proposing Secs. 4.971 and 4.972 and the definitions of
``obligation,'' ``monetary obligation,'' and ``nonmonetary obligation''
in proposed Sec. 4.903 as proposed amendments to the existing MMS and
IBLA appeals rules in the event that this proposed rule is not
promulgated as a final rule. These provisions are needed to implement
the RSFA requirements if the present appeals structure is retained. We
anticipate that some division and duplication of paragraphs in these
sections would be needed to codify the appropriate parts to both 30 CFR
part 290 and 43 CFR part 4 in a final rule. However, the substance of
such amendments to the current process would not differ from the way
these sections would be promulgated if this proposed rule is
promulgated as a final rule.
III. Section-by-Section Analysis, 30 CFR Part 208
Section 208.2 Definitions
This section would be amended to define new terms used in the
proposed amendment of Sec. 208.16.
Section 208.16 Appeals
This section would be amended to provide a specialized appeals
process for appeals filed by refiners or other parties involved in
disposition of royalty taken in kind. The purchaser of royalty-in-kind
(RIK) production has a contract to purchase personal property from the
Federal Government. Such contracts are governed by the Contract
[[Page 1957]]
Disputes Act of 1978 (CDA), 41 U.S.C. 601-13. The CDA requires that
``[a]ll claims by the government against a contractor relating to a
contract shall be the subject of a decision by the contracting
officer.'' 41 U.S.C. 605(a). It further requires that ``[t]he
contracting officer shall issue his decisions in writing, and shall
mail or otherwise furnish a copy of the decision to the contractor. The
decision shall state the reasons for the decision reached, and shall
inform the contractor of his rights as provided in this chapter.'' Id.
Under the proposed rule, the contracting officer would be the MMS
Director, his or her delegate, or the person designated under a RIK
purchase contract. MMS anticipates that the Director will delegate such
authority to MMS staff responsible for auditing RIK purchases. Thus, an
order issued by an MMS auditor indicating that an RIK purchaser owes
additional money to the Government would be a decision of the
contracting officer.
The CDA provides for appeals of contracting officers' decisions to
the agency's board of contract appeals. 41 U.S.C. 606. Accordingly,
there would be no appeal of the contracting officer's decision to the
MMS Director. Instead, MMS proposes to provide for appeals of the
contracting officer's decision to the Interior Board of Contract
Appeals (IBCA) under 43 CFR part 4, subpart C. Note, however, that,
although MMS proposes no appeal to the MMS Director, MMS proposes to
retain the requirement under the existing provision at 30 CFR 208.12,
that appellants must post a bond under 30 CFR part 243 if they decide
not to pay pending appeal to the IBCA.
In addition, MMS does not believe that the 33-month limitation for
the Department to issue final decisions on appeals under Sec. 4 RSFA,
30 U.S.C. 1724(h), applies to appeals by refiners or other parties
involved in disposition of royalty taken in kind. This is because RSFA
applies to Federal oil and gas leases and not to the Government's
resale under RIK contracts of oil that it receives as royalty under
those leases. Thus, appeals to the IBCA under this section would not be
subject to any specialized timing requirements such as the default
decision rule proposed under 43 CFR 4.956 or 4.972.
The CDA also provides for contractors to bring actions challenging
contracting officers' decisions in the United States Court of Federal
Claims in lieu of appealing to the agency contract appeals board. 41
U.S.C. 609. Therefore, the proposed amendment to Sec. 208.16 provides
for this alternative.
IV. Section-by-Section Analysis, 30 CFR Part 241
This part would be replaced in its entirety by revised provisions
making the following general changes.
First, new Secs. 241.51 through 241.77 would revise current
regulations to clarify the methods to be used to appeal civil penalties
authorized by Sec. 109 of FOGRMA, 30 U.S.C. 1719 (Supp. I 1994).
Second, existing Sec. 241.20, which addresses civil penalties
authorized by statutes other than FOGRMA, would be deleted. MMS has
never used this section. This deletion should not affect MMS's
authority to use powers other than civil penalties, such as lease
cancellation and debarment, as authorized by other statutes or
regulations. MMS welcomes comments regarding whether MMS should keep
this section and what form the appeals process should take if it is
kept.
Third, this proposal reflects our effort to rewrite this part in
``plain language.'' MMS proposes to use a question and answer format
for ease of use.
Fourth, because the amendments to the appeals regulations under
this notice are consolidating all royalty appeals before the IBLA, MMS
proposes to modify the current rule, which allows certain appeals
concerning Notices of Noncompliance to be made to the MMS Director, and
allow appeals instead to the IBLA.
Fifth, MMS proposes several changes to make the regulations more
consistent with the applicable provisions of FOGRMA.
Finally, MMS proposes to delete the current Sec. 241.53, which
addresses assessments for nonperformance. MMS has never used this
section and believes that new assessments for chronic erroneous
reporting to be proposed under the provisions of the RSFA will be an
adequate replacement. MMS welcomes comments suggesting that it be
retained and what form the appeals process should take if it is to be
retained.
In the new proposed Secs. 241.51 through 241.55, MMS would
establish the same process for all persons who wish to contest a
potential civil penalty that would be assessed under FOGRMA Sec. 109(a)
and (b), 30 U.S.C. 1719(a) and (b). Under the current rules, there are
separate processes for those persons who comply within the twenty days
allowed to correct certain violations under FOGRMA and for those who do
not correct within the statutory time frame. The proposed sections
would allow all persons served with Notices of Noncompliance to request
a hearing on the record before the Hearings Division of the OHA.
The current rule also provides that a person may appeal to the MMS
Director if the violation has been corrected within the 20-day cure
period. MMS does not believe there is any reason to retain this
separate process because we have eliminated appeals to the MMS Director
for other appeals involving lease obligations. Thus, consistent with
the changes made to 30 CFR parts 243 and 290 and 43 CFR part 4, subpart
J, the appeals related to the MMS royalty civil penalty process will
also be before the OHA. MMS requests comments on whether MMS should
retain the process for appealing royalty civil penalty assessments to
the MMS Director.
Section 241.55 would retain the current provision that continues
the accrual of penalties during the pendency of appeals. Section 241.63
has a similar provision for penalties authorized by FOGRMA subsections
109(c) and (d), 30 U.S.C. 1719(c) and (d). MMS believes that this
provision encourages early compliance with MMS orders when a person in
violation believes it is likely to lose on appeal. These provisions
would allow a person who receives a Notice of Noncompliance to ask OHA
to stay the accrual of penalties.
Section 241.60 would amend the conditions under which MMS may
assess penalties without providing recipents with an opportunity to
correct them by changing the phraseology from ``for intentional
violations'' to be more consistent with FOGRMA. FOGRMA distinguishes
between two types of violations: (1) all failures to comply with
applicable statutes, regulations, orders, or lease terms, including
failures to permit inspection (30 U.S.C. 1719(a) and (b)) and (2)
failures to make royalty payments; failures to permit entry, inspection
or audit; knowing or wilful failure to inform the Secretary when
production commences or resumes (30 U.S.C. 1719(c)); and knowing or
wilful preparation, maintenance or submission of false reports; knowing
or wilful taking of oil or gas without authority; or purchase,
conveyance of oil or gas knowing it was stolen (30 U.S.C. 1719(d)). MMS
has previously termed the second group of violations as
``intentional.'' MMS now believes that the use of the term
``intentional violations'' has caused two types of confusion. First, it
may have caused the belief that the standard was exactly the same as
that for criminal intent. Second, it may have caused confusion by
implying that any knowing wrongdoing was covered. MMS believes that
using
[[Page 1958]]
the same language as the statute will reduce confusion.
MMS therefore is proposing to substitute the specific provisions of
FOGRMA for the more generic language in the current rule. This includes
increasing the maximum civil penalty up to the $25,000 per day for
those acts for which FOGRMA allows such a penalty. MMS does not believe
that the regulations should prevent MMS from exercising the full powers
granted to it by statute.
Finally, MMS believes that the statutory provision for assessing
penalties for ``failure to permit entry, inspection or audit'' applies
to failure to provide MMS with documents or information that MMS has
requested under the authority of FOGRMA, the regulations, or leases.
V. Section-by-Section Analysis, 30 CFR Part 242
Subpart A--General Provisions
Section 242.1 What Is the Purpose of This Part?
This proposed section would state that the purpose of this part is
to explain how MMS or delegated States will issue orders and notices of
orders, and serve official correspondence, and how the recipient of an
order may appeal that order and exhaust administrative remedies.
Section 242.2 What Leases Are Subject to This Part?
This section would explain that this part applies to all Federal
mineral leases onshore and on the OCS, and to all federally-
administered mineral leases on Indian tribal and individual Indian
mineral owners' lands. However, some procedures under this rule would
apply only to Federal oil and gas leases because the RSFA provisions
regarding notifying lessees when MMS sends orders to their designees
applies only to Federal oil and gas leases. The procedures regarding
Indian lessor requests for MMS to issue orders under subpart C apply
only to Indian leases.
Section 242.3 What Definitions Apply to This Part?
This section would explain the definitions that you will need to
know for this part.
Delegated State would mean a State to which MMS has delegated
authority to perform royalty management functions pursuant to an
agreement or agreements under regulations at 30 CFR part 227. This
definition is essentially the same as that under RSFA Sec. 2(1), FOGRMA
Sec. 3, 30 U.S.C. 1702(22).
Designee would mean the person designated by a lessee under 30 CFR
218.52 to make all or part of the royalty or other payments due on a
lease on the lessee's behalf. This definition is essentially the same
as the definition under RSFA Sec. 2(1), as added to FOGRMA Sec. 3, 30
U.S.C. 1702(24). Accordingly, the definition cites the rule at 30 CFR
218.52 implementing the requirements of RSFA Sec. 6(g), FOGRMA
Sec. 102(a), 30 U.S.C. 1712(a), which allows lessees to designate
another person to pay royalties on their behalf. Thus, this definition
only would apply to appeals involving royalties and other payments due
on production from Federal oil and gas leases after September 1, 1996.
Indian lessor would mean an Indian tribe or individual Indian
mineral owner with a beneficial interest in a property that is subject
to a lease issued or administered by the Secretary on behalf of the
tribe or individual Indian mineral owner.
Lessee would mean any person to whom the United States, or the
United States on behalf of an Indian tribe or an individual Indian
mineral owner, issues a lease subject to this subpart, or any person to
whom all or part of the lessee's interest or operating rights in a
lease subject to this subpart has been assigned. This definition is
essentially the same as that under RSFA Sec. 2(1) and FOGRMA Sec. 3, 30
U.S.C. 1702(7), and would include owners of operating rights. Although
RSFA does not apply to Federal oil and gas leases for production prior
to September 1, 1996, other Federal solid mineral and geothermal
leases, and Indian leases, MMS did not separately define operating
rights owners or operators because recipients of orders not subject to
RSFA may appeal under this rule regardless of whether they are a
``lessee'' under RSFA.
Obligation would mean:
A lessee's, designee's or payor's duty to:
(1) Deliver royalty-in-kind; or
(2) Make a lease-related payment, including royalty, minimum
royalty, rental, bonus, net profit share, proceeds of sale, interest,
penalty, civil penalty, or assessment.
This proposed definition is similar to the definition under RSFA
Sec. 2(1), FOGRMA, 30 U.S.C. 1702(25), but it does not include MMS's
obligations as set out in RSFA's definition of ``obligations,'' because
MMS's obligations are not subject to ``orders'' under this part.
Payor would mean any person responsible for reporting and paying
royalties for:
(1) Federal oil and gas leases for production before September 1,
1996;
(2) Federal mineral leases other than oil and gas leases; and
(3) Leases on Indian lands subject to this subpart.
This definition is necessary because the term ``designee'' is used
for Federal oil and gas leases subject to RSFA, and ``payor'' is used
for leases not subject to RSFA.
Reporter would mean a person who submits reports for leases subject
to this subpart regardless of whether that person has payment
responsibility.
Subpart B--Orders
Section 242.100 What Is the Purpose of This Subpart?
This section would state that the purpose of subpart B is to
explain how MMS or delegated States will issue orders and notices to
persons concerning the following functions related to leases subject to
this subpart: (a) reporting production; (b) reporting, computing, and
paying royalties; (c) reporting, computing, and making other payments;
and (d) providing documents and other information. This subpart would:
(1) respond to the RPC recommendation that lessees receive a
``preliminary determination letter'' before they receive an order and
that orders should contain specific information about the basis for the
order; and (2) conform to RSFA provisions regarding orders and orders
to perform restructured accounting and for service of Notices of Orders
on lessees when orders are sent to designees.
Section 242.101 Who May Issue Orders?
This section would specify which officials within and outside the
Department of the Interior may issue orders. Within the Department, the
Assistant Secretary--Land and Minerals Management, could issue orders
in exercise of his or her delegated authority from the Secretary. In
addition, the MMS Director, or other officials within the Department of
the Interior to whom the MMS Director delegates authority, could issue
orders with respect to both Federal and Indian leases. However, only
the MMS Associate Director for RMP or higher officials within the
Department could issue notices to perform a restructured accounting for
leases and time periods subject to RSFA.
Outside the Department, under RSFA Sec. 3, FOGRMA Sec. 205, 30
U.S.C. 1735, and its implementing regulations at 30 CFR part 227,
delegated States could issue orders. This section of the rule would
specify that for delegated States, the
[[Page 1959]]
highest delegated State official having ultimate authority over the
collection of royalties, or other State officials to whom that
authority has been delegated could issue orders. However, in accordance
with RSFA Sec. 4, FOGRMA Sec. 115, 30 U.S.C. 1735(d)(4)(B)(ii), only
the highest delegated State official having ultimate authority over the
collection of royalties could issue orders to perform restructured
accounting. The authority for delegated States to issue orders to
perform only applies to leases and time periods subject to RSFA.
MMS specifically requests comments on whether the rule also needs
to address the potential for Indian tribes to issue orders. Under the
Indian Self-Determination and Education Assistance Act, as amended, 25
U.S.C. 450f (1994), Indian tribes could assume the function of issuing
orders for additional royalties and other payments. Because no tribes
to date have formally sought this authority, and because MMS wants to
avoid any unnecessary complications in the rule, MMS has not addressed
this potentiality in the proposed rule. However, such orders would be
handled in the same way as orders delegated States issue. If
commentators think that the rule should address this potentiality, then
MMS would appreciate specific recommendations on how best to address
it.
Section 242.102 What May MMS, Tribes, or Delegated States Do Before
Issuing an Order?
This section of the rule would implement the RPC recommendation
that MMS, State, or tribal auditors issue a ``preliminary findings
letter'' to lessees before issuing them an order. RPC Report
recommendations, paragraph 4. Because there may be time constraints or
other factors making such preliminary notices overly burdensome in some
cases, the rule would not make this a mandatory step. Instead, the rule
would specify that auditors ``may'' notify lessees, designees, or
payors through a ``Preliminary Determination Letter.'' This is the same
as the current step auditors usually take to send informal, non-
mandatory ``issue letters'' to persons to provide an opportunity to the
recipient to discuss the issues and resolve them informally before
issuing an order. Thus, the proposed rule would seek to resolve issues
informally at the earliest possible stage in order to avoid unnecessary
administrative appeals and litigation. Accordingly, this proposed
section would make it clear that Preliminary Determination Letters are
not appealable.
Section 242.103 What Does a Preliminary Determination Letter Contain?
This section specifies that Preliminary Determination Letters will
provide information about the scope of the audit, the factual findings,
the legal and policy basis for the preliminary determination, and
instructions on how to respond to the letter and seek an informal
resolution.
Section 242.104 What Is an Order?
This section would define what an order is for purposes of this
part. This section is similar to the definition of order in the
proposed new 43 CFR 4.903, but it provides some additional detail not
contained in that section and it excludes certain actions (such as
denials of lessee requests for MMS to perform some obligation) that are
treated as orders under the proposed new definition at 43 CFR 4.903,
for the purpose of defining what is appealable.
This section would distinguish between ``orders'' and actions that
are not orders. ``Orders'' would contain mandatory language requiring a
person to take some action or prohibiting a person from taking some
action, whereas actions that are not orders would not contain such
language.
Specifically, this section would establish that orders to pay and
orders to perform restructured accounting are orders for the purposes
of this section. The description of an order to pay would be
essentially the same as the definition of that term in RSFA Sec. 2,
FOGRMA Sec. 3, 30 U.S.C. 1702(26). Thus, an order to pay would be a
demand or order that asserts a specific, definite, and quantified
obligation. The types of obligations that could be included in an order
include those defined in RSFA Sec. 2, FOGRMA Sec. 3, 30 U.S.C.
1702(25)(B), including duties arising from or relating to a mineral
lease administered by the Secretary such as duties to: deliver
royalties in kind; pay the principal amount of any royalty, minimum
royalty, rental, bonus, net profit share, or proceed of sale; or pay
any interest, penalty, or assessment.
The description of an order to perform restructured accounting
would largely mirror the description of that term in RSFA Sec. 4,
FOGRMA Sec. 115, 30 U.S.C. 1724(d)(4)(B)(i). Thus, orders to perform
restructured accounting would have to be based on a finding by MMS or a
delegated State that a lessee, designee, or payor made identified
underpayments or overpayments as demonstrated by repeated, systemic
reporting errors for a significant number of leases, or for a single
lease for a significant number of reporting months, such that the
errors constitute a pattern of violations. However, because RSFA did
not define what ``errors constitute a pattern of violations,'' this
proposed rule would state that a person's admission of its failure to
comply with lease terms, statutes, or regulations would constitute a
pattern of violations likely to result in significant underpayments or
overpayments. Such admissions may be sufficient to justify an order to
perform because an admitted failure to follow lease terms, regulations,
or statutory provisions is per se a systemic reporting or payment error
that constitutes a pattern of violations that may result in significant
overpayments or underpayments. Moreover, nothing in RSFA's description
of restructured accounting orders contradicts that interpretation.
This section also would specify what other MMS or delegated State
actions constitute ``orders.'' Orders would include denials of requests
for exceptions from various valuation and reporting requirements,
orders to file reports, and orders to provide documents or other
information. This section would make clear that orders to perform a
restructured accounting are not ``orders to provide documents or
information.'' In addition, under the proposed rule, an order to
provide documents or information would not be appealable under 43 CFR
part 4, subpart J if the order is issued by Associate Director for
Royalty Management, or by a person to whom that Associate Director
delegates the authority to issue such orders that are final for the
Department. MMS proposes to make such orders final for the Department
because (1) courts have consistently upheld MMS's authority to issue
orders to produce documents and information, see Shell Oil Co. (On
Reconsideration, 132 IBLA 354 (overruling Shell Oil Co., 130 IBLA 93),
aff'd, Shell Oil Co. v. Babbitt, 945 F. Supp 792 (D. Del. 1996), aff'd,
125 F.3d 172 (3d Cir. 1997); Santa Fe Energy Products Co., 127 IBLA 265
(1993), aff'd Santa Fe Energy Products Co. v. McCutcheon, No. 94-C-535,
slip op., (D. Colo. Mar. 30, 1995), aff'd, 90 F.3d 409 (10th Cir. 1996)
(1996)), and (2) it would avoid the delay caused by administrative
appeals of such orders. Delays associated with these types of orders
are particularly detrimental because they interfere with MMS's and
delegated States' ability to determine whether additional royalties or
other payments may be due. Accordingly, such orders would only be
subject to judicial review. Such delays also are contrary to the intent
of RSFA, which
[[Page 1960]]
attempts to assure that amounts due will be determined quickly.
This section also would state what MMS or delegated State actions
would not constitute ``orders.'' Orders would not include non-binding
requests for information and guidance. For example, the rule would
specify that Preliminary Determination Letters, advice or guidance on
how to report and pay, such as valuation determinations, and policy
determinations are not ``orders.'' For example, a letter sent to
lessees, designees, reporters, or payors with guidance on how to report
or pay would not be an order unless it included language mandating that
the recipients follow the guidance. Similarly, a policy paper approved
by MMS's Royalty Policy Board or other MMS offices would not be
appealable. This is because such items do not require anyone to fulfill
any obligations associated with Federal or Indian mineral leases.
However, if a valuation determination or a letter to payors included
mandatory language requiring a person to fulfill an obligation
associated with a mineral lease administered by the Secretary, then it
would be considered an order. In addition, a person's failure to follow
such guidance would not preclude them from later appealing an ``order''
with mandatory language requiring them to follow such guidance.
Subpoenas also would not be ``orders'' under this proposed section.
The recipient of a subpoena is obligated to comply with the subpoena.
However, if the recipient of a subpoena does not comply, subpoenas are
only enforceable by the United States Government in Federal district
court under 30 U.S.C. 1717(b), and, thus, are not appealable
``orders.''
Also, orders to pay that MMS issues to refiners or other parties
involved in disposition of royalty taken in kind would not be
``orders'' under this section. This is because such orders are under
royalty-in-kind contracts between MMS and the purchasers; they are not
under leases subject to this part. See changes to 30 CFR part 208
proposed elsewhere in this notice.
Section 242.105 What Does an Order Contain?
This proposed new section would implement the RPC's recommendation
that orders should contain specific information about the factual,
legal, and policy basis for the order. Thus, this section would require
orders to include a description of the audit, review or investigation
that led to the order, the facts and legal or policy basis for the
order, instructions on how to comply, and instructions on how to
appeal. Orders also would have to include a list of other persons
affected by or involved in the order, including representatives of
affected Indian lessors (appropriate BIA Area offices in the case of
individual Indian mineral owners), States concerned, relevant MMS
offices, delegated States, tribal offices, and any lessees MMS notified
of the order under proposed Sec. 242.106(b).
To determine whether the principal amount of any monetary
obligation contained in an order to perform a restructured accounting
is $10,000 or more (for purposes of determining the consequence of any
failure to meet the 33-month time limit for appeals involving Federal
oil and gas leases under RSFA Sec. 4, FOGRMA Sec. 115(h)(2), 30 U.S.C.
1724(h)(2)), this section would provide that orders to perform a
restructured accounting may contain an estimate of the additional
royalties due. This section also would apply to orders involving leases
other than Federal oil and gas leases, because such an estimate could
be helpful to any appeal. If MMS or a delegated State later adjusted
the estimate based on additional information obtained or on a refined
estimation technique, then MMS or the delegated State would inform the
recipient of the order in writing of such adjustment.
Section 242.106 How Will MMS and Delegated States Serve Orders?
This section would, in part, redesignate and rewrite the section
formerly codified at 30 CFR 243.4(a) in ``plain language.'' However,
the proposed rewritten section would allow the use of new technologies,
such as facsimile and electronic mail, to serve orders, if the new
technology provides for a receipt confirming delivery at the applicable
address.
This proposed section also would implement the requirement in RSFA
Sec. 2, FOGRMA Sec. 3, 30 U.S.C. 1702(23), that MMS or delegated States
notify lessees of Federal oil and gas leases whenever MMS or a
delegated State issues an order to a lessee's designee. The Notice of
Order would include information on the designee who received the order
to facilitate contact between the lessee and the designee. Where
appropriate and practicable, MMS or a delegated State could send the
lessee a copy of the order sent to the designee with the Notice of
Order.
However, under paragraph (c), there is an exception to the
requirement that MMS or a delegated State serve lessees with a Notice
of Order. If a lessee does not designate a designee in writing as
required under 30 CFR 218.52, then MMS or a delegated State will serve
orders on the person currently making royalty or other payments on the
lessee's behalf. Currently, although lessees continue to have persons
report and pay on their behalf, few lessees have complied with
Sec. 218.52's requirement that they designate a designee in writing as
mandated by RSFA Sec. 6, FOGRMA, 30 U.S.C. 1712(a). Thus, because such
lessees have not complied with either MMS regulations or RSFA:
(1) MMS or a delegated State would not be required to serve the
lessee with the Notice of Order required under paragraph (b) (because
RSFA only requires notice to the lessee who has designated the designee
in writing to the Secretary); and
(2) The lessee would remain liable for any royalty or other
payments due under the order, regardless of the fact that MMS or a
delegated State did not serve the lessee with a Notice of Order under
paragraph (c)(1).
Subpart C--Requests From Indian Lessors for MMS To Issue an Order
Section 242.200 What Is the Purpose of This Subpart?
This section would state that the purpose of this subpart is to
explain how Indian lessors may request that MMS issue an order
concerning the reporting and payment of royalty and other payments due
under their leases when Indian lessors believe additional royalties or
other payments are due based on the lessor's interpretation of the
lease, statutes, or regulations.
This subpart only would apply to Indian lessors. MMS is not
proposing a similar process for States that receive a portion of the
revenues from Federal leases because: (1) States do not hold a property
interest in the leases from which they derive a portion of the
royalties, and (2) States can obtain a delegation to issue orders
themselves under 30 CFR part 227.
Section 242.201 How Can an Indian Lessor Request That MMS Issue an
Order?
This section would describe the formal process for lessors to
request that MMS issue an order. However, this is not the only process
available and, indeed, is not the preferred process. MMS strongly
encourages Indian lessors to consult with MMS informally when they
believe there are potential problems with royalty payments prior to
resorting to use of this subpart. In many cases, MMS could research the
issues the Indian lessor raises and take appropriate action, which
would avoid
[[Page 1961]]
disputes between MMS and the Indian lessor. Thus, Indian lessors only
should use this section in those situations where informal efforts do
not lead to a result that is satisfactory to the Indian lessor. If
informal efforts did not lead to a satisfactory result, they could
formally request the MMS issue an order under this section.
Paragraphs (a) and (b) would address requests that MMS issue an
order from individual Indian mineral owners or tribes. These paragraphs
would state what a request would have to include and who the individual
Indian mineral owner or tribe without a cooperative agreement must
submit the request to at MMS. Specifically, a request would have to
state with specificity why the Indian lessor thinks there is a problem
with royalty payments or reports. The Indian lessor also would have to
provide any information that he or she has that would support the
belief that there is a problem with the royalty payments or reports and
that would help MMS to investigate the problem.
Paragraph (c) would address requests that MMS issue an order from
tribes with cooperative agreements under Sec. 202 of FOGRMA, 30 U.S.C.
1732 and the regulations at 30 CFR part 228. Because tribes with a
cooperative agreement typically would prepare a draft order which they
would send to MMS with a request that MMS issue the order, they could
not make a request under this section unless MMS does not agree to
issue that order in a manner that is satisfactory to the tribe. Any
such request would have to be filed with the office that administers
the tribe's cooperative agreement, not with the MMS offices listed in
paragraph (a). However, such tribes would have to follow the
requirements for what a request must include specified under paragraph
(b).
Paragraph (d) would explain where tribes and individual Indian
mineral owners who do not have cooperative agreements must submit their
requests.
Section 242.202 What Will MMS Do After It Receives My Request?
This section would state that MMS will investigate requests filed
under the proposed new Sec. 242.201 and will either issue an
appropriate order or deny the request and not issue the order.
Section 242.203 How Will MMS Notify Me of Its Decision on My Request
That It Issue an Order?
This section would explain how MMS will provide Indian lessors with
written notification of its decision to either grant or deny their
request that MMS issue an order. If MMS granted your request, MMS would
send a copy of the order with the notification. If MMS denied your
request, then MMS would state the reasons for denial and advise you of
your appeal rights under 43 CFR part 4, subpart J.
Section 242.204 May I Appeal MMS's Decision To Deny My Request to
Issue an Order?
This section would state that an Indian lessor may appeal an MMS
decision not to issue an order under the proposed new rules at 43 CFR
part 4, subpart J. With its appeal, the Indian lessor would have to
provide a copy of its request and the notification MMS provided denying
the request under proposed Sec. 242.203(b).
Subpart D--Appeals and Service
This subpart would contain essentially the same requirements as
those currently found in MMS's regulations at 30 CFR 243.1, 243.3, and
243.4. MMS rewrote this proposed subpart in ``plain language'' and
added language necessary to conform to changes made elsewhere in this
proposed rule. Such necessary changes were: (1) to eliminate references
to 30 CFR part 290 on how to appeal orders, because that part no longer
applies to appeals of orders and decisions not to issue orders issued
under this part; and (2) to refer to the proposed IBLA rules at 43 CFR
part 4, subpart J, that would be applicable to appeals of orders and
decisions not to issue orders issued under this part. Also, this
section would expand the methods of service in the same manner and for
the same reasons as discussed above for the proposed new Sec. 242.106.
Finally, the proposed section would expand the persons who are
``addressees of record'' to include not only ``payors,'' but also
lessees, designees and reporters, and for participants in the royalty-
in-kind (RIK) program, the section would expand the addressee of record
from a ``refiner'' to a ``refiner or other party involved in
disposition of royalty taken in kind.''
VI. Section-by-Section Analysis for 30 CFR Part 243
Currently, 30 CFR 243.2, regarding suspension of orders or
decisions pending appeal, specifies the types of surety instruments MMS
accepts for appeals on royalty and other payments due on Federal and
Indian mineral leases. However, RSFA Sec. 4(a) amended FOGRMA to add a
new Sec. 115(l), 30 U.S.C. 1724(l), ``Stay of Payment Obligation
Pending Review.'' Section 115(l) allows any person (as that term is
defined by FOGRMA Sec. 102(12)), who MMS or a delegated State orders to
pay any obligation (other than an ``assessment'') subject to RSFA, to
demonstrate that the person is ``financially solvent.'' If MMS
determines that you meet the MMS standard for financial solvency, you
would be allowed to stay of order (other than one to pay an assessment)
without posting a bond or other surety instrument pending an
administrative or judicial proceeding. MMS will use the phrase:
``eligible for self-bonding'' in this preamble to describe MMS's
determination that a person is financially solvent and thus entitled to
a stay of an order without posting a bond or other surety instrument
pending an administrative or judicial proceeding.
If MMS orders you to pay an ``assessment,'' which RSFA defines as:
[A]ny fee or charge levied or imposed by the Secretary or a
delegated State other than--
(A) The principal amount of any royalty, minimum royalty, rental
bonus, net profit share or proceed of sale;
(B) Any interest; or
(C) Any civil or criminal penalty,
RSFA Sec. 2(19), you would be entitled to a stay of such an order
without posting a surety or demonstrating financial solvency.
This proposed rule provides for ``self-bonding'' by allowing you, a
lessee, as that term is defined under FOGRMA, 30 U.S.C. 1701(7), as
amended by RSFA, Sec. 2, to demonstrate financial solvency in lieu of
the current requirement that you post a bond or other surety instrument
for each MMS or delegated State order to pay any obligation that you
appeal. Designees who lessees designate to report and pay on their
behalf under 30 CFR 218.52 and other persons also could demonstrate
financial solvency on behalf of lessees.
The proposed rule also would delete the current part 243 in its
entirety and rewrite it using ``plain language.''
RSFA applies to royalties and other payments due on production from
Federal oil and gas leases beginning September 1, 1996. Congress made
the policy determination that RSFA's ``self-bonding'' provision applies
to oil and gas produced from Federal lands after September 1, 1996.
However, MMS believes that there is no practical reason, under this
proposed part, to treat oil and gas production from earlier periods,
and other types of Federal mineral leases, differently than it treats
production subject to RSFA. MMS also believes that administration of
the sureties will be simplified for both MMS and for lessees receiving
MMS decisions or orders to pay any obligation under Federal leases for
minerals other than
[[Page 1962]]
oil and gas if similar rules apply to all Federal mineral leases.
Therefore, MMS proposes to allow self-bonding for all appeals of MMS or
delegated State orders to pay any obligation for Federal oil and gas,
geothermal, and solid mineral leases, regardless of the date of
production. This would:
Treat all production dates consistently;
Streamline the administrative appeals process;
Simplify record keeping; and
Reduce costs for both Government and industry.
However, the rule retains the requirement that you post a bond or
other surety instrument for MMS or delegated State orders to pay any
obligations for Indian leases.
MMS specifically requests comments regarding the application of
these rules to appeals concerning amounts due on Indian leases. Should
MMS raise the amount for which a bond is required for Indian leases to
$10,000 and allow the lease bonds to cover amounts less than that?
Should MMS allow for self-bonding with respect to appeals of amounts
potentially due on Indian leases; or does our trust responsibility to
Indian tribes and individual Indian mineral owners preclude the
elimination of surety bonds even when the person responsible for paying
a demand is financially solvent?
Subpart A--General Provisions
Section 243.1 What Is the Purpose of This Part?
This section would state that the purpose of this part is to
explain how a lessee, its designee, or the recipient of an order may
suspend compliance with an order that it has appealed under 43 CFR part
4, subpart J or 30 CFR part 208. This part also would explain when a
surety must be submitted or when a demonstration of financial solvency
could be made.
Section 243.2 What Leases Are Subject to This Part?
This section would explain that this proposed part would apply to
all Federal mineral leases onshore and on the OCS, and to all
federally-administered mineral leases on Indian tribal and individual
Indian mineral owners' lands.
Section 243.3 What Definitions Apply to This Part?
This section would explain the definitions that you will need to
know for this part. However, other definitions in this subchapter, or
43 CFR part 4, subpart J, which are not specifically defined in this
proposed rule and do not conflict with definitions in this proposed
rule would apply.
Assessment would mean any fee or charge levied or imposed by the
Secretary or a delegated State other than: (1) the principal amount of
any royalty, minimum royalty, rental, bonus, net profit share or
proceed of sale; (2) any interest; or (3) any civil or criminal
penalty.
Designee would mean the person designated by a lessee under 30 CFR
218.52 to make all or part of the royalty or other payments due on a
lease on the lessee's behalf.
Lessee would mean any person to whom the United States, or the
United States on behalf of an Indian tribe or individual Indian mineral
owner, issues a lease subject to this part, or any person to whom all
or part of the lessee's interest or operating rights in a lease subject
to this subpart has been assigned.
MMS bond-approving officer would mean the Associate Director for
Royalty Management or an official to whom the Associate Director
delegates that responsibility.
MMS-specified surety instrument would mean an MMS-specified
administrative appeal bond, an MMS-specified irrevocable letter of
credit, a Treasury book-entry bond or note, or a financial institution
book-entry certificate of deposit.
Notice of order would mean the notice under 30 CFR part 242 that
MMS or a delegated State provides to a lessee stating that MMS or the
delegated State has issued an order to the lessee's designee.
Order would mean any written order to pay a monetary amount
appealable under 43 CFR part 4, subpart J or 30 CFR part 208. Orders
may be issued by the MMS Director, officials of the MMS Royalty
Management Program (RMP), or a delegated State.
Appeals of orders that do not involve the payment of amounts
specified by MMS or delegated State officials would not require the
posting of a bond or other surety to stay compliance. For example,
appellants would not have to post a bond when appealing MMS or
delegated State decisions to deny a lessee's, designee's, or payor's
written request that MMS make a payment, refund, offset, or credit of
money to the lessee or designee related to the principal amount of any
royalty, minimum royalty, rental, bonus, net profit share, proceeds of
sale, or any interest or assessment related to a lease obligation.
Person would mean any individual, firm, corporation, association,
partnership, consortium, or joint venture.
Self-bond would mean an MMS-approved demonstration of financial
solvency under this part.
Section 243.4 Who Must Post a Bond or Other Surety Instrument or
Demonstrate Financial Solvency Under This Part to Suspend Compliance
With an Order?
Paragraph (a) of this section would provide that if you appeal an
order that requires you to make a payment, you may suspend compliance
with the order by either posting a bond or demonstrating financial
solvency. Paragraph (b) would provide that you do not need to bond or
demonstrate financial solvency if the order is an assessment. Paragraph
(c) would provide that another way to meet the requirements of
paragraph (a) is if another person fulfills these requirements on your
behalf.
Section 243.5 May Another Person Post a Bond or Other Surety
Instrument or Demonstrate Financial Solvency on My Behalf?
Under Sec. 243.5, MMS would allow any person to either bond or
demonstrate their financial solvency on behalf of a lessee.
Section 243.6 When Must I or Another Person Meet the Bonding or
Financial Solvency Requirements Under This Part?
This section would state that, if you must meet the bonding or
financial solvency requirements under Sec. 243.4, or if another person
is meeting your bonding or financial solvency requirements, then you or
the other person must post a bond or other surety instrument or
demonstrate financial solvency within 60 days of your receipt of the
order or the Notice of Order.
Section 243.7 What Must a Person Do When Posting a Bond or Other
Surety Instrument or Demonstrating Financial Solvency on Behalf of an
Appellant?
This section would explain the requirements for assuming the
responsibility to post a surety or to demonstrate financial solvency on
behalf of another person. First, in paragraph (a) you would need to
notify MMS in writing that you wish to assume another person's
responsibility with respect to an appealed order.
Second, in paragraph (b) you would need to agree that if you post a
bond or demonstrate financial solvency on behalf of another person, you
could not use your possible non-liability for the underlying monies
due, either under the
[[Page 1963]]
provisions of RSFA or otherwise, as a defense.
Thus, a designee would not be able to use the fact that it is not
liable for royalties or other payments made, under FOGRMA, 30 U.S.C.
1712(a), as amended by RSFA Sec. 6(g), as a defense if MMS calls its
bond or requires it to fulfill its responsibility covered by its
financial solvency. MMS does not believe this requirement is equivalent
to imposing liability on designees. Designees retain the ability to
decide whether they are willing to assume this contingent
responsibility. If a designee does not wish to act as the surety for
the lessees for whom it is paying, it does not need to do so. MMS will
attempt to collect first from the liable persons, the lessees, and will
only demand payment from designees who accept this responsibility if
MMS is unable to collect from the liable person.
Under paragraph (c), you would not be able to end the
responsibility you assumed for the appellant under this section unless
either the appellant or another person has taken over the
responsibility. The purpose of this section is to ensure that if you
have assumed the bond responsibilities of another person, you cannot
simply walk away from them.
MMS expects that the persons who most commonly would assume
responsibility for another person, would be designees who appeal on
behalf of their lessees, or affiliates who may have greater assets and
be able to lower their affiliate-lessee's bonding costs. However, MMS
proposes to allow any person to be able to undertake these
responsibilities. MMS welcomes comments on whether the ability to bond
or demonstrate financial solvency on behalf of another should be
limited.
Section 243.8 When Will MMS Suspend My Obligation to Comply With an
Order?
Under paragraph (a)(1) MMS will increase the minimum amount under
appeal for which you must post a bond or other surety instrument for
Federal mineral leases from $1,000 to $10,000. Appeals with monetary
amounts less than $10,000 typically involve appellants who have
adequate lease surety coverage to secure the indebtedness during the
administrative appeals process. Thus, MMS believes that lease bonds
should be sufficient surety for orders of less than $10,000. Moreover,
the additional cost to both MMS and appellants to post bonds for
amounts less than $10,000 outweighs any benefits to the United States
for requiring bonds for lesser amounts.
For appeals of $10,000 or more, under paragraph (a)(2), you would
have the option of either posting a bond or other surety instrument
under this section or demonstrating financial solvency under subpart C.
Paragraph (b) provides the process for suspending compliance with
MMS or delegated State orders to pay any obligation concerning Indian
leases. This paragraph continues to require a bond or other surety
instrument for appeal amounts of $1,000 or more. This proposal treats
lessees and payors with respect to Indian leases differently from
lessees and payors with respect to Federal leases in two ways. First,
lessees/payors of Indian leases may only assure the financial
responsibility for their potential obligations by posting a surety, not
by demonstrating financial solvency. Second, lessees/payors of Indian
leases would be required to post a surety for any debt of $1,000 or
more, while lessees/payors of Federal leases must post a surety for
debts of $10,000 or more. MMS has treated Indian and Federal lessees/
payors differently because it is concerned that its trust
responsibility to Indian lessors may require heightened precaution with
respect to potential debts to Indian lessors that remain unpaid. MMS
specifically requests comment on whether lessees or payors with
contested debts on Indian leases should be treated the same as lessees
or payors with contested debts on Federal leases, i.e., whether they
should be allowed to self-bond and whether sureties or self-bonding
should only be required only for contested debts of $10,000 or more.
Both paragraphs (a) and (b) continue the provision that the MMS,
with notification, may choose to not suspend the requirement to comply
with an MMS decision or order you appeal. This provision is for
circumstances where MMS believes that a stay would not be in the best
interests of the United States or Indian lessors. Orders where a bond
would serve as adequate surety would not normally be the type of orders
where the interests of the United States or Indian lessors would
require immediate compliance.
Finally, paragraph (c) continues the proviso that you may pay or
comply pending appeal.
Section 243.9 Will MMS Continue To Suspend My Obligation To Comply
With an Order if I Appeal to a Federal Court?
This section continues the current requirement that sureties remain
in effect if you seek judicial review in Federal court for orders that
MMS stayed pending appeal. It also maintains that MMS will notify you
in writing of a decision to not suspend your obligation to comply with
an order during judicial review.
Section 243.10 When Will MMS Initiate Collection Actions Against a
Bond or Other Surety Instrument or the Person Demonstrating Financial
Solvency?
This section explains that when your appeal is decided adversely to
you, MMS may initiate collection actions 30 days after the decision is
issued by either IBLA, the Director of OHA, an Assistant Secretary, the
Secretary, or a court of competent jurisdiction. MMS may also initiate
collection actions if you or another person do not maintain an adequate
surety under Sec. 243.101 or if you or another person are no longer
financially solvent under Sec. 243.202.
Section 243.11 May I Appeal the MMS Bond-Approving Officer's
Determination of My Surety Amount or Financial Solvency?
MMS proposes to delegate the determination of financial solvency to
a bond-approving officer. The designated bond-approving officer for
MMS's RMP is the Associate Director for Royalty Management or a
delegated official. MMS proposes that the decision by the bond-
approving officer be final and not subject to appeal. MMS believes that
allowing administrative appeals of MMS's determination of financial
solvency would delay the securing of a surety and defeat the purpose of
requiring either a surety or a demonstration of financial solvency. MMS
requests comments on our election to make this decision final.
Section 243.12 May I Substitute Financial Solvency for a Bond Posted
Before the Effective Date of This Rule?
This section would provide for a transitional rule that would allow
you to replace a surety with a self-bond if you had posted a bond or
other surety prior to the effective date of these regulations.
Subpart B--Bonding Requirements
Section 243.100 What Standards Must My MMS-Specified Surety Instrument
Meet?
For purposes of this section, an ``MMS-specified surety
instrument'' would have to be in a form MMS specifies. MMS would
provide you with standard forms and information.
In addition, MMS would use a bank rating service to determine
whether a financial institution has an acceptable rating to provide a
surety instrument adequate to indemnify the lessor from loss or damage.
Your appeal bonds would have to be from a qualified surety
[[Page 1964]]
company which the Department of the Treasury has approved. If you
decide to use an irrevocable letter of credit or certificate of
deposit, it would have to be from a financial institution acceptable to
us with a minimum 1-year period of coverage subject to automatic
renewal up to 5 years.
Section 243.101 How Will MMS Determine My Bond or Other Surety
Instrument Amount?
The amount of your bond or other surety instrument would be
determined by adding the principal amount owed to any accrued interest
on that amount and projecting interest on the total for a 1-year
period. If your appeal is not decided within 1 year from the date it
was filed, then MMS would project additional annual interest and
require an amended bond or other surety instrument.
You could submit a single surety that covers multiple appeals if
you amend the surety annually to either add new amounts under appeal or
remove amounts that have been decided in your favor or that you have
paid. However, you would be required to file a separate surety for new
amounts under appeal until those new appeals are covered by the single
(consolidated) surety during the annual amendment.
Subpart C--Financial Solvency Requirements
Section 243.200 How Do I Demonstrate Financial Solvency?
MMS is proposing to add this new section to provide the procedure
for lessees or their designees who appeal MMS or delegated State orders
to pay any obligation to demonstrate financial solvency and ``self-
bond.'' This would also apply to other persons who wish to demonstrate
financial solvency on a lessee's behalf. The proposed regulation allows
you to demonstrate financial solvency in two ways. First, you can
submit an audited financial statement demonstrating that you have a net
worth in excess of $300 million. Second, if you have a net worth less
than the $300 million benchmark amount, or you do not have an audited
financial statement documenting your net worth, you can ask MMS to
consult an MMS determined-business information or credit reporting
service or program.
Section 243.201 How Will MMS Determine if I am Financially Solvent?
If your net worth is greater than $300 million, you are
presumptively deemed financially solvent and do not need to post a bond
or other surety instrument. MMS believes that a company with a net
worth in excess of $300 million would clearly be financially solvent.
This benchmark value would allow half of the companies that currently
post a bond or other surety instrument to ``self-bond.''
The net worth benchmark of $300 million represents the total net
worth of all your affiliated entities that you agree would be
responsible for paying MMS orders to make a payment. MMS also will
deduct the contingent liability of all of your appeals, including your
affiliates' appeals, in considering whether your net worth exceeds the
benchmark amount. Therefore, if you have a net worth of $325,000,000,
and MMS and its delegated States issued one or more orders, which could
result in your paying $40,000,000 in additional royalties, including
interest, then MMS would not consider you to have a net worth in excess
of $300 million. Consequently, you would not be eligible to self-bond
under this section. However you would still be eligible to apply for
self-bonding by requesting that MMS consult a business information or
credit reporting service or program, as described more fully below.
The rule would require you to submit your audited financial
statement at the first appeal for which you wish to substitute
financial solvency or self-bonding for surety. If MMS determined that
you were financially solvent and could self-bond, you would not be
required to update the audited financial statement you provided if you
file subsequent appeals during the calendar year for which you
demonstrated financial solvency unless you file for bankruptcy under
the bankruptcy code, Title 11, United States Code. Thereafter, you
would submit this statement annually as long as you have pending
appeals.
If you had a net worth less than the $300 million benchmark amount,
you could ask MMS to consult an MMS-determined business information or
credit reporting service or program. In such cases, MMS would consult
such services or programs to provide additional information concerning
whether you are eligible for self-bonding. Our intent is to look to the
information gathered from these commercial services or programs, such
as Experian (formerly TRW), to provide information regarding the risk
of your default for an obligation equal to the magnitude of the MMS
order to make a payment that you appealed, plus accrued interest.
For example, if a commercial service would consider you a low to
moderate risk if you were applying for a loan of the same amount as the
order, MMS might not require you to post a bond or other surety
instrument. However, MMS could determine that you are not financially
solvent if, for example, you:
Have insufficient cash flow to take on new debt, often
determined from your financial ratios, and have no alternative source
of repayment; or
Have a poor credit history of late payments, loan
defaults, or bankruptcies.
MMS intends to use these and other factors to decide whether an
appellant with an audited net worth less than $300 million is eligible
to self-bond. If MMS determines that an appellant's risk is low to
moderate, we would allow that appellant to self-bond. MMS specifically
requests comments concerning the appropriate level of risk that MMS
should use in determining whether an appellant is eligible to self-
bond.
If you asked MMS to consult a commercial service or program to
determine your financial solvency, you would have to submit a non-
refundable fee of $50. The fee would have to be paid with the original
request and annually thereafter as long as you wish to continue self-
bonding. MMS is recovering its costs under the Independent Offices
Appropriations Act of 1952, 31 U.S.C. 9701 et seq. (IOAA), for Federal
solid mineral, geothermal, and offshore leases, and Indian leases, and
the Federal Land Policy and Management Act of 1976, 43 U.S.C. 1701 et
seq. (FLPMA), for Federal onshore leases. Thus, as part of this interim
final rulemaking, MMS analyzed the rule's cost recovery fees for
reasonableness according to the factors in FLPMA Sec. 304(b), 43 U.S.C.
1734(b). The ``reasonableness factors'' set out in FLPMA are: a)
``actual costs (exclusive of management overhead),'' b) ``the monetary
value of the rights or privileges sought by the applicant,'' c) ``the
efficiency to the government processing involved,'' d) ``that portion
of the cost incurred for the benefit of the general public interest
rather than for the exclusive benefit of the applicant,'' e) ``the
public service provided,'' and f) ``other factors relevant to
determining the reasonableness of the costs.''
For the recovery of costs to process a lessee's or its designee's
request that MMS consult a commercial service or program to determine
their financial solvency under 30 CFR 243.201(c), the method MMS used
to evaluate the FLPMA factors is twofold. First, MMS estimated actual
costs and MMS evaluated each of the remaining FLPMA reasonableness
factors (b) through (f) individually to decide whether the factor might
reasonably lead to an
[[Page 1965]]
adjustment in actual costs. Second, MMS then weighed that factor
against remaining factors to determine whether another factor might
reasonably increase, decrease, or eliminate the contemplated reduction.
On the basis of this twofold analysis, MMS determined what final fee is
reasonable for requests to determine financial solvency. MMS cannot
recover an amount greater than its actual costs, so any final
adjustment cannot result in a fee greater than actual costs.
For processing a request that a lessee or another person wishes MMS
to consult a commercial service or program to determine its financial
solvency under 30 CFR 243.201(c), MMS analyzed the FLPMA factors as
follows:
Factor (a)--Actual Costs
Actual costs means the financial measure of resources expended or
used by the Minerals Management Service in processing a lessee or
another person's request that MMS consult a commercial service to
determine its financial solvency under 30 CFR 243.201(c), including,
but not limited to, the costs of special studies, or any other relevant
action. Actual costs includes both direct and indirect costs, exclusive
of management overhead. Management overhead costs means costs
associated with the MMS directorate, which means the entire Washington
Office staff, except where a member of such staff is required to
perform work on a specific case. Section 304(b) of FLPMA requires that
management overhead be excluded from chargeable costs.
Direct costs include agency expenditures for labor, material,
stores, and equipment usage connected with the performance of
processing responsibilities. MMS's indirect costs include program
support such as systems, appeals, enforcement, and rulemaking. Indirect
costs are allocated to specific projects on a pro rata basis. MMS
determined the indirect cost rate and applied the rate to its direct
costs to determine its total actual costs. This method of calculating
costs is a generally accepted practice in both the private and public
sectors.
MMS's method of establishing actual costs involved measuring the
cost to MMS of processing an individual request for a financial
solvency determination. MMS concluded that measuring the cost of an
individual request was reasonable because the actual costs will not
vary substantially from one individual request to another.
The costs to process a lessee or another person's request that MMS
consult a commercial service to determine its financial solvency under
30 CFR 243.201(c) would include MMS's cost to request information from
commercial services and to evaluate the lessee or another person's
financial solvency, in other words, to process the request. On average,
services such as Experian charge MMS $22.50 per request for
information. In addition, MMS has determined that the average burden
hour estimate to the Federal Government to process each request is \1/
2\ hour per request. This estimate is based on current MMS time
requirements for completing similar tasks. Using an estimate of $50 per
hour based on the salary of the MMS personnel responsible for
processing such requests, MMS estimates the average direct cost burden
for these requests is $25 ($50/hour x \1/2\ hour). MMS's indirect
costs for the requests is $5 per request (18.5% indirect cost rate x
$25 rounded) resulting in total estimated actual costs of $52.50 per
average request.
Factor (b)--Monetary Value of the Rights and Privileges Sought
The monetary value of rights and privileges sought means the
objective worth of self-bonding, in financial terms, to the lessee or
its designee. In this instance, the monetary value to each lessee or
another person would be the value of not having to post a bond. Thus,
the monetary value will vary depending on the amount under appeal, time
value of the amount under appeal, etc. Accordingly, MMS rejected the
idea of trying to calculate monetary value on a case-by-case basis as
too time-consuming, wasteful of resources, and subject to disputes.
Instead, MMS took into account equitable considerations involving its
savings in not having to process and maintain bonds relative to the
monetary value to the lessee or another person for not having to post a
bond. Accordingly, this equitable factor would be offset by the savings
to MMS as discussed under factor (e) below. Thus, MMS did not upwardly
adjust its actual costs for this factor.
Factor (c)--Efficiency to the Government Processing Involved
Efficiency to the government processing means the ability of the
United States to process a lessee's or another person's request that
MMS consult a commercial service to determine its financial solvency
under 30 CFR 243.201(c) with a minimum of waste, expense and effort.
Implicit in this factor is the establishment of a cost recovery process
that does not cost more to operate than MMS would collect and does not
unduly increase the costs to be recovered. As noted in the above
section on actual costs, MMS has determined that for the requests in
this rulemaking, it would be inefficient to determine actual cost data
on a case-by-case basis. Estimates based on MMS experience indicate
that the cost of maintaining actual cost data on specific cases is
unreasonably high where the amount potentially collectible is
relatively small. This is principally because MMS's automated
accounting system would have to be extensively reprogrammed to add a
relatively few items of information. MMS has thus used cost estimates
derived from collected data.
MMS determined that the processing of requests in this proposed
rulemaking would be reasonably efficient. The procedures that MMS will
use in processing the data would be based on standardized steps for
similar MMS transactions in order to eliminate duplication and
extraneous procedures. Therefore, MMS believes this would be the most
efficient processing method. Accordingly, because this is an efficient
processing method, MMS has made no adjustment to actual costs as a
result of this factor.
Factor (d)--Cost Incurred for the Benefit of the General Public
Interest
The cost incurred for the benefit of the general public interest
(public benefit) means funds the United States expends in connection
with processing a lessee's or another person's request that MMS consult
a commercial service to determine its financial solvency under 30 CFR
243.201(c), for studies and/or data collection determined to have value
or utility to the United States or the general public separate and
apart from the document processing. It is important to note that this
definition addresses funds expended in connection with a request. There
is another level of public benefit that includes studies which MMS is
required, by statute or regulation, to perform regardless of whether a
request is received. The costs of such studies are excluded from any
cost recovery calculations from the outset. Therefore, no additional
reduction from costs recovered is necessary in relation to these
studies.
MMS analysts concluded that the processing of the requests in this
rulemaking did not as a rule produce studies or data collection that
might benefit the public to any appreciable degree. Therefore, any
possible benefits of such studies to the public are balanced by their
possible benefits to the applicant. Accordingly, MMS made no adjustment
to the fee recovered based on this factor.
[[Page 1966]]
Factor (e)--Public Service Provided
Public service provided means tangible improvements or other direct
benefits, such as reduced administrative costs, with significant public
value that are expected in connection with processing the request to
determine financial solvency. This definition distinguishes the factor
of ``public service provided'' (a benefit resulting from activities
associated with determining financial solvency) from the factor of
``costs incurred for the benefit of the general public interest''
(which relates to benefits of the document processing itself).
MMS has determined that the requests under this rule provide the
public service of reducing its costs by decreasing the total number of
hours it must devote to monitoring and maintaining bonds. Therefore,
MMS has determined that the Government would benefit under this factor
to some extent. However, MMS has determined that the administrative
savings would be relatively minor and, as discussed above, would be
offset by the relative benefit to the lessees from not posting a bond.
Accordingly, MMS has not further reduced actual costs as a result of
these minor savings.
Factor (f)--Other Factors
The final reasonableness factor is other factors relevant to
determining the reasonableness of the costs. MMS examined the requests
in this rulemaking to determine whether other factors warranted a
reduction in the proposed fee.
MMS has determined that there are no other factors that warrant a
reduction to MMS's actual costs.
MMS personnel with expertise and program management
responsibilities in the particular area of the requests in this
rulemaking reviewed the requests and weighed the proposed processing
fee against their knowledge of the value of similar transactions. In
the case of the requests in this rulemaking, the MMS analysts concluded
that the value of the rights was clearly so far above the expected
processing cost that a fee set at actual costs is appropriate. As a
result, MMS has determined that a processing cost of $50 would meet the
reasonableness factors of FLPMA for onshore leases. Although the IOAA
does not contain the same ``reasonableness factors'' as FLPMA section
304(b), the factors MMS considered under the IOAA to determine
reasonable fees led it to conclude that the fees for offshore leases
are the same as that for onshore leases.
MMS invites specific comments concerning the proposed processing
fee.
Section 243.202 When Will MMS Monitor My Financial Solvency?
Under paragraphs (a) and (b) MMS would monitor your financial
solvency each time you appeal a new order and at least annually as long
as you have active appeals.
In paragraph (c) MMS explains that if the MMS bond-approving
officer determines that you are no longer financially solvent, a bond
or other surety would be required.
VII. Section-by-Section Analysis for 30 CFR Part 250 and 290,
Offshore Minerals Management Appeal Procedures
OMM proposes to amend the regulations related to appeals of OMM
decisions or orders to clarify and simplify the appeals process. The
proposed OMM appeals process would eliminate the appeal to the MMS
Director and provide for a 60-day period to informally resolve the
dispute within the Office of the OMM officer that issued the decision
or order. If the dispute is not resolved informally, the proposed rule
would provide for an appeal to the IBLA. Sections 290.3 and 290.10 of
this proposed rule would supersede 43 CFR 4.411(a) and 43 CFR 4.21(a),
allowing 60 days to file an appeal with the IBLA and stating that an
OMM decision or order will remain in effect during the 60-day period
unless otherwise specified in the decision or order.
The proposed MMS rule would require an appellant pay a
nonrefundable $150 processing fee with each appeal. See Section-by-
Section analysis for 43 CFR 4.965 for our analysis leading to the
choice of $150 as the processing fee.
The proposed MMS rule would require the appellant to post a bond
when an MMS Reviewing Officer's final decision on a civil penalty is
appealed. MMS is committed to safety and environmental protection and
only imposes penalties when: (1) a threat of serious, irreparable, or
immediate harm or damage to human life, the environment, any mineral
deposit, or property resulted from a violation; or (2) the violation
was not corrected within the time provided by MMS. The requirement to
post a bond is designed to ensure that funds will be available to cover
the final civil penalty assessment if the appeal is denied, and to
discourage any appeals filed for the sole purpose of delaying payment
of that assessment.
These rules will be effective for decisions or orders received by
appellants 60 days or more after the final rule is published.
VIII. Procedural Matters
Regulatory Planning and Review E.O. 12866
This document is not a significant rule and is not subject to
review by the Office of Management and Budget under Executive Order
12866.
(1) This rule will not have an annual effect of $100 million or
more on the economy. It will not adversely affect in a material way the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or tribal governments or
communities. This rule does not require the payment of additional
revenues. This rule sets out how the Department will review MMS's
implementation of royalty and OCS operations policy.
(2) This rule will not create a serious inconsistency or otherwise
interfere with an action taken or planned by another agency. The
primary function of MMS appealable actions are for the collection of
royalties from the minerals industry and the operations of mineral
leases on the OCS. Other agency functions do not cover these areas.
This rule consolidates the MMS appeals process with the IBLA process.
IBLA also provides this function for other agencies such as BLM and
Office of Surface Mining. This rule also provides for bonding changes
and defines agency orders.
(3) This rule does not alter the budgetary effects or entitlements,
grants, user fees, or loan programs or the rights or obligations of
their recipients. The administrative appeals process from MMS orders
regarding royalty or OCS operational matters have no impact or relation
to grants, user fee, loan programs, or the rights and obligations of
their recipients.
(4) This rule does not raise legal or policy issues. Some of the
proposed rules may be controversial (processing fees, self bonding,
placing time limits on the appeals process), but they are not novel.
Some procedures have been used in the past but not formalized. This
proposed rule was developed in cooperation with States, tribes, and
industry.
Regulatory Flexibility Act
The Department of the Interior certifies that this document will
not have a significant economic effect on a substantial number of small
entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.).
Accordingly, a Small Entity Compliance Guide is not required.
This rule will affect three groups of individuals or companies; (1)
Indian lessors, (2) lessees and operators on
[[Page 1967]]
offshore leases, and (3) lessees, payors, and designees on Federal and
Indian leases (onshore and offshore). Indian lessors are either tribes
or individuals. However, Indian tribes are not considered to be small
entities for the purposes of RSFA, and individuals do not fit the
definition of small entities. As for the remaining groups, the majority
of lessees, designees, payors, and operators on Federal and Indian
leases would be classified as small businesses according to the
definitions in the Small Business Administration Standard Industry Code
(SIC). Changes in the proposed rule that could have an economic effect
on these groups are the establishment of processing fees for filing a
Notice of Appeal and a Statement of Reasons, requirement of using
electronic transfers, posting a bond, and serving Statement of Reasons
on all affected parties, and an increase in the maximum civil penalty
to $25,000.
Any processing fees contained in this proposed rule also provide
for a waiver or fee reduction to allow relief to small entities. The
processing fees are to be paid by electronic fund transfer but again,
small entities may be granted a waiver from this provision.
Bonding or payment is mandatory for appealed amounts above $10,000
on Federal leases and $1,000 for Indian leases. Appealed amounts less
than $10,000 for Federal and $1,000 for Indian leases do not require
bonding which typically provides relief to small entities. The ability
to self bond provides relief of credit charges from surety companies.
The proposed rule requires the appellant to serve copies of the
Statement of Reasons to all affected parties in the appeal such as the
office that issued the order, affected tribes, and affected delegated
states. The cost of serving these papers is not significant, even for a
small entity. The number of pages for the Statement of Reasons filed
under the proposed rule are less than the number of pages and
documentation now being filed under the current rule. Much of the
documentation presented under the current rule will have been obtained
during the record development and settlement conferences.
The proposed rule changes the maximum civil penalty up to $25,000
per day for those acts for which FOGRMA allows such a penalty. A larger
penalty should not have significant economic impacts because MMS
assesses penalties only when business operations have reached a very
poor level of conduct. A variety of remedies are available to
businesses prior to the assessment of a penalty (including alternative
dispute resolution) which should be used.
Small Business Regulatory Enforcement Fairness Act (SBREFA)
This rule is not a major rule under 5 U.S.C. 804(2), the Small
Business Regulatory Enforcement Fairness Act. This proposed rule:
a. Does not have an annual effect on the economy of $100 million or
more.
b. Will not cause a major increase in costs or prices for
consumers, individual industries, Federal, State, or local government
agencies, or geographic regions. The required record development and
settlement conferences could lead to quicker resolution of most appeals
causing a reduction in the amount of money required for a legal
defense. These conference meetings can be conducted over the phone,
video conference, at MMS locations, or at the appellant's office. The
appellant is not required to travel to these conferences.
While this rule proposes a processing fee of $150 at certain stages
in the appeals process, the rule also provides for waiver or reduction
in the fee. MMS receives an average of 400 appeals a year which means a
total of $60,000 and IBLA receives an average of 75 MMS appeals which
means a total of $11,250, a relatively small amount, would be collected
in one year if no waivers or reductions in fees were requested.
c. Does 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. This
is an administrative review process; there is no impact on these
things. The proposed rule allows for faster appeal resolution on
onshore and offshore leases, sets a time limit on when an appealed
issue must be resolved or decided, gives relief for maintaining bonds,
defines what an order is, and clarifies the order process.
Unfunded Mandates Reform Act
This proposed rule does not impose an unfunded mandate on State,
local, or tribal governments or the private sector of more than $100
million per year. The rule does not have a significant or unique effect
on State local or tribal governments or the private sector. This
proposed rule does not change the relationship between MMS, IBLA, and
State, local, or tribal governments. A statement containing the
information required by the Unfunded Mandates Reform Act (2 U.S.C. 1531
et seq.) is not required.
Takings (E.O. 12630)
In accordance with Executive Order 12630, the proposed rule does
not have significant takings implications. The proposed rule would not
take away or restrict an entity's right to appeal or bond orders
received from MMS or a delegated State. A takings implication
assessment is not required.
Federalism (E.O. 12612)
In accordance with Executive Order 12612, the proposed rule does
not have sufficient federalism implications to warrant the preparation
of a Federalism Assessment. The proposed rule does not change the role
or responsibilities between Federal, State, and local governmental
entities. The rule does not relate to the structure and role of States
and will not have direct, substantive, or significant effects on
States. A Federalism Assessment is not required.
Civil Justice Reform (E.O. 12988)
In accordance with Executive Order 12988, the Office of the
Solicitor has determined that this proposed rule does not unduly burden
the judicial system and meets the requirements of Secs. 3(a) and
3(b)(2) of the Order. The proposed rule has been reviewed and provides
clear language as to what is allowed and what is prohibited. The IBLA
and MMS have drafted this proposed rule in plain language and have
consulted with The Department of the Interior's Office of the
Solicitor, RPC Subcommittee, States, and tribes throughout the drafting
process.
Paperwork Reduction Act
There are three information collections associated with this
rulemaking. The information collections are at OMB for review and
approval. As part of our continuing effort to reduce paperwork and
respondent burden, IBLA and MMS invite the public and other Federal
agencies to comment on any aspect of the reporting burden. Submit your
comments to the Office of Management and Budget, Office of Information
and Regulatory Affairs, Attention: Desk Officer for the U. S.
Department of the Interior, Washington, DC 20503.
OMB has up to 60 days to approve or disapprove this collection of
information but may respond after 30 days. Therefore, public comments
should be submitted to OMB within 30 days in order to assure their
maximum consideration. However, IBLA and MMS will consider all comments
received during the comment period for this notice of proposed
rulemaking.
MMS estimates that there will be 400 respondents requesting an
appeal and
[[Page 1968]]
preparing a Preliminary Statement of Issues (PSI) document and that the
average annual burden hour estimate for each respondent will be 90
hours. Respondents will review the issues presented by the MMS order,
research the accounting transactions or legal documents related to
those issues, and prepare documentation to refute those items where
disagreement exists. MMS estimates that the annual burden is 36,000
hours (400 PSI's x 90 hours). Using an estimate of $50 per hour for
industry cost, the annual cost burden is $1,800,000 (36,000 burden
hours x $50 per hour).
There also will be costs associated with the processing fees and
with requests for waiver and reduction. MMS believes that only small
businesses would seek a waiver or reduction of the fee. MMS estimates
that 49 percent of the appeals it receives are filed by small
businesses. Thus, of the 400 appeals filed annually, MMS estimates that
196 appeals will be filed annually by small businesses. However,
because the proposed processing fee is nominal, MMS believes that few
small businesses will request a waiver or reduction. If a small
business did request a fee waiver or reduction, MMS estimates that the
burden for each respondent requesting a waiver or reduction of the
processing fee would be 5 hours.
Using an estimate of $50 per hour for industry cost, the cost
burden would be $250 per request (5 burden hours x $50 per hour).
Because MMS thinks that most appellants would pay the nominal fee of
$150 rather than incur the costs to request a waiver or reduction, MMS
estimates that it could receive up to 20 requests per year for a waiver
or reduction of the initial fee due with the Notice of Appeal (10
percent of the 196 appeals per year filed by small businesses). (MMS
recognized that some appellants might request a waiver and spend more
than the $150 processing because of concerns of a more general nature
about the fee.) Thus, the total industry costs to prepare requests for
waiver or reduction of the initial fee could be up to $5,000 (20
requests per year x $250 per request). Based on an MMS estimate that
about one-half of all appeals would proceed to briefing at the IBLA,
MMS estimates that the annual industry costs for seeking a waiver or
reduction of the second $150 fee they are required to submit with a
Statement of Reasons would be about half of the amount for the first
fee, or $2,500. Thus, total annual industry costs for fee waiver or
reduction requests could be $7,500 if appellants sought a waiver or
reduction of both fees.
Based on the assumption that 10% of small business appellants might
seek a fee waiver or reduction, industry would pay the full amount of
the initial fee (without a waiver or reduction request) 380 times per
year, for a total amount of $57,000. MMS estimates that, the
combination of waiving some fees, granting reductions for others, and
denying requests for waiver or reduction could halve the amount paid
overall by those appellants seeking waiver or reduction. Thus, the
initial processing fees paid by those seeking waiver or reduction would
be $1,500 (\1/2\ x 20 requests per year x $150). Based on these
estimates, the total amount of initial processing fees paid would be
$58,500. Including the amounts paid for the fee paid with the Statement
of Reasons, MMS estimates that the total amount paid for processing
fees would be $87,750 (1.5 x $58,500).
MMS estimates that it would take 2 hours per request for MMS to
process requests for a fee waiver or reduction. This time is spent
reviewing the reasons for the waiver or reduction and preparing a
response to the requestor. Thus, the cost per request would be $100.
Based on the estimate of 20 requests per year, MMS's total costs to
process requests for waiver or reduction of the initial processing fee
would be $2,000 per year (20 requests per year x $100 per request).
Including costs to process waivers or reductions of the processing fee
paid with the Statement of Reasons (based on an assumption that there
would be \1/2\ the number of requests for this fee waiver or reduction,
i.e., 10 x $100), MMS estimates total costs to process fee waiver or
reduction requests to be $3,000 ($1,000 + $2,000).
MMS estimates that it will take 3 hours to review the Notice of
Appeal and PSI, record the payment of the processing fee, and generate
a letter to document receipt of the appeal. MMS estimates the burden to
the Federal government for processing 400 PSI's is 1,200 hours (400
PSI's x 3 hours initial appeals processing). Using an estimate of $50
per hour, MMS estimates that the annual costs for processing this
information is $60,000 per year (1,200 hours x $50).
MMS estimates that 12 Indian lessors will submit a request for an
order annually. It will take an estimated 15 hours to prepare a request
which will result in 180 annual burden hours (12 requests x 15 hours
= 180 annual burden hours). Based on $25 per hour, the annualized cost
of this collection to Indian lessors is estimated to be $4,500 (180
total burden hours x $25).
MMS expects it will take on average 32 hours to evaluate the merits
of each request for an order. Of the expected 12 requests annually, MMS
estimates that four will actually result in an order being issued. MMS
expects it will take approximately 50 hours to issue each resulting
order. Total cost to the Federal Government for this process is $29,200
as described below:
Request Evaluation
12 requests x 32 hours = 384 annual burden hours
384 annual burden hours x $50 hour = $19,200 annual cost
Resulting Orders
4 orders x 50 hours = 200 annual burden hours
200 annual burden hours x $50 hour = $ 10,000 annual cost
The total annual burden is 584 hours, and the total annual cost is
$29,200.
Regardless of the type of surety collected (bonds, letters of
credit, certificates of deposit), the estimated reporting and record
keeping burden is 1 hour. MMS estimates that there will be 136 bonds,
63 Letters of Credit, 100 Self-bonds, and 1 Certificate of Deposit
submitted each year. MMS has not had any Treasury Securities submitted
as sureties, but would estimate that they would also require one hour
for reporting and recording keeping, if any were to be filed. The
burden for submitting these sureties is 300 hours; the annual cost
burden is $15,000 (300 hours x $50).
The estimated cost to the Federal Government is essentially the
same for each type of surety instrument, approximately 1 hour per
instrument. MMS estimates there will be 136 bonds, 100 self-bonds, 63
Letters of Credit, 1 Certificate of Deposit and no Treasury Securities.
We estimate that the burden for the processing, input, review,
approval, and handling of 136 bonds is 136 hours; the annual cost
burden is $6,800 (136 burden hours x $50). We estimate that the
burden for the processing, input, review, approval, and handling of the
63 LOCs we receive is 63 hours; the annual cost burden is $3,150 (63
burden hours x $50). We estimate that the burden for the processing,
input, review, approval, and handling of the 1 certificate of deposit
we receive is 1 hour; the annual cost burden is $50 (1 burden hour x
$50).
MMS proposes to consult a business information or credit reporting
service for all small entities or non-publicly traded companies that
cannot comply with the audited, consolidated balance sheet requirement
or for a publicly traded company that does not meet our established net
worth of $300 million.
[[Page 1969]]
We estimate that 100 requests to self-bond will be made each year.
We estimate 25 of those requests will require that we consult with
a business information or credit reporting service. It will require
approximately 25 hours to review the requests and process the inquiries
(1 hour per inquiry) by both MMS and by the business information or
credit reporting service. Using an estimate of $50 per inquiry, we
estimate the annual cost to the Federal Government will be $1,250 (25
inquires x $50 per request). Using an estimate of $25 per inquiry, we
estimate the annual cost to access the business information or credit
reporting service to the Federal Government will be $625 (25 inquires
x $25 per request). The remaining 75 requests will also require one
hour to process by MMS at $50 per hour or $3,750. The total cost to
review and process all self-bonding requests is $5,625 ($1,250 + $625 +
$3,750).
In accordance with the requirement of section 3506(c)(2)(A) of the
Paperwork Reduction Act of 1995, IBLA and MMS are providing notice and
otherwise consulting with members of the public and affected agencies
concerning this proposed increase in the collection of information in
order to solicit comment to (a) evaluate whether this expanded
collection of information is necessary for the proper performance of
the functions of the agency, including whether the information shall
have practical utility; (b) evaluate the accuracy of the agency's
estimate of the burden of the proposed collection of information; (c)
enhance the quality, utility, and clarity of the information to be
collected; and (d) minimize the burden of the collection of information
on those who are to respond, including through the use of automated
collection techniques or other forms of information technology.
The Paperwork Reduction Act of 1995 provides that an agency may not
conduct or sponsor, and a person is not required to respond to, a
collection of information unless it displays a currently valid OMB
control number.
National Environmental Policy Act
This rule does 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.
Clarity of This Regulation
Executive Order 12866 requires each agency to write regulations
that are easy to understand. We invite your comments on how to make
this rule easier to understand, including answers to questions such as
the following: (1) Are the requirements in the rule clearly stated? (2)
Does the rule contain technical language or jargon that interferes with
this clarity? (3) Does the format of the rule (grouping and order of
sections, use of headings, paragraphing, etc.) aid or reduce its
clarity? (4) Would the rule be easier to understand if it were divided
into more (but shorter) sections? (A ``section'' appears in bold type
and is preceded by the symbol ``Sec. '' and a numbered heading; for
example Sec. 4.904.) (5) Is the description of the rule in the
``Supplementary Information'' section of the preamble helpful in
understanding the proposed rule? What else could we do to make the rule
easier to understand?
Send a copy of any comments that concern how we could make this
rule easier to understand to: Office of Regulatory Affairs, Department
of the Interior, Room 7229, 1849 C Street NW, Washington, DC 20240. You
may also e-mail the comments to this address: Exsec@ios.doi.gov.
List of Subjects
43 CFR Part 4
Administrative practice and procedures, Coal, Continental Shelf,
Geothermal energy, Indian lands, Mineral royalties, Natural Gas,
Petroleum, Public Lands--mineral resources.
30 CFR Part 208
Continental shelf, Government contracts, Mineral royalties,
Petroleum, Public lands--Mineral resources, Public lands--rights-of-
way, Reporting and recordkeeping requirements, Small businesses, Surety
bonds.
30 CFR Part 241
Coal, Continental shelf, Geothermal energy, Government contracts,
Indian lands, Mineral royalties, Natural gas, Penalties, Petroleum,
Public lands--Mineral resources, Reporting and recordkeeping
requirements.
30 CFR Part 242
Coal, Continental shelf, Geothermal energy, Indian lands,
Investigations, Mineral royalties, Natural gas, Oil and gas reserves,
Penalties, Petroleum, Public lands--Mineral resources, Reporting and
recordkeeping requirements.
30 CFR Part 243
Coal, Continental shelf, Geothermal energy, Government contracts,
Indian lands, Mineral royalties, Natural gas, Petroleum, Public lands--
Mineral resources, Surety bonds.
30 CFR Part 250
Continental shelf, Environmental impact statements, Environmental
protection, Government contracts, Incorporation by reference,
Investigations, Mineral royalties, Natural gas, Oil and gas development
and production, Oil and gas exploration, Oil and gas reserves,
Penalties, Petroleum, Pipelines, Public lands--Mineral resources,
Public lands--rights-of-way, Reporting and recordkeeping requirements,
Sulphur development and production, Sulphur exploration, Surety bonds.
30 CFR Part 290
Administrative practice and procedure.
Sylvia V. Baca,
Acting Assistant Secretary--Land and Minerals Management.
Robert L. Baum,
Director, Office of Hearings and Appeals.
Hilda A. Manuel,
Deputy Commissioner of Indian Affairs.
For the reasons set out in the preamble, OHA and MMS propose to add
43 CFR part 4, subpart J and 30 CFR part 242 and to amend 30 CFR Parts
208, 241, 243, 250, and 290, as follows:
PART 4--DEPARTMENT HEARINGS AND APPEALS PROCEDURES
1. The authority citation for part 4 continues to read as follows:
Authority: R.S. 2478, as amended, 43 U.S.C. sec. 1201, unless
otherwise noted.
1a. In 43 CFR part 4, subpart J is added to read as follows.
Subpart J--Special Rules Applicable to Appeals Concerning Royalties and
Related Matters
Sec.
Purpose, Applicability and Definitions
4.901 What is the purpose of this subpart?
4.902 What leases are subject to this subpart?
4.903 What definitions apply to this subpart?
Appeal Rights
4.904 Who may file an appeal?
4.905 What may I not appeal under this subpart?
How to Appeal or Join an Appeal
4.906 When must I file an appeal?
4.907 How must I file an appeal?
4.908 If I am a lessee, can I join a designee's appeal?
4.909 What is the effect of joining an appeal?
4.910 What must a designee do if it decides to discontinue an
appeal?
Calculating Time Frames for Appeals
4.911 When does my appeal commence?
[[Page 1970]]
4.912 When does my appeal end?
4.913 What if a due date falls on a day the Department or relevant
office is not open for business?
How MMS Processes Appeals
4.914 What will MMS do after it receives my appeal?
Record Development Procedures
4.915 How will MMS schedule record development conferences?
4.916 Who must and who may participate in record development
conferences?
4.917 How will I receive notification of record development
conferences?
4.918 How will the parties to the appeal develop the record during
the record development conferences?
4.919 What will the parties do if they agree on the record
contents?
4.920 What will the parties do if they do not agree on the record
contents?
4.921 What must MMS or I do if the record contains proprietary or
confidential information?
4.922 What if MMS or I need more time to develop the record?
4.923 May parties supplement the record or Statement of Facts and
Issues after the record is deemed complete?
Settlement Procedures
4.924 How will MMS schedule a settlement conference?
4.925 Who must and who may participate in the settlement
conference?
4.926 How will I receive notification of settlement conferences?
4.927 May parties resolve an appeal by settlement or using third
party neutrals after the settlement conference?
4.928 What if I need more time to consider settlement?
MMS Director Actions on Appeals
4.929 May the MMS Director concur with, rescind, or modify an order
or decision not to issue an order that I appealed?
4.930 What other persons will MMS notify when the MMS Director
concurs with, rescinds, or modifies an order or decision not to
issue an order?
4.931 If the MMS Director rescinds or modifies an order, how does
it affect the statutory limitations period?
4.932 When will MMS send the record to IBLA?
Appellant Response to MMS Action
4.933 What must I do, or what may I do, after the MMS Director
concurs with, rescinds or modifies an order or decision not to issue
an order that I have appealed?
Intervening in an Appeal
4.934 Who may intervene in an appeal?
4.935 What is the record for an appeal if a State or Indian lessor
intervenes?
4.936 If an Indian lessor or delegated State intervenes, how does
it affect the time frame for deciding an appeal?
Assistant Secretary Decisions
4.937 May an Assistant Secretary decide an appeal?
4.938 Who will notify other persons that an Assistant Secretary
will decide an appeal or has decided an appeal?
Filing Pleadings with IBLA
4.939 How do I file my Statement of Reasons or Intervention Brief?
4.940 What if I do not timely file my Statement of Reasons,
Intervention Brief, or Request for an Extension of Time to File
those documents?
4.941 Who may file an Answer to a Statement of Reasons or
Intervention Brief?
4.942 How do I file an Answer to a Statement of Reasons or
Intervention Brief?
4.943 Who may file an Amicus Brief?
4.944 May parties file additional responsive pleadings?
Additional Evidence, Arguments, and Hearings
4.945 May I ask for a hearing by an Administrative Law Judge?
4.946 May IBLA require additional evidence or arguments from
parties?
4.947 May IBLA establish deadlines for matters referred to
Administrative Law Judges?
Decision on an Appeal
4.948 When will IBLA decide my appeal?
4.949 When is an IBLA or an Assistant Secretary's decision
effective?
4.950 What if IBLA requires MMS or a delegated State to recalculate
royalties or other payments?
Reconsideration of a Decision
4.951 May a party ask IBLA to reconsider its decision?
4.952 Under what circumstances may IBLA reconsider its decision?
4.953 May other parties to an appeal respond to a request for
reconsideration?
4.954 On whom will IBLA serve a decision on reconsideration?
Jurisdiction of the Secretary or Director, Office of Hearings and
Appeals
4.955 May the Secretary of the Interior or the Director of OHA take
jurisdiction of an appeal or review a decision?
Consequences if the Department Does Not Issue a Decision on Time
4.956 What if the Department does not issue a decision by the date
my appeal ends?
4.957 What is the administrative record for my appeal if it is
deemed decided?
Extensions of Time
4.958 How do I request an extension of time?
Consolidation
4.959 May IBLA consolidate appeals?
Filing, Notification, and Service Requirements
4.960 Where do I file documents required under this subpart?
4.961 How can a State concerned receive notification of record
development and settlement conferences?
4.962 What copies of documents filed under this subpart are
Appellants, Lessees and Intervenors required to serve?
4.963 What copies of documents filed under this subpart is the
Department required to serve?
4.964 What if I don't serve documents as required?
Processing Fees
4.965 How do I pay the processing fee?
4.966 How do I request a waiver or reduction of my fee?
4.967 When will MMS grant a fee waiver or reduction?
4.968 How do I pay my processing fee if MMS grants a reduction or
denies my request for a reduction or waiver?
Appeals Not Filed on Time
4.969 How do I appeal a decision that my appeal was not filed on
time?
Provisions for Appeals Filed Before [Insert Date This Proposed Subpart
Becomes Effective]
4.970 What rules apply to appeals filed before [insert date when
this subpart becomes effective]?
4.971 When does my appeal commence and end if it was filed before
[insert date this subpart becomes effective]?
4.972 What if the Department does not issue a decision by the date
my appeal ends if I filed my appeal before [insert effective date
this proposed subpart]?
Appendix A to Subpart J of Part 4
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. 9701; 43 U.S.C. 1301 et seq., 1331 et
seq., and 1801 et seq.
Subpart J--Special Rules Applicable to Appeals Concerning Royalties
and Related Matters
Purpose, Applicability and Definitions
Sec. 4.901 What is the purpose of this subpart?
This subpart tells you how to appeal Minerals Management Service
(MMS) or delegated State orders, and MMS decisions not to issue orders
under 30 CFR part 242, concerning reporting to the MMS Royalty
Management Program (RMP) and the payment of royalties and other
payments due under leases subject to this subpart.
Sec. 4.902 What leases are subject to this subpart?
This subpart applies to:
(a) All Federal mineral leases onshore and on the Outer Continental
Shelf (OCS); and
(b) All federally-administered mineral leases on Indian tribal and
individual Indian mineral owners' lands, regardless of the statutory
authority under which the lease was issued or maintained.
[[Page 1971]]
Sec. 4.903 What definitions apply to this subpart?
Affected means, with respect to delegated States and States
concerned, that the appeal concerns an order regarding a Federal
onshore or OCS lease, within a State's borders or offshore of the
State, from which the State, or a political subdivision of the State,
receives a statutorily-prescribed portion of the royalties; and, with
respect to Indian lessors, that the appeal concerns an order regarding
the Indian lessor's federally-administered mineral lease.
Assessment means any fee or charge levied or imposed by the
Secretary or a delegated State other than:
(1) The principal amount of any royalty, minimum royalty, rental,
bonus, net profit share or proceed of sale;
(2) Any interest; or
(3) Any civil or criminal penalty.
Delegated State means a State to which MMS has delegated authority
to perform royalty management functions pursuant to an agreement or
agreements under regulations at 30 CFR part 227.
Designee means the person designated by a lessee under 30 CFR
218.52 to make all or part of the royalty or other payments due on a
lease on the lessee's behalf.
IBLA means the Interior Board of Land Appeals.
Indian lessor means an Indian tribe or individual Indian mineral
owner with a beneficial or restricted interest in a property that is
subject to a lease issued or administered by the Secretary on behalf of
the tribe or individual Indian mineral owner.
Lease means any agreement authorizing exploration for or extraction
of any mineral, regardless of whether the instrument is expressly
denominated as a ``lease,'' including any:
(1) Contract;
(2) Net profit share arrangement;
(3) Joint venture; or
(4) Agreement the Secretary approves under the Indian Mineral
Development Act, 25 U.S.C. 2101 et seq.
Lessee means any person to whom the United States, or the United
States on behalf of an Indian tribe or individual Indian mineral owner,
issues a lease subject to this subpart, or any person to whom all or
part of the lessee's interest or operating rights in a lease subject to
this subpart has been assigned.
Monetary obligation means any requirement to pay or to compute and
pay any obligation in any order. For purposes of the default rule of
decision in Secs. 4.956 and 4.972, and 30 U.S.C. 1724(h):
(1) If an order asserts a monetary obligation arising from one
issue or type of underpayment that covers multiple leases or production
months, the total obligation for all leases or production months
involved constitutes a single monetary obligation;
(2) If an order asserts monetary obligations arising from different
issues or types of underpayments for one or more leases, the
obligations arising from each separate issue, subject to paragraph (1)
of this definition, constitute separate monetary obligations; and
(3) If an order asserts a monetary obligation with a stated amount
of additional royalties due, plus an order to perform a restructured
accounting arising from the same issue or cause as the specifically
stated underpayment, the stated amount of royalties due plus the
estimated amount due under the restructured accounting, subject to
paragraphs (1) and (2) of this definition, together constitutes a
single monetary obligation.
Nonmonetary obligation means any duty of a lessee or its designee
to deliver oil or gas in kind, or any duty of the Secretary to take oil
or gas royalty in kind.
Notice of order means the notice under 30 CFR part 242 that MMS or
a delegated State provides to a lessee stating that MMS or the
delegated State has issued an order to the lessee's designee.
Obligation means:
(1) A lessee's, designee's or payor's duty to:
(i) Deliver oil or gas royalty in kind; or
(ii) Make a lease-related payment, including royalty, minimum
royalty, rental, bonus, net profit share, proceeds of sale, interest,
penalty, civil penalty, or assessment; and
(2) The Secretary's duty to:
(i) Take oil or gas royalty in kind; or
(ii) Make a lease-related payment, refund, offset, or credit,
including royalty, minimum royalty, rental, bonus, net profit share,
proceeds of sale, or interest.
Order means any document issued by the MMS Director, MMS RMP, or a
delegated State that contains mandatory or ordering language that
requires the recipient to do any of the following for any lease subject
to this subpart: report, compute, or pay royalties or other
obligations, report production, or provide other information. An order
includes any order issued under 30 CFR part 242 by MMS or a delegated
State.
(1) Order includes but is not limited to the following:
(i) An order to pay;
(ii) An MMS or delegated State decision to deny a lessee's,
designee's, or payor's written request that MMS make a payment, refund,
offset, or credit of money to the lessee or designee related to the
principal amount of any royalty, minimum royalty, rental, bonus, net
profit share, proceeds of sale, or any interest or assessment related
to a lease obligation;
(iii) A denial of a request for an exception from any valuation and
reporting requirement;
(iv) An order to perform restructured accounting;
(v) An order to file a report related to any royalty or other lease
requirement under 30 CFR part 210 or 216; and
(vi) An order to provide documents or information. An order to
perform a restructured accounting is not an order to provide documents
or information.
(2) Order does not include:
(i) A non-binding request, information, or guidance, such as:
(A) A Preliminary Determination Letter issued under 30 CFR 242.102;
(B) Advice or guidance on how to report or pay, including a
valuation determination, unless it contains mandatory or ordering
language; and
(C) A policy determination;
(ii) A subpoena; or
(iii) An order to pay that MMS issues to a refiner or other party
involved in disposition of royalty taken in kind.
Party means MMS, any person who files a Notice of Appeal, and any
person who files a Notice of Joinder or Intervention Brief in an appeal
under this subpart.
Payor means any person responsible for reporting and paying
royalties for:
(1) Federal oil and gas leases for production before September 1,
1996;
(2) Federal mineral leases other than oil and gas leases; and
(3) Leases on Indian lands subject to this subpart.
Reporter means a person who submits reports for leases subject to
this subpart regardless of whether that person has payment
responsibility.
State concerned means the State that receives a statutorily
prescribed portion of the royalties from a Federal onshore or Outer
Continental Shelf lease.
Appeal Rights
Sec. 4.904 Who may file an appeal?
(a) If you receive an order that adversely affects you, you may
appeal that order except as provided under Sec. 4.905.
(b) If you are a lessee and you receive a Notice of Order, and if
you contest the order, you may either appeal the order or join in your
designee's appeal under Sec. 4.908.
(c) If you are an Indian lessor, you may file an appeal of any MMS
decision
[[Page 1972]]
not to issue an order under 30 CFR part 242 that adversely affects you.
Sec. 4.905 What may I not appeal under this subpart?
You may not appeal under this subpart:
(a) An action that is not an order, as defined in this subpart;
(b) An order to provide documents or information issued under 30
CFR 242.104(b)(4) by the Associate Director for Royalty Management or a
person to whom that Associate Director delegates the authority to issue
such orders that are final for the Department; or
(c) A determination of the surety amount or financial solvency
under 30 CFR part 243, subparts B or C.
How to Appeal or Join an Appeal
Sec. 4.906 When must I file an appeal?
You must file your appeal with the MMS Dispute Resolution Division
(DRD) under Sec. 4.960 within 60 days after you are served the order,
Notice of Order, or MMS decision not to issue an order under 30 CFR
part 242. An order, Notice of Order, or decision not to issue an order
is considered served as provided under 30 CFR 242.305.
Sec. 4.907 How must I file an appeal?
(a) For your appeal to be filed, the MMS DRD must receive all of
the following by the deadline in Sec. 4.906:
(1) A written Notice of Appeal and a copy of the order, or MMS
decision not to issue an order, that you are appealing. You cannot
extend the 60-day period for MMS to receive your Notice of Appeal;
(2) A written Preliminary Statement of Issues you will raise on
appeal. You must specifically identify the legal and factual
disagreements you have with the order, or MMS decision not to issue an
order, that you are appealing. See appendix A to this subpart for an
example of a Preliminary Statement of Issues;
(3) A nonrefundable processing fee of $150 or a request for
reduction or waiver under Secs. 4.965 or 4.966. Indian lessors do not
have to pay a processing fee.
(b) You must serve your Notice of Appeal, Preliminary Statement of
Issues, and any attached documents as required under Sec. 4.962.
(c) You may request an automatic extension of time of up to 60 days
to file the Preliminary Statement of Issues or the processing fee
required under this paragraph. Your request must be in writing and must
be received by the MMS DRD within the time allowed for filing your
appeal.
(d) If you are a designee, when you file your appeal under
paragraph (a) of this section, you must serve your Notice of Appeal on
the lessees who MMS identifies under 30 CFR 242.105(a)(5)(i) in the
order you appealed.
Sec. 4.908 If I am a lessee, can I join a designee's appeal?
If you are a lessee, and your designee files an appeal under
Sec. 4.904, you may join in that appeal. To join you must:
(a) File a Notice of Joinder with the MMS DRD as required under
Sec. 4.960 within 30 days after you receive your designee's Notice of
Appeal; and
(b) Serve your Notice of Joinder on all parties to the appeal and
other persons as required under Sec. 4.962.
(c) If you are a lessee and you neither appeal nor join in your
designee's appeal under Sec. 4.908, your designee's actions with
respect to the appeal and any decisions in the appeal bind you.
Sec. 4.909 What is the effect of joining an appeal?
If you join in an appeal under Sec. 4.908:
(a) You are deemed to appeal the order jointly with the designee;
(b) The designee must fulfill all requirements imposed on
appellants under this subpart;
(c) You may not file submissions or pleadings separately from the
designee; and
(d) If the designee notifies you under Sec. 4.910(b) that it
declines to further pursue the appeal, then you become an appellant and
must then meet all requirements of this subpart as the appellant.
Sec. 4.910 What must a designee do if it decides to discontine an
appeal?
If you are a designee who has appealed under Sec. 4.904 and you
decide to stop participating in the appeal, you must notify the
following parties in writing at least 30 days before the next
submission or pleading is due:
(a) All lessees who have joined in the appeal under Sec. 4.908;
(b) The office or officer with whom any subsequent submissions or
pleadings must be filed; and
(c) Other persons as required under Sec. 4.962.
Calculating Time Frames for Appeals
Sec. 4.911 When does my appeal commence?
(a) For purposes of the period in which the Department must issue a
final decision in your appeal under Sec. 4.956, or which the Department
uses as guidance to track your appeal under Sec. 4.948, your appeal
commences on the date the MMS DRD receives the last of all the items
you must file under Sec. 4.907(a).
(b) If you file a request for an extension of time to file your
Preliminary Statement of Issues or processing fee under Sec. 4.907(c),
your appeal does not commence until the date the MMS DRD receives your
Preliminary Statement of Issues and processing fee.
(c) If you requested a fee waiver or reduction under Sec. 4.966,
your appeal does not commence until the date the MMS DRD:
(1) Grants your request for a waiver;
(2) Receives the reduced fee, if MMS grants your request for a
reduction in the fee; or
(3) Receives the entire fee if MMS denies your request for a
reduction in the fee.
Sec. 4.912 When does my appeal end?
For purposes of the period in which the Department must issue a
final decision in your appeal under Sec. 4.956, or which the Department
uses as guidance to track your appeal under Sec. 4.948:
(a) Your appeal ends on the same day of the month of the 33rd
calendar month after your appeal commenced under Sec. 4.911, plus the
number of days of any applicable time extensions, and
(b) If the 33rd calendar month after your appeal commenced does not
have the same day of the month as the day of the month your appeal
commenced, then the initial 33-month period ends on the last day of the
33rd calendar month.
Sec. 4.913 What if a due date falls on a day the Department or
relevant office is not open for business?
If a due date under this subpart falls on a day the relevant office
is not open for business (such as a weekend, Federal holiday, or
shutdown), then the due date is the next day the relevant office is
open for business.
How MMS Processes Appeals
Sec. 4.914 What will MMS do after it receives my appeal?
(a) Documentation of receipt. When the MMS DRD receives your
appeal, it will date stamp each document received. The MMS DRD also
will document receipt of your processing fee using any method it deems
appropriate.
(b) Decision on timeliness. The MMS DRD will decide whether your
appeal is filed on time. If the MMS DRD does not receive your Notice of
Appeal, Preliminary Statement of Issues, and processing fee, or your
request(s) for extension of time to file your Preliminary Statement of
Issues and processing fee, or your request for a waiver or fee
reduction, by 5:00 p.m. (local time of MMS Dispute Resolution Division)
on the 60th day after you
[[Page 1973]]
received the order, Notice of Order, or MMS decision not to issue an
order, your appeal is not timely filed and will not be considered.
(c) Notification of decision on timeliness. The MMS DRD will notify
you in writing of its decision on whether your appeal was filed on
time.
(1) If MMS notifies you that your appeal was late, you may appeal
that decision under Sec. 4.969.
(2) If MMS notifies you that your appeal was filed on time, MMS
will give you a docket number to use in future communications regarding
your appeal. The notification will include instructions regarding:
(i) A record development conference under Sec. 4.915; and
(ii) A settlement conference under Sec. 4.924.
Record Development Procedures
Sec. 4.915 How will MMS schedule record development conferences?
(a) If you file an appeal, MMS will schedule you to attend at least
one record development conference within 60 days of the commencement of
your appeal under Sec. 4.911. You may extend this 60-day period if you
agree in writing under Sec. 4.958.
(b) You may ask to hold the record development conferences via
telephone, video conference, or in person.
(c) MMS will determine the time and location of record development
conferences and whether record development conferences will take place
via telephone, video conference, or in person. MMS will not compel you
to travel.
Sec. 4.916 Who must and who may participate in record development
conferences?
(a) Mandatory participation. The following persons must participate
in all record development conferences:
(1) The appellant; and
(2) Relevant MMS offices.
(b) Optional participation. The following persons may participate
in the record development conferences:
(1) An affected delegated State or affected State concerned;
(2) An affected Indian lessor; and (3) A lessee, designee, payor,
or reporter, if not the appellant.
(c) Consequence of nonparticipation by mandatory participants. If a
person must participate in any record development conference under
paragraph (a) of this section, but refuses to do so, then that person
my not file any documents or materials for the record.
(d) Consequence of nonparticipation by optional participants. If a
person may participate in any record development conferences under
paragraph (a) of this section, but participates in none of them, then
that person may not file any documents or materials for the record.
Sec. 4.917 How will I receive notification of record development
conferences?
(a) After MMS schedules a record development conference under
Sec. 4.915, MMS will notify the following persons of the time and
location of the conferences:
(1) The appellant;
(2) Lessees that joined under Sec. 4.908;
(3) The office that issued the order;
(4) Affected delegated States;
(5) The persons that affected States concerned identify under
Sec. 4.961; and
(6) Affected Indian tribes or appropriate BIA offices.
(b) The BIA office that MMS notifies under paragraph (a)(6) of this
section will make available whatever notice to individual Indian
mineral owners it deems appropriate by any method it deems appropriate.
Sec. 4.918 How will the parties to the appeal develop the record
during the record development conferences?
(a) During the record development conferences, the parties to the
appeal will attempt to agree on the facts and issues on appeal.
(b) At the record development conferences, the parties must
identify all documents and evidence that are relevant to disputed legal
or factual issues involved in the appeal or that demonstrate material
facts, unless the documents or evidence are privileged or their
disclosure is prohibited by law.
Sec. 4.919 What will the parties do if they agree on the record
contents?
(a) If the parties to the appeal agree on the contents of the
record and the facts and issues on appeal at the record development
conferences, unless the parties agree that a party other than MMS will
perform this function, MMS will:
(1) Compile for the record all documents and materials listed in
paragraph (b) of this section;
(2) Draft a ``Joint Statement of Facts and Issues;'' and
(3) File the following items with the MMS DRD within 30 days after
the end of the record development conference:
(i) The record compiled under paragraph (a)(1) of this section;
(ii) The ``Joint Statement of Facts and Issues'' developed under
paragraph (a)(2) of this section; and
(iii) A certification that the record is complete, except as
provided in Sec. 4.923 of this subpart. The parties may file the
certification jointly or individually, but the MMS DRD must receive all
parties' certifications before it will deem the record complete. When
the record is complete, MMS will notify all parties;
(b) At a minimum, the record compiled under paragraph (a)(1) of
this section must include the following, unless they are privileged or
their disclosure is prohibited by law:
(1) The order or decision not to issue an order under appeal and
associated documents;
(2) All documents and materials that MMS or a delegated State
directly or indirectly considered in issuing the order or decision not
to issue an order;
(3) All relevant correspondence between applicable MMS or delegated
State or tribal offices and the recipient of the order or decision not
to issue an order; and
(4) Any evidence in the control of either party that bears upon the
disputed facts or issues that are subject to the appeal of the order.
Sec. 4.920 What will the parties do if they do not agree on the record
contents?
If the parties to the appeal cannot agree on the contents of the
record and the facts and issues on appeal, each party must:
(a) Jointly or individually submit the material listed under
Secs. 4.919(a)(3);
(b) File an Additional Statement of Facts and Issues and supporting
documentation with the MMS DRD within 30 days after the end of the
record development conferences; and
(c) Certify that in the view of the party submitting the
certification, the materials filed in paragraphs (a) and (b) of this
section comprise the complete record, except as provided in Sec. 4.923
of this subpart. The MMS DRD must receive all parties' certifications
before it will deem the record complete. When the record is complete,
MMS will notify all parties.
Sec. 4.921 What must MMS or I do if the record contains proprietary or
confidential information?
If a party wishes MMS or IBLA to treat any of the documents or
materials compiled under this subpart as proprietary or confidential
information, that party must follow the procedures under 43 CFR 4.31.
Sec. 4.922 What if MMS or I need more time to develop the record?
If you are an appellant and you need more time to complete the
record development process, you must obtain an extension under
Sec. 4.958.
Sec. 4.923 May parties supplement the record or Statement of Facts and
Issues after the record is deemed complete?
(a) If you are a party, and you want to supplement the record or
any
[[Page 1974]]
Statement of Facts and Issues submitted under Sec. 4.919 or 4.920, you
must:
(1) File any additional material together with a written request
for permission to supplement the record or Joint or Additional
Statement of Facts and Issues to IBLA (or an Assistant Secretary who is
deciding your appeal under Sec. 4.937); and
(2) File these materials and your request between the time MMS
deems the record complete under Sec. 4.919 or 4.920 and the time
additional responsive pleadings are filed under Sec. 4.944.
(b) Your request must explain why the additional documents,
evidence, facts or issues were not available or provided in the record
or in the Statement of Facts and Issues and why they are material to a
decision on the appeal.
(c) If you are an appellant, you must include with your request
your written agreement to extend the period for the Department to issue
a final decision in your appeal under 30 U.S.C. 1724(h)(1) by 45 days.
(d) You must serve your request on all parties to the appeal.
(e) IBLA will issue an order either granting or denying your
request within 30 days of receiving your request. If IBLA does not
issue such an order within 30 days of receiving your request, then your
request is deemed granted.
(f) If IBLA grants a request or a request is deemed granted under
paragraph (e) of this section, any party to the appeal may respond to
the additional material. The party must respond within 15 days of
receiving IBLA's order, or, if IBLA does not issue an order, within 45
days of the party's receiving the request.
Settlement Procedures
Sec. 4.924 How will MMS schedule a settlement conference?
(a) If you file an appeal, MMS will schedule you to attend a
settlement conference within 120 days of the commencement of your
appeal under Sec. 4.911. You may extend this 120-day period if you
agree in writing under Sec. 4.958.
(b) You may ask to have the conference take place via telephone,
video conference, or in person.
(c) MMS will determine the time and location of the settlement
conference and whether the settlement conference will take place via
telephone, video conference, or in person. MMS will not compel you to
travel.
(d) The settlement conference may be held as part of the record
development conference scheduled under Sec. 4.915 if you and MMS agree
to do so.
Sec. 4.925 Who must and who may participate in the settlement
conference?
(a) Mandatory participation. The following persons must participate
in all settlement conferences:
(1) The appellant; and
(2) Relevant MMS offices.
(b) Optional participation. The following persons may participate
in the settlement conference:
(1) An affected delegated State or affected State concerned;
(2) An affected Indian lessor; and
(3) A lessee, designee, payor, or reporter, if not the appellant.
Sec. 4.926 How will I receive notification of settlement conferences?
(a) After MMS schedules a settlement conference under Sec. 4.924,
MMS will notify the following persons of the time and location of the
conference:
(1) The appellant;
(2) Lessees that joined under Sec. 4.908;
(3) The office that issued the order;
(4) Affected delegated States;
(5) The persons that affected States concerned identify under
Sec. 4.961; and
(6) Affected Indian tribes or appropriate BIA offices.
(b) The BIA office that MMS notifies under paragraph (a)(6) of this
section will make available whatever notice to individual Indian
mineral owners it deems appropriate by any method it deems appropriate.
Sec. 4.927 May parties resolve an appeal by settlement or using third
party neutrals after the settlement conference?
(a) Parties may resolve any appeal by settlement at any time before
the Department has issued a final decision.
(b) Any party may participate in settlement negotiations at any
stage of the appeal. MMS may use any personnel or officials it deems
appropriate for settlement negotiations, including representatives of
tribes and delegated States.
(c) In addition to negotiated settlements, at any stage of the
appeal, MMS may use third party neutrals under the Administrative
Dispute Resolution Act, 5 U.S.C. 571 et seq., if both MMS and the other
parties to the appeal agree to do so. If MMS uses third party neutrals,
MMS may use the Alternative Dispute Resolution Official from OHA, or a
person from OHA's roster of third party neutrals.
Sec. 4.928 What if I need more time to consider settlement?
If you are an appellant, and you need more time to continue
settlement efforts, you must obtain an extension under Sec. 4.958.
MMS Director Actions on Appeals
Sec. 4.929 May the MMS Director concur with, rescind, or modify an
order or decision not to issue an order that I appealed?
(a) Within 60 days after the MMS DRD receives the record under
Secs. 4.919 or 4.920, the MMS Director may concur with, rescind, or
modify the order or decision not to issue an order that you have
appealed.
(b) Before the MMS Director rescinds or modifies an order or
decision not to issue an order under paragraph (a) of this section, MMS
will consult informally with:
(1) The MMS office that issued the order or decision not to issue
the order; and
(2) Affected tribes or affected delegated States that participated
in any record development or settlement conference.
(c) MMS also may consult informally with:
(1) Other relevant MMS offices;
(2) States concerned; and
(3) Affected Indian lessors.
(d) MMS will notify you in writing that the MMS Director has
concurred with, rescinded or modified the order or decision not to
issue an order you have appealed. A notice of rescission or
modification will state the reasons for the rescission or modification.
(e) If the MMS Director does not act by the deadline in paragraph
(a) of this section, the MMS Director is deemed to have concurred with
the order or decision not to issue an order.
Sec. 4.930 What other persons will MMS notify when the MMS Director
concurs with, rescinds, or modifies an order or decision not to issue
an order?
MMS will send a copy of any notice that it issues under
Sec. 4.929(d) as follows:
[[Page 1975]]
------------------------------------------------------------------------
Then MMS will send a copy of the notice
If the appeal was filed by: under Sec. 4.929(d) to:
------------------------------------------------------------------------
(a) The recipient of an order (1) The office that issued the order;
or notice of order under (2) Any affected delegated State;
Sec. 4.904(a) or (b). (3) Any affected tribe; and
(4) The appropriate BIA office, if the
order involves leases on individual
Indian lands. The BIA office will
provide whatever notice to individual
Indian lessors that it deems appropriate
by whatever method it deems appropriate.
(b) An Indian lessor under (1) The office that decided not to issue
Sec. 4.904(c). the order, and
(2) The lessee or its designee.
------------------------------------------------------------------------
Sec. 4.931 If the MMS Director rescinds or modifies an order, how does
it affect the statutory limitations period?
For purposes of determining whether an order is timely under 30
U.S.C. 1724(b)-(d):
(a) If the MMS Director modifies an order under Sec. 4.929, the
timeliness of the order is not affected and the modified order is
timely if the original order was timely. The MMS Director's
modification will not address production not included in the original
order.
(b) If the MMS Director rescinds all or part of an order under
Sec. 4.929, and if IBLA, an Assistant Secretary, the Director of OHA,
the Secretary, or a court reinstates that order, in whole or in part,
then the reinstated order relates back to the date the order was
originally issued, and the reinstated order is timely if the original
order was timely.
Sec. 4.932 When will MMS send the record to IBLA?
(a) The MMS DRD will send the record to the IBLA within 45 days of
the date MMS notifies the appellant under Sec. 4.929(d).
(b) If the MMS Director is deemed to have concurred with an order
under Sec. 4.929(e), the MMS DRD will send the record to the IBLA
within 105 days after MMS receives the record under Secs. 4.919 or
4.920.
(c) The MMS deadline under this section is only guidance for the
MMS DRD. It creates no substantive rights in parties to the appeal or
any other persons.
Appellant Response to MMS Action
Sec. 4.933 What must I do, or what may I do, after the MMS Director
concurs with, rescinds or modifies an order or decision not to issue an
order that I have appealed?
(a) Concurrence. If the MMS Director concurs with the order or
decision not to issue an order that you have appealed, and you wish to
continue your appeal, you must file your Statement of Reasons under
Sec. 4.939 within 60 days after you receive the MMS Director's
concurrence under Sec. 4.929.
(b) Recission. If the MMS Director rescinds the order that you have
appealed, and if an Indian lessor or delegated State intervenes under
Sec. 4.934, because you will be bound by the Department's final
decision in the intervention in your appeal, you may file an Answer to
the Intervention Brief under Sec. 4.942 within 60 days after you
receive the MMS Director's rescission under Sec. 4.929(d).
(c) Modification. If the MMS Director modifies the order that you
have appealed, and if you contest the order as modified, you must file
your Statement of Reasons under Sec. 4.939, and any Answer to an
Intervention Brief under Sec. 4.942, within 60 days after you receive
the MMS Director's modification under Sec. 4.929.
(d) Deemed concurrence. If the MMS Director is deemed under
Sec. 4.929(e) to have concurred with the order or decision not to issue
an order that you have appealed, you must file your Statement of
Reasons under Sec. 4.939 within 120 days after the date the MMS DRD
receives the record forwarded under Secs. 4.919 or 4.920.
Intervening in an Appeal
Sec. 4.934 Who may intervene in an appeal?
(a) Indian lessors. If you are an Indian lessor, you may intervene
in any appeal involving your lease(s) by filing an Intervention Brief
under Sec. 4.939 within 30 days after you receive notification of the
MMS Director's concurrence, rescission or modification of an order
under Sec. 4.930 that adversely affects you.
(b) Affected delegated States. If you are an affected delegated
State, and the MMS Director modifies or rescinds an order under
Sec. 4.929 that the recipient of an order or Notice of Order has
appealed, you may intervene in that appeal by filing an Intervention
Brief under Sec. 4.939 within 30 days after you receive MMS's
notification of any rescission or modification under Sec. 4.930 if
MMS's rescission or modification of the order adversely affects you.
Sec. 4.935 What is the record for an appeal if a State or Indian
lessor intervenes?
If an Indian lessor or delegated State intervenes under Sec. 4.934,
the following documents are added to the record established under
Secs. 4.919 or 4.920:
(a) Any additional correspondence to the MMS Director; and
(b) The MMS Director's notice of modification or rescission under
Sec. 4.929(d).
Sec. 4.936 If an Indian lessor or delegated State intervenes, how does
it affect the time frame for deciding an appeal?
If an Indian lessor or delegated State intervenes under Sec. 4.934,
the appeal commences on the appellant's commencement date under
Sec. 4.911, not on the date an intervening party files its intervention
brief. The time frame for deciding the appeal under Sec. 4.956 or
tracking the appeal under Sec. 4.948 is calculated from that
commencement date.
Assistant Secretary Decisions
Sec. 4.937 May an Assistant Secretary decide an appeal?
(a) The Assistant Secretary for Land and Minerals Management (or
the Assistant Secretary for Indian Affairs for an appeal involving an
Indian lease) may decide an appeal if the Assistant Secretary notifies
the appellant, the MMS DRD, intervenors, and IBLA in writing any time
up to 30 days before the date the appellant must file its Statement of
Reasons or an intervenor must file its Intervention Brief under
Sec. 4.939.
(b) If an Assistant Secretary will decide under paragraph (a) of
this section, you must file all subsequent documents required under
this subpart with the Assistant Secretary under Sec. 4.960.
Sec. 4.938 Who will notify other persons that an Assistant Secretary
will decide an appeal or has decided an appeal?
(a) MMS will transmit a copy of the Assistant Secretary's notice
required under Sec. 4.937 to:
(1) Affected tribes;
(2) Affected delegated States;
(3) Lessees who join under Sec. 4.908;
(4) Intervenors; and
(5) Affected lessees or their designees if an Indian lessor files
an appeal under Sec. 4.904 of any MMS decision not to issue an order.
(b) For any appeal involving a lease on individual Indian lands, in
addition
[[Page 1976]]
to notifying the persons under paragraph (a) of this section, MMS will
transmit a copy of the Assistant Secretary's notice required under
Sec. 4.937 to the appropriate BIA office. That BIA office may make
available to individual Indian lessors whatever notice it deems
appropriate by any method it deems appropriate.
Filing Pleadings With IBLA
Sec. 4.939 How do I file my Statement of Reasons or Intervention
Brief?
(a) If the IBLA is deciding your appeal, you must file your
Statement of Reasons or Intervention Brief with IBLA under Sec. 4.960
within the times required under Secs. 4.933 and 4.934.
(b) If an Assistant Secretary is deciding your appeal under
Sec. 4.937, you must file your Statement of Reasons with that Assistant
Secretary under Sec. 4.960 within 60 days after the MMS DRD has
received the record under Secs. 4.919 or 4.920.
(c) You must pay a nonrefundable processing fee of $150 with your
Statement of Reasons as required under Sec. 4.965 or seek a reduction
or waiver under Sec. 4.966 within the time required under Secs. 4.933
and 4.934. Indian lessors and delegated States do not have to pay a
processing fee.
(d) You must serve your Statement of Reasons or Intervention Brief
on all parties to the appeal, and on other persons as required under
Sec. 4.962.
Sec. 4.940 What if I do not timely file my Statement of Reasons,
Intervention Brief or Request for an Extension of Time to File those
documents?
If you do not file your Statement of Reasons, Intervention Brief,
or request for extension of time to file either of those documents
within the times prescribed in Secs. 4.933, 4.934, 4.939, or within any
extension of time requested and granted under Sec. 4.958, IBLA or the
Assistant Secretary will dismiss your appeal, or will not allow you to
intervene.
Sec. 4.941 Who may file an Answer to a Statement of Reasons or
Intervention Brief?
(a) If the recipient of an order or Notice of Order files a
Statement of Reasons under Sec. 4.939, MMS and Indian lessors whose
leases are affected may file Answers under Sec. 4.942.
(b) If an Indian lessor files a Statement of Reasons or an
Intervention Brief under Sec. 4.939, MMS and any lessee, designee or
payor for the lease(s) involved in the appeal may file Answers under
Sec. 4.942.
(c) If a delegated State files an Intervention Brief under
Sec. 4.939, the following may file Answers under Sec. 4.942:
(1) MMS;
(2) Indian lessors whose leases are adversely affected; and
(3) Any lessee, its designee, or the payor for the lease(s)
involved in the appeal.
Sec. 4.942 How do I file an Answer to a Statement of Reasons or
Intervention Brief?
(a) If you may file an Answer:
(1) To a Statement of Reasons under Sec. 4.941, you must file your
Answer within 60 days after the date the Statement of Reasons is served
upon you; or
(2) To an Intervention Brief under Sec. 4.933(b), you must file
your Answer within the time required under that section.
(b) You must file your Answer with the appropriate office under
Sec. 4.960.
(c) You must serve your Answer on all parties to the appeal.
Sec. 4.943 Who may file an Amicus Brief?
(a) Any person may file an Amicus Brief with the appropriate office
under Sec. 4.960 within 60 days after the date the Statement of Reasons
or Intervention Brief is filed with IBLA or Assistant Secretary.
(b) You must serve your Amicus Brief on all parties to the appeal.
Sec. 4.944 May parties file additional responsive pleadings?
(a) If you filed a Statement of Reasons or an Intervention Brief,
and another person files an Answer or an Amicus Brief, then you may
file a Reply to the Answer or a Response to the Amicus Brief with IBLA
or an Assistant Secretary under Sec. 4.960 within 30 days after the
date the Answer or Amicus Brief was served upon you.
(b) If you filed an Answer under Sec. 4.942 and if another person
files a Reply or an Amicus Brief, then you may, within 20 days after
the Reply or Amicus Brief is served upon you, file under Sec. 4.960:
(1) a Surreply to that Reply to address new arguments or
authorities raised in the Reply; or
(2) a Response to the Amicus Brief.
(c) You must serve any responsive pleadings under this section on
all parties to the appeal.
Additional Evidence, Arguments, and Hearings
Sec. 4.945 May I ask for a hearing by an Administrative Law Judge?
(a) If you are a party, you may request a hearing by an
Administrative Law Judge of the Hearings Division under 43 CFR 4.415 if
there are disputed issues of material fact which could affect the
decision on the appeal.
(1) You must file your request in writing within 30 days after all
responsive pleadings are filed under Sec. 4.944.
(2) You must specify the issues of fact that are in dispute.
(b) If you are an appellant, you must agree in writing under
Sec. 4.958 to extend the period in which the Department must issue a
final decision in your appeal under Sec. 4.956, by the additional
amount of time necessary for the Hearings Division to complete any
action with respect to the referral request, including any of the
actions authorized under paragraph (c) of this section.
(c) If IBLA grants a party's request, IBLA may:
(1) Authorize the Administrative Law Judge to specify additional
issues;
(2) Authorize the parties to add additional relevant issues, with
the approval of the Administrative Law Judge; and
(3) Ask the Administrative Law Judge to issue:
(i) Proposed findings of fact;
(ii) A recommended decision that includes findings of fact and
conclusions of law; or
(iii) A decision that would be final for the Department absent an
appeal to IBLA.
Sec. 4.946 May IBLA require additional evidence or arguments from
parties?
(a) IBLA may require additional evidence or written arguments from
parties by issuing an order:
(1) Requiring any party or all parties to the appeal to produce
additional evidence or written arguments or both;
(2) Requiring the parties to appear before IBLA for oral argument;
or
(3) Referring the matter to an Administrative Law Judge of the
Hearings Division under 43 CFR 4.415 for an evidentiary hearing if
there are disputed issues of material fact that could affect the
decision on the appeal.
(b) IBLA's referral under paragraph (a)(3) of this section:
(1) Must specify the issues of fact upon which the hearing is to be
held;
(2) May authorize the Administrative Law Judge to specify
additional relevant issues;
(3) May authorize the parties to add additional relevant issues,
with the approval of the Administrative Law Judge; and
(4) May request that the Administrative Law Judge issue:
(i) Proposed findings of fact;
(ii) A recommended decision that includes findings of fact and
conclusions of law; or
[[Page 1977]]
(iii) A decision that would be final for the Department absent an
appeal to IBLA.
(c) Failure of any party to comply with an IBLA order issued under
this section may result in any contested fact being found against the
party who does not comply.
Sec. 4.947 May IBLA establish deadlines for matters referred to
Administrative Law Judges?
IBLA may establish appropriate deadlines for any matter referred to
an Administrative Law Judge under Secs. 4.945 or 4.946.
Decision on an Appeal
Sec. 4.948 When will IBLA decide my appeal?
(a) IBLA will decide your appeal on or before the date your appeal
ends under 4.912.
(b) The IBLA will serve its decision on all parties to the appeal,
and other persons as required under Sec. 4.963.
(c) If an Assistant Secretary is deciding your appeal under
Sec. 4.937, the Assistant Secretary will:
(1) Decide your appeal on or before the day your appeal ends under
Sec. 4.912; and
(2) Serve the decision on all parties to the appeal and other
persons as required under Sec. 4.963.
Sec. 4.949 When is an IBLA or an Assistant Secretary's decision
effective?
An IBLA or an Assistant Secretary's decision is effective on the
date it is issued, unless IBLA or the Assistant Secretary provides
otherwise. The decision is the final action of the Department.
Sec. 4.950 What if IBLA requires MMS or a delegated State to
recalculate royalties or other payments?
(a) This section applies to appeals of orders involving the
reporting and payment of royalties or other payments due under Federal
oil and gas leases. For Indian leases and for Federal mineral leases
other than oil and gas, the time limits and finality requirements for
purposes of 30 U.S.C. 1724(h) stated in this section do not apply.
(b) An IBLA decision modifying an order and requiring MMS or a
delegated State to recalculate royalties or other payments is a final
decision in the administrative proceeding for purposes of 30 U.S.C.
1724(h).
(c) MMS or the delegated State must provide to IBLA and all parties
served with IBLA's decision any recalculation IBLA requires under
paragraph (b) of this section within 60 days of receiving IBLA's
decision.
(d) There is no further appeal within the Department from MMS's or
the State's recalculation under paragraph (c) of this section.
(e) The IBLA decision issued under paragraph (b) of this section
together with recalculation under paragraph (c) of this section are the
final action of the Department that is judicially reviewable under 5
U.S.C. 704.
Reconsideration of a Decision
Sec. 4.951 May a party ask IBLA to reconsider its decision?
(a) If you are a party, you may ask the IBLA to reconsider its
decision by:
(1) Submitting a written request to IBLA within 30 days of the date
you receive the decision;
(2) Explaining the extraordinary circumstances that justify
reconsideration; and
(3) Serving your request on all parties to the appeal.
(b) Filing a request for reconsideration will not suspend the
effectiveness of IBLA's decision.
(c) A request for reconsideration is not necessary to exhaust
administrative remedies.
Sec. 4.952 Under what circumstances may IBLA reconsider its decision?
IBLA may reconsider its decision in extraordinary circumstances for
reasons such as:
(a) Discovery of additional evidence that demonstrates error in the
decision;
(b) IBLA's misinterpretation of material facts;
(c) Clear error of law;
(d) Recent judicial developments;
(e) Change in Departmental policy; or
(f) Inconsistent agency decisions.
Sec. 4.953 May other parties to an appeal respond to a request for
reconsideration?
(a) If you are a party, you may answer a request for
reconsideration within 15 days of the date you received a copy of the
request.
(b) You must serve your answer to a request for reconsideration on
all parties to the appeal.
Sec. 4.954 On whom will IBLA serve a decision On reconsideration?
The IBLA will serve its decision on all parties to the appeal, and
other persons as required under Sec. 4.963.
Jurisdiction of the Secretary or Director, Office of Hearings and
Appeals
Sec. 4.955 May the Secretary of the Interior or the Director of OHA
take jurisdiction of an appeal or review a decision?
The Secretary or the Director of OHA may take jurisdiction of an
appeal or review a decision issued under this subpart. See 43 CFR 4.5.
Consequences if the Department Does Not Issue a Decision On Time
Sec. 4.956 What if the Department does not issue a decision by the
date my appeal ends?
(a) Applicability of section. This section applies to any appeal of
an order, or portion of an order, involving a monetary or nonmonetary
obligation under a Federal oil and gas lease filed on or after [insert
the date this proposed subpart becomes effective], where the Department
does not issue a final decision by the date the appeal ends under
Sec. 4.912. The time limits in 30 U.S.C. 1724(h)(2) and the rule of
decision stated in this section do not apply to appeals of orders, or
portions of orders, that:
(1) Involve Indian leases or Federal mineral leases other than oil
and gas; or
(2) Relate to Federal oil and gas leases but do not involve a
monetary or nonmonetary obligation.
(b) General provision. If IBLA or an Assistant Secretary (or the
Secretary or the Director of OHA) does not issue a final decision in an
appeal by the date the appeal ends under Sec. 4.912, then under 30
U.S.C. 1724(h)(2), the Secretary will be deemed to have decided the
appeal:
(1) In favor of the appellant for any nonmonetary obligation at
issue in the appeal, or any monetary obligation at issue in the appeal
with a principal amount of less than $10,000;
(2) In favor of the Secretary for any monetary obligation at issue
in the appeal with a principal amount of $10,000 or more.
(c) Orders modified by the MMS Director. If the MMS Director has
modified an order under Sec. 4.929 that you appealed:
(1) If you continued to appeal the order, or any portion of the
order, as modified by the Director, then the rule of decision
prescribed in paragraph (b) of this section will apply only to those
portions of the modified order that you contested.
(2) If neither you nor a joining lessee continues to contest the
order, or any portion of the order, as modified by the Director, and a
delegated State has intervened in the appeal to contest a modification
that neither you nor a joining lessee contests, then the Secretary will
be deemed to have affirmed the MMS Director's modification, regardless
of the amount of any monetary or nonmonetary obligation that neither
you nor a joining lessee contests.
(d) Orders rescinded by the MMS Director. If the MMS Director has
rescinded an order under Sec. 4.929 that
[[Page 1978]]
you appealed, and if a delegated State intervened in the appeal, then
the Secretary will be deemed to have affirmed the MMS Director's
recission in all respects.
(e) Requests for reconsideration. If the IBLA issues a decision on
or before the date the appeal ends under Sec. 4.912, that decision is
the final decision in the administrative proceeding and fulfills the
requirements of 30 U.S.C. 1724(h)(1). The provisions of 30 U.S.C.
1724(h)(1) and (2) have no further application. If any party requests
reconsideration of an IBLA decision, the IBLA is not required to issue
a decision on reconsideration before the date the appeal would have
ended under Sec. 4.912 had there been no IBLA decision.
(f) Estimation of principal amount of monetary obligation. If the
principal amount of a monetary obligation is not specifically stated in
an order and must be computed to comply with the order, the principal
amount referred to in paragraph (b) of this section means the principal
amount MMS estimates you would be required to pay as a result of the
order.
Sec. 4.957 What is the administrative record for my appeal if it is
deemed decided?
If your appeal is deemed decided under Secs. 4.956 or 4.972, the
record for your appeal consists of:
(a) The record established under Secs. 4.919 or 4.920, or before
the MMS Director in an appeal under former 30 CFR part 290;
(b) Any additional correspondence to the MMS Director;
(c) The MMS Director's notice of concurrence, modification or
rescission under Sec. 4.933(d);
(d) The MMS Director's decision under former 30 CFR part 290;
(e) Any pleadings to the IBLA; and
(f) Any IBLA orders and decisions.
Extensions of Time
Sec. 4.958 How do I request an extension of time?
(a) If you are a party to an appeal, and you need additional time
after an appeal commences:
(1) You may obtain an extension of time under this section:
(i) To meet any filing requirement under this subpart;
(ii) For the Department to issue a final decision in your appeal;
(iii) To stay the appeal pending settlement efforts; or
(iv) To stay the appeal for any other reasons; and
(2) You must submit a written request for an extension of time to
the office or official with whom you must file the document before the
required filing date, or with the office or official who is responsible
for that stage of the appeals process.
(b) If you are an appellant, in addition to meeting the
requirements of paragraph (a) of this section, you must agree in
writing in your request to extend the period in which the Department
must issue a final decision in your appeal under Secs. 4.956 or 4.972,
or which the Department uses as guidance to track your appeal under
Sec. 4.948, by the amount of time for which you are requesting an
extension.
(c) If you are any other party, the office or official with whom
you must file the request may require you to submit a written agreement
signed by the appellant to extend the period in which the Department
must issue a final decision in the appeal under Secs. 4.956 or 4.972,
or which the Department uses as guidance to track the appeal under
Sec. 4.948, by the amount of time for which you are requesting an
extension.
(d) The office or official with whom you must file your request has
the discretion to decline any request for an extension of time.
(e) You must file requests submitted to the MMS DRD, IBLA or an
Assistant Secretary as required under Sec. 4.960.
(f) You must serve your request on all parties to the appeal.
Consolidation
Sec. 4.959 May IBLA consolidate appeals?
(a) IBLA may consolidate appeals that involve:
(1) The same order or decision not to issue an order;
(2) Common issues of disputed material fact; or
(3) Common issues of law.
(b) If you are an appellant and you request consolidation, you
must:
(1) Notify all parties to the appeals for which you have requested
consolidation; and
(2) Agree in writing under Sec. 4.958 to extend the period for the
Department to issue a final decision in each appeal you wish to
consolidate to either:
(i) The date by which the Department must issue a final decision in
the most recently filed appeal; or
(ii) Any other date to which you and IBLA agree.
(c) IBLA will notify all parties to the appeal of any
consolidations under this section.
Filing, Notification and Service Requirements
Sec. 4.960 Where do I file documents required under this subpart?
You must file documents required under this subpart in the
appropriate office as follows:
(a) With the MMS DRD between 9 a.m. and 5 p.m. local time at:
[address for MMS DRD] using the U.S. Postal Service, a private delivery
or courier service, hand delivery or telefax to (______) ______-
________.
(b) With IBLA at: Interior Board of Land Appeals 4015 Wilson
Boulevard, Arlington, Virginia 22203, using the U.S. Postal Service, a
private delivery or courier service, hand delivery or telefax to (703)
235-9014; or
(c) With an Assistant Secretary at: [address for MMS DRD] using the
U.S. Postal Service, a private delivery or courier service, hand
delivery or telefax to (______) ______-________.
(d) If you file a document by telefax, you must send an additional
copy of your document to the same office or official using the U.S.
Postal Service, a private delivery or courier service or hand delivery
so that it is received within 5 business days of your telefax
transmission.
Sec. 4.961 How can a State concerned receive notification of record
development and settlement conferences?
If a State concerned wants to receive notification of record
development conferences under Sec. 4.917 and settlement conferences
under Sec. 4.924, the State concerned must give the MMS DRD the name,
title, address, and telephone number of the State official authorized
to receive the notices.
Sec. 4.962 What copies of documents filed under this subpart are
Appellants, Lessees and Intervenors required to serve?
(a) Appeals by parties other than Indian lessors. For any appeal
filed by a recipient of an order or Notice of Order involving a lease
on Federal or Indian lands, appellants, lessees that have joined, and
Intervenors must serve copies of required filings under this subpart as
follows:
----------------------------------------------------------------------------------------------------------------
Then you must serve copies of
If you are the: the: On the following:
----------------------------------------------------------------------------------------------------------------
(1) Person filing the Notice of Appeal (i) Notice of Appeal and (A) The office that issued the order;
Preliminary Statement of
Issues.
(B) Affected tribes;
[[Page 1979]]
(C) Affected delegated States; and
(D) Lessees under Sec. 4.907(c) if you
are the designee.
(ii) Statement of Reasons..... (A) The office that issued the order;
(B) Affected tribes;
(C) Affected delegated States;
(D) Lessees that join under Sec. 4.908;
(E) Intervenors;
(F) The Office of the Solicitor at the
address required under 43 CFR
4.413(c)(1)(i); and
(G) MMS DRD.
(2) Lessee joining under Sec. 4.908.. (i) Notice of Joinder......... (A) The designee who appealed the order;
(B) The office that issued the order;
(C) Affected tribes; and
(D) Affected delegated States.
(3) Intervenor under Sec. 4.934...... (i) Intervention Brief........ (A) The office that issued the order;
(B) Affected tribes;
(C) Affected delegated States;
(D) Lessees that join under Sec. 4.908;
(E) The appellant;
(F) The Office of the Solicitor at the
address required under 43 CFR
4.413(c)(1)(i); and
(G) MMS DRD.
----------------------------------------------------------------------------------------------------------------
(b) Appeals by Indian lessors. For any appeal filed by an Indian
lessor, appellants must serve copies of required filings under this
subpart as follows:
----------------------------------------------------------------------------------------------------------------
Then you must serve copies of
If you are the: the: On the following:
----------------------------------------------------------------------------------------------------------------
(1) Person filing the Notice of Appeal (i) Notice of Appeal, and (A) The office that refused to issue the
Preliminary Statement of order under 30 CFR part 242; and
Issues.
(B) The lessee or payor for the leases
involved.
(ii) Statement of Reasons..... (A) The office that refused to issue the
order under 30 CFR part 242;
(B) The lessee or payor for the leases
involved;
(C) The Office of the Solicitor at the
address required under 43 CFR
4.413(c)(1)(i); and
(D) MMS DRD.
----------------------------------------------------------------------------------------------------------------
Sec. 4.963 What copies of documents filed under this subpart is the
Department required to serve?
(a) Appeals by parties other than Indian lessors. For any appeal
filed by a recipient of an order or Notice of Order involving a lease
on Federal or Indian tribal lands, Department of the Interior offices
must serve copies of required filings under this subpart as follows:
----------------------------------------------------------------------------------------------------------------
Then you must serve copies of
If you are the: the: On the following:
----------------------------------------------------------------------------------------------------------------
(1) MMS DRD........................... (i) Notice that an appeal is (A) The office that issued the order;
timely filed.
(B) Affected tribes;
(C) Affected delegated States; and
(D) Lessees that join under Sec. 4.908.
(2) IBLA or Assistant Secretary....... (i) Decisions and Decisions on (A) The office that issued the order;
Reconsideration.
(B) Affected tribes;
(C) Affected delegated States;
(D) Persons who file amicus briefs under
Sec. 4.943;
(E) The Office of the Solicitor at the
address required under 43 CFR
4.413(c)(1)(i); and
(F) MMS DRD.
----------------------------------------------------------------------------------------------------------------
(b) Appeals by Indian Lessors. For any appeal filed by an Indian
lessor, Department of the Interior offices must serve copies of
required filings under this subpart as follows:
----------------------------------------------------------------------------------------------------------------
Then you must serve copies of
If you are the: the: On the following:
----------------------------------------------------------------------------------------------------------------
(1) MMS DRD........................... (i) Notice that an appeal is (A) The office that refused to issue the
timely filed. order under 30 CFR part 242; and
[[Page 1980]]
(B) The lessee or payor for the leases
involved.
(2) IBLA or Assistant Secretary....... (1) Decisions and Decisions on (A) The office that refused to issue the
Reconsideration. order under 30 CFR part 242;
(B) The lessee or payor for the leases
involved;
(C) Persons who file amicus briefs under
Sec. 4.943;
(D) The Office of the Solicitor at the
address required under 43 CFR
4.413(c)(1)(i); and
(E) MMS DRD.
----------------------------------------------------------------------------------------------------------------
(c) For any appeal involving a lease on individual Indian lands,
the following service requirements also apply:
(1) MMS will transmit to the appropriate BIA office a copy of the
following documents:
(i) Notices of Appeal;
(ii) Notices of Joinder;
(iii) Notices by designees that they are discontinuing an appeal,
(iv) MMS notices of timely filing,
(v) Statements of Reasons,
(vi) Intervention Briefs, and
(vii) IBLA decisions.
(2) That BIA office may make available to individual Indian lessors
whatever notice it deems appropriate by any method it deems
appropriate.
Sec. 4.964 What if I don't serve documents as required?
If you are an appellant, IBLA may dismiss your appeal if:
(a) You do not serve any person as required by Sec. 4.962; and
(b) The person you did not serve or the adverse party is prejudiced
by your failure to serve.
Processing Fees
Sec. 4.965 How do I pay the processing fee?
(a) You must pay the processing fee to the MMS DRD.
(b) You must use Electronic Funds Transfer using the Federal
Reserve Communications System (FRCS) link to the Financial Service
Fedwire Deposit System unless you request and MMS authorizes payment by
check or by an alternative method before the date the processing fee is
due.
(c) You must include with the payment:
(1) Your taxpayer identification number;
(2) Your payor identification number, if applicable; and
(3) The number of the order, the bill number, or any other
applicable identification of the order that you are appealing.
Sec. 4.966 How do I request a waiver or reduction of my fee?
To request a waiver or reduction you must:
(a) Send a written request to the MMS DRD when you send your Notice
of Appeal or Statement of Reasons; and
(b) Demonstrate in your request that you are unable to pay the fee
or that payment of the fee would impose an undue hardship upon you.
Sec. 4.967 When will MMS grant a fee waiver or reduction?
(a) MMS may grant a fee waiver or fee reduction in extraordinary
circumstances.
(b) The MMS DRD will send you a written decision granting or
denying your request.
Sec. 4.968 How do I pay my processing fee if MMS grants a reduction or
denies my request for a reduction or waiver?
(a) If MMS grants your request for a fee reduction, you must pay
the reduced processing fee within 30 days of the date you recieved the
decision to reduce your fee.
(b) If MMS denies your request:
(1) You must pay the processing fee within 30 days of your receipt
of the decision; and
(2) That decision is final for the Department.
Appeals not Filed on Time
Sec. 4.969 How do I appeal a decision that my appeal was not filed on
time?
If MMS notifies you under Sec. 4.914(c)(1) that your appeal was not
filed on time:
(a) You may appeal that decision to IBLA within 15 days of the date
you received MMS's notification.
(1) Your appeal constitutes agreement in writing to extend the
period in which the Department must issue a final decision in your
appeal under Sec. 4.956, or which the Department uses as guidance to
track your appeal under Sec. 4.948. The period is extended by the
amount of time it takes IBLA to decide whether your appeal was filed on
time.
(2) If IBLA denies your appeal, IBLA's decision is final, and you
have failed to exhaust required administrative remedies as to the
merits of the order or MMS decision not to issue an order.
(b) If you do not appeal MMS's decision to IBLA under paragraph (a)
of this section, you have no further right to appeal within the
Department. In that event, the order, or MMS decision not to issue an
order, is final, and you have failed to exhaust required administrative
remedies as to the merits of the order or MMS decision not to issue an
order.
(c) If IBLA or a court of competent jurisdiction later determines
that MMS's or the IBLA's decision under this paragraph was incorrect,
and that your appeal was filed on time, your appeal commences, and your
Preliminary Statement of Issues and processing fee are due (if you have
not already filed them), 60 days after the date a final non-appealable
judgment is entered.
Provisions for Appeals Filed Before [insert date this proposed
subpart becomes effective]
Sec. 4.970 What rules apply to appeals filed before [insert date this
proposed subpart becomes effective]?
The following provisions apply to appeals filed either with the MMS
Director or IBLA before [insert date this proposed subpart becomes
effective]:
(a) 30 CFR parts 243 and 290 in effect prior to [insert date this
rule becomes effective]; and (b) 43 CFR 4.901, 4.902, 4.903, 4.911--
4.913, 4.948, 4.950, 4.957, 4.958, 4.971, and 4.972.
Sec. 4.971 When does my appeal commence and end if it was filed before
[insert date this proposed subpart becomes effective]?
For purposes of the period in which the Department must issue a
final decision in your appeal under Sec. 4.972:
(a) If you filed your Notice of Appeal and initial Statement of
Reasons with MMS before August 13, 1996, your appeal commenced on
August 13, 1996.
(b) If you filed your Notice of Appeal or initial Statement of
Reasons with MMS after August 13, 1996, your appeal commenced on the
date MMS received your Notice of Appeal, or, if later, your initial
Statement of Reasons under 30 CFR 290.3.
(c) Your appeal ends on the same day of the month of the 33rd
calendar month after your appeal commenced under paragraphs (a) or (b),
plus the number of days of any applicable time extensions under
Sec. 4.958. If the 33rd calendar
[[Page 1981]]
month after your appeal commenced does not have the same day of the
month as the day of the month your appeal commenced, then the initial
33 month period ends on the last day of the 33rd calendar month.
Sec. 4.972 What if the Department does not issue a decision by the
date my appeal ends if I filed my appeal before [insert effective date
this proposed subpart]?
(a) This section applies to any appeal of an order, or portion of
an order, involving a monetary or nonmonetary obligation under a
Federal oil and gas lease filed before [insert the date this proposed
subpart becomes effective], where the Department does not issue a final
decision by the date the appeal ends under Sec. 4.971(c). The time
limits in 30 U.S.C. 1724(h)(2) and the rule of decision stated in this
section do not apply to appeals of orders, or portions of orders, that:
(1) Involve Indian leases or Federal mineral leases other than oil
and gas; or
(2) Relate to Federal oil and gas leases but do not involve a
monetary or nonmonetary obligation.
(b) If the IBLA or an Assistant Secretary (or the Secretary or the
Director of OHA) does not issue a final decision in an appeal filed
before [insert date this proposed subpart becomes effective] by the
date the appeal ends under Sec. 4.971(c), then under 30 U.S.C.
1724(h)(2), the Secretary will be deemed to have decided the appeal:
(1) In favor of the appellant for any nonmonetary obligation at
issue in the appeal, or any monetary obligation at issue in the appeal
with a principal amount of less than $10,000;
(2) In favor of the Secretary for any monetary obligation at issue
in the appeal with a principal amount of $10,000 or more.
(c)(1) If your appeal ends before the MMS Director issues a
decision in your appeal of an order under 30 CFR 290.3(c), then the
provisions of paragraph (b) of this section apply to the monetary and
nonmonetary obligations in the order that you contested in your appeal
to the Director.
(2) If the MMS Director issues a decision in your appeal of an
order under 30 CFR 290.3(c) before your appeal ends, and if you
appealed the Director's decision to IBLA, then the provisions of
paragraph (b) of this section apply to the monetary and nonmonetary
obligations in the Director's decision that you contested in your
appeal to IBLA.
(3) If the MMS Director issues a decision in your appeal of an
order under 30 CFR 290.3(c), and if you did not appeal the Director's
decision to IBLA within the time required under 30 CFR 290.7 and 43 CFR
part 4, then the MMS Director's decision is the final decision of the
Department and 30 U.S.C. 1724(h)(2) has no application.
(d) If any party requests reconsideration of an IBLA decision
issued before the date the appeal ends under Sec. 4.971(c), and if IBLA
does not issue a decision on reconsideration before the date the appeal
ends, then 30 U.S.C. 1724(h)(2) does not apply and the decision the
IBLA has issued is the final action of the Department.
(e) If the principal amount of any monetary obligation is not
specifically stated in an order or MMS Director's decision and must be
computed to comply with the order or MMS Director's decision, then the
principal amount referred to in paragraph (b) of this section means the
principal amount MMS estimates you would be required to pay as a result
of the order.
Appendix A to Subpart J of Part 4
Xxxxxxx Production Company
Appeal of MMS Order dated
Bill/Invoice No. [if any]
$ amount disputed
Date
Preliminary Statement of Issues
Under the regulations at 43 CFR 4.907(a)(2)(i) (1998), Xxxxxxx
hereby submits the following preliminary facts and arguments as
reasons for its appeal of the Minerals Management Service (MMS)
order dated ____________________, 1998, (Bill No.
____________________):
1. The MMS claims are barred by Sec. 4(b) of the Federal Oil and
Gas Royalty Simplification and Fairness Act of 1996, P.L. 104-185
(August 13, 1996), which States that a demand which arises from an
obligation ``shall be commenced within seven years from the date on
which the obligation becomes due.'' Here, the transactions upon
which MMS bases its demand took place on ____________________, and
MMS did not issue its demand for payment to Xxxxxxx Production
Company until ____________________, which was more than seven years
after the date(s) of the transactions.
2. Xxxxxxx's ownership of less than 50 percent of the ABC Gas
Plant merely creates a rebuttable presumption of control. That
presumption should be deemed rebutted by the fact that at the time
Xxxxxxx executed its Agreement with the ABC Gas Plant, Xxxxxxx's
ownership interest in the ABC Gas Plant was significantly lower than
its current ownership (i.e., only ____ percent). Therefore, its
Agreement with the ABC Gas Plant should be considered arm's-length.
[Insert citation to applicable case law, statutes, and/or
regulations.]
3. Xxxxxxx's non-arm's length sales were at fair market prices
and were consistent with other, comparable sales in the field or
area. For example, data available to Xxxxxxx from [source] indicate
that in ________________ 19____ comparable sales in the field or
area were in the range of $____.____ to $____.____ per mcf, while
the non-arm's length sales challenged by the order were at
$____.____ per mcf. Therefore, those sales should be treated the
same as arm's-length sales for royalty purposes. [Insert citation to
applicable case law, statutes, and/or regulations.]
4. The MMS erred in billing the entire amount of the subject
assessment to Xxxxxxx. Until ________________ ____, 19____, Lease
Nos. ________________ were owned by XYZ Corporation. When Xxxxxxx
acquired Lease Nos. ________________ from XYZ Corporation, Xxxxxxx
did not assume responsibility for obligations that predated the
effective date of that acquisition. [Insert citation to applicable
case law, statutes, and/or regulations.]
Please contact the undersigned for all matters relating to this
appeal. Respectfully submitted this ______ day of ________________,
1999.
By:--------------------------------------------------------------------
[name]
Xxxxxxx Production Company
[address]
[phone no.]
TITLE 30--MINERAL RESOURCES
PART 208--SALE OF FEDERAL ROYALTY OIL
2. The authority citation for part 208 is revised to read as
follows:
Authority: 5 U.S.C. 301 et seq.; 30 U.S.C. 181 et seq., 351 et
seq., 1701 et seq.; 31 U.S.C. 9701; 41 U.S.C. 601 et seq.; 43 U.S.C.
1301 et seq., 1331 et seq., and 1801 et seq.
3. In Sec. 208.2, new definitions are added in alphabetical order
to read as follows:
Sec. 208. Definitions.
* * * * *
Contracting officer means the Director, his or her delegate, or the
person designated under a royalty oil purchase contract.
Contracting officer's decision means an MMS order or decision that
a contracting officer issues under this part to a purchaser of oil
under a royalty oil purchase contract.
* * * * *
Service means served as provided under 30 CFR 242.305.
4. Section 208.16 is revised to read as follows:
Sec. 208.16 How to appeal a contracting officer's decision that you
receive.
If you receive a contracting officer's decision, you may:
(a) Appeal that decision to the Board of Contract Appeals in the
Office of Hearings and Appeals, Office of the Secretary, in accordance
with the procedures provided in 43 CFR part 4, subpart C; or
(b) File an action in the United States Court of Federal Claims.
[[Page 1982]]
PART 241--PENALTIES
5. The authority citation for part 241 continues to read as
follows:
Authority: 25 U.S.C 396 et seq.; 25 U.S.C. 396a et seq.; 25
U.S.C. 2101 et seq.; 30 U.S.C. 181 et seq.; 30 U.S.C. 351 et seq.;
30 U.S.C. 1001 et seq.; 30 U.S.C. 1701 et seq.; 43 U.S.C. 1301 et
seq.; 43 U.S.C. 1331 et seq.; and 43 U.S.C. 1801 et seq.
Sec. 241.20 [Removed]
6. Section 241.20 is removed and subpart A is reserved.
7. Subpart B is revised to read as follows:
Subpart B--Penalties for Oil and Gas Leases
Sec.
Definitions
241.50 What definitions apply to this subpart?
Penalties After a Period to Correct
241.51 What may MMS do if I violate a statute, regulation, order,
or lease term relating to a Federal or Indian oil and gas lease?
241.52 What if I correct the violation?
241.53 What if I do not correct the violation?
241.54 How may I request a review of a Notice of Noncompliance?
241.55 Does my request for a hearing on the record affect the
penalties?
Penalties Without a Period to Correct
241.60 May I be subject to penalties without prior notice and an
opportunity to correct?
241.61 How will MMS inform me of violations without a period to
correct?
241.62 How may I request a review of a Notice of Noncompliance
regarding violations without a period to correct?
241.63 Does my request for a hearing on the record affect the
penalties?
General Provisions
241.70 How does MMS decide what the amount of the penalty should
be?
241.71 Does the penalty affect whether I owe interest?
241.72 How will the Office of Hearings and Appeals conduct the
hearing on the record?
241.73 How may I appeal the Administrative Law Judge's decision?
241.74 May I seek judicial review of the decision of the Interior
Board of Land Appeals?
241.75 When must I pay the penalty?
241.76 Can MMS reduce my penalty once it is assessed?
241.77 How may MMS collect the penalty?
Criminal Penalties
241.80 May the United States criminally prosecute me for violations
under mineral leases?
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. 9701; 43 U.S.C. 1301 et seq., 1331 et
seq., and 1801 et seq.
Subpart B--Penalties for Oil and Gas Leases
Definitions
Sec. 241.50 What definitions apply to this subpart?
The terms used in this subpart have the same meaning as in 30
U.S.C. 1702.
Penalties After a Period to Correct
Sec. 241.51 What may MMS do if I violate a statute, regulation, order,
or lease term relating to a Federal or Indian oil and gas lease?
(a) If we believe that you have not followed any requirement of a
statute, regulation, order, or terms of a lease for any Federal or
Indian oil or gas lease, we will send you a Notice of Noncompliance
telling you what the violation is and what you need to do to correct it
to avoid civil penalties under 30 U.S.C. 1719(a) and (b).
(b) We will send the Notice to your address of record under 30 CFR
242.304 using the standards of service under 30 CFR 242.305.
Sec. 241.52 What if I correct the violation?
The matter will be closed if you correct all of the violations
identified in the Notice of Noncompliance within 20 days of your
receipt of the Notice (or within a longer time period specified in the
Notice).
Sec. 241.53 What if I do not correct the violation?
(a) We may send you a Notice of Civil Penalty if you do not correct
all of the violations identified in the Notice of Noncompliance within
20 days of your receipt of the Notice of Noncompliance (or within a
longer time period specified in that Notice). The Notice of Civil
Penalty will tell you how much penalty you must pay. The amount of
penalty may be up to $500 per day, beginning with the date of the
Notice of Noncompliance, for each violation set out in the Notice of
Noncompliance for as long as you do not correct the violations.
(b) If you do not correct all of the violations identified in the
Notice of Noncompliance within 40 days of your receipt of the Notice of
Noncompliance (or 20 days following the expiration of a longer time
period specified in that Notice), we may increase the amount of the
penalty to up to $5,000 per day, beginning with the date of the Notice
of Noncompliance, for each violation for as long as you do not correct
the violations.
Sec. 241.54 How may I request a review of a Notice of Noncompliance?
You may request a hearing on the record to review a Notice of
Noncompliance by filing a request within 20 days of the date you
received the Notice of Noncompliance with the Hearings Division
(Departmental), Office of Hearings and Appeals, U.S. Department of the
Interior, 4015 Wilson Boulevard, Arlington, Virginia 22203. You may do
this regardless of whether you correct the violations identified in the
Notice of Noncompliance.
Sec. 241.55 Does my request for a hearing on the record affect the
penalties?
(a) If you do not correct the violations identified in the Notice
of Noncompliance, the penalties will continue to accrue even if you
request a hearing on the record.
(b) You may petition the Departmental Hearings Division to stay the
accrual of penalties pending the hearing on the record and a decision
by the Administrative Law Judge under Sec. 241.73. You must file your
petition within 45 calendar days of receiving the Notice of
Noncompliance. The Hearings Division will grant or deny the petition
under 43 CFR 4.21(b).
Penalties Without a Period to Correct
Sec. 241.60 May I be subject to penalties without prior notice and an
opportunity to correct?
The Federal Oil and Gas Royalty Management Act sets out several
specific violations for which penalties accrue without an opportunity
to first correct the violation.
(a) Under 30 U.S.C. 1719(c), you may be subject to penalties of up
to $10,000 per day per violation for each day the violation continues
if you:
(1) Knowingly or willfully fail to make any royalty payment by the
date specified by statute, regulation, order or terms of the lease;
(2) Fail or refuse to permit lawful entry, inspection, or audit; or
(3) Knowingly or willfully fail or refuse to notify the Secretary,
within 5 business days after any well begins production on a lease site
or allocated to a lease site, or resumes production in the case of a
well which has been off production for more than 90 days, of the date
on which production has begun or resumed.
(b) Under 30 U.S.C. 1719(d), you may be subject to civil penalties
of up to $25,000 per day for each day each violation continues if you:
(1) Knowingly or willfully prepare, maintain, or submit false,
inaccurate, or misleading reports, notices, affidavits,
[[Page 1983]]
records, data, or other written information;
(2) Knowingly or willfully take or remove, transport, use or divert
any oil or gas from any lease site without having valid legal authority
to do so; or
(3) Purchase, accept, sell, transport, or convey to another person,
any oil or gas knowing or having reason to know that such oil or gas
was stolen or unlawfully removed or diverted.
Sec. 241.61 How will MMS inform me of violations without a period to
correct?
We will inform you of violations without a period to correct by
issuing a Notice of Noncompliance explaining what the violation is and
how to correct it. We also will send you a Notice of Civil Penalty
stating the amount of the penalty. The Notice of Noncompliance and
Notice of Civil Penalty may be issued simultaneously. We will send the
Notice of Noncompliance and the Notice of Civil Penalty to your address
of record under 30 CFR 242.304 using the standards of service under 30
CFR 242.305.
Sec. 241.62 How may I request a review of a Notice of Noncompliance
regarding violations without a period to correct?
You may request a hearing on the record of a Notice of
Noncompliance regarding violations without a period to correct by
filing a request within 20 days of the date you received the Notice of
Noncompliance with the Hearings Division (Departmental), Office of
Hearings and Appeals, U.S. Department of the Interior, 4015 Wilson
Boulevard, Arlington, Virginia 22203. You may do this regardless of
whether you correct the violations identified in the Notice of
Noncompliance.
Sec. 241.63 Does my request for a hearing on the record affect the
penalties?
(a) If you do not correct the violations identified in the Notice
of Noncompliance regarding violations without a period to correct, the
penalties will continue to accrue even if you request a hearing on the
record.
(b) You may ask the Departmental Hearings Division to stay the
accrual of penalties pending the hearing on the record and a decision
by the Administrative Law Judge under Sec. 241.73. You must file your
petition within 45 calendar days of your receipt of the Notice of
Noncompliance. The Hearings Division will grant or deny the petition
under 43 CFR 4.21(b).
General Provisions
Sec. 241.70 How does MMS decide what the amount of the penalty should
be?
We determine the amount of the penalty by considering the severity
of the violations, your history of compliance, and if you are a small
business.
Sec. 241.71 Does the penalty affect whether I owe interest?
(a) The penalties under this section are in addition to interest
you may owe on any underlying underpayments or unpaid debt.
(b) If you do not pay the penalty by the date stated in the order
assessing the penalty issued under Sec. 241.75, MMS will assess you
late payment interest on the penalty amount at the same rate interest
is assessed on late royalty payments for the number of days the penalty
payment is late.
Sec. 241.72 How will the Office of Hearings and Appeals conduct the
hearing on the record?
If you request a hearing on the record under Secs. 241.54 or
241.62, the hearing will be conducted by a Departmental Administrative
Law Judge from the Office of Hearings and Appeals. After the hearing,
the Administrative Law Judge will issue a decision in accordance with
the evidence presented and applicable law.
Sec. 241.73 How may I appeal the Administrative Law Judge's decision?
If you are adversely affected by the Administrative Law Judge's
decision, you may appeal that decision to the Interior Board of Land
Appeals in accordance with the procedures set forth in 43 CFR part 4,
subpart E.
Sec. 241.74 May I seek judicial review of the decision of the Interior
Board of Land Appeals?
Under 30 U.S.C. 1719(j), you may seek judicial review of the
decision of the Interior Board of Land Appeals. Review by the District
Court is only on the administrative record and not de novo. An appeal
to the District Court shall be barred unless filed within 90 days after
the final order.
Sec. 241.75 When must I pay the penalty?
(a) We will send you an order assessing the penalty, in accordance
with the Notice of Civil Penalty issued under Secs. 241.53 or 241.61,
if:
(1) You do not request a hearing on the record under Secs. 241.54
or 241.62;
(2) You do not appeal the determination of the Administrative Law
Judge to the Interior Board of Land Appeals under Sec. 241.73; or
(3) The Interior Board of Land Appeals issues a final decision for
the Department under Sec. 241.73.
(b) You must pay the penalty assessed in that order within 30 days
of receiving it, unless you have sought judicial review of the decision
of the Interior Board of Land Appeals under Sec. 241.74 and obtained a
stay from the district court.
(c) The order assessing the penalty is not appealable.
(d) If you do not pay, that amount is subject to collection under
the provisions of Sec. 241.77.
Sec. 241.76 Can MMS reduce my penalty once it is assessed?
Under 30 U.S.C. 1719(g), the Associate Director for Royalty
Management may compromise or reduce civil penalties assessed under this
section.
Sec. 241.77 How may MMS collect the penalty?
(a) MMS may use all available means to collect the penalty
including, but not limited to:
(1) Requiring the lease surety, for amounts owed by lessees, to pay
the penalty;
(2) Deducting the amount of the penalty from any sums the United
States owes to you;
(3) Using judicial process to compel your payment under 30 U.S.C.
1719(k).
(b) If the Department uses judicial process, or if you appeal to a
Court under Sec. 241.74 and lose, the Court shall have jurisdiction to
award the amount assessed plus interest assessed from the date of the
expiration of the 90-day period referred to in Sec. 241.74. The amount
of any penalty, as finally determined, may be deducted from any sum
owing to you by the United States.
Criminal Penalties
Sec. 241.80 May the United States criminally prosecute me for
violations under mineral leases?
If you commit an act for which a civil penalty is provided at 30
U.S.C. 1719(d) and Sec. 241.60(b), the United States may assess
criminal penalties as provided at 30 U.S.C. 1720, in addition to any
authority for prosecution under other statutes.
8. The heading of part 242 is revised and subparts A through D are
added to part 242 to read as follows.
PART 242--ORDERS
Subpart A--General Provisions
Sec.
242.1 What is the purpose of this part?
242.2 What leases are subject to this part?
242.3 What definitions apply to this part?
Subpart B--Orders
242.100 What is the purpose of this subpart?
242.101 Who may issue orders?
[[Page 1984]]
242.102 What may MMS, tribes, or delegated States do before issuing
an order?
242.103 What does a Preliminary Determination Letter contain?
242.104 What is an order?
242.105 What does an order contain?
242.106 How will MMS and delegated States serve orders?
Subpart C--Requests From Indian Lessors for MMS to Issue an Order
242.200 What is the purpose of this subpart?
242.201 How can an Indian lessor request that MMS issue an order?
242.202 What will MMS do after it receives my request?
242.203 How will MMS notify me of its decision on my request that
it issue an order?
242.204 May I appeal MMS's decision to deny my request to issue an
order?
Subpart D--Appeals and Service
242.300 What is the purpose of this subpart?
242.301 How do I appeal an order?
242.302 How do I exhaust administrative remedies?
242.303 How will MMS and delegated States serve official
correspondence?
242.304 Who is the addressee of record?
242.305 When is official correspondence considered served?
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. 9701; 43 U.S.C. 1301 et seq., 1331 et
seq., and 1801 et seq.
Subpart A--General Provisions
Sec. 242.1 What is the purpose of this part?
This part explains how the Minerals Management Service (MMS) or
delegated States will issue orders and notices of orders, and serve
official correspondence, and how the recipient of an order may appeal
that order, and exhaust administrative remedies.
Sec. 242.2 What leases are subject to this part?
This part applies to all Federal mineral leases onshore and on the
Outer Continental Shelf (OCS), and to all federally-administered
mineral leases on Indian tribal and individual Indian mineral owners'
lands.
Sec. 242.3 What definitions apply to this part?
Delegated State means a State to which MMS has delegated authority
to perform royalty management functions pursuant to an agreement or
agreements under regulations at 30 CFR part 227.
Demand means an order to pay issued under this part.
Designee means the person designated by a lessee under 30 CFR
218.52 to make all or part of the royalty or other payments due on a
lease on the lessee's behalf.
Indian lessor means an Indian tribe or individual Indian mineral
owner with a beneficial interest in a property that is subject to a
lease issued or administered by the Secretary on behalf of the tribe or
individual Indian mineral owner.
Lessee means any person to whom the United States, or the United
States on behalf of an Indian tribe or individual Indian mineral owner,
issues a lease subject to this part, or any person to whom all or part
of the lessee's interest or operating rights in a lease subject to this
part have been assigned.
Obligation means a lessee's, designee's or payor's duty to:
(1) Deliver oil or gas royalty in kind; or
(2) Make a lease-related payment, including royalty, minimum
royalty, rental, bonus, net profit share, proceeds of sale, interest,
penalty, civil penalty, or assessment.
Payor means any person who has been assigned or has assumed the
responsibility to report and pay royalties on its own behalf, or on
behalf of another person for:
(1) Federal oil and gas leases for production before September 1,
1996;
(2) Federal mineral leases other than oil and gas leases; or
(3) Leases on Indian lands subject to this part.
Reporter means a person who submits reports for leases subject to
this part regardless of whether that person has payment responsibility.
Subpart B--Orders
Sec. 242.100 What is the purpose of this subpart?
This subpart explains how MMS or delegated States issue orders and
notices to lessees, designees, payors, reporters, and any other persons
concerning the following functions related to leases subject to this
part:
(a) Reporting production;
(b) Reporting, computing, and paying royalties;
(c) Reporting, computing, and making other payments; and
(d) Providing documents and other information.
Sec. 242.101 Who may issue orders?
(a) The Assistant Secretary for Land and Minerals Management, the
MMS Director, or other officials to whom the MMS Director delegates
authority, may issue orders concerning reporting of production and
reporting and paying royalties and other payments due under leases
subject to this part.
(b) For States to whom MMS has delegated the authority to issue
demands, orders and notices under 30 CFR part 227:
(1) The highest delegated State official having ultimate authority
over the collection of royalties, or other State officials to whom that
authority has been delegated, may issue demands, orders and notices
(other than notices to perform a restructured accounting), concerning
reporting and paying royalties and other payments due under any lease
for which the State has delegated authority; and
(2) Only the highest delegated State official having ultimate
authority over royalty collection may issue orders to perform a
restructured accounting.
Sec. 242.102 What may MMS, tribes, or delegated States do before
issuing an order?
Before issuing an order under this subpart, MMS, a tribe, or a
delegated State may send you a Preliminary Determination Letter. MMS,
the tribe, or the delegated State may send you this letter if it
believes that you have not properly:
(a) Provided information related to your lease; or
(b) Reported or paid royalties or other payments due under your
lease.
Sec. 242.103 What does a Preliminary Determination Letter contain?
A Preliminary Determination Letter:
(a) Does not have mandatory or ordering language;
(b) Is not appealable under 43 CFR part 4, subpart J;
(c) Will include:
(1) A description of the scope and conduct of the audit, review, or
investigation that led to the letter;
(2) The factual findings and the legal or policy basis for the
preliminary determination; and
(3) Instructions on how to respond to the letter to attempt to
resolve informally any disagreement you may have with the preliminary
determination.
Sec. 242.104 What is an order?
(a) An order is any document that the MMS Director, MMS RMP, or a
delegated State issues that contains mandatory or ordering language
that requires the recipient to do any of the following for any lease
subject to this subpart: report, compute, or pay royalties or other
obligations, or report production, or provide documents or other
information.
(b) Orders include but are not limited to the following:
(1) A demand or order to pay which--
(i) Asserts a specific, definite, and quantified amount or
obligation claimed to be due; and
(ii) For production from Federal oil and gas leases after September
1, 1996,
[[Page 1985]]
specifically identifies the obligation by lease(s), production month(s)
and monetary amount of such obligation claimed to be due and ordered to
be paid, as well as the reason or reasons such obligation is claimed to
be due, but such term does not include any other communication or
action by or on behalf of MMS or a delegated State;
(2) Orders to perform restructured accounting that MMS or a
delegated State issues to a lessee, designee, or payor when MMS or a
delegated State determines that the lessee, designee or payor should
recalculate amounts due on an obligation based upon a finding that the
lessee, designee or payor has made identified underpayments or
overpayments as demonstrated by repeated, systemic reporting errors for
a significant number of leases or for a single lease for a significant
number of reporting months with the same type of error which
constitutes a pattern of violations likely to result in either
significant underpayments or overpayments. A person's admission that it
has not complied with lease terms, statutes or regulations regarding
the reporting and payment of royalties per se constitutes a pattern of
violations;
(3) Orders to file a report related to any reporting, royalty, or
other lease requirement under 30 CFR parts 210, 216, 218, 220, and 250;
and
(4) Orders to provide documents or information.
(i) Orders to perform a restructured accounting are not orders to
provide documents or information.
(ii) An order to provide documents or information issued under this
part by the MMS Associate Director for Royalty Management, or by a
person to whom the Associate Director delegates the authority to issue
such orders that are final for the Department, is final for the
Department and is not appealable under 43 CFR part 4, subpart J.
(c) Orders do not include:
(1) Non-binding requests, information, and guidance, such as:
(i) Preliminary Determination Letters issued under Sec. 242.102;
(ii) Advice or guidance on how to report or pay, including
valuation determinations, unless they contain mandatory or ordering
language; and
(iii) Policy determinations;
(2) Subpoenas; and
(3) Orders to pay that MMS issues to refiners or other parties
involved in disposition of royalty taken in kind.
Sec. 242.105 What does an order contain?
(a) An order must include:
(1) A description of the audit, review, or investigation that
results in the order;
(2) The factual findings and the legal or policy basis for the
order;
(3) Instructions on how to comply with the order;
(4) Instructions on how to appeal the order; and
(5) A list specifying:
(i) Lessees who receive notice under Sec. 242.106(b);
(ii) Representatives of any Indian lessors affected by the order;
and
(iii) Relevant MMS offices, the Office of the Solicitor, delegated
State or tribal offices, and representatives of States concerned.
(b) An order may include references to the Preliminary
Determination Letter issued under Sec. 242.102 and any responses to
that letter.
(c) An order to perform a restructured accounting under
Sec. 242.104(b)(2) may include an estimate of additional royalties due
which MMS or a delegated State may adjust based on new information. If
MMS or the delegated State adjusts the estimate, it will send written
notice to the recipient of the order.
Sec. 242.106 How will MMS and delegated States serve orders?
(a) MMS and delegated States will serve orders under Sec. 242.303
to the address that you provide under Sec. 242.304.
(b) If MMS or a delegated State serves an order to a designee, as
defined in 30 U.S.C. 1701(23), MMS or the delegated State will notify
the designee's lessee(s). This notification will be in the form of a
Notice of Order that:
(1) Tells the lessee that MMS or the delegated State has issued an
order to the lessee's designee;
(2) Includes information about the designee who received the order;
and
(3) Is served at the same time and in the same way the order was
served.
(c) If a lessee does not designate a designee in writing as
required under 30 CFR 218.52, then MMS or a delegated State will serve
the order on the person currently making royalty or other payments on
the lessee's behalf. In these cases:
(1) MMS or the delegated State is not required to serve the lessee
with the Notice of Order required under paragraph (b) of this section;
and
(2) The lessee remains liable for any royalty or other payments due
under the order, regardless of the fact that MMS or the delegated State
did not serve the lessee with a Notice of Order under paragraph (c)(1)
of this section.
Subpart C--Requests from Indian Lessors for MMS to Issue an Order
Sec. 242.200 What is the purpose of this subpart?
This subpart explains how Indian lessors may formally request that
MMS issue an order to persons concerning the reporting of production
and the reporting and payment of royalties and other payments due under
their leases.
Sec. 242.201 How can an Indian lessor request that MMS issue an order?
(a) If you are an Indian lessor, you may request in writing that
MMS issue an order to a lessee, payor or reporter concerning the
reporting and payment of royalties and other payments due under any of
your leases if you believe that royalties or other lease payments have
been underpaid, or that reports are inaccurate.
(b) Your request must:
(1) Specifically state why you believe that royalties or other
lease payments have been underpaid, or that reports are inaccurate;
(2) Include evidence, including documents, that you may have that
supports your belief that royalties or other lease payments have been
underpaid, or that reports are inaccurate;
(3) Include your name, address, the affected lease number(s), and
any other information you may have that will help MMS to investigate
your request, including the name and address of the lessee, payor, or
reporter for the lease(s).
(c) If you are a tribe with a cooperative agreement under Sec. 202
of FOGRMA, send your request to the office designated in your contract.
(d) Other tribes and individual Indian mineral owners must submit
their requests to the Office of Indian Royalty Assistance.
(1) You must mail your request to the: Minerals Management Service,
Royalty Management Program, Office of Indian Royalty Assistance, MS
3010, PO Box 25165, Denver CO 80225-0165; or
(2) You must deliver your request in person at one of the following
offices:
(i) Minerals Management Service, Royalty Management Program, Office
of Indian Royalty Assistance, Building 85, Denver Federal Center,
Kipling Street and Sixth Avenue, Lakewood, Colorado 80225, (303) 231-
3410;
(ii) Minerals Management Service, Royalty Management Program,
Oklahoma Indian Royalty Assistance, 4013 NW Expressway, Suite 230,
Oklahoma City, OK 73116, (405) 879-6050; or (iii) Department of the
Interior, MMS, BIA, and BLM Services, Farmington Indian Minerals
Office,
[[Page 1986]]
1235 LaPlata Highway, Farmington, NM 87401, (505) 599-8960.
Sec. 242.202 What will MMS do after it receives my request?
When MMS receives your request, it will:
(a) Investigate your belief that royalties or other lease payments
have been underpaid, or that reports are inaccurate; and
(b) Determine whether royalties or other lease payments have been
underpaid, or whether reports are inaccurate.
(1) If MMS determines that royalties or other lease payments have
been underpaid, or that reports are inaccurate, MMS will issue an
appropriate order.
(2) If MMS determines that royalties or other lease payments have
not been underpaid, or that reports are not inaccurate as you allege in
your request, MMS will deny your request and will not issue an order.
Sec. 242.203 How will MMS notify me of its decision on my request that
it issue an order?
(a) If MMS grants your request, it will notify you in writing of
any order that it issues and will give you a copy of the order.
(b) If MMS denies all or part of your request, MMS will explain why
in a notice it will issue to you. The notice also will tell you about
your appeal rights under 43 CFR part 4, subpart J.
Sec. 242.204 May I appeal MMS's decision to deny my request to issue
an order?
You may appeal MMS's decision to deny your request to issue an
order under 43 CFR part 4, subpart J. You must include with your appeal
a copy of your request and the notification MMS gave you under
Sec. 242.203(b).
Subpart D--Appeals and Service
Sec. 242.300 What is the purpose of this subpart?
This subpart explains how the recipient of an order may appeal that
order, exhaust administrative remedies, and how MMS or delegated States
will serve official correspondence.
Sec. 242.301 How do I appeal an order?
If you receive an order, you may appeal that order under 43 CFR
part 4, subpart J.
Sec. 242.302 How do I exhaust administrative remedies?
If you receive an order, you must appeal that order to the Interior
Board of Land Appeals (IBLA) to exhaust administrative remedies (43 CFR
part 4, subpart J) unless the Assistant Secretary for Land and Minerals
Management or IBLA makes the order immediately effective under 43 CFR
part 4, notwithstanding an appeal.
Sec. 242.303 How will MMS and delegated States serve official
correspondence?
(a) MMS and delegated States will serve official correspondence
using a method that provides for receipt confirming delivery, such as:
certified mail, overnight delivery service, or personal service.
(b) For purposes of this subpart, official correspondence includes
all orders that are appealable under 30 CFR part 242.
Sec. 242.304 Who is the addressee of record?
The addressee of record for each type of official correspondence is
shown in the following table:
------------------------------------------------------------------------
The addressee of
For correspondence about: record is: And:
------------------------------------------------------------------------
(a) A refiner or other party The position title, The refiner or other
involved in disposition of department name and party must notify
Federal royalty taken in address, or MMS in writing of
kind. individual name and all addressee
address in the changes.
executed royalty
sale contract; or a
different position
title, department
name and address,
or individual name
and address that
the refiner or
other party under
the executed
royalty sale
contract identifies
in writing for
billing purposes.
(b) Any person required to The most recent The reporter/ payor
report energy and mineral position title, must notify RMP, in
resources removed from department name and writing, of any
Federal and Indian leases address, or addressee changes.
to the RMP Production individual name and
Accounting and Auditing address that RMP
System. has in its records
for the reporter/
payor.
(c) Onshore Federal leases.. The current lessee.. The lessee must
notify BLM of any
addressee changes.
(d) Indian leases........... The current lessee.. The lessee must
notify BIA of any
addressee changes.
(e) Offshore leases......... The current lessee.. The lessee must
notify OMM of any
addressee changes.
(f) Reviews and audits of The position title, The lessee,
lessee, designee, reporter department name and designee, reporter
or payor records. address, or or payor must
individual name and notify MMS of any
address the lessee, addressee changes.
designee, reporter
or payor identifies
in writing at the
initiation of the
audit; or the most
recent addressee
that the lessee,
designee, reporter
or payor specified
in writing.
(g) Reporting on the The most recent The lessee,
``Report of Sales and position title, designee, reporter
Royalty Remittance'' (Form department name and or payor is
MMS-2014). address, or responsible for
individual name and notifying RMP in
address that the writing of any
lessee, designee, addressee changes.
reporter or payor
identifies in
writing.
(h) Remittances regarding The most recent The lessee,
rental and bonuses from position title, designee, reporter
nonproducing Federal leases. department name and or payor is
address, or responsible for
individual name and notifying RMP in
address maintained writing of any
in RMP records. addressee changes.
[[Page 1987]]
(i) Orders, demands, The position title, See 30 CFR 210.51.
invoices, or decisions, and department name and
other actions identified address or
with lessees, designees, individual name and
reporters or payors address for the
reporting to the RMP lessee, designee,
Auditing and Financial reporter or payor
System not identified in identified on the
paragraphs (a) through (h) most recent Payor
of this section. Confirmation Report
(Report No. ARR
290R) of a Payor
Information Form
(PIF) (Form MMS-
4025 or Form MMS-
4030) that RMP
returned to the
lessee, designee,
reporter or payor.
------------------------------------------------------------------------
(j) If official correspondence relates to more than one category
identified in paragraphs (a) through (i) of this section, then MMS or
the delegated State may serve the correspondence on any one category of
affected party.
Sec. 242.305 When is official correspondence considered served?
(a) Except as provided in paragraph (b) of this section, official
correspondence is considered served on the date that it is received at
the address of record under Sec. 242.304. A receipt from any person at
the address of record is evidence that the correspondence was received.
If official correspondence is served by more than one method, the date
of service is the earliest date it is received by a method authorized
under Sec. 242.303(a).
(b) If MMS or a delegated State cannot deliver the official
correspondence after reasonable effort to the addressee of record under
Sec. 242.304, official correspondence is deemed to have been
constructively served 7 days after the date that MMS or a delegated
State mailed the document. This provision covers such situations as
nondelivery because:
(1) The addressee has moved without providing a forwarding address
in writing to MMS as required under Sec. 242.304;
(2) The forwarding order expired;
(3) Delivery was expressly refused; or
(4) The official correspondence was unclaimed and U.S. Postal
Service authorities verify MMS's attempt to deliver.
9. Part 243 is revised to read as follows:
PART 243--SUSPENSIONS PENDING APPEAL AND BONDING--ROYALTY
MANAGEMENT PROGRAM
Subpart A--General Provisions
Sec.
243.1 What is the purpose of this part?
243.2 What leases are subject to this part?
243.3 What definitions apply to this part?
243.4 Who must post a bond or other surety instrument or
demonstrate financial solvency under this part to suspend compliance
with an order?
243.5 May another person post a bond or other surety instrument or
demonstrate financial solvency on my behalf?
243.6 When must I or another person meet the bonding or financial
solvency requirements under this part?
243.7 What must a person do when posting a bond or other surety
instrument or demonstrating financial solvency on behalf of an
appellant?
243.8 When will MMS suspend my obligation to comply with an order?
243.9 Will MMS continue to suspend my obligation to comply with an
order if I appeal to a Federal court?
243.10 When will MMS initiate collection actions against a bond or
other surety instrument or the person demonstrating financial
solvency?
243.11 May I appeal the MMS bond-approving officer's determination
of my surety amount or financial solvency?
243.12 May I substitute financial solvency for a bond posted before
the effective date of this rule?
Subpart B--Bonding Requirements
243.100 What standards must my MMS-specified surety instrument
meet?
243.101 How will MMS determine my bond or other surety instrument
amount?
Subpart C--Financial Solvency Requirements
243.200 How do I demonstrate financial solvency?
243.201 How will MMS determine if I am financially solvent?
243.202 When will MMS monitor my financial solvency?
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. 9701; 43 U.S.C. 1301 et seq., 1331 et
seq., and 1801 et seq.
Subpart A--General Provisions
Sec. 243.1 What is the purpose of this part?
This part explains how a lessee or recipient of an order may
suspend compliance with an order that the lessee, its designee, or the
recipient of an order has appealed under 43 CFR part 4, subpart J, or
30 CFR part 208, and when a bond or other surety must be submitted or a
party may demonstrate financial solvency.
Sec. 243.2 What leases are subject to this part?
This part applies to all Federal mineral leases onshore and on the
Outer Continental Shelf (OCS), and to all federally-administered
mineral leases on Indian tribal and individual Indian mineral owners'
lands.
Sec. 243.3 What definitions apply to this part?
Assessment means any fee or charge levied or imposed by the
Secretary or a delegated State other than:
(1) The principal amount of any royalty, minimum royalty, rental,
bonus, net profit share or proceed of sale;
(2) Any interest; or
(3) Any civil or criminal penalty.
Designee means the person designated by a lessee under 30 CFR
218.52 to make all or part of the royalty or other payments due on a
lease on the lessee's behalf.
Lessee means any person to whom the United States, or the United
States on behalf of an Indian tribe or individual Indian mineral owner,
issues a lease subject to this subpart, or any person to whom all or
part of the lessee's interest or operating rights in a lease subject to
this subpart has been assigned.
MMS bond-approving officer means the Associate Director for Royalty
Management or an official to whom the Associate Director delegates that
responsibility.
MMS-specified surety instrument means an MMS-specified
administrative appeal bond, an MMS-specified irrevocable letter of
credit, a Treasury book-entry bond or note, or a financial institution
book-entry certificate of deposit.
Notice of order means the notice under 30 CFR part 242 that MMS or
a delegated State provides to a lessee stating that MMS or the
delegated State has issued an order to the lessee's designee.
Order means an order to pay a monetary obligation appealable under
43 CFR part 4, subpart J, or 30 CFR part 208.
Person means any individual, firm, corporation, association,
partnership, consortium, or joint venture.
[[Page 1988]]
Self-bond means an MMS-approved demonstration of financial solvency
under this part.
Sec. 243.4 Who must post a bond or other surety instrument or
demonstrate financial solvency under this part to suspend compliance
with an order?
(a) If you appeal under 43 CFR part 4, subpart J or 30 CFR part
208, an order that requires you to make a payment, and you want to
suspend compliance with that order, you must post a bond or other
surety instrument or demonstrate financial solvency under this part,
except as provided in paragraphs (b) and (c) of this section.
(b) You need not meet the requirements of paragraph (a) of this
section if the order is an assessment.
(c) You need not meet the requirements of paragraph (a) of this
section if another person agrees to fulfill these requirements on your
behalf under Sec. 243.5.
Sec. 243.5 May another person post a bond or other surety instrument
or demonstrate financial solvency on my behalf?
Any other person, including a designee, payor, or affiliate, may
post a bond or other surety instrument or demonstrate their financial
solvency under this part on behalf of an appellant required to post a
bond or other surety instrument under Sec. 243.4(a).
Sec. 243.6 When must I or another person meet the bonding or financial
solvency requirements under this part?
If you must meet the bonding or financial solvency requirements
under Sec. 243.4, or if another person is meeting your bonding or
financial solvency requirements, then you or the other person must post
a bond or other surety instrument or demonstrate financial solvency
within 60 days of your receipt of the order or the Notice of Order.
Sec. 243.7 What must a person do when posting a bond or other surety
instrument or demonstrating financial solvency on behalf of an
appellant?
If you are another person assuming an appellant's responsibility to
post a bond or other surety instrument or demonstrating financial
solvency under Sec. 243.5, you:
(a) Must notify MMS in writing at the address specified in
Sec. 243.200(a) that you are assuming the appellant's responsibility
under this part;
(b) May not assert that you are not otherwise liable for royalties
or other payments under 30 U.S.C. 1712(a), or any other theory, as a
defense if MMS calls your bond or requires you to pay based on your
demonstration of financial solvency; and
(c) May end your voluntarily-assumed responsibility for either
posting a bond or other surety instrument under this part on behalf of
the appellant only after the appellant either pays or posts a bond or
other surety instrument or demonstrates financial solvency under this
part.
Sec. 243.8 When will MMS suspend my obligation to comply with an
order?
(a) Federal leases. For orders appealed under 43 CFR part 4,
subpart J, regarding the payment and reporting of royalties and other
payments due from Federal mineral leases onshore and on the OCS:
(1) If the amount under appeal is less than $10,000 or does not
require payment of a specified amount, MMS will suspend your obligation
to comply with the order. MMS will use the lease surety posted with the
Bureau of Land Management for onshore leases, and MMS for OCS leases,
as collateral for the obligation;
(2) If the amount under appeal is $10,000 or more, MMS will suspend
your obligation to comply with that order if you:
(i) Submit an MMS-specified surety instrument under subpart B
within a time period MMS prescribes; or
(ii) Demonstrate financial solvency under subpart C of this part.
(3) MMS may inform you that it will not suspend your obligation to
comply with the order because suspension would harm the interests of
the United States.
(b) Indian leases. For orders appealed under 43 CFR part 4, subpart
J, regarding the payment and reporting of royalties and other payments
due from Indian mineral leases subject to this part:
(1) If the amount under appeal is less than $1,000 or does not
require payment, MMS will suspend your obligation to comply with the
order. MMS will use the lease surety posted with the Bureau of Indian
Affairs as collateral for the obligation;
(2) If the amount under appeal is $1,000 or more, MMS will suspend
your obligation to comply with that order if you submit an MMS-
specified surety instrument under subpart B within a time period MMS
prescribes.
(3) MMS may inform you that it will not suspend your obligation to
comply with the order because suspension would harm the interests of
the United States or the Indian lessor.
(c) Nothing in this part prohibits you from paying any demanded
amount or complying with any other requirement pending appeal. However,
voluntarily paying any demanded amount or otherwise complying with any
other requirement when suspension of an order is otherwise available
under these rules does not create judicially reviewable final agency
action under 5 U.S.C. 704.
Sec. 243.9 Will MMS continue to suspend my obligation to comply with
an order if I appeal to a Federal court?
(a) If you seek judicial review of an IBLA decision or other final
action of the Department of the Interior regarding an order, MMS will
suspend your obligation to comply with that order pending judicial
review if you continue to meet the requirements of this part.
(b) Notwithstanding the provisions of paragraph (a) of this
section, MMS may decide that it will not suspend your obligation to
comply with an order. The Department will notify you in writing of that
decision and state the reasons for that decision.
Sec. 243.10 When will MMS initiate collection actions against a bond
or other surety instrument or the person demonstrating financial
solvency?
If you maintain a bond or an MMS-specified surety instrument or
have demonstrated financial solvency, or if another person maintains a
bond or other surety instrument or demonstrates financial solvency on
your behalf, for an appeal of an order under this part, MMS may
initiate collection actions against the bond or other surety instrument
or the person demonstrating financial solvency:
(a) If the IBLA, the Director of the Office of Hearings and
Appeals, an Assistant Secretary, or the Secretary decides your appeal
adversely to you, and you do not pay the amount due or pursue judicial
review within 30 days of the decision;
(b) If a court of competent jurisdiction issues a final non-
appealable decision adverse to you, and you do not pay the amount due
within 30 days of the decision;
(c) If you do not increase the amount of your bond or other surety
instrument as required under Sec. 243.101(b), or otherwise fail to
maintain an adequate surety instrument in effect, and you do not pay
the amount due under the order within 30 days of notice from MMS under
Sec. 243.101(b);
(d) If the MMS bond-approving officer determines that you are no
longer financially solvent under Sec. 243.202(c), and you do not pay
the order amount or post a bond or other MMS-specified surety
instrument under subpart B within 30 days of that determination.
[[Page 1989]]
Sec. 243.11 May I appeal the MMS bond-approving officer's
determination of my surety amount or financial solvency?
Any decision on your surety amount under subpart B or your
financial solvency under subpart C is final and is not subject to
appeal under 43 CFR part 4, subpart J.
Sec. 243.12 May I substitute financial solvency for a bond posted
before the effective date of this rule?
If you appealed an order before the effective date of this rule and
you submitted an MMS-specified surety instrument to suspend compliance
with that order, you may replace the surety with a demonstration of
financial solvency under this part when the surety instrument is due
for renewal.
Subpart B--Bonding Requirements
Sec. 243.100 What standards must my MMS-specified surety instrument
meet?
(a) An MMS-specified surety instrument must be in a form specified
in MMS instructions. MMS will provide you with written information and
standard forms for MMS-specified surety instrument requirements.
(b) MMS will use a bank-rating service to determine whether a
financial institution has an acceptable rating to provide a surety
instrument adequate to indemnify the lessor from loss or damage.
(1) Administrative appeal bonds must be issued by a qualified
surety company which the Department of the Treasury has approved.
(2) Irrevocable letters of credit or certificates of deposit must
be from a financial institution acceptable to MMS with a minimum 1-year
period of coverage subject to automatic renewal up to 5 years.
Sec. 243.101 How will MMS determine my bond or other surety instrument
amount?
(a) The MMS bond-approving officer may approve your surety if he or
she determines that the amount is adequate to guarantee payment. The
amount of your surety may vary depending on the form of the surety and
how long the surety is effective.
(1) The amount of the MMS-specified surety instrument must include
the principal amount owed under the order plus any accrued interest MMS
determines is owed plus projected interest for a 1-year period.
(2) Treasury book-entry bonds or notes amounts must be equal to at
least 120 percent of the required surety amount.
(b) If your appeal is not decided within 1 year from the date your
appeal is filed, you must increase the surety amount to cover
additional estimated interest for another 1-year period annually on the
date your appeal was filed. MMS will determine the additional estimated
interest and notify you of the amount so you can amend your surety
instrument.
(c) You may submit a single surety instrument that covers multiple
appeals of orders, and you may add new amounts under appeal or remove
amounts that have been adjudicated in your favor or that you have paid
if you amend the single surety instrument annually on the date you
filed your first appeal. However, you must submit a separate surety
instrument for new amounts under appeal until those new appeals are
covered by the single surety instrument during the annual amendment.
Subpart C--Financial Solvency Requirements
Sec. 243.200 How do I demonstrate financial solvency?
(a) To demonstrate financial solvency under this part, you must
submit an audited consolidated balance sheet, and up to 3 years of tax
returns if requested by the MMS bond-approving officer, to the Minerals
Management Service, Debt Collection Section using:
(1) The U.S. Postal Service or private delivery at P.O. Box 5760,
MS 3031, Denver, CO 80217-5760; or
(2) Courier or overnight delivery at MS 3031, Denver Federal
Center, Bldg. 85, Room A-212, Denver, CO 80225-0165.
(b) You must submit an audited consolidated balance sheet annually,
and additional annual tax returns if requested, on the date MMS first
determined that you demonstrated financial solvency as long as you have
active appeals, or whenever MMS requests.
(c) If you demonstrate financial solvency in the current calendar
year, you are not required to redemonstrate financial solvency for new
appeals of orders during that calendar year unless you file for
protection under any provision of the U.S. Bankruptcy Code (Title 11,
U.S.C.), or MMS notifies you that you must redemonstrate financial
solvency.
Sec. 243.201 How will MMS determine if I am financially solvent?
(a) The MMS bond-approving officer will determine your financial
solvency by examining your total net worth, including, as appropriate,
the net worth of your affiliated entities.
(b) If your net worth, minus the amount MMS would require as surety
under subpart B for all orders you have appealed is greater than $300
million, you are presumptively deemed financially solvent, and MMS will
not require you to post a bond or other surety instrument.
(c) If your net worth, minus the amount MMS would require as surety
under subpart B for all orders you have appealed is less than $300
million, you must submit the following to the MMS Debt Collection
Section by one of the methods in Sec. 243.200(a):
(1) A written request asking MMS to consult a business-information,
or credit-reporting service or program to determine your financial
solvency; and
(2) A nonrefundable $50 processing fee.
(i) You must pay the processing fee to by Electronic Funds Transfer
using the Federal Reserve Communications System (FRCS) link to the
Financial Service Fedwire Deposit System unless you request and MMS
authorizes payment by check or an alternative method before the date
the processing fee is due. Include with the payment:
(A) Your taxpayer identification number;
(B) Your payor identification number, if applicable; and
(C) The Interior Board of Land Appeals or Interior Board of
Contract Appeals Docket Number for the order you appealed, the number
of the order, the bill number, or any other applicable identification
of the order that you appealed.
(ii) You must submit the fee with your request under paragraph
(c)(1) of this section, and then annually on the date MMS first
determined that you demonstrated financial solvency, as long as you are
not able to demonstrate financial solvency under paragraph (a) of this
section and you have active appeals.
(d) If you request that MMS consult a business-information or
credit-reporting service or program under paragraph (c) of this
section:
(1) MMS will use criteria similar to that which a potential
creditor would use to lend an amount equal to the bond or other surety
instrument MMS would require under subpart B;
(2) For MMS to consider you financially solvent, the business-
information or credit-reporting service or program must demonstrate
your degree of risk as low to moderate:
(i) If the MMS bond-approving officer determines that the business-
information or credit-reporting service or program information
demonstrates your financial solvency to MMS's satisfaction, the MMS
bond-approving officer will not require you to post a
[[Page 1990]]
bond or other surety instrument under subpart B;
(ii) If the MMS bond-approving officer determines that the
business-information or credit-reporting service or program information
does not demonstrate your financial solvency to MMS's satisfaction, the
MMS bond-approving officer will require you to post a bond or other
surety instrument under subpart B or pay the obligation.
Sec. 243.202 When will MMS monitor my financial solvency?
(a) If you are presumptively financially solvent under
Sec. 243.201(b), MMS will determine your net worth as described under
Secs. 243.201(b) and (c) to evaluate your financial solvency at least
annually on the date MMS first determined that you demonstrated
financial solvency as long as you have active appeals and each time you
appeal a new order.
(b) If you requested that MMS consult a business-information or
credit-reporting service or program under Sec. 243.201(c), MMS will
consult a service or program annually as long as you have active
appeals and each time you appeal a new order.
(c) If the MMS bond-approving officer determines that you are no
longer financially solvent, you must post a bond or other MMS-specified
surety instrument under subpart B.
PART 250--OIL AND GAS AND SULPHUR OPERATIONS IN THE OUTER
CONTINENTAL SHELF
10. The authority citation for part 250 continues to read as
follows:
Authority: 43 U.S.C. 1331, et seq.
10a. Section 250.1409 is revised to read as follows:
Sec. 250.1409 What are my appeal rights?
(a) When you receive the Reviewing Officer's final decision, you
have 60 days to either pay the penalty or file an appeal in accordance
with 30 CFR part 290.
(b) If you file an appeal, you must submit to the Regional
Adjudication Office in the Region where the penalty was assessed, a
surety bond in the amount of the penalty. Instructions on submitting
the surety bond will be included in the Reviewing Officer's final
decision.
(1) In the alternative, you may notify the Regional Adjudication
Office in the Region where the penalty was assessed, that you want your
lease-specific/areawide bond on file to be used to cover the penalty
amount.
(2) The Regional Director may determine that additional security
(i.e., security in excess of your lease-specific/areawide bond) is
necessary to ensure sufficient coverage during an appeal. If additional
security is required, the Regional Director will require that the
appellant post the supplemental bond with the regional office in a
manner consistent with the regulations established for supplemental
bonding in Sec. 256.53(d) through (f). If the Regional Director
determines the specific appeal should be covered by a lease-specific
abandonment account then the appellant will establish an account
consistent with the rules and regulations established in Sec. 256.56.
(c) If you do not either pay the penalty or file a timely appeal,
MMS will take one or more of the following actions:
(1) MMS will collect the amount you were assessed, plus interest,
late payment charges, and other fees as provided by law, from the date
of assessment until the date MMS receives payment;
(2) MMS may initiate additional enforcement, including, if
appropriate, cancellation of the lease, right-of-way, license, permit,
or approval, or the forfeiture of a bond under this part; or
(3) MMS may bar you from doing further business with the Federal
Government according to Executive Orders 12549 and 12689, and Sec. 2455
of the Federal Acquisition Streamlining Act of 1994, 31 U.S.C. 6101.
The Department of the Interior's regulations implementing these
authorities are found at 43 CFR part 62, subpart D.
11. Part 290 of subchapter C is transferred to subchapter B and is
revised to read as follows:
PART 290--OFFSHORE MINERALS MANAGEMENT APPEAL PROCEDURES
Sec.
290.1 What is the purpose of this part?
290.2 Who may appeal?
290.3 What is the time limit for filing an appeal?
290.4 How do I file an appeal?
290.5 How do I pay my processing fee
290.6 How will MMS notify me of its action on my request?
290.7 What is the filing date for my appeal?
290.8 Can I obtain an extension for filing documents?
290.9 Are informal resolutions permitted?
290.10 Do I have to comply with the decision or order while my
appeal is pending?
290.11 How do I exhaust my administrative remedies?
Authority: 5 U.S.C. 301 et seq.; 43 U.S.C. 1331 et seq.
Sec. 290.1 What is the purpose of this part?
The purpose of this part is to explain the procedures for appeals
of Minerals Management Service (MMS) Offshore Minerals Management (OMM)
decisions and orders issued under subchapter B.
Sec. 290.2 Who may appeal?
If you are adversely affected by an OMM official's final decision
or order issued under 30 CFR subchapter B, you may appeal that decision
or order to the Interior Board of Land Appeals (IBLA). Your appeal must
conform with the procedures found in this part and 43 CFR part 4. A
request for reconsideration of an MMS decision concerning a lease bid,
authorized in 30 CFR 256.47(e)(3) and 281.21(a)(1), or a deep water
field determination, authorized in 30 CFR 203.79(a) and 30 CFR
260.110(d)(2), is not subject to the procedures found in this part.
Sec. 290.3 What is the time limit for filing an appeal?
You must file your appeal within 60 days after you receive OMM's
final decision or order. The 60-day time period supersedes the time
period provided in 43 CFR 4.411(a). A decision or order is received on
the date you sign a receipt confirming delivery or, if there is no
receipt, the date otherwise documented.
Sec. 290.4 How do I file an appeal?
For your appeal to be filed, MMS must receive all of the following
within 60 days after you receive the decision or order:
(a) A written Notice of Appeal together with a copy of the decision
or order you are appealing in the office of the OMM officer that issued
the decision or order. You cannot extend the 60-day period for that
office to receive your Notice of Appeal; and
(b) A nonrefundable processing fee of $150.00 paid under
Sec. 290.5. You cannot extend the 60-day period for payment of the
processing fee.
Sec. 290.5 How do I pay my processing fee?
(a) You must pay the processing fee to the MMS DRD by Electronic
Funds Transfer using the Federal Reserve Communications System (FRCS)
link to the Financial Service Fedwire Deposit System unless you request
and MMS authorizes payment by check or an alternative method before the
date the processing fee is due. Include with the payment:
(1) Your taxpayer identification number; and
(2) The number of the decision or order, or any other applicable
identification of the decision or order that you are appealing.
(b) MMS may grant a fee waiver or fee reduction in extraordinary
circumstances.
[[Page 1991]]
(c) To request a waiver or reduction you must:
(1) Send a written request to the MMS DRD when you send your Notice
of Appeal.
(2) Demonstrate in your request that you are unable to pay the fee
or that payment of the fee would impose an undue hardship upon you.
Sec. 290.6 How will MMS notify me of its action on my request?
The MMS DRD will send you a written decision granting or denying
your request.
(a) If MMS grants your request for a fee reduction, you must pay
the reduced processing fee within 30 days of your receipt of the
decision to reduce your fee.
(b) If MMS denies your request, that decision is final for the
Department. You may not appeal this denial, and you must pay the
processing fee within 30 days of your receipt of the decision.
Sec. 290.7 What is the filing date for my appeal?
For purposes of this part, the date your appeal is filed is the
date the MMS DRD receives the last of all the items that you submit
under Sec. 290.4.
Sec. 290.8 Can I obtain an extension for filing documents?
(a) You cannot obtain an extension of time to file the Notice of
Appeal. See 43 CFR 4.411(c).
(b) You may ask for additional time to submit your statement of
reasons or other supporting documents by following the procedures in 43
CFR 4.22(f).
Sec. 290.9 Are informal resolutions permitted?
You may seek informal resolution with the issuing officer's next
level supervisor during the 60-day period established in Sec. 290.3.
Sec. 290.10 Do I have to comply with the decision or order while my
appeal is pending?
(a) The decision or order is effective during the 60-day period for
filing an appeal under Sec. 290.3 unless:
(1) OMM notifies you that the decision or order, or some portion of
it, is suspended during this period because there is no likelihood of
immediate and irreparable harm to human life, the environment, any
mineral deposit, or property; or (2) The appellant posts a surety bond
under 30 CFR 250.1409 pending the appeal challenging an order to pay a
civil penalty.
(b) This section supersedes 43 CFR 4.21 (a).
(c) After you file your appeal, IBLA may grant a stay of a decision
or order under 43 CFR 4.21 (b); however, a decision or order remains in
effect until IBLA grants your request for a stay of the decision or
order under appeal.
Sec. 290.11 How do I exhaust my administrative remedies?
(a) If you receive a decision or order issued under this
subchapter, to exhaust administrative remedies, you must appeal that
decision or order to IBLA under 43 CFR part 4 subpart E;
(b) This section does not apply if the Assistant Secretary for Land
and Minerals Management or the IBLA makes a decision or order
immediately effective notwithstanding an appeal.
SUBCHAPTER C [Removed]
12. Subchapter C is removed.
[FR Doc. 99-37 Filed 1-11-99; 8:45 am]
BILLING CODE 4310-MR-P
