04-23304. Agency Information Collection Activities: Proposed Collection, Comment Request

AGENCY:

Minerals Management Service (MMS), Interior.

ACTION:

Notice of an extension of a currently approved information collection (OMB Control Number 1010-0122).

SUMMARY:

To comply with the Paperwork Reduction Act of 1995 (PRA), we are inviting comments on a collection of information that we will submit to the Office of Management and Budget (OMB) for review and approval. We changed the title of this information collection request (ICR) to clarify the regulatory language we are covering under 30 CFR Part 243. The previous title of this ICR was “30 CFR Part 243 Suspensions Pending Appeal and Bonding (formerly Filing Sureties).” The new title of this ICR is “30 CFR Part 243, Suspensions Pending Appeal and Bonding—Minerals Revenue Management (Forms MMS-4435, Administrative Appeal Bond, and MMS-4436, Letter of Credit).”

DATES:

Submit written comments on or before December 20, 2004.

ADDRESSES:

Submit written comments to Sharron L. Gebhardt, Lead Regulatory Specialist, Minerals Management Service, Minerals Revenue Management, P.O. Box 25165, MS 302B2, Denver, Colorado 80225. If you use an overnight courier service, our courier address is Building 85, Room A-614, Denver Federal Center, Denver, Colorado 80225. You may also e-mail your comments to us at [e-mail]. Include the title of the information collection and the OMB control number in the “Attention” line of your comment. Also include your name and return address. Submit electronic comments as an ASCII file avoiding the use of special characters and any form of encryption. If you do not receive a confirmation that we have received your e-mail, contact Ms. Gebhardt at [phone].

FOR FURTHER INFORMATION CONTACT:

Sharron L. Gebhardt, telephone [phone], FAX [phone], or e-mail [e-mail].

SUPPLEMENTARY INFORMATION:

Title: 30 CFR Part 243, Suspensions Pending Appeal and Bonding—Minerals Revenue Management (Forms MMS-4435, Administrative Appeal Bond, and MMS-4436, Letter of Credit).

OMB Control Number: 1010-0122.

Bureau Form Number: Forms MMS-4435 and MMS-4436.

Abstract: The Secretary of the U.S. Department of the Interior is responsible for collecting royalties from lessees who produce minerals from leased Federal and Indian lands. The Secretary is required by various laws to manage mineral resources production on Federal and Indian lands, collect the royalties due, and distribute the funds in accordance with those laws. The MMS performs the royalty management functions for the Secretary.

Applicable citations of the laws pertaining to mineral leases include Public Law 97-451—Jan. 12, 1983 (Federal Oil and Gas Royalty Management Act of 1982 [FOGRMA]), Public Law 104-185—Aug. 13, 1996 (Federal Oil and Gas Royalty Simplification and Fairness Act of 1996 [RFSA]) as corrected by Public Law 104-200—Sept. 22, 1996), and the Indian Mineral Development Act of 1982 (25 U.S.C. 2101 et seq.). Public laws pertaining to mineral royalties are located on our Web site at http://www.mrm.mms.gov/​Laws_​R_​D/​PublicLawsAMR.htm. Proprietary information submitted to MMS under the collection is protected.

Stay of Payment Pending Appeal

Lessees or recipients of MMS's Minerals Revenue Management (MRM) orders may suspend compliance with an order if they appeal in accordance with 30 CFR 290, Subpart B. Pending appeal, MMS suspends the payment requirement if the appellant submits a formal agreement of payment in case of default, such as a bond or other surety. The MMS accepts the following surety types: Form MMS-4435, Administrative Appeal Bond; Form MMS-4436, Letter of Credit; Self-bonding; Certificate of Deposit; and U.S. Treasury Securities.

When one of the surety types is selected and put in place, appellants must maintain the surety until completion of the appeal. If the appeal is decided in favor of the appellant, MMS returns the surety to the appellant. If the appeal is decided in MMS's favor, we will take action to collect full royalty payment or draw down on the surety. The MMS draws down on a surety if the appellant fails to comply with requirements relating to amount due, time frame, or surety submission or resubmission. Whenever MMS must draw down on a surety, the total amount due is defined as unpaid principal plus interest accrued to the projected receipt date of the surety payment. The five surety types are discussed below.

Form MMS-4435, Administrative Appeal Bond

Appellants may file Form MMS-4435, Administrative Appeal Bond, which MMS uses to secure the financial interests of the public and Indian lessors during the entire administrative and judicial appeal process. The bond must be issued by a qualified surety company that is approved by the Department of the Treasury (see Department of the Treasury Circular No. 570, revised periodically in the Federal Register). The Associate Director for MRM (Associate Director) or the delegated bond-approving officer (officer) maintains these bonds in a secure facility. Once the appeal has concluded, MMS may release and return the bond to the appellant or collect royalty payment upon the bond. If collection is necessary for a remaining royalty payment balance, MMS will issue a demand for payment to the surety company with a notice to the appellant, including all interest accrued on the affected bill.

Form MMS-4436, Letter of Credit

Appellants may choose to file Form MMS-4436, Letter of Credit, with no modifications. The Associate Director or officer maintains the Letter of Credit (LOC) in a secure facility. A bank must notarize and issue the LOC for appellants in which the bank has a minimum Fitch rating (formerly Bankwatch) of “C” for an LOC of less than $1 million, “B/C” for an LOC between $1 million and $10 million, or “B” for an LOC over $10 million. The LOC must have a minimum coverage period of 1 year and be automatically renewable for up to 5 years. The appellant is responsible for verifying that the bank provides a current rating to MMS. If the issuing bank's rating falls below the minimum acceptable level, a satisfactory replacement surety must be submitted within 14 days or MMS will draw down the existing LOC. If the bank issuing the LOC chooses not to renew the existing LOC, it must provide MMS with a notice of its decision not to renew 30 days prior to expiration of the LOC. Once the appeal has been concluded, MMS may release and return the LOC to the appellant or collect royalty payment upon the LOC. If collection is necessary for a remaining royalty payment balance, MMS will issue a demand for payment, which includes all interest assessed on the affected bill, to the bank with a notice to the appellant.

Self-Bonding

For Federal oil and gas leases only, RSFA Section 4(l), as promulgated in regulations at 30 CFR 243.201, provides that no surety instrument is required when a person representing the appellant periodically demonstrates, to the satisfaction of MMS, that the guarantor or appellant is financially solvent and otherwise able to pay the obligation. Appellants must submit a written request to “self-bond” every time a new appeal is filed. To evaluate the financial solvency and exemption from requirements of appellants to maintain a surety related to an appeal, MMS requires appellants to submit an audited, consolidated balance sheet. In some cases, MMS also requires copies of the most recent tax returns—up to 3 years—filed by appellants.

Appellants must submit audited financial statements annually to support their net worth. The MMS uses the audited, consolidated balance sheet or business information supplied to evaluate the financial solvency of a lessee, designee, or payor seeking a stay of payment obligation pending review. If appellants do not have an audited, consolidated balance sheet documenting their net worth, or they do not meet the $300 million net worth requirement, MMS selects a business information or credit reporting service to provide information concerning an appellant's financial solvency. We charge the appellant a $50 fee each time we need to review data from a business information or credit reporting service. We need the fee to recover our costs to determine an appellant's financial solvency. The Associate Director or officer uses this information to determine the financial solvency of a lessee, designee, or payor on the basis of their net worth.

Certificate of Deposit (CD)

Appellants may choose to secure their debts by requesting to use a CD from their bank. Appellants must file the request with MMS prior to the invoice due date. The MMS will accept a book-entry CD that explicitly assigns the CD to the Associate Director. A bank must issue the CD in which the bank has a minimum Fitch rating or is confirmed by a bank with an acceptable rating. The acceptable ratings for a CD are the same as for an LOC. If collection of the CD is necessary for a royalty payment balance, MMS will return unused CD funds to the appellant after total settlement of the appealed issues including applicable interest charges.

U.S. Treasury Securities (TS)

Appellants may choose to secure their debts by requesting to use a TS. Appellants must file the request with MMS prior to the invoice due date. The MMS only accepts a book-entry TS. The TS must be a U.S. Treasury note or bond with maturity equal to or greater than 1 year. The TS must equal 120 percent of the appealed amount plus 1 year of estimated interest (necessary to protect MMS against interest rate fluctuations).

Frequency of Response: Annually and on occasion.

Estimated Number and Description of Respondents: 300 Federal/Indian lessees.

Estimated Annual Reporting and Recordkeeping “Hour” Burden: 300 hours.

There are approximately 300 respondents (Federal/Indian lessees). Responses are annually and on occasion. The MMS estimates that there will be 200 surety instruments (135 bonds, 63 LOCs, 1 CD, and 1 TS) and 100 self-bonding submissions each year. The MMS estimates the total annual burden is 300 reporting and recordkeeping hours, based on 1 hour per response, regardless of the type of surety. Based on a cost factor of $50 per hour, we estimate the total annual cost to industry is $15,000 ($50 x 300 hours = $15,000). We have not included in our estimates certain requirements performed in the normal course of business and considered usual and customary.

The following chart shows the breakdown of the estimated burden hours by CFR section and paragraph:

Respondents' Estimated Annual Burden Hours 1

Citation 30 CFR 243	Reporting and recordkeeping requirement	Hour burden	Average number of annual responses	Annual burden hours
Subpart A—General Provisions
243.4(a)(1)	How do I suspend compliance with an order?	1 hour	200 surety instruments (including Forms MMS-4435 and MMS-4436, CD or TS)	200
	(a) If you timely appeal an order, and if that order or portion of that order:
	(1) 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 * * *
243.6	When must I or another person meet the bonding or financial solvency requirements under this part?	Burden covered § 243.4(a)(1)		0
	If you must meet the bonding or financial solvency requirements under § 243.4(a)(1), or if another person is meeting your bonding or financial solvency requirements, then either you or the other person must post a bond or other surety instrument or demonstrate financial solvency within 60 days after you receive the order or the Notice of Order.
243.7(a)	What must a person do when posting a bond or other surety instrument or demonstrating financial solvency on behalf of an appellant?	Burden covered under § 243.4(a)(1).		0
	If you assume an appellant's responsibility to post a bond or other surety instrument or demonstrate financial solvency * * *
	(a) Must notify MMS in writing * * * that you are assuming the appellant's responsibility * * *
243.8(a)(2) and (b)(2)	When will MMS suspend my obligation to comply with an order?	Burden covered § 243.4(a)(1)		0
	(a) Federal leases. * * *
	(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 of this part within a time period MMS prescribes; or
	(ii) Demonstrate financial solvency under subpart C
	(b) Indian leases. * * *
	(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 of this part within a time period MMS prescribes
Subpart B—Bonding Requirements
243.101(b)	How will MMS determine the amount of my bond or other surety instrument?	Burden covered under § 243.4(a)(1)		0
	* * * (b) If your appeal is not decided within 1 year from the filing date, you must increase the surety amount to cover additional estimated interest for another 1-year period. You must continue to do this annually * * *
Subpart C—Financial Solvency Requirements
243.200(a) and (b)	How do I demonstrate financial solvency?	1 hour	100 self-bonding submissions (demonstration of financial solvency)	100
	(a) To demonstrate financial bonding solvency under this part, you submissions must submit an audited (demonstration consolidated balance sheet, of and, if requested by the MMS financial bond-approving officer, up to 3 solvency) years of tax returns to the MMS, * * *
	(b) You must submit an audited consolidated balance sheet annually, and, if requested, additional annual tax returns on the date MMS first determined that you demonstrated financial solvency as long as you have active appeals, or whenever MMS requests. * * *
243.201 (c)(1), (c)(2)(i) and (c)(2)(ii) and 243.201 (d)(2)	How will MMS determine if I am financially solvent?	Burden covered under §§ 243.4(a)(1) and 243.200(a) and (b)		0
	* * * (c) If your net worth, minus the amount we would require as surety under subpart B for all orders you have appealed is less than $300 million, you must submit * * *:
	(1) A written request asking us 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 * * *;
	(ii) You must submit the fee with your request * * * and then annually on the date we first determined that you demonstrated financial solvency, as long as you are not able to demonstrate financial solvency * * * and you have active appeals
	(d) * * * (2) For us to consider you financially solvent, the business-information or credit-reporting service or program must demonstrate your degree of risk as low to moderate: * * *
243.202(c)	When will MMS monitor my financial solvency?	Burden covered under § 243.4(a)(1)		0
	* * * (c) If our 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
Total Burden			300	300

Estimated Annual Reporting and Recordkeeping “Non-hour Cost” Burden: We have identified a $50 fee for reviewing data from a business information or credit reporting service as a “non-hour cost” burden. Over the past 3 years, MMS has only collected a $50 fee from 5 lessees.

Public Disclosure Statement: The PRA (44 U.S.C. 3501 et seq.) 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.

Comments: Before submitting an ICR to OMB, PRA Section 3506(c)(2)(A) requires each agency “* * * to provide notice * * * and otherwise consult with members of the public and affected agencies concerning each proposed collection of information * * *.” Agencies must specifically solicit comments to: (a) Evaluate whether the proposed collection of information is necessary for the agency to perform its duties, including whether the information is useful; (b) evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information; (c) enhance the quality, usefulness, and clarity of the information to be collected; and (d) minimize the burden on the respondents, including the use of automated collection techniques or other forms of information technology.

The PRA also requires agencies to estimate the total annual reporting “non-hour cost” burden to respondents or recordkeepers resulting from the collection of information. We have identified a $50 fee for reviewing data from a business information or credit reporting service as a “non-hour cost” burden for this information collection. If you have costs to generate, maintain, and disclose this information, you should comment and provide your total capital and startup cost components or annual operation, maintenance, and purchase of service components. You should describe the methods you use to estimate major cost factors, including system and technology acquisition, expected useful life of capital equipment, discount rate(s), and the period over which you incur costs. Capital and startup costs include, among other items, computers and software you purchase to prepare for collecting information; monitoring, sampling, and testing equipment; and record storage facilities. Generally, your estimates should not include equipment or services purchased: (i) Before October 1, 1995; (ii) to comply with requirements not associated with the information collection; (iii) for reasons other than to provide information or keep records for the Government; or (iv) as part of customary and usual business or private practices.

We will summarize written responses to this notice and address them in our ICR submission for OMB approval, including appropriate adjustments to the estimated burden. We will provide a copy of the ICR to you without charge upon request. The ICR also will be posted on our Web site at http://www.mrm.mms.gov/​Laws_​R_​D/​FRNotices/​FRInfColl.htm.

Public Comment Policy: We will post all comments in response to this notice on our Web site at http://www.mrm.mms.gov/​Laws_​R_​D/​FRNotices/​FRInfColl.htm. We also will make copies of the comments available for public review, including names and addresses of respondents, during regular business hours at our offices in Lakewood, Colorado. Upon request, we will withhold an individual respondent's home address from the public record, as allowable by law. There also may be circumstances in which we would withhold from the rulemaking record a respondent's identity, as allowable by law. If you request that we withhold your name and/or address, state your request prominently at the beginning of your comment. However, we will not consider anonymous comments. We will make all submissions from organizations or businesses, and from individuals identifying themselves as representatives or officials of organizations or businesses, available for public inspection in their entirety.

MMS Information Collection Clearance Officer: Arlene Bajusz [phone].

Dated: October 7, 2004.

Janice Bigelow,

Acting Associate Director for Minerals Revenue Management.