95-2876. Notice of Establishment of the Indian Gas Valuation Negotiated Rulemaking Committee

[Federal Register Volume 60, Number 25 (Tuesday, February 7, 1995)]
[Proposed Rules]
[Pages 7152-7154]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2876]



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DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR Chapter II

RIN 1010-AB57


Notice of Establishment of the Indian Gas Valuation Negotiated 
Rulemaking Committee

AGENCY: Minerals Management Service, Interior.

ACTION: Establishment of advisory committee.

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SUMMARY: As required by Section 9(a)(2) of the Federal Advisory 
Committee Act (FACA), 5 U.S.C. App., the Department of the Interior 
(Department) is giving notice of the establishment of the Indian Gas 
Valuation Negotiated Rulemaking Committee (Committee) to develop 
specific recommendations with respect to Indian gas valuation pursuant 
to its responsibilities imposed by the Federal Oil and Gas Royalty 
Management Act of [[Page 7153]] 1982, 30 U.S.C. 1701 et seq. (FOGRMA). 
The Department has determined that the establishment of this Committee 
is in the public interest and will assist the Agency in performing its 
duties under FOGRMA. Copies of the Committee's charter will be filed 
with the appropriate committees of Congress and the Library of Congress 
in accordance with section 9(c) of FACA.

FOR FURTHER INFORMATION CONTACT: Mr. Donald T. Sant, Deputy Associate 
Director for Valuation and Operations, Minerals Management Service, 
Royalty Management Program, P.O. Box 25165, MS-3900, Denver, Colorado, 
80225-0165, telephone number [phone], fax number [phone].

SUPPLEMENTARY INFORMATION: Through an informal study group, MMS has 
conducted discussions to receive input on the current gas market and 
identify the challenges facing royalty valuation of gas produced from 
Indian leases for royalty purposes. The discussions have gone well and 
needs for regulatory changes have been identified. The MMS now believes 
that using a negotiated rulemaking committee to make specific 
recommendations with respect to Indian gas valuation would help the 
agency in developing a rulemaking. The Department is, therefore, 
establishing the Indian Gas Valuation Negotiated Rulemaking Committee.

Background

    Since the publication of the March 1, 1988, gas valuation 
regulations many of MMS's constituents have expressed concern about the 
valuation basis for Indian gas royalties. Concern has focused upon the 
scope of the Secretary of the Interior's (Secretary) discretion to 
determine the values of lease substances for royalty purposes in a 
manner consistent with the Federal trust responsibility to Indian 
beneficiaries. Moreover, the implementation of specific valuation 
methodologies in paragraph 3(c) of standard Indian oil and gas leases, 
such as, dual accounting, and major portion analysis, has been 
problematic. Those difficulties include issues of comparability, 
certainty, and access to information. As part of Vice President Gore's 
National Performance Review (NPR), the Royalty Management Program 
recently initiated a Reinvention Laboratory Team to examine ways to 
streamline the royalty management process. One of the overall 
recommendations of that team was to improve the gas valuation process 
on Indian lands.

Statutory Provisions

    FOGRMA (30 U.S.C. 1701 et seq.), Indian Mineral Development Act of 
1982 (25 U.S.C. 2101-2108; and 25 U.S.C. 2 and 9), 30 CFR Part 206 
(1993), 25 CFR Part 225 (1994), and Indian oil and gas lease and 
agreement terms.

The Committee and Its Process

    To carry out the Secretary's trust responsibility to Indian mineral 
lessors, the MMS met during the winter and spring of 1994 with 
representatives of several tribes and allottee associations to receive 
input about the current gas market and identify regulatory changes 
needed to add certainty and simplicity to valuation, for royalty 
purposes, of gas produced from Indian leases. The purpose of the 
meetings was to ensure that Indian mineral lessors receive the maximum 
revenues from mineral resources on their land consistent with the 
Secretary's trust responsibility and lease terms. An informal study 
group format was used to obtain and clarify varying viewpoints. The 
first work product of the study group was publication, on August 4, 
1994, of an Advance Notice of Proposed Rulemaking soliciting comments 
on new methodologies being considered to establish value on production 
from Indian leases. The materials received to date during the input 
sessions are available for inspection and copying at the address 
referenced above for Mr. Donald T. Sant. Members of the study group 
currently include tribal and allottee representatives involving from 
time to time the Navajo Nation, the Jicarilla Apache Tribe, the Native 
American Rights Fund, the Shoshone and Arapaho Tribes of the Wind River 
Reservation, the Northern Ute Tribe, the Southern Ute Tribe, the 
Council of Energy Resource Tribes, the Bureau of Indian Affairs (BIA), 
and MMS. To get specific input from the oil and gas industry, the study 
group anticipates adding new members representing the interests of 
large, medium, and small operators. New members will include 
representatives from Conoco Inc.--a large integrated company with 
significant production from Indian lands, Meridian Oil Inc.--a large 
independent company producing gas from Indian lands, Mid-Continent Oil 
and Gas Association--a trade association with members from both the 
major and independent oil and gas industry, and a private sector 
attorney from Holmes, Roberts and Owens--with clients that produce gas 
from Indian lands in the Rocky Mountain area.
    The MMS and the study group participants believe that the input 
sessions have been mutually beneficial. As a result, MMS now believes 
it would be appropriate for the study group to transform itself and 
make specific regulatory recommendations for implementing a rulemaking 
regarding Indian gas valuation. The Department is therefore 
establishing the Indian Gas Valuation Negotiated Rulemaking Committee.
    The recently enacted Negotiated Rulemaking Act of 1990 (Pub. L. 
101-648) contemplates a ``convening'' process which involves 
identifying the potential parties and issues, publishing a notice of 
intent to form a committee, waiting 30 days for comments to be 
submitted responding to the notice, and only then proceeding with the 
establishment of the committee provided it meets the criteria of the 
Act. In this case, the study group process has served the same function 
as the convening--parties that would be significantly affected and the 
issues in controversy have been identified. The study group's 
discussions have also enabled the MMS to determine that the criteria 
for negotiated rules, as spelled out in the Negotiated Rulemaking Act, 
are met for this rule:
     The rule is needed, since royalty payors have considerable 
difficulty in complying with the current regulations at the time 
royalties are due, particularly in the current gas market.
     A limited number of identifiable interests will be 
significantly affected by the rule. Those parties are oil and gas 
companies who produce gas and pay royalties on Indian leases and Indian 
tribes and allottees who receive royalties from gas produced from 
Indian leases located on their lands.
     Representatives can be selected to adequately represent 
these interests, as reflected above.
     The interests are willing to negotiate in good faith to 
attempt to reach a consensus on a proposed rule.
     There is reasonable likelihood that the Committee will 
reach consensus on a proposed rule within a reasonable time. This 
determination has been made based on discussions of the study group, 
and hence is built on the developments to date.
     The use of the negotiation will not delay the development 
of the rule if time limits are placed on the negotiation. Indeed, its 
use will expedite it and the ultimate acceptance of the rule.
    The Department is not proposing to issue a separate notice of 
intent to form a negotiated rulemaking committee for this rule. Given 
the evolution of this committee, the publication of such a notice would 
only slow down the [[Page 7154]] rulemaking process and the functions 
of the notice of intent have either already been met or are provided 
for in this notice. Moreover, the Negotiated Rulemaking Act 
specifically provides that its provisions are not mandatory.
    The Negotiated Rulemaking Act does anticipate an outreach to ensure 
that people who were not contacted during the convening process can 
come forward to explain why they believe they would be significantly 
affected and yet not represented on the Committee or to argue why they 
believe the rule should not be negotiated. The MMS believes that the 
interests who would be significantly affected by this rule will be 
represented when representatives from Conoco Inc., Meridian Oil Inc., 
Mid-Continent Oil and Gas Association, and as attorney with clients 
from the oil and gas industry join the informal study group already in 
place which includes representatives from the Indian tribes, allottee 
associations, BIA, and MMS. If anyone believes that their interests 
will not be adequately represented by these organizations, they must 
demonstrate and document that assertion through an application 
submitted no later than 10 calendar days following publication of this 
notice. You may fax your documentation to [phone].

Certification

    I hereby certify that the Indian Gas Valuation Negotiated 
Rulemaking Committee is in the public interest in connection with the 
performance of duties imposed on the Department of the Interior by 30 
U.S.C. 1701 et. seq.

    Dated: January 31, 1995.
Bruce Babbitt,
Secretary of the Interior.
[FR Doc. 95-2876 Filed 2-6-95; 8:45 am]
BILLING CODE 4130-MR-M