2023-25795. States' Decisions on Participating in Accounting and Auditing Relief for Federal Oil and Gas Marginal Properties

AGENCY:

Office of Natural Resources Revenue, Interior.

ACTION:

Notice.

SUMMARY:

In accordance with Office of Natural Resources Revenue (ONRR) regulations, ONRR provides two types of accounting and auditing relief for Federal oil and gas production from marginal properties: the cumulative royalty reports and payments relief option, which allows a lessee or designee to submit one royalty report and payment for the calendar year's production; and other requested relief, which allows a lessee or designee to request any type of accounting and auditing relief that is appropriate for production from the marginal property and meets certain requirements. By October 1 of each calendar year, ONRR provides a list of qualifying marginal Federal oil and gas properties to the States receiving a portion of Federal royalties from those properties. Each State then decides whether to participate in neither, one, or both relief options. This Notice provides the public each State's decision on whether to participate in marginal property relief.

DATES:

Applicable January 1, 2024.

FOR FURTHER INFORMATION CONTACT:

Mr. Robert Sudar, Market & Spatial Analytics, Research, Enforcement, Guidance, and Appeals, ONRR, at (303) 231–3511; or by email to [e-mail].

SUPPLEMENTARY INFORMATION:

Pursuant to the Federal Oil and Gas Royalty Simplification and Fairness Act of 1996 (30 U.S.C. 1726) and 30 CFR part 1204, subpart C, ONRR and States can relieve the lessee of a marginal Federal oil and gas property from certain reporting, accounting, and auditing requirements. ONRR's rules under 30 CFR 1204.202 and 1204.203 authorize two relief options: (1) cumulative royalty reports and payments relief option, which allows a lessee or designee to submit one royalty report and payment during a calendar year; and (2) other requested relief, which allows a lessee or designee to request any type of appropriate marginal property accounting and auditing relief that meets the requirements under § 1204.5 and is not prohibited under § 1204.204.

To qualify for the first relief option, cumulative royalty reports and payments relief option, properties must produce less than 1,000 barrels-of-oil-equivalent (BOE) per year for the base period (July 1, 2022, through June 30, 2023). Annual reporting relief will begin January 1, 2024, with the annual report and payment due February 28, 2025. If a lessee has an estimated payment on file, the payment due date is March 31, 2025. To qualify for the second relief option, other requested relief, the combined equivalent production of the marginal properties during the base period must equal an average daily well production of less than 15 BOE per well per day, as calculated under 30 CFR 1204.4(c).

Each State makes an annual determination as to whether it will participate in neither, one, or both relief options. This Notice fulfills the requirement in ONRR's rules to publish a notice of the State's “intent to allow or not allow certain relief options . . . in the Federal Register no later than 30 days before the beginning of the applicable calendar year.” See30 CFR 1204.208(f).

The following table shows the States with qualifying marginal properties and those States' decisions on whether to participate in neither, one, or both relief options for calendar year 2024. An “N/A” means that no properties within the State met that condition for that type of relief:

State	Cumulative royalty report and payment relief (less than 1,000 BOE per year)	Other accounting and auditing relief (less than 15 BOE per well per day)
Alabama	No	No.
Arkansas	No	No.
California	No	No.
Colorado	No	No.
Kansas	No	No.
Louisiana	Yes	Yes.
Michigan	Yes	Yes.
Montana	No	No.
Nebraska	No	No.
Nevada	Yes	Yes.
New Mexico	No	Yes.
North Dakota	Yes	Yes.
Oklahoma	Yes	Yes.
South Dakota	Yes	Yes.
Utah	No	No.
Wyoming	Yes	No.

Pursuant to 30 U.S.C. 1726(c), a Federal oil and gas property located in a State where ONRR does not share a portion of Federal royalties with that State (that is, for 2024, a State not listed in the table above) is eligible for relief if it qualifies as a marginal property. For more information on how to obtain relief, please refer to 30 CFR 1204.205.

Unless the information that ONRR receives is proprietary data, all correspondence, records, or information received in response to this notice may be subject to disclosure under the Freedom of Information Act (FOIA, 5 U.S.C. 552 et seq.). If applicable, please highlight the proprietary portions, including any supporting documentation, or mark the page(s) containing proprietary data. ONRR protects proprietary information under the Trade Secrets Act (18 U.S.C. 1905), FOIA Exemption 4 (5 U.S.C. 552(b)(4)), and the Department of the Interior's FOIA regulations (43 CFR part 2).

Authority: Federal Oil and Gas Royalty Management Act of 1982, 30 U.S.C. 1701 et seq., as amended by Federal Oil and Gas Royalty Simplification and Fairness Act of 1996 (RSFA, Pub. L. 104–185—Aug. 13, 1996, as corrected by Pub. L. 104–200—Sept. 22, 1996).

Howard M. Cantor,

Director, Office of Natural Resources Revenue.