[Federal Register Volume 62, Number 44 (Thursday, March 6, 1997)]
[Proposed Rules]
[Pages 10247-10248]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-5493]
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DEPARTMENT OF THE INTERIOR
Minerals Management Service
30 CFR Parts 202 and 206
RIN 1010-AB57
Amendments to Gas Valuation Regulations for Indian Leases
AGENCY: Minerals Management Service, Interior.
ACTION: Notice of meeting and reopening of public comment period.
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SUMMARY: The Minerals Management Service (MMS) is reopening the public
comment period for a proposed rule published in the Federal Register on
September 23, 1996, 61 FR 49894, amending its regulations governing the
valuation for royalty purposes of natural gas produced from Indian
leases.
DATES: Comments must be submitted on or before April 4, 1997. The
committee meeting will be on March 26, 1997.
ADDRESSES: MMS will hold a meeting of the Indian Gas Valuation
Negotiated rulemaking committee on March 26, 1997, in the conference
room at: Golden Hill Office Complex, 12600 West Colfax Avenue, Suite
B200, Golden, Colorado.
Written comments, suggestions, or objections regarding this
proposed amendment should be sent to the following addresses. For
comments sent via the U.S. Postal Service use: Minerals Management
Service, Royalty Management Program, Rules and Publications Staff, P.O.
Box 25165, MS 3101, Denver, Colorado 80225-0165.
For comments via courier or overnight delivery service use:
Minerals Management Service, Royalty Management Program, Rules and
Publications Staff, MS 3101, Building 85, Denver Federal Center, Room
A-212, Denver, Colorado 80225-0165.
FOR FURTHER INFORMATION CONTACT:
David S. Guzy, Chief, Rules and Publications Staff, phone (303) 231-
3432, FAX (303) 231-3194, e-Mail David__Guzy@smtp.mms.gov.
FOR FURTHER INFORMATION CONTACT: David S. Guzy, Chief, Rules and
Procedures Staff, at (303) 231-3432.
I. SUPPLEMENTARY INFORMATION:
Background
On September 23, 1996, MMS published a notice of proposed
rulemaking in the Federal Register (61 FR 49894) to amend the valuation
regulations for gas production from Indian leases. The framework for
the proposed rule was the product of an Indian Gas Valuation Negotiated
Rulemaking Committee. The proposed rulemaking provided for a 60-day
comment period, which ended November 22, 1996, and was extended to
December 3, 1996, by a Federal Register Notice (61 FR 59849, November
25, 1996). during the public comment period MMS received 13 written
comments: 7 responses from industry, 4 from industry trade groups or
associations, 1 from an Indian tribe, and 1 from an Indian agency. A
public hearing was held in Oklahoma City, Oklahoma, on October 23,
1996.
II. Comments on Proposed Rule
MMS proposed to revise the current regulations regarding the
valuation of gas production from Indian leases to accomplish the
following:
To ensure that Indian mineral lessors receive the maximum
revenues from mineral resources on their land consistent with the
Secretary of the
[[Page 10248]]
Interior's (Secretary) trust responsibility and lease terms; and,
To improve the regulatory framework so that information is
available which would permit lessees to comply with the regulatory
requirements at the time that royalties were due.
All commenters endorsed the concept of revising the existing
regulations to provide simplicity and certainty, decrease
administrative costs, and decrease litigation. Industry generally
supports the use of independent published index prices for valuing gas
produced from Indian leases. Industry also supports the concept of an
alternative ``percentage increase'' to satisfy the dual accounting
requirement contained in most Indian leases to the extent the use of
this alternative methodology is voluntarily chosen by the lessee.
Industry does not support the language in the proposed rule and objects
to:
the safety net concept for nondedicated sales,
the separate dual accounting requirement on natural gas
liquids, and
the gross proceeds requirement if gas production was
subject to a previous contract which was the subject of a gas contract
settlement. The Council of Petroleum Accountants Societies (COPAS)
states ``The COPAS representative on the Committee voted in favor of
the original index-based formula at the Committee's May, 1995 meeting
based on the belief that the use of that formula would satisfy both the
gross proceeds and major portion clauses contained in most Indian
leases, with the exception of gas sold under certain high-priced
contracts.''
MMS agrees the gross proceeds requirement in the proposed rule
dealing with the issue of gas contract settlements changed the
Committee's agreement that the index formula was to replace both the
gross proceeds requirement and the major portion requirement. The MMS
would like to receive comments on a concept where contract settlement
proceeds would be royalty bearing, but would not require a monthly
gross proceeds comparison to the index formula. MMS will view contract
settlement proceeds to be part of gross proceeds when value is
determined by gross proceeds such as for production from a dedicated
contract, or in nonindex areas where the initial value is determined
under the gross proceeds context. For index areas, MMS will require the
gross proceeds of gas sold under nondedicated contracts to be
calculated only if the contract settlement proceeds per MMBTU when
added to the 80 percent of the safety net price exceeds the formula
value for the month including any increase for dual accounting. This
computation would be made after the safety net prices were reported to
the MMS by the lessee. Specifically, under this concept, MMS would
revise Sec. 206.172(b)(2)(ii) to read as follows:
This paragraph applies to gas not sold under a dedicated contract
and that was subject to a previous contract which was part of a gas
contract settlement. If the contract settlement proceeds per MMBTU
added to the 80 percent of the safety net prices calculated at
Sec. 206.172(e)(4)(i) exceeds the index-based value that applies to the
gas under this section (including any adjustments required under
Sec. 206.176), then the value of the gas is the higher of the value
determined under this section (including any adjustments required under
Sec. 206.176) or Sec. 206.174.
MMS specifically requests comments on these revised paragraphs. You
do not need to comment on the rest of the rule. MMS will respond to all
comments in a final rule.
February 28, 1997.
Lucy R. Querques,
Associate Director for Royalty Management.
[FR Doc. 97-5493 Filed 3-5-97; 8:45 am]
BILLING CODE 4310-MR-M
