[Federal Register Volume 59, Number 146 (Monday, August 1, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-18573]
[[Page Unknown]]
[Federal Register: August 1, 1994]
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DEPARTMENT OF THE INTERIOR
Minerals Management Service
30 CFR Parts 216 and 218
RIN 1010-AB82
Amendment of Regulations Governing Assessments for Incorrect
Reports
agency: Minerals Management Service, Interior.
action: Final rule.
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summary: The Minerals Management Service (MMS) is amending its Royalty
Management Program (RMP) regulations governing assessments for
incorrect reports submitted by royalty reporters, payors, lease
operators, lessees, or other parties. The amendment will authorize MMS
to assess reporters and payors submitting incorrect reports after the
designated due date, in the same manner currently applied to incorrect
reports received by the designated due date. Thus, this rule will
provide consistency in MMS' practice for incorrect reporting
assessments.
effective date: August 31, 1994.
for further information contact: David S. Guzy, Chief, Rules and
Procedures Staff, (303) 231-3432, Minerals Management Service, Royalty
Management Program, Denver Federal Center, Building 85, P.O. Box 25165,
Mail Stop 3901, Denver, Colorado 80225-0165.
supplementary information: The principal authors of this rule are
Philip Wilson of the Reports and Payments Division and David Steiber of
the Compliance Verification Division, RMP, MMS, Lakewood, Colorado.
I. Background
Paragraphs 216.40(b) and 218.40(b) of title 30 of the Code of
Federal Regulations (30 CFR) authorize MMS to assess an amount not to
exceed $10 for each incorrectly completed report received by the
designated due date. These paragraphs do not authorize assessments for
incorrectly completed reports received after the designated due date.
The assessments apply to reports submitted by royalty reporters,
payors, lease operators, lessees or other parties in accordance with
statutes, regulations, contracts, orders, or terms of Federal or Indian
mineral leases. The assessments compensate the Government for the costs
of researching and resolving reporting errors. Under Sec. 216.40 (c)
and (d), a report is defined as each line item on a Monthly Report of
Operations (Form MMS-3160), an Oil and Gas Operations Report (Form MMS-
4054), a Gas Analysis Report (Form MMS-4055), a Gas Plant Operations
Report (Form MMS-4056), a Production Allocation Schedule Report (Form
MMS-4058), a Solid Minerals Operations Report (Form MMS-4059), or a
Solid Minerals Facility Report (Form MMS-4060). Under Sec. 218.40(c), a
report is defined as each line item on a Report of Sales and Royalty
Remittance (Form MMS-2014). This amendment authorizes MMS to assess
reporters and payors submitting incorrect reports after the designated
due date, in the same manner currently applied to incorrect reports
received by the designated due date.
In response to the proposed rulemaking, MMS received comments from
four parties, representing independent oil and natural gas producers,
royalty owners, industry consultants, and service/supply companies and
other interested parties. The comments were considered in preparing
this final rulemaking and are discussed, in detail, in Section II
below. The final rule is summarized and discussed at the end of Section
II.
II. Comments Received on Proposed Rule
All commenters expressed opposition to the proposed rule. The
comments received are discussed below:
(1) Three commenters argued that the proposed rule would increase
costs and place an even greater financial burden on small, independent
producers.
Response: The rule is not intended to place a greater financial
burden on small, independent producers. Rather, the intent is to
provide consistency in MMS' assessments of incorrect reports by
amending 216.40(b) and 218.40(b) to authorize assessments of all
reports that are submitted incorrectly, regardless of whether the
report was received timely or late.
(2) Three commenters suggested that MMS is attempting to raise
revenue through greater administrative penalties on small entities when
MMS should be encouraging producers to lease more Federal land and
drill for and produce more Federal oil and gas.
Response: The purpose of this rule is not to raise revenue. As
currently structured, MMS regulations provide for assessments on
incorrect reports received by the designated due date but authorize no
assessment for incorrect reports received late. The costs of
researching and resolving reporting errors are the same whether the
report is received timely or late. Therefore, MMS is implementing this
rulemaking to encourage accurate reporting and to begin to assess
reports consistently whether they are received timely or late. This
rule applies to reporting accuracy and is not intended to encourage or
discourage oil and gas exploration and production on Federal land.
(3) Two commenters stated that if the proposed rule is intended to
ensure that administrative costs are similarly addressed for similar
situations, then a single $10 assessment would accomplish this
objective, whether the report was timely submitted or not. The MMS
currently assesses for late reporting as authorized under 30 CFR
paragraphs 216.40(a) and 218.40(a). The commenters suggest that MMS'
proposal represents ``double-dipping'' on late reports serving as a
penalty and not as compensation for administrative costs.
Response: The intent of this rule is to recover the costs of
resolving reporting errors and to make the regulations consistent for
incorrect reporting. The MMS is aware that reporters and payors may be
assessed for both late and incorrect reports. This rulemaking will
encourage accurate reporting. The MMS will review the late assessment
issue at a later date.
(4) All commenters argued that this proposed rule should be dropped
because:
Aside from unsubstantiated need to recover administrative
costs, the proposed rule provides no justification for increasing
penalties on small businesses; and
Most of the errors are the result of MMS or Bureau of Land
Management (BLM) actions or are beyond the control of lessees thus
making the proposed fines counterproductive.
Response: The rule is intended to apply to all reporters and payors
equally. It is designed to recover the costs of resolving reporting
errors and not impose a sanction on small businesses. The MMS' practice
is to assess for errors that are caused by reporters and payors when
completing required MMS reports. Reporters and payors are not assessed
for errors that are the result of MMS/BLM miscommunications.
This final rulemaking will be included in MMS regulations at 30 CFR
216.40(b) and 218.40(b). The final rule is summarized and discussed
below:
Current MMS regulations provide for an assessment on incorrect
reports received on or before the designated due date. However, the
costs incurred by MMS to research and resolve reporting errors are
identical whether the report is received timely or late. So that MMS
may be compensated for all costs incurred due to reporting errors, MMS
is amending Sec. 216.40(b) and Sec. 218.40(b) to include as assessable
all reports that are submitted incorrectly, regardless of whether the
report was received by the designated due date or was received late.
Therefore, a report that is both late and incorrect may be subject to
two assessments, one under 216.40(a) or 218.40(a) for being late and
one under the amended subsection (b) for being incorrect.
III. Procedural Matters
The Regulatory Flexibility Act
The Department certifies that this rule will not have a significant
economic effect on a substantial number of small entities under the
Regulatory Flexibility Act (5 U.S.C. 601 et seq.). This rulemaking
would compensate the Government for costs incurred as the result of
reporting errors and provide for consistency in MMS' practice for
incorrect reporting assessments.
Executive Order 12630
The Department certifies that this rule does not represent a
governmental action capable of interference with constitutionally
protected property rights. Thus a Takings Implication Assessment need
not be prepared pursuant to Executive Order 12630, ``Government Action
and Interference with Constitutionally Protected Property Rights.''
Executive Order 12778
The Department has certified to the Office of Management and Budget
that these proposed regulations meet the applicable standards provided
in sections 2(a) and 2(b)(2) of Executive Order 12778.
Executive Order 12866
This document has been reviewed under Executive Order 12866 and is
not a significant regulatory action requiring review by the Office of
Management and Budget.
Paperwork Reduction Act of 1980
This rule does not contain information collection requirements
which require approval by the Office of Management and Budget under 44
U.S.C. 3501 et seq.
National Environmental Policy Act of 1969
It is hereby determined that this rulemaking does not constitute a
major Federal action significantly affecting the quality of the human
environment and a detailed statement pursuant to paragraph (2)(C) of
Sec. 102 of the National Environmental Policy Act of 1969 (42 U.S.C.
4332(2)(C)) is not required.
List of Subjects
30 CFR Part 216
Coal, Continental shelf, Geothermal energy, Government contracts,
Indians--lands, Mineral royalties, Natural gas, Penalties, Petroleum,
Public lands--mineral resources, Reporting and recordkeeping
requirements.
30 CFR Part 218
Coal, Continental shelf, Electronic funds transfers, Geothermal
energy, Government contracts, Indians--lands, Mineral royalties,
Natural gas, Penalties, Petroleum, Public lands--mineral resources,
Reporting and recordkeeping requirements.
Dated: July 22, 1994.
Bob Armstrong,
Assistant Secretary--Land and Minerals Management.
For the reasons set out in the preamble, 30 CFR parts 216 and 218
are amended as set forth below:
PART 216--PRODUCTION ACCOUNTING
1. The authority citation for part 216 is revised to read as
follows:
Authority: 5 U.S.C. 301 et seq.; 25 U.S.C. 396 et seq., 396a et
seq., 2101 et seq.; 30 U.S.C. 181 et seq., 351 et seq., 1001 et
seq., 1701 et seq.; 31 U.S.C. 3716, 3720A, 9701; 43 U.S.C. 1301 et
seq., 1331 et seq., 1801 et seq.
2. Paragraph (b) of Sec. 216.40 under Subpart A, General
Provisions, is revised to read as follows:
Sec. 216.40 Assessments for incorrect or late reports and failure to
report.
* * * * *
(b) An assessment of an amount not to exceed $10 may be charged for
each incorrectly completed report.
* * * * *
PART 218--COLLECTION OF ROYALTIES, RENTALS, BONUSES AND OTHER
MONIES DUE THE FEDERAL GOVERNMENT
1. The authority citation for part 218 is revised to read as
follows:
Authority: 5 U.S.C. 301 et seq.; 25 U.S.C. 396 et seq., 396a et
seq., 2101 et seq.; 30 U.S.C. 181 et seq., 351 et seq., 1001 et
seq., 1701 et seq.; 31 U.S.C. 3716, 3720A, 9701; 43 U.S.C. 1301 et
seq., 1331 et seq., 1801 et seq.
2. Paragraph (b) of Sec. 218.40 under Subpart A, General
Provisions, is revised to read as follows:
Sec. 218.40 Assessments for incorrect or late reports and failure to
report.
* * * * *
(b) An assessment of an amount not to exceed $10 may be charged for
each incorrectly completed report.
* * * * *
[FR Doc. 94-18573 Filed 7-29-94; 8:45 am]
BILLING CODE 4310-MR-M
