05-3252. Public Workshop on Proposed Rule-Establishing Oil Value for Royalty Due on Indian Leases

AGENCY:

Minerals Management Service, Interior.

ACTION:

Notice of public workshops.

SUMMARY:

The Minerals Management Service (MMS) is giving notice of public workshops concerning the valuation of crude oil produced from Indian oil and gas leases.

DATES:

The public workshop dates are:

Workshop 1: Oklahoma City, Oklahoma, on March 8, 2005, beginning at 8:30 a.m. and ending at 2 p.m., central time.

Workshop 2: Albuquerque, New Mexico, on March 9, 2005, beginning at 8:30 a.m. and ending at 2 p.m., mountain time.

Workshop 3: Billings, Montana, on March 16, 2005, beginning at 8:30 a.m. and ending at 2 p.m., mountain time.

ADDRESSES:

Public workshop locations:

Workshop 1 will be held at the Sheraton Downtown in the Frontier Room, One North Broadway, Oklahoma City, Oklahoma 73102 (telephone number [phone]).

Workshop 2 will be held at the Wyndham Albuquerque in the Bernalillo Room, 2910 Yale Boulevard SE., Albuquerque, New Mexico 87106 (telephone number [phone]).

Workshop 3 will be held at the Sheraton Billings Hotel in the Avalanche Room, 27 North 27th Street, Billings, Montana 59101 (telephone number [phone]).

FOR FURTHER INFORMATION CONTACT:

Mr. John Barder, Supervisory Mineral Revenue Specialist, Minerals Management Service, Minerals Revenue Management, Indian Oil and Gas Compliance and Asset Management, telephone [phone], Fax [phone], e-mail to [e-mail], P.O. Box 25165, MS 396B2, Denver, Colorado 80225-0165.

SUPPLEMENTARY INFORMATION:

On February 12, 1998, MMS published a notice of proposed rulemaking regarding the value for royalty purposes of crude oil produced from Indian tribal and allotted leases. 63 FR 7089. On January 5, 2000, MMS published a supplementary proposed Indian oil valuation rule. 65 FR 403. Because of the substantial amount of time that has passed since the last proposal, and because of changes that have occurred since then in the market for crude oil, MMS has decided not to promulgate a final rule based on the previous proposed rules and comments received. Therefore, MMS is withdrawing both the proposed rule and the supplementary proposed rule, and is starting a new rulemaking process regarding the royalty valuation of crude oil produced from Indian leases.

The record compiled for the February 1998 proposed rule and the January 2000 supplementary proposed rule, including comments submitted on those proposals, will not be part of the record of the new rulemaking. At this time, MMS has made no decisions regarding the content of a future proposed rule or any future final rule that may result from this process. A new proposed rule may or may not include provisions similar to prior proposals.

The MMS has decided to gather preliminary comments and conduct preliminary consultation in anticipation of publishing a new proposed rule regarding Indian oil royalty valuation. The MMS is conducting the series of public workshops identified above for that purpose.

Among other things, MMS specifically seeks public comment on the following issues:

1. The MMS published amendments to the Federal crude oil valuation rule on May 5, 2004 (69 FR 24959). Should MMS adopt any of those same changes in the Indian oil valuation rule (e.g., using NYMEX prices adjusted for location and quality and for transportation costs for oil that is not sold at arm's length, and using 1.3 times the Standard & Poor's BBB bond rate as the rate of return on undepreciated capital investment in calculating non-arm's-length transportation costs)?

2. The current Indian oil valuation rule provides that Amajor portion” prices are to be calculated on the basis of the arm's-length sales in the field or area. Should MMS revise the rule to use arm's-length reported values for production from a reservation or other designated area?

3. Should MMS collect information to use in the major portion calculations to distinguish the quality of the oil (e.g., sweet crude, sour crude, yellow wax crude, etc.)? The workshops will be open to the public in order to discuss the valuation of crude oil produced from Indian leases. We encourage members of the public to attend these meetings. Those wishing to make formal presentations should sign up to do so upon arrival. The sign-up sheet will determine the order of speakers.

Executive Order 13175 requires the Federal Government to consult and collaborate with the Indian community (tribes and individual Indian mineral owners) in the development of Federal policies that impact the Indian community. The locations of the workshops were chosen to allow for increased participation by the Indian community. In addition, MMS will send out letters to various leaders in the Indian community advising them of, and encouraging them to participate in, the workshops.

The workshops will be open to the public without advance registration. Public attendance may be limited to the space available. We encourage a workshop atmosphere, and members of the public are encouraged to participate. We will post the minutes from each workshop on our Web site at http://www.mrm.mms.gov. You may submit written comments to MMS following the workshops by regular mail to P.O. Box 25165, MS 396B2, Denver, Colorado 80225-0165, by e-mail to [e-mail], or through our Internet public comment system at http://ocsconnect.mms.gov.

Dated: February 9, 2005.

Lucy Querques Denett,

Associate Director for Minerals Revenue Management.