05-12135. Agency Information Collection Activities: Submitted for Office of Management and Budget (OMB) Review; Comment Request

AGENCY:

Minerals Management Service (MMS), Interior.

ACTION:

Notice of an extension of a currently approved information collection (OMB Control Number 1010-0122).

SUMMARY:

To comply with the Paperwork Reduction Act of 1995 (PRA), we are notifying the public that we have submitted to OMB an information collection request (ICR) to renew approval of the paperwork requirements in the regulations under 30 CFR 243. This notice also provides the public a second opportunity to comment on the paperwork burden of these regulatory requirements. We changed the title of this ICR to clarify the regulatory language we are covering under 30 CFR 243. The previous title of this ICR was “30 CFR Part 243—Suspensions Pending Appeal and Bonding.” The new title of this ICR is “30 CFR 243—Suspensions Pending Appeal and Bonding—Minerals Revenue Management (Forms MMS-4435, Administrative Appeal Bond; MMS-4436, Letter of Credit; and MMS-4437, Assignment of Certificate of Deposit).”

DATES:

Submit written comments on or before July 21, 2005.

ADDRESSES:

Submit written comments by either FAX [phone] or e-mail ([e-mail]) directly to the Office of Information and Regulatory Affairs, OMB, Attention: Desk Officer for the Department of the Interior (OMB Control Number 1010-0122). Mail your comments to Sharron L. Gebhardt, Lead Regulatory Specialist, Minerals Management Service, Minerals Revenue Management, P.O. Box 25165, MS 302B2, Denver, Colorado 80225. If you use an overnight courier service or wish to hand-carry your comments, our address is Building 85, Room A-614, Denver Federal Center, Denver, Colorado 80225. You may also e-mail your comments to us at [e-mail]. Include the title of the information collection and the OMB Control Number in the “Attention” line of your comment. Also include your name and return address. Submit electronic comments as an ASCII file avoiding the use of special characters and any form of encryption. If you do not receive a confirmation that we have received your e-mail, contact Ms. Gebhardt at [phone].

FOR FURTHER INFORMATION CONTACT:

Sharron L. Gebhardt, telephone [phone], FAX [phone], e-mail [e-mail]. You may also contact Sharron Gebhardt to obtain a copy at no cost of the forms and regulations that require the subject collection of information.

SUPPLEMENTARY INFORMATION:

Title: 30 CFR 243—Suspensions Pending Appeal and Bonding—Minerals Revenue Management (Forms MMS-4435, Administrative Appeal Bond; MMS-4436, Letter of Credit; and MMS-4437, Assignment of Certificate of Deposit).

OMB Control Number: 1010-0122.

Bureau Form Number: Forms MMS-4435, MMS-4436, and MMS-4437.

Abstract: The Secretary of the U.S. Department of the Interior is responsible for matters relevant to mineral resource development on Federal and Indian lands and the Outer Continental Shelf (OCS). The Secretary, under the Mineral Leasing Act of 1920 (30 U.S.C. 1923) and the Outer Continental Shelf Lands Act (43 U.S.C. 1353), is responsible for managing the production of minerals from Federal and Indian lands and the OCS, collecting royalties from lessees who produce minerals, and distributing the funds collected in accordance with applicable laws. The Secretary has a trust responsibility to manage Indian lands and seek advice and information from Indian beneficiaries. The MMS performs the royalty management functions for the Secretary and assists the Secretary in carrying out the Department's trust responsibility.

Additional applicable citations of the laws pertaining to mineral leases include Public Law 97-451—Jan. 12, 1983 (Federal Oil and Gas Royalty Management Act of 1982 [FOGRMA]); Public Law 104-185—Aug. 13, 1996 (Federal Oil and Gas Royalty Simplification and Fairness Act of 1996 [RSFA]), as corrected by Public Law 104-200—Sept. 22, 1996; and Public Law 97-382—Dec. 22, 1982 (Indian Mineral Development Act of 1982). Public laws pertaining to mineral royalties are located on our Web site at http://www.mrm.mms.gov/​Laws_​R_​D/​PublicLawsAMR.htm. The RSFA Section 4(l), “Stay of Payment Obligation Pending Review,” requires MMS to evaluate any person, ordered by the Secretary or a delegated state to pay any obligation (other than an assessment) subject to RSFA, to determine whether that person is entitled to a stay of the order without bond or other surety instrument, pending an administrative or judicial proceeding, based on the financial solvency of that person.

Implementing regulations at 30 CFR 243 govern the suspension of orders or decisions pending administrative appeal for Federal leases. These regulations require the submission of information demonstrating financial solvency by the person who represents the appellant, requesting a suspension without the need to provide a surety. For those appellants who are not financially solvent or for appeals involving Indian leases, MMS requires that a surety instrument be posted to secure the financial interest of the public and Indian lessors during the entire administrative or judicial appeal process. This information collection request covers the burden hours associated with appellants submitting financial statements or surety instruments, subject to annual audit, required to stay an MMS order.

Minerals produced from Federal and Indian leases vary greatly in the nature of occurrence, production and processing methods, and markets served. When a company or an individual enters into a lease to explore, develop, produce, and dispose of minerals from Federal or Indian lands, that company or individual agrees to pay the lessor a share (royalty) of the value received from production from the leased lands. The lease creates a business relationship between the lessor and the lessee. The lessee is required to report various kinds of information to the lessor relative to the disposition of the leased minerals. Such information is similar to data reported to private and public mineral interest owners and is generally available within the records of the lessee or others involved in developing, transporting, processing, purchasing, or selling such minerals. The information collected includes data necessary to ensure that the royalties are paid appropriately.

Proprietary information submitted to MMS under this collection is protected, and no items of a sensitive nature are collected. A response is required to obtain the benefit of suspending compliance with an order pending appeal.

Stay of Payment Pending Appeal

Title 30 CFR 243.1 states that lessees or recipients of MMS Minerals Revenue Management (MRM) orders may suspend compliance with an order if they appeal in accordance with 30 CFR 290, Subpart B—Appeals of Royalty Management Program and Delegated States Orders (the Royalty Management Program is now known as Minerals Revenue Management). Pending appeal, MMS suspends the payment requirement if the appellant submits a formal agreement of payment in case of default, such as a bond or other surety, or demonstrate financial solvency. The MMS accepts the following surety types: Form MMS-4435, Administrative Appeal Bond; Form MMS-4436, Letter of Credit; Form MMS-4437, Assignment of Certificate of Deposit; Self-bonding; and U.S. Treasury Securities.

When one of the surety types is selected and put in place, appellants must maintain the surety until completion of the appeal. If the appeal is decided in favor of the appellant, MMS returns the surety to the appellant. If the appeal is decided in favor of MMS, then MMS will take action to collect full royalty payment or draw down on the surety. The MMS draws down on a surety if the appellant fails to comply with requirements relating to amount due, time frame, or surety submission or resubmission. Whenever MMS must draw down on a surety, the total amount due is defined as unpaid principal plus interest accrued to the projected receipt date of the surety payment. Appellants may refer to the Surety Instrument Posting Instructions for each of the five surety types to submit the respective information. The five surety types are discussed below.

Form MMS-4435, Administrative Appeal Bond

Appellants may file Form MMS-4435, Administrative Appeal Bond, which MMS uses to secure the financial interests of the public and Indian lessors during the entire administrative and judicial appeal process. Under 30 CFR 243.4, appellants are required to submit their contact and surety amount information on the bond to obtain the benefit of suspension of an obligation to comply with an order. The bond must be issued by a qualified surety company that is approved by the Department of the Treasury (see Department of the Treasury Circular No. 570, revised periodically in the Federal Register). The Associate Director for MRM (Associate Director) or the delegated bond-approving officer (officer) maintains these bonds in a secure facility. Once the appeal has concluded, MMS may release and return the bond to the appellant or collect royalty payment upon the bond. If collection is necessary for a remaining royalty payment balance, MMS will issue a demand for payment to the surety company with a notice to the appellant, including all interest accrued on the affected bill.

Form MMS-4436, Letter of Credit

Appellants may choose to file Form MMS-4436, Letter of Credit, with no modifications. Under 30 CFR 243.4, appellants are required to submit their contact and surety amount information on a surety instrument to obtain the benefit of suspension of an obligation to comply with an order. The Associate Director or officer maintains the Letter of Credit (LOC) in a secure facility. A bank must notarize and issue the LOC for appellants in which the bank has a minimum Fitch rating (formerly Bankwatch) of “C” for an LOC of less than $1 million, “B/C” for an LOC between $1 million and $10 million, or “B” for an LOC over $10 million. The LOC must have a minimum coverage period of 1 year and be automatically renewable for up to 5 years. The appellant is responsible for verifying that the bank provides a current rating to MMS. If the issuing bank's rating falls below the minimum acceptable level, a satisfactory replacement surety must be submitted within 14 days, or MMS will draw down the existing LOC. If the bank issuing the LOC chooses not to renew the existing LOC, it must provide MMS with a notice of its decision not to renew 30 days prior to expiration of the LOC. Once the appeal has been concluded, MMS may release and return the LOC to the appellant or collect royalty payment upon the LOC. If collection is necessary for a remaining royalty payment balance, MMS will issue a demand for payment, which includes all interest assessed on the affected bill, to the bank with a notice to the appellant.

Form MMS-4437, Assignment of Certificate of Deposit

Appellants may choose to secure their debts by requesting to use a Certificate of Deposit (CD) from their bank and submitting Form MMS-4437, Assignment of Certificate of Deposit. Under 30 CFR 243.4, appellants are required to submit their contact and surety amount information on a surety instrument to obtain the benefit of suspension of an obligation to comply with an order. Appellants must file the request with MMS prior to the invoice due date. The MMS will accept a book-entry CD that explicitly assigns the CD to the Associate Director. A bank must issue the CD in which the bank has a minimum Fitch rating or is confirmed by a bank with an acceptable rating. The acceptable ratings for a CD are the same as for an LOC. If collection of the CD is necessary for a royalty payment balance, MMS will return unused CD funds to the appellant after total settlement of the appealed issues including applicable interest charges.

This information collection is currently approved by OMB. Form MMS-4437 is a new form for this ICR. Under 30 CFR 243.100(a), this form standardizes the information already collected. This form does not affect the burden hours.

Self-bonding

For Federal leases, RSFA Section 4(l), as promulgated at 30 CFR 243.201, provides that no surety instrument is required when a person representing the appellant periodically demonstrates, to the satisfaction of MMS, that guarantor or appellant is financially solvent or otherwise able to pay the obligation. Appellants must submit a written request to “self-bond” every time a new appeal is filed. To evaluate the financial solvency and exemption from requirements of appellants to maintain a surety related to an appeal, MMS requires appellants to submit a consolidated balance sheet, subject to annual audit. In some cases, MMS also requires copies of the most recent tax returns—up to 3 years—filed by appellants.

In addition, appellants must annually submit financial statements, subject to annual audit, to support their net worth. The MMS uses the consolidated balance sheet or business information supplied to evaluate the financial solvency of a lessee, designee, or payor seeking a stay of payment obligation pending review. If appellants do not have a consolidated balance sheet documenting their net worth, or if they do not meet the $300 million net worth requirement, MMS selects a business information or credit reporting service to provide information concerning an appellant's financial solvency. We charge the appellant a $50 fee each time we need to review data from a business information or credit reporting service. We need the fee to recover our costs to determine an appellant's financial solvency. The Associate Director or officer uses this information to determine the financial solvency of a lessee, designee, or payor on the basis of their net worth.

U.S. Treasury Securities

Appellants may choose to secure their debts by requesting to use a U.S. Treasury Security (TS). Appellants must file the letter of request with MMS prior to the invoice due date. The TS must be a U.S. Treasury note or bond with maturity equal to or greater than 1 year. The TS must equal 120 percent of the appealed amount plus 1 year of estimated interest (necessary to protect MMS against interest rate fluctuations). The MMS only accepts a book-entry TS.

The MMS is requesting OMB's approval to continue to collect this information. Not collecting this information would limit the Secretary's ability to discharge their duties and may also result in loss of royalty payments.

Frequency: Annually and on occasion.

Estimated Number and Description of Respondents: 300 Federal/Indian appellants.

Estimated Annual Reporting and Recordkeeping “Hour” Burden: 300 hours.

The following chart shows the breakdown of the estimated annual burden hours by CFR section and paragraph. We have not included in our estimates certain requirements performed in the normal course of business and considered usual and customary.

Respondents' Estimated Annual Burden Hours

Citation 30 CFR 243	Reporting and recordkeeping requirement	Hour burden	Average number of annual responses	Annual burden hours
Subpart A—General Provisions
243.4(a)(1)	How do I suspend compliance with an order? (a) If you timely appeal an order, and if that order or portion of that order: (1) Requires you to make a payment, and you want to suspend compliance with that order, you must post a bond or other surety instrument or demonstrate financial solvency * * *	1	200 surety instruments (including Forms MMS-4435, MMS-4436, and MMS-4437, or TS)	200
243.6	When must I or another person meet the bonding or financial solvency requirements under this part? If you must meet the bonding or financial solvency requirements under § 243.4(a)(1), or if another person is meeting your bonding or financial solvency requirements, then either you or the other person must post a bond or other surety instrument or demonstrate financial solvency within 60 days after you receive the order or the Notice of Order.	Burden hours covered under § 243.4(a)(1).
243.7(a)	What must a person do when posting a bond or other surety instrument or demonstrating financial solvency on behalf of an appellant? If you assume an appellant's responsibility to post a bond or other surety instrument or demonstrate financial solvency * * *: (a) Must notify MMS in writing * * * that you are assuming the appellant's responsibility * * *	Burden hours covered under § 243.4(a)(1).
243.8(a)(2) and (b)(2)	When will MMS suspend my obligation to comply with an order? (a) Federal leases. * * * (2) If the amount under appeal is $10,000 or more, MMS will suspend your obligation to comply with that order if you: (i) Submit an MMS-specified surety instrument under subpart B of this part within a time period MMS prescribes; or (ii) Demonstrate financial solvency under subpart C (b) Indian leases. * * * (2) If the amount under appeal is $1,000 or more, MMS will suspend your obligation to comply with that order if you submit an MMS-specified surety instrument under subpart B of this part within a time period MMS prescribes	Burden hours covered under § 243.4(a)(1).
Subpart B—Bonding Requirements
243.101(b)	How will MMS determine the amount of my bond or other surety instrument? * * * (b) If your appeal is not decided within 1 year from the filing date, you must increase the surety amount to cover additional estimated interest for another 1-year period. You must continue to do this annually * * *	Burden hours covered under § 243.4(a)(1).
Subpart C—Financial Solvency Requirements
243.200(a) and (b)	How do I demonstrate financial solvency? (a) To demonstrate financial solvency under this part, you must submit an audited consolidated balance sheet, and, if requested by the MMS bond-approving officer, up to 3 years of tax returns to the MMS, * * * (b) You must submit an audited consolidated balance sheet annually, and, if requested, additional annual tax returns on the date MMS first determined that you demonstrated financial solvency as long as you have active appeals, or whenever MMS requests. * * *	1	100 self-bonding submissions (demonstration of financial solvency)	100
243.201(c)(1), (c)(2)(i) and (c)(2)(ii) and 243.201(d)(2)	How will MMS determine if I am financially solvent? * * * (c) If your net worth, minus the amount we would require as surety under subpart B for all orders you have appealed is less than $300 million, you must submit * * *: (1) A written request asking us to consult a business-information, or credit-reporting service or program to determine your financial solvency; and (2) A nonrefundable $50 processing fee: (i) You must pay the processing fee * * *; (ii) You must submit the fee with your request * * * and then annually on the date we first determined that you demonstrated financial solvency, as long as you are not able to demonstrate financial solvency * * * and you have active appeals. (d)* * * (2) For us to consider you financially solvent, the business-information or credit—reporting service or program must demonstrate your degree of risk as low to moderate: * * *	Burden hours covered under §§ 243.4(a)(1) and 243.200(a) and (b).
243.202(c)	When will MMS monitor my financial solvency? * * * (c) If our bond-approving officer determines that you are no longer financially solvent, you must post a bond or other MMS-specified surety instrument under subpart B.	Burden hours covered under § 243.4(a)(1).
Total Burden			300	300

Estimated Annual Reporting and Recordkeeping “Non-hour” Cost Burden: There are no additional recordkeeping costs associated with this information collection. However, MMS estimates 15 appellants will pay MMS a $50 fee to obtain credit data from a business information or credit reporting service as a “non-hour” cost burden over the next three years, or 5 appellants per year.

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: Section 3506(c)(2)(A) of the PRA requires each agency “* * * to provide notice * * * 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.

To comply with the public consultation process, we published a notice in the Federal Register on October 19, 2004 (69 FR 61522), announcing that we would submit this ICR to OMB for approval. The notice provided the required 60-day comment period. We received no comments in response to the notice.

If you wish to comment in response to this notice, you may send your comments to the offices listed under the ADDRESSES section of this notice. OMB has up to 60 days to approve or disapprove the information collection but may respond after 30 days. Therefore, to ensure maximum consideration, OMB should receive public comments by July 21, 2005.

Public Comment Policy: We will post all comments in response to this notice on our Web site at http://www.mrm.mms.gov/​Laws_​R_​D/​InfoColl/​InfoColCom.htm. We will also make copies of the comments available for public review, including names and addresses of respondents, during regular business hours at our offices in Lakewood, Colorado. Upon request, we will withhold an individual respondent's home address from the public record, as allowable by law. There also may be circumstances in which we would withhold from the rulemaking record a respondent's identity, as allowable by law. If you request that we withhold your name and/or address, state your request prominently at the beginning of your comment. However, we will not consider anonymous comments. We will make all submissions from organizations or businesses, and from individuals identifying themselves as representatives or officials of organizations or businesses, available for public inspection in their entirety.

MMS Information Collection Clearance Officer: Arlene Bajusz [phone].

Dated: March 14, 2005.

Lucy Querques Denett,

Associate Director for Minerals Revenue Management.