# Agency Information Collection Activities: Proposed Collection, Comment Request
**AGENCY:**
Minerals Management Service (MMS), Interior.
**ACTION:**
Notice of a revision of a currently approved information collection (OMB Control Number 1010-0087).
**SUMMARY:**
To comply with the Paperwork Reduction Act (PRA) of 1995, 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. The title of this information collection request (ICR) is “30 CFR Part 227—Delegation to States; 30 CFR Part 228—Cooperative Activities with States and Indian Tribes; and 30 CFR Part 229—Delegation to States.” We changed the title of this ICR to clarify the regulatory language we are covering under 30 CFR parts 227, 228, and 229 and to reflect OMB approval of consolidation of two ICRs, titled:
• 1010-0087: 30 CFR Part 228—Cooperative Activities with States and Indian Tribes; and
• 1010-0088: 30 CFR Part 227—Delegation to States.
In the two ICRs, much of the general information was repeated and cross referenced. This consolidated ICR 1010-0087 eliminates that duplication of effort and redundancy of data and, also, includes 30 CFR part 229 information collection burden hours, which were not included in the previous information collections (1010-0087 and 1010-0088).
**DATES:**
Submit written comments on or before December 27, 2005.
**ADDRESSES:**
Submit written 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 courier address is Building 85, Room A-614, Denver Federal Center, West 6th Ave. and Kipling Blvd., Denver, Colorado 80225. You may also e-mail your comments to us at *[email protected].* 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 (303) 231-3211.
**FOR FURTHER INFORMATION CONTACT:**
Sharron L. Gebhardt, telephone (303) 231-3211, FAX (303) 231-3781, or e-mail *[email protected].*
**SUPPLEMENTARY INFORMATION:**
*Title:* 30 CFR Part 227—Delegation to States; 30 CFR Part 228—Cooperative Activities with States and Indian Tribes; and 30 CFR Part 229—Delegation to States.
*OMB Control Number:* 1010-0087.
*Bureau Form Number:* None.
*Abstract:* The Secretary of the U.S. Department of the Interior is responsible for collecting royalties from lessees who produce minerals from leased Federal and Indian lands. The Secretary is required by various laws to manage mineral resources production on Federal and Indian lands, collect the royalties due, and distribute the funds in accordance with those laws.
The Secretary also has a trust responsibility to manage Indian lands and seek advice and information from Indian beneficiaries. The MMS performs the royalty management functions and assists the Secretary in carrying out the Department's trust responsibility for Indian lands.
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 of such minerals. The information collected includes data necessary to ensure that the royalties are accurately valued and appropriately paid.
Sections 202 and 205 of the Federal Oil and Gas Royalty Management Act of 1982 (FOGRMA), as amended, authorized the Secretary to develop delegated and cooperative agreements with states and Indian tribes to carry out certain inspection, auditing, investigation, or limited enforcement activities for leases in their jurisdiction. The states and Indian tribes are working partners and are an integral part of the overall onshore and offshore compliance effort.
**Applicable Citations**
Applicable citations of the laws pertaining to this ICR include:
(1) Public Law 97-451—Jan. 12, 1983, FOGRMA, Sections 202 and 205; and
(2) Public Law 104-185, as corrected by Public Law 104-200, the Federal Oil and Gas Royalty Simplification and Fairness Act of 1996 (RSFA).
Relevant parts of the Code of Federal Regulations (CFR) include 30 CFR parts 227, 228, and 229, as described below:
Title 30 CFR part 227, Delegation to States, provides procedures to delegate certain Federal royalty management functions to states for Federal oil and gas, geothermal, and solid mineral leases and leases subject to 8(g) of the Outer Continental Shelf Lands Act, within their state boundaries.
Title 30 CFR part 228, Cooperative Activities with States and Tribes, provides procedures to utilize the capabilities of the Indian tribes to carry out audits and related investigations of their respective leased lands.
Title 30 CFR part 229, Delegation to States, provides procedures to utilize the capabilities of the states to carry out audits and related investigations of leased Indian lands within their respective state boundaries, by permission of the respective Indian tribal councils or individual Indian mineral owners.
Effective September 11, 1997, parts 228 and 229 do not apply to Federal lands, due to implementation of RSFA amendments.
**Delegation to States, 30 CFR Part 227**
The states audit Federal lands under provisions of 30 CFR part 227. The Secretary is authorized under Section 205 of FOGRMA, as amended by RSFA, to delegate to states, all or part of authorities and responsibilities of the Secretary, to conduct inspections, audits, investigations, and limited enforcement activities for leases in their jurisdiction.
The RSFA amended FOGRMA Section 205 to include all of the following royalty management functions on Federal lands:
a. Conducting audits and investigations;
b. Receiving and processing production and royalty reports;
c. Correcting erroneous report data;
d. Performing automated verification;
e. Issuing demands and subpoenas (except for solid mineral and geothermal leases);
f. Issuing orders to perform restructured accounting; and
g. Issuing related tolling agreements and notices to lessees or their designees.
The states perform nearly all audits on Federal leases within their boundaries and typically receive 50 percent of any additional collections; however, Alaska typically receives 90 percent of onshore royalties. Many states gain efficiencies by performing audits on state severance taxes and concurrently on properties that have both Federal and state interests. Federal royalties are a significant portion of many states' annual budgets.
To be considered for delegation under 30 CFR part 227, states must submit a written delegation proposal to, and receive approval from, the MMS Associate Director for Minerals Revenue Management (MRM). Delegation agreements benefit both MMS and states by helping to ensure correct and timely production reporting, proper product valuation, and accurate and timely royalty payment through the application of an aggressive and comprehensive audit program.
Eleven states currently have MMS-approved delegation agreements to perform audits and investigations, which are the functions previously authorized under FOGRMA. The most recent delegated agreement was established in 2004 between MMS and the state of Alaska. Since the final rulemaking of Delegation of Royalty Management Functions to States on August 12, 1997 (62 FR 43076), effective September 11, 1997, one state has proposed a delegation agreement to assume the automated verification functions authorized by RSFA.
When a state performs any of the delegated functions under 30 CFR part 227, the state also assumes the burden of providing various types of information to MMS. Under RSFA, and to properly administer the delegation of the functions to the requesting states, MRM must collect pertinent information from industry and states to ensure that this program continues to operate efficiently and effectively.
Companies send all royalty reports and payments (ICR 1010-0140, expires October 31, 2006) and production reports (ICR 1010-0139, expires August 31, 2006) to MRM. The MRM verifies the accuracy of the reports and payments prior to disbursing the funds to states, Indian tribes, individual Indian mineral owners, the U.S. Treasury, and other Federal agencies. If states choose to participate in the delegable function of receiving and processing financial and production reports, payors/reporters must send these reports to each participating state for the Federal leases within that state and to MRM for the remaining Federal leases. The states must verify the accuracy of these reports.
The MRM currently handles production and royalty reporting, error correction, automated verification, issuing demand letters, and billing actions. Although one state has requested the automated verification functions, if another state does in the future, payors/reporters may have to work with and provide data to various contacts in the participating state(s) and in MRM. At this time, MRM has not approved the state for said functions.
In addition, MRM is held accountable to certain measurements and standards and must file reports to outside entities. States choosing to participate in any delegable function will be held to these same measurements and standards and, therefore, will have to provide data to document the work they are performing. This information, provided to MMS in the course of performing delegated agreements, is the focus of this information collection. States must comply with Generally Accepted Accounting Principles (GAAP) and MMS standards, as required under 30 CFR 227.200, and with the MMS Audit Procedures Manual and Generally Accepted Government Auditing Standards (GAGAS), as required under 30 CFR 227.301.
**Cooperative Activities With State and Indian Tribes, 30 CFR Part 228**
Effective September 11, 1997, part 228 does not apply to Federal lands.
The Secretary is authorized under FOGRMA Section 202, Cooperative Agreements, as amended by RSFA Section 8, to enter into cooperative agreements with any state or Indian tribe upon their written request; to share oil or gas royalty management information; and to use the capabilities of states and Indian tribes to carry out inspection, royalty audit, and related investigation.
At this time, no state has proposed to enter into a cooperative agreement or to undertake activities on Indian lands within the state.
Cooperative activities benefit both MMS and Indian tribes by helping to ensure accurate and timely production reporting, proper product valuation, and accurate and timely royalty payment through the application of an aggressive and comprehensive audit program.
Indian tribes currently manage audits for 88 percent of all tribal mineral royalties. Major focuses in FY 2007 provide for additional funding for a new tribal cooperative agreement with the Hopi Tribe and additional full-time MMS employees to provide increased oversight of Indian tribal audits due to a recent court decision.
To be considered for a cooperative audit agreement, Indian tribes must comply with the regulations at 30 CFR part 228. Indian tribes who want to do royalty audits in cooperation with MMS must submit a written proposal to enter into a cooperative agreement, signed by the tribal chairman or other appropriate official, to the MMS Director. The request should outline the activities to be undertaken and present evidence that the Indian tribe(s) can meet the standards established by the Secretary for the activities to be conducted. Prior to beginning work, approval must be obtained from the MMS Director.
Currently, there are no states with cooperative agreements. However, eight Indian tribes currently have cooperative agreements to perform audits and investigations. When an Indian tribe performs any of the cooperative activities under 30 CFR part 228, the Indian tribe also assumes the burden of providing various types of information to MMS. This information, provided to MMS in the course of performing cooperative agreements, is the focus of this information collection. After the request is accepted and a cooperative agreement is in effect, Indian tribes must submit an annual workplan and budget, as well as quarterly reimbursement vouchers. They must follow GAAP and MMS standards as required under 30 CFR 228.102. The cooperative agreements also require them to comply with the MMS Audit Procedures Manual and GAGAS.
**Delegation to States, 30 CFR Part 229**
Effective September 11, 1997, part 229 does not apply to Federal lands.
Under the Secretary's delegation of authority at this part, a state may conduct audits and related investigations of oil and gas payments made to MMS regarding leased Indian lands within the state's boundaries. A state must receive written permission from the respective Indian tribe(s) or individual Indian mineral owner(s).
After receiving written permission, the governor or other authorized official of a state may petition the Secretary to assume responsibilities of conducting audits and related investigation of Indian oil and gas leases. A state petitioning for a delegation of authority will have the opportunity to present testimony at a public hearing within the state.
After the state receives approval of the Secretary's delegation of authority, it must submit annual audit work plans detailing its audits and related investigations, annual budgets, and quarterly reimbursement vouchers. The state shall maintain books and records and provide a quarterly summary of costs following Department standards, as required under 30 CFR 229.109.
Title 30 CFR 229.101(b), covering the Federal Government's administration of delegations, states:
(b) A State may enter into a delegation of authority under this part without affecting a State's ability to enter into a cooperative agreement under Part 228 of this chapter.
At this time no state has proposed to undertake delegated functions on Indian lands within its boundaries.
**Summary**
Proprietary information submitted to MMS under this collection is protected. No items of a sensitive nature are collected. The opportunity to engage in these programs is voluntary; however, if MMS approval for the cooperative agreement or delegation is obtained, the requirement to respond is mandatory.
*Frequency of Response:* Varies based on the function performed.
*Estimated Number and Description of Respondents:* 11 states and 8 Indian tribes.
*Estimated Annual Reporting and Recordkeeping “Hour” Burden:* 6,309 hours.
We are revising this ICR to include reporting requirements, part 229 citations, that were overlooked in the previous renewal, and we have adjusted the burden hours accordingly.
The MMS estimates 767 responses each year from the 11 states and 8 Indian tribes. We estimate the total annual burden is 6,309 (4,309 for states and 2,000 for Indian tribes) reporting and recordkeeping hours. Due to the complexity of the chart below, we are detailing the number of burden hours for the states and Indian tribes.
• States: We estimate 701 responses (685 from 30 CFR part 227 and 16 from 30 CFR part 229) from 11 states. We estimate the total annual burden for these responses is 4,309 reporting and recordkeeping hours (4,293 from 30 CFR part 227 and 16 from 30 CFR part 229) due to historical information.
• Indian tribes: We estimate 66 responses (from 30 CFR part 228) from 8 Indian tribes. We estimate the total annual burden for these responses is 2,000 reporting and recordkeeping hours due to historical information.
We have not included in our estimates certain requirements performed in the normal course of business and considered usual and customary. The following chart shows the estimated burden hours by CFR section and paragraph.
| | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | |
| | | | | | | | |
| 227.103 | What must a State's delegation proposal contain? | 200 | 1 | 200 | | | |
| | | | | | | | |
| 227.107 | When will the MMS Director decide whether to approve a State's delegation proposal? | Hour burden covered under § 227.103. | | | | | |
| 227.109 | What if the MMS Director denies a State's delegation proposal? | Hour burden covered under § 227.103. | | | | | |
| 227.110(a) | When and for how long are delegation agreements effective? | Hour burden covered under § 227.103. | | | | | |
| 227.110(b) and (b)(1) | (b) You may ask MMS to renew the delegation for an additional 3 years no less than 6 months before your 3-year delegation agreement expires. You must submit your renewal request to the MMS Associate Director for Minerals Revenue Management as follows: (1) If you do not want to change the terms of your delegation agreement for the renewal period, you need only ask to extend your existing agreement for the 3-year renewal period * * * | Hour burden covered under § 227.103. | | | | | |
| 227.110(b)(2) | (b)(2) If you want to change the terms of your delegation agreement for the renewal period, you must submit a new delegation proposal under this part. | 15 | 11 | 165 | | | |
| 227.110(c) | (c) The MMS Director may approve your renewal request only if MMS determines that you are meeting the requirements of the applicable standards and regulations. If the MMS Director denies your renewal request, MMS will state the reasons for denial. MMS also will inform you in writing of the conditions you must meet to receive approval. You may submit a new renewal request any time after denial. | Hour burden covered under § 227.103. | | | | | |
| 227.110(d) | (d) After the 3-year renewal period for your delegation agreement ends, if you wish to continue performing one or more delegated functions, you must request a new delegation agreement from MMS under this part. MMS will schedule a hearing on your request, if MMS determines a hearing is appropriate * * * | Hour burden covered under § 227.103. | | | | | |
| 227.110(e) | (e) If you do not request a hearing under paragraphs (b)(1) or (d) of this section, any other affected person may submit a written request for a hearing under those paragraphs to the MMS Associate Director for Minerals Revenue Management | Hour burden covered under § 227.103. | | | | | |
| | | | | | | | |
| 227.111(a) and (b) | Do existing delegation agreements remain in effect? | Hour burden covered under § 227.103. | | | | | |
| | | | | | | | |
| 227.112(d) | What compensation will a State receive to perform delegated functions? | 4 | 84 | 336 | | | |
| 227.112(e) | (e) You must maintain adequate books and records to support your vouchers * * * | Hour burden covered under § 227.200(d). | | | | | |
| | | | | | | | |
| 227.200(a)(b), (c), and (d) | What are a State's general responsibilities if it accepts a delegation? | 200 | 11 | 2,200 | | | |
| 227.200(e) and (h) | What are a State's general responsibilities if it accepts a delegation? | 3 | 44 | 132 | | | |
| 227.200(f) | What are a State's general responsibilities if it accepts a delegation? | 1 | 250 | 250 | | | |
| 227.200(g) and 227.301(e) | § 227.200 What are a State's general responsibilities if it accepts a delegation? * * * | 60 | 11 | 660 | | | |
| 227.400(a)(4) and (a)(6) | What functions may a State perform in processing production reports or royalty reports? | 1 | 250 | 250 | | | |
| 227.400(c) | What functions may a State perform in processing production reports or royalty reports? | 1 | 12 | 12 | | | |
| 227.401(d) | What are a State's responsibilities if it processes production reports or royalty reports? | Hour burden covered under § 227.400(a)(4) and (a)(6). | | | | | |
| 227.401(e) | What are a State's responsibilities if it processes production reports or royalty reports? | Hour burden covered under § 227.200(f). | | | | | |
| 227.501(c) | What are a State's responsibilities to ensure that reporters correct erroneous data? | Hour burden covered under § 227.400(a)(4) and (a)(6). | | | | | |
| 227.601(c) | What are a State's responsibilities if it performs automated verification? | 8 | 11 | 88 | | | |
| 227.601(d) | What are a State's responsibilities if it performs automated verification? | Hour burden covered under § 227.200(f). | | | | | |
| | | | | | | | |
| 227.801(a) | What if a State does not adequately perform a delegated function? | Hour burden covered under § 227.200(e). | | | | | |
| 227.804 | How else may a State's delegation agreement terminate? | Hour burden covered under § 227.200(e). | | | | | |
| 227.805 | How may a State obtain a new delegation agreement after termination? | Hour burden covered under § 227.103 | | | | | |
| | Subtotal Burden for 30 CFR part 227 | 685 | 4,293 | | | | |
| | | | | | | | |
| | | | | | | | |
| 228.100(a) and (b) | Entering into an agreement | 200 | 1 | 200 | | | |
| 228.101(a) | Terms of agreement | 15 | 8 | 120 | | | |
| 228.101(c) | (c) * * * Indian tribe may unilaterally terminate an agreement by giving a 120-day written notice of intent to terminate | Hour burden covered under § 228.100(a). | | | | | |
| 228.101(d) | Terms of Agreement | 80 | 1 | 80 | | | |
| 228.103(a) and (b) | Maintenance of records | 120 | 8 | 960 | | | |
| 228.105(a)(1) and (a)(2) | Funding of cooperative agreements | 60 | 8 | 480 | | | |
| 228.105(c) | Funding of cooperative agreements | 4 | 40 | 160 | 228.107(b) | Eligible cost of activities | Hour burden covered under § 228.100(a) and (b). |
| | Subtotal Burden for 30 CFR part 228 | 66 | 2,000 | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| 229.100(a)(1) and (a)(2) | Authorities and responsibilities subject to delegation | 1 | 1 | 1 | | | |
| 229.101(a) and (d) | Petition for delegation | 1 | 1 | 1 | | | |
| 229.102(c) | Fact-finding and hearings | 1 | 1 | 1 | | | |
| 229.103(c) | Duration of delegations; termination of delegations | 1 | 1 | 1 | | | |
| 229.105 | Evidence of Indian agreement to delegation | 1 | 1 | 1 | | | |
| 229.106 | Withdrawal of Indian lands from delegated authority | 1 | 1 | 1 | | | |
| 229.109(a) | Reimbursement for costs incurred by a State under the delegation of authority. | 1 | 1 | 1 | | | |
| 229.109(b) | Reimbursement for costs incurred by a State under the delegation of authority | 1 | 1 | 1 | | | |
| 229.120 | Obtaining regulatory and policy guidance | 1 | 1 | 1 | | | |
| 229.121(a), (b), (c), and (d) | Recordkeeping requirements | 1 | 1 | 1 | | | |
| 229.122(a), (b), and (c) | Coordination of audit activities | 1 | 1 | 1 | | | |
| 229.123(b)(3)(i) | Standards for audit activities | 1 | 1 | 1 | | | |
| 229.124 | Documentation standards | 1 | 1 | 1 | | | |
| 229.125(a) and (b) | Preparation and issuance of enforcement documents | 1 | 1 | 1 | | | |
| 229.126(a) and (b) | Appeals | 1 | 1 | 1 | | | |
| 229.127 | Reports from States | 1 | 1 | 1 | | | |
| | 16 | 16 | | | | | |
| | 767 | 6,309 | | | | | |
*Estimated Annual Reporting and Recordkeeping “Non-hour Cost” Burden:* We have identified the “non-hour cost” burden at $20,000 as annual start-up costs.
*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 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.
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. The ICR also will be posted on our Web site at *http://www.mrm.mms.gov/Laws_R_D/FRNotices/FRInfColl.htm* .
*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/FRNotices/FRInfColl.htm* . We also will 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 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 (202) 208-7744.
Dated: October 13, 2005.
Lucy Querques Denett,
Associate Director for Minerals Revenue Management.