# Agency Information Collection Activities: Submitted for Office of Management and Budget (OMB) Review; 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 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 parts 227—Delegation to States; 228—Cooperative Activities with States and Indian Tribes; and 229—Delegation to States. This notice also provides the public a second opportunity to comment on the paperwork burden of these regulatory requirements. This ICR is titled “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:
• ICR 1010-0087: 30 CFR Part 228—Cooperative Activities with States and Indian Tribes; and
• ICR 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 (ICRs 1010-0087 and 1010-0088).
**DATES:**
Submit written comments on or before August 11, 2006.
**ADDRESSES:**
Submit written comments by either FAX (202) 395-6566 or e-mail ( *[email protected]* ) directly to the Office of Information and Regulatory Affairs, OMB, Attention: Desk Officer for the Department of the Interior (OMB Control Number 1010-0087).
Please also send a copy of your comments to MMS via e-mail 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. If you do not receive a confirmation that we have received your e-mail, contact Ms. Gebhardt at (303) 231-3211.
You may also mail a copy of 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-deliver your comments, our courier address is Building 85, Room A-614, Denver Federal Center, West 6th Ave. and Kipling Blvd., Denver, Colorado 80225.
**FOR FURTHER INFORMATION CONTACT:**
Sharron L. Gebhardt, telephone (303) 231-3211, FAX (303) 231-3781, e-mail *[email protected]* . You may also contact Sharron Gebhardt to obtain, at no cost, copies of (1) the ICR, (2) any associated forms, and (3) regulations that require the subject collection of information.
**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 minerals revenue 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 on 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—Aug. 13, 1996, as corrected by Public Law 104-200—Sept. 22, 1996, the Federal Oil and Gas Royalty Simplification and Fairness Act of 1996 (RSFA), Sections 3, 4, and 8.
Public laws pertaining to mineral royalties are located on our Web site at *http://www.mrm.mms.gov/Laws_R_D/PublicLawsAMR.htm* .
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 minerals revenue 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 Section 3, 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. Specifically, RSFA Section 3 amended FOGRMA Section 205 to add items e through g below for minerals revenue management functions on Federal lands:
a. Conducting audits and investigations;
b. Issuing demands and subpoenas (except for solid mineral and geothermal leases);
c. Issuing orders to perform restructured accounting;
d. Issuing related tolling agreements and notices to lessees or their designees;
e. Receiving and processing production and royalty reports;
f. Correcting erroneous report data; and
g. Performing automated verification.
**Under FOGRMA**
Eleven states currently have MMS-approved delegation agreements to perform audits and investigations, which are the functions previously authorized under FOGRMA (items a through d above). The most recent delegated agreement was established in 2004 between MMS and the state of Alaska.
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.
**Under RFSA**
Currently, there are no states with MMS-approved delegation agreements. 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 MRM. Delegation agreements benefit both MMS and states by helping to ensure accurate and timely production reporting, royalty payment, and proper product valuation through the application of an aggressive and comprehensive audit program.
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.
Currently, 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, end-to-end compliance review process, issuing demand letters, and billing actions.
The 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 *MRM Audit Manual, MRM Compliance Review Manual* , and Generally Accepted Government Auditing Standards (GAGAS), as required under 30 CFR 227.301.
**Cooperative Activities With States and Indian Tribes, 30 CFR Part 228**
The final rulemaking of Delegation of Royalty Management Functions to States was published on August 12, 1997 (62 FR 43076), effective September 11, 1997, and stated that part 228 does not apply to Federal lands because delegation for Federal lands is now covered under part 227.
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 revenue management information; and to use the capabilities of states and Indian tribes to carry out inspection, royalty audit, and related investigation and enforcement activities.
**States**
There are no states with cooperative agreements, as no state has proposed to enter into a cooperative agreement or to undertake activities on Indian lands within its boundaries.
**Indian Tribes**
Currently, seven Indian tribes 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 activities, 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 *MRM Audit Manual, MRM Compliance Review Manual* , and GAGAS.
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 89 percent of all tribal mineral royalties. Major focus in FY 2007 provide for 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 perform 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.
**Delegation to States, 30 CFR Part 229**
The final rulemaking of Delegation of Royalty Management Functions to States was published on August 12, 1997 (62 FR 43076), effective September 11, 1997, and stated that part 229 does not apply to Federal lands because delegation for Federal lands is now covered under part 227.
At this time, no state has proposed to undertake delegated functions on Indian lands within its boundaries.
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 workplans 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.
In addition, 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 [229] without affecting a State's ability to enter into a cooperative agreement under part 228 of this chapter.
**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 the respondents want to receive benefits, the requirement for response is mandatory.
*Frequency of Response:* Varies based on the function performed.
*Estimated Number and Description of Respondents:* 11 states and 7 Indian tribes.
*Estimated Annual Reporting and Recordkeeping “Hour” Burden:* 6,194 hours.
We are revising this ICR to include reporting requirements from part 229 citations that were overlooked in the previous renewal, and we have adjusted the burden hours accordingly.
The MMS estimates 774 responses each year from the 11 states and 7 Indian tribes. We estimate the total annual burden is 6,194 (4,389 for states and 1,805 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 711 responses (695 from 30 CFR part 227 and 16 from part 229) from 11 states. We estimate the total annual burden for these responses is 4,389 (4,373 from 30 CFR part 227 and 16 from 30 CFR part 229) reporting and recordkeeping hours due to historical information.
• *Indian tribes:* We estimate 63 responses (from 30 CFR part 228) from 7 Indian tribes. We estimate the total annual burden for these responses is 1,805 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:
| 30 CFR section | Reporting and recordkeeping requirements | Hour burden per response | Number of | Annual burden hours |
| --- | --- | --- | --- | --- |
| | | | | |
| | | | | |
| 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: | Hour burden covered under § 227.103. | | |
| | (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. * * * | | | |
| 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. | | |
| | (a) * * * Before the agreement expires, if you wish to continue to perform one or more of the delegated functions you performed under the expired agreement, you must request a new delegation agreement meeting the requirements of this part and the applicable standards. | | | |
| | | | | |
| 227.112(d) | What compensation will a State receive to perform delegated functions? | 4 | 84 | 336 |
| | You will receive compensation for your costs to perform each delegated function subject to the following conditions. * * * | | | |
| 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 |
| | (5) Maintain adequate royalty and production information. * * * | | | |
| 227.200(e) | (e) Provide reports to MMS about your activities under your delegated functions. * * * At a minimum, you must provide periodic statistical reports to MMS summarizing the activities you carried out. * * * | 3 | 44 | 132 |
| 227.200(f) | (f) Assist MMS in maintaining adequate reference, royalty, and production databases. * * * | 1 | 250 | 250 |
| 227.200(h) | (h) Help MMS respond to requests for information from other Federal agencies, Congress, and the public * * * | 8 | 10 | 80 |
| 227.200(g) and 227.301(e) | 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 |
| | (6) Providing production data or royalty data to MMS and other affected Federal agencies. * * * | | | |
| 227.400(c) | (c) You must provide MMS with a copy of any exceptions from reporting and payment requirements for marginal properties and any alternative royalty and payment requirements for unit agreements and communitization agreements you approve | 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) | In processing production reports or royalty reports you must * * * | 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) | (d) Access well, lease, agreement, and production reporter or royalty reporter reference data from MMS and provide updated information to MMS. * * * | 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. | | |
| | 695 | 4,373 | | |
| | | | | |
| | | | | |
| 228.100(a) and (b) | Entering into an agreement | 200 | 1 | 200 |
| 228.101(a) | Terms of agreement | 15 | 7 | 105 |
| 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) | (d) * * * Indian tribe will be given 60 days to respond to the notice of deficiencies and to provide a plan for correction of those deficiencies. * * * | 80 | 1 | 80 |
| 228.103(a) and (b) | Maintenance of records | 120 | 7 | 840 |
| 228.105(a)(1) and (a)(2) | Funding of cooperative agreements | 60 | 7 | 420 |
| 228.105(c) | (c) * * * Indian tribe shall submit a voucher for reimbursement of eligible costs incurred within 30 days of the end of each calendar quarter. * * * Indian tribe must provide the Department a summary of costs incurred, for which * * * Indian tribe is seeking reimbursement, with the voucher | 4 | 40 | 160 |
| 228.107(b) | Eligible cost of activities | Hour burden covered under § 228.100(a) and (b). | | |
| | 63 | 1,805 | | |
| | | | | |
| | | | | |
| | | | | |
| 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) | (b) The State shall submit a voucher for reimbursement of costs incurred within 30 days of the end of each calendar quarter | 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 | | |
| Total Burden | 774 | 6,194 | | |
*Estimated Annual Reporting and Recordkeeping “Non-hour” Cost Burden:*
Due to more current information, we have identified no “non-hour cost” burden for this information collection.
*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 25, 2005 (70 FR 61631), 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. The 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 August 11, 2006.
*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 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: June 7, 2006.
Lucy Querques Denett,
Associate Director for Minerals Revenue Management.