2011-7140. Agency Information Collection Activities: Proposed Collection, Comment Request

AGENCY:

Office of Natural Resources Revenue (ONRR), Interior.

ACTION:

Notice of a revision of a currently approved information collection (OMB Control Number 1012-0009, formerly 1010-0073).

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. This information collection request (ICR) was formerly approved under OMB Control Number 1010-0073. After the Secretary of the Interior established ONRR (the former Minerals Revenue Management, a program under the Minerals Management Service) on October 1, 2010, OMB approved a new series number for ONRR and renumbered our ICRs. Also, effective October 1, 2010, ONRR reorganized and transferred their regulations from chapter II to chapter XII in title 30 of the Code of Federal Regulations (CFR), resulting in a change in our citations. This ICR covers the paperwork requirements in the regulations under 30 CFR part 1220 (previously 30 CFR part 220). The revised title of this information collection request (ICR) is “30 CFR Part 1220, OCS Net Profit Share Payment Reporting.” There are no forms associated with this information collection.

DATES:

Submit written comments on or before May 24, 2011.

ADDRESSES:

You may submit comments on this ICR to ONRR by any of the following methods. Please use “ICR 1012-0009” as an identifier in your comment.

• Electronically go to http://www.regulations.gov. In the entry titled “Enter Keyword or ID,” enter ONRR-2011-0006, and then click search. Follow the instructions to submit public comments. The ONRR will post all comments.
• Mail comments to Armand Southall, Regulatory Specialist, Office of Natural Resources Revenue, P.O. Box 25165, MS 61013B, Denver, Colorado 80225. Please reference ICR 1012-0009 in your comments.
• Hand-carry comments or use an overnight courier service. Our courier address is Building 85, Room A-614, Denver Federal Center, West 6th Ave. and Kipling St., Denver, Colorado 80225. Please reference ICR 1012-0009 in your comments.

FOR FURTHER INFORMATION CONTACT:

For questions on technical issues, contact Mary Ann Guilinger, Audit and Compliance Management (ACM), Office of Natural Resources Revenue (ONRR), telephone [phone], or e-mail [e-mail]. For other comments or questions, contact Armand Southall, Project Management Office—Regulations, ONRR, telephone [phone], or e-mail [e-mail]. You may contact Mr. Southall to obtain copies, at no cost, of (1) the ICR and (2) the regulations that require the subject information collection.

SUPPLEMENTARY INFORMATION:

Title: 30 CFR Part 1220, OCS Net Profit Share Payment Reporting.

OMB Control Number: 1012-0009.

Bureau Form Number: None.

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

Public laws pertaining to mineral leases on Federal and Indian lands and the OCS are posted at http://www.onrr.gov/​Laws_​R_​D/​PublicLawsAMR.htm.

I. General Information

The ONRR collects and uses this information to determine all allowable direct and allocable joint costs and credits under § 1220.011 incurred during the lease term, appropriate overhead allowance permitted on these costs under § 1220.012, and allowances for capital recovery calculated under § 1220.020. The ONRR also collects this information to ensure royalties or net profit share payments are accurately valued and appropriately paid. This ICR affects only oil and gas leases on submerged Federal lands on the OCS.

II. Information Collections

Title 30 CFR part 1220 covers the net profit share lease (NPSL) program and establishes reporting requirements for determining the net profit share base and calculating net profit share payments due the Federal Government for the production of oil and gas from leases.

A. NPSL Bidding System

To encourage exploration and development of oil and gas leases on submerged Federal lands on the OCS, the Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE, the former Offshore Energy and Minerals Management [OEMM] of Minerals Management Service [MMS]) promulgated regulations at 30 CFR 260—Outer Continental Shelf Oil and Gas Leasing. Also, BOEMRE promulgated specific implementing regulations for the NPSL bidding system at § 260.110(d). The BOEMRE, formerly OEMM/MMS, established the NPSL bidding system to balance a fair market return to the Federal Government for the lease of its public lands with a fair profit to companies risking their investment capital. The system provides an incentive for early and expeditious exploration and development and provides for sharing the risks by the lessee and the Federal Government. The NPSL bidding system incorporates a fixed capital recovery system as a means through which the lessee recovers costs of exploration and development from production revenues, along with a reasonable return on investment.

B. NPSL Capital Account

The Federal Government does not receive a profit share payment from an NPSL until the lessee shows a credit balance in its capital account, that is, when cumulative revenues and other credits exceed cumulative costs. Lessees multiply the credit balance by the net profit share rate (30 to 50 percent), resulting in the amount of net profit share payment due the Federal Government.

The ONRR requires lessees to maintain an NPSL capital account for each lease under § 1220.010, which transfers to a new owner when sold. Following the cessation of production, lessees are also required to provide either an annual or a monthly report to the Federal Government, using data from the capital account.

C. NPSL Inventories

The NPSL lessees must notify ONRR of their intent to perform an inventory and file a report after each inventory of controllable materiel under § 1220.032.

D. NPSL Audits

When non-operators of an NPSL call for an audit, they must notify ONRR. When ONRR calls for an audit, the lessee must notify all non-operators on the lease. These requirements are located at § 1220.033.

III. OMB Approval

The information we collect under this ICR is essential in order to determine when net profit share payments are due and to ensure lessees properly value and pay royalties or net profit share payments.

The ONRR will request OMB's approval to continue to collect this information. Not collecting this information would limit the Secretary's ability to discharge fiduciary duties and may also result in the inability to confirm the accurate royalty value. Proprietary information submitted to ONRR under this collection is protected, and no items of a sensitive nature are collected.

Frequency: Annually, monthly, and on occasion.

Estimated Number and Description of Respondents: 6 lessees.

Estimated Annual Reporting and Recordkeeping “Hour” Burden: 1,046 hours.

All six lessees report monthly because all current NPSLs are in producing status. Because the requirements for establishment of capital accounts at § 1220.010(a) and reporting of annual capital account at § 1220.031(a) are necessary only during non-producing status of a lease, we included only one response annually for these requirements, in case a new NPSL is established. We have not included in our estimates certain requirements performed in the normal course of business, which are considered usual and customary. The following chart shows the estimated annual burden hours by CFR section and paragraph.

Respondents' Estimated Annual Burden Hours

Citation 30 CFR 1220	Reporting and recordkeeping requirement	Hour burden	Number of annual responses	Annual burden hours
PART 1220—Accounting Procedures for Determining Net Profit Share Payment for Outer Continental Shelf Oil and Gas Leases
§ 1220.010 NPSL capital account.
1220.010(a)	(a) For each NPSL tract, an NPSL capital account shall be established and maintained by the lessee for NPSL operations.	1	1	1
§ 1220.030  Maintenance of records
1220.030(a) and (b)	(a) Each lessee . . . shall establish and maintain such records as are necessary.	1	6	6
§ 1220.031 Reporting and payment requirements
1220.031(a)	(a) Each lessee subject to this part shall file an annual report during the period from issuance of the NPSL until the first month in which production revenues are credited to the NPSL capital account.	1	1	1
1220.031(b)	(b) Beginning with the first month in which production revenues are credited to the NPSL capital account, each lessee. shall file a report for each NPSL, not later than 60 days following the end of each month.	13	72	936
1220.031(c)	(c) Each lessee subject to this Part 1220 shall submit, together with the report required . . . any net profit share payment due.	Burden hours covered under § 1220.031(b).
1220.031(d)	(d) Each lessee . . . shall file a report not later than 90 days after each inventory is taken.	8	6	48
1220.031(e)	(e) Each lessee . . . shall file a final report, not later than 60 days following the cessation of production.	4	6	24
§ 1220.032  Inventories
1220.032(b)	(b) At reasonable intervals, but at least once every three years, inventories of controllable materiel shall be taken by the lessee. Written notice of intention to take inventory shall be given by the lessee at least 30 days before any inventory is to be taken so that the Director may be represented at the taking of inventory.	1	6	6
§ 1220.033 Audits
1220.033(b)(1)	(b)(1) When nonoperators of an NPSL lease call an audit in accordance with the terms of their operating agreement, the Director shall be notified of the audit call.	2	6	12
1220.033(b)(2)	(b)(2) If DOI determines to call for an audit, DOI shall notify the lessee of its audit call and set a time and place for the audit . . . The lessee shall send copies of the notice to the nonoperators on the lease.	2	6	12
1220.033(e)	(e) Records required to be kept under § 1220.030(a) shall be made available for inspection by any authorized agent of DOI.	The Office of Regulatory Affairs determined that the audit process is exempt from the Paperwork Reduction Act of 1995 because MMS staff asks non-standard questions to resolve exceptions.
Total Burden			110	1,046

Estimated Annual Reporting and Recordkeeping “Non-hour” Cost Burden: We have identified no “non-Hour cost” burdens.

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 60-day notice in the Federal Register * * * 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. 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. We also will post the ICR at http://www.onrr.gov/​Laws_​R_​D/​FRNotices/​FRInfColl.htm.

Public Comment Policy: We will post all comments, including names and addresses of respondents, at http://regulations.gov. Before including your address, phone number, e-mail address, or other personal identifying information in your comment, be advised that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold from public view your personal identifying information, we cannot guarantee that we will be able to do so.

ONRR Information Collection Clearance Officer: Rachel Drucker [phone].

Dated: March 22, 2011.

Gregory J. Gould,

Director for Office of Natural Resources Revenue.