[Federal Register Volume 78, Number 45 (Thursday, March 7, 2013)]
[Notices]
[Pages 14824-14834]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-05286]


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DEPARTMENT OF THE INTERIOR

Office of Natural Resources Revenue

[Docket No. ONRR-2012-0006]


Agency Information Collection Activities: Submitted for Office of 
Management and Budget Review; Comment Request

AGENCY: Office of the Secretary, Office of Natural Resources Revenue 
(ONRR), Interior.

ACTION: Notice of an extension of a currently approved information 
collection (OMB Control Number 1012-0005).

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SUMMARY: To comply with the Paperwork Reduction Act of 1995 (PRA), we 
are inviting comments on a collection of information requests that we 
will submit to the Office of Management and Budget (OMB) for review and 
approval. OMB formerly approved this information collection request 
(ICR) under OMB Control Number 1010-0136. Subsequently, on March 6, 
2012, OMB approved a new series number for ONRR and renumbered our 
ICRs. This ICR covers the paperwork requirements in the regulations 
under title 30, Code of Federal Regulations (CFR), parts 1202, 1204, 
and 1206 (previously 30 CFR parts 202, 204, and 206). Also, this ICR 
pertains to (1) Federal oil and gas valuation regulations, which 
include transportation and processing regulatory allowance limits; and 
(2) accounting and auditing relief for marginal properties. This ICR 
includes Form MMS-4393, Request to Exceed Regulatory Allowance 
Limitation. Effective January 1, 2014, ONRR will discontinue the 
information collection requirements of the Stripper Oil royalty rate 
reductions in this ICR. The revised title of this ICR is ``30 CFR Parts 
1202, 1204, and 1206, Federal Oil and Gas Valuation.''

DATES: Submit written comments on or before May 6, 2013.

ADDRESSES: Submit written comments on this ICR to ONRR by any of the 
following methods (please use ``ICR 1012-0005'' as an identifier in 
your comment):
     Electronically, go to http://www.regulations.gov. In the 
entry titled ``Enter Keyword or ID,'' enter ``ONRR-2012-0006'' and then 
click ``Search.'' Follow the instructions to submit public comments. 
ONRR will review all comments.
     Mail comments to Armand Southall, Regulatory Specialist, 
Office of Natural Resources Revenue, P.O. Box 25165, MS 61030A, Denver, 
Colorado 80225.
     Hand-carry comments, or use an overnight courier service, 
to ONRR. Our courier address is Building 85, Room A-614, Denver Federal 
Center, West 6th Ave. and Kipling St., Denver, Colorado 80225.

FOR FURTHER INFORMATION CONTACT: Armand Southall, telephone (303) 231-
3221, or email armand.southall@onrr.gov. You may also contact Mr. 
Southall to obtain copies, at no cost, of (1) The ICR, (2) any 
associated forms, and (3) the regulations that require the subject 
collection of information. You may also review the information 
collection online at http://www.reginfo.gov/public/PRAMain.

SUPPLEMENTARY INFORMATION: 
    Title: 30 CFR Parts 1202, 1204, and 1206, Federal Oil and Gas 
Valuation.
    OMB Control Number: 1012-0005.
    Bureau Form Number: Form MMS-4393.

    Note: ONRR will publish a rule updating our form numbers to Form 
ONRR-4393.

    Abstract: The Secretary of the United States Department of the 
Interior is responsible for mineral resource development on Federal and 
Indian lands and the Outer Continental Shelf (OCS). The Secretary is 
required, by various laws, to manage mineral resource production from 
Federal and Indian lands and the OCS, collect the royalties and other 
mineral revenues due, and distribute the funds collected under those 
laws. We have posted those laws pertaining to mineral leases on Federal 
and Indian lands and the OCS at http://www.onrr.gov/Laws_R_D/PublicLawsAMR.htm.
    Effective October 1, 2010, ONRR reorganized and transferred our 
regulations from chapter II to chapter XII in 30 CFR, resulting in a 
change to our citations. You can find the information collections 
covered in this ICR at 30 CFR part 1202, subparts C and D, which 
pertain to Federal oil and gas royalties; part 1204, subpart C, which 
pertains to accounting and auditing relief for marginal properties; and 
part

[[Page 14825]]

1206, subparts C and D, which pertain to Federal oil and gas product 
valuation.

I. General Information

    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 in an 
amount or value of production from the leased lands. The mineral lease 
laws require the lessee, or his designee, to report various kinds of 
information to the lessor relative to the disposition of the leased 
minerals. Such information is generally available within the records of 
the lessee or others involved in developing, transporting, processing, 
purchasing, or selling of such minerals.

II. Information Collections

    ONRR uses the information that we collect in this ICR to ensure 
that lessees accurately value and appropriately pay royalties on oil 
and gas produced from Federal onshore and offshore leases. Please refer 
to the chart for all reporting requirements and associated burden 
hours. All data submitted is subject to subsequent audit and 
adjustment.

A. Federal Oil and Gas Valuation Regulations

    The valuation regulations at 30 CFR part 1206, subparts C and D, 
mandate that companies collect and/or submit information used to value 
their Federal oil and gas, including (1) transportation and processing 
allowances and (2) regulatory allowance limit information. Companies 
report certain data on Form MMS-2014, Report of Sales and Royalty 
Remittance (OMB Control Number 1012-0004, formerly 1010-0139). The 
information that we request is the minimum necessary to carry out our 
mission and places the least possible burden on respondents. If ONRR 
does not collect this information, both Federal and State governments 
may incur a loss of royalties.
    Transportation and Processing Regulatory Allowance Limits: Lessees 
may deduct the reasonable, actual costs of transportation and 
processing from Federal royalties. The lessees report these allowances 
on Form MMS-2014. For oil and gas, regulations establish the allowable 
limit on transportation allowance deductions at 50 percent of the value 
of the oil or gas. For gas only, regulations establish the allowable 
limit on processing allowance deductions at 66\2/3\ percent of the 
value of each gas plant product.
    Request to Exceed Regulatory Allowance Limitation, Form MMS-4393: 
Lessees may request to exceed regulatory limitations. Upon proper 
application from the lessee, ONRR may approve oil or gas transportation 
allowance in excess of 50 percent or gas processing allowance in excess 
of 66\2/3\ percent on Federal leases. Lessees use Form MMS-4393 for 
both Federal and Indian leases to request to exceed allowance 
limitations. This ICR covers only Federal leases; therefore, we have 
not included burden hours of Form MMS-4393 for Indian leases in this 
ICR. We include burden hours for Form MMS-4393 for Indian leases in OMB 
Control Number 1012-0002.

B. Accounting and Auditing Relief for Marginal Properties

    In 2004, we amended our regulations to comply with section 7 of the 
Federal Oil and Gas Royalty Simplification and Fairness Act of 1996. 
The regulations provide guidance for lessees and designees seeking 
accounting and auditing relief for qualifying Federal marginal 
properties. Under the regulations, both ONRR and the State concerned 
must approve any relief granted for a marginal property.

C. Stripper Oil Royalty Rate Reduction Program

    Under 43 CFR 3103.4-2, the Bureau of Land Management (BLM), the 
surface management agency for Federal onshore leases, established the 
Stripper Oil Royalty Rate Reduction Program (Stripper Oil Program). 
ONRR, who administered the Stripper Oil Program for BLM, approved 
royalty rate reductions for operators of stripper oil properties for 
applicable sales periods from October 1, 1992, through January 31, 
2006. Effective February 1, 2006, BLM terminated the reduced royalty 
rates under this program. This change is not currently reflected in 
title 30 CFR, chapter XII; however, on October 6, 2010, BLM published a 
final rule (75 FR 61624) that removed this citation from their 
regulations.
    For production through January 31, 2006, reporters used Form MMS-
4377, Stripper Royalty Rate Reduction Notification, to notify ONRR of 
royalty rate changes. Although BLM terminated the royalty rate 
reductions, ONRR continues to verify previously submitted notifications 
and may require the operator to submit an amended Form MMS-4377 through 
December 31, 2013. Effective January 1, 2014, ONRR will discontinue the 
Stripper Oil Program; therefore, ONRR will not request OMB approval for 
the Stripper Oil information collection requirements.

III. OMB Approval

    We will request OMB approval to continue to collect, from companies 
and/or lessees and designees, information used (1) to value their 
Federal oil and gas, including (a) transportation and processing 
allowances and (b) regulatory allowance limit information and (2) to 
request accounting and auditing relief approval for qualifying Federal 
marginal properties. If ONRR does not collect this information, this 
would limit the Secretary's ability to discharge fiduciary duties and 
may also result in loss of royalty payments. ONRR protects the 
proprietary information that we receive, and we do not collect items of 
a sensitive nature.
    ONRR requires lessees to respond to information collections 
relating to valuation requirements.
    Frequency: Annually and on occasion.
    Estimated Number and Description of Respondents: 120 Federal 
lessees/designees and 7 States for Federal oil and gas.
    Estimated Annual Reporting and Recordkeeping ``Hour'' Burden: 9,198 
hours.
    We have not included in our estimates certain requirements 
performed in the normal course of business and considered as usual and 
customary. We display the estimated annual burden hours by CFR section 
and paragraph in the following chart:

[[Page 14826]]



                                                       Respondents' Estimated Annual Burden Hours
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                                                                                                                          Average number
   30 CFR 1202,  1204, 1206, and 1210                 Reporting and recordkeeping requirement               Hour burden      of annual     Annual burden
                                                                                                                             responses         hours
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                                                                  PART 1202--ROYALTIES
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                                                            Subpart C--Federal and Indian Oil
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1202.101................................  Standards for reporting and paying royalties.                    Burden covered under OMB Control Number 1012-
                                          Oil volumes are to be reported in barrels of clean oil of 42                         0004.
                                           standard U.S. gallons (231 cubic inches each) at 60 [deg]F.
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                                                                 Subpart D--Federal Gas
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1202.152(a) and (b).....................  Standards for reporting and paying royalties on gas.             Burden covered under OMB Control Number 1012-
                                          (a)(1) If you are responsible for reporting production or                            0004.
                                           royalties you must:
                                          (i) Report gas volumes and British thermal unit (Btu) heating
                                           values, if applicable, under the same degree of water
                                           saturation;
                                          (ii) Report gas volumes in units of 1,000 cubic feet (mcf);
                                           and
                                          (iii) Report gas volumes and Btu heating value at a standard
                                           pressure base of 14.73 pounds per square inch absolute (psia)
                                           and a standard temperature base of 60 [deg]F.
                                          (b) Residue gas and gas plant product volumes shall be
                                           reported as specified in this paragraph.
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                                                     PART 1204--ALTERNATIVES FOR MARGINAL PROPERTIES
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                                                        Subpart C--Accounting and Auditing Relief
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1204.202(b)(1)..........................  What is the cumulative royalty reports and payments relief                  40               1              40
                                           option?
                                          (b) To use the cumulative royalty reports and payments relief
                                           option, you must do all of the following:
                                          (1) Notify ONRR in writing by January 31 of the calendar year
                                           for which you begin taking your relief.
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1204.202(b)(2) and (b)(3)...............  (b)(2) Submit your royalty report and payment by the end of      Burden covered under OMB Control Number 1012-
                                           February of the year following the calendar year for which                          0004.
                                           you reported annually. If you have an estimated payment on
                                           file, you must submit your royalty report and payment by the
                                           end of March of the year following the calendar year for
                                           which you reported annually; (3) Use the sales month prior to
                                           the month that you submit your annual report and payment for
                                           the entire previous calendar year's production for which you
                                           are paying annually.
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1204.202(b)(4), (b)(5), (c), (d)(1),      (b)(4) Report one line of cumulative royalty information on      Burden covered under OMB Control Number 1012-
 (d)(2), (e)(1), and (e)(2).               Form MMS-2014 for the calendar year; and                                            0004.
                                          (5) Report allowances on Form MMS-2014 on the same annual
                                           basis as the royalties for your marginal property production.
                                          (c) If you do not pay your royalty by the date due in
                                           paragraph (b) of this section, you will owe late payment
                                           interest from the date your payment was due under this
                                           section until the date ONRR receives it.
                                          (d) If you take relief you are not qualified for, you may be
                                           liable for civil penalties.
                                          Also you must: (1) Pay ONRR late payment interest determined
                                           under 30 CFR 1218.54 (2) Amend your Form MMS-2014.
                                          (e) If you dispose of your ownership interest in a marginal
                                           property for which you have taken relief you must:
                                          (1) Report and pay royalties for the portion of the calendar
                                           year for which you had an ownership interest; and
                                          (2) Make the report and payment by the end of the month after
                                           you dispose of the ownership interest in the marginal
                                           property. If you do not report and pay timely, you will owe
                                           interest from the date the payment was due.
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1204.203(b), 1204.205(a) and (b), and     What is the other relief option?                                           200               1             200
 1204.206(a)(3)(i) and (b)(1).            (b) You must request approval from ONRR before taking relief
                                           under this option.
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[[Page 14827]]

 
1204.208 (c)(1), (d)(1), and (e)........  May a State decide that it will or will not allow one or both               40               7             280
                                           of the relief options under this subpart?
                                          (c) If a State decides that it will or will not allow one or
                                           both of the relief options within 30 days the State must: (1)
                                           Notify the Director for Office of Natural Resources Revenue,
                                           in writing, of its intent to allow or not allow one or both
                                           of the relief options.
                                          (d) If a State decides in advance that it will not allow one
                                           or both of the relief options the State must: (1) Notify the
                                           Director for Office of Natural Resources Revenue, in writing,
                                           of its intent to allow one or both of the relief options.
                                          (e) If a State does not notify ONRR the State will be deemed
                                           to have decided not to allow either of the relief options.
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1204.209(b).............................  What if a property ceases to qualify for relief obtained under               6               1               6
                                           this subpart?
                                          (b) If a property is no longer eligible for relief the relief
                                           for the property terminates as of December 31 of that
                                           calendar year. You must notify ONRR in writing by December 31
                                           that the relief for the property has terminated.
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1204.210(c) and (d).....................  What if a property is approved as part of a nonqualifying        Burden covered under OMB Control Number 1012-
                                           agreement?                                                                          0004.
                                          (c) the volumes on which you report and pay royalty must be
                                           amended to reflect all volumes produced on or allocated to
                                           your lease under the nonqualifying agreement as modified by
                                           BLM. Report and pay royalties for your production using the
                                           procedures in Sec.   1204.202(b).
                                          (d) If you owe additional royalties based on the retroactive
                                           agreement approval and do not pay your royalty by the date
                                           due in Sec.   1204.202(b), you will owe late payment interest
                                           determined under Sec.   1218.54 from the date your payment
                                           was due under Sec.   1204.202(b)(2) until the date ONRR
                                           receives it.
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1204.214(b)(1) and (b)(2)...............  Is minimum royalty due on a property for which I took relief?    Burden covered under OMB Control Number 1012-
                                          (b) If you pay minimum royalty on production from a marginal                         0004.
                                           property during a calendar year for which you are taking
                                           cumulative royalty reports and payment relief, and:
                                          (1) The annual payment you owe under this subpart is greater
                                           than the minimum royalty you paid, you must pay the
                                           difference between the minimum royalty you paid and your
                                           annual payment due under this subpart; or
                                          (2) The annual payment you owe under this subpart is less than
                                           the minimum royalty you paid, you are not entitled to a
                                           credit because you must pay at least the minimum royalty
                                           amount on your lease each year.
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                                         Accounting and Auditing Relief Subtotal                                                      10             526
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                                                              Part 1206--Product Valuation
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                                                                 Subpart C--Federal Oil
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1206.102(e)(1)..........................  How do I calculate royalty value for oil that I or my                      AUDIT PROCESS. See note.
                                           affiliate sell(s) under an arm's-length contract?
                                          (e) If you value oil under paragraph (a) of this section: (1)
                                           ONRR may require you to certify that your or your affiliate's
                                           arm's-length contract provisions include all of the
                                           consideration the buyer must pay, either directly or
                                           indirectly, for the oil.
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[[Page 14828]]

 
1206.103(a)(1), (a)(2), and (a)(3)......  How do I value oil that is not sold under an arm's-length                   45               5             225
                                           contract?
                                          This section explains how to value oil that you may not value
                                           under Sec.   1206.102 or that you elect under Sec.
                                           1206.102(d) to value under this section. First determine
                                           whether paragraph (a), (b), or (c) of this section applies to
                                           production from your lease, or whether you may apply
                                           paragraph (d) or (e) with ONRR approval.
                                          (a) Production from leases in California or Alaska. Value is
                                           the average of the daily mean ANS spot prices published in
                                           any ONRR-approved publication during the trading month most
                                           concurrent with the production month.
                                          (1) To calculate the daily mean spot price.
                                          (2) Use only the days.
                                          (3) You must adjust the value.
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1206.103(a)(4)..........................  (a)(4) After you select an ONRR-approved publication, you may                8               2              16
                                           not select a different publication more often than once every
                                           2 years,
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1206.103(b)(1)..........................  (b) Production from leases in the Rocky Mountain Region.                   400               2             800
                                          (1) If you have an ONRR-approved tendering program, you must
                                           value oil.
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1206.103(b)(1)(ii)......................  (b)(1)(ii) If you do not have an ONRR-approved tendering                   400               2             800
                                           program, you may elect to value your oil under either
                                           paragraph (b)(2) or (b)(3) of this section.
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1206.103(b)(4)..........................  (4) If you demonstrate to ONRR's satisfaction that paragraphs              400               2             800
                                           (b)(1) through (b)(3) of this section result in an
                                           unreasonable value for your production as a result of
                                           circumstances regarding that production, the ONRR Director
                                           may establish an alternative valuation method.
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1206.103(c)(1)..........................  (c) Production from leases not located in California, Alaska                50              10             500
                                           or the Rocky Mountain Region. (1) Value is the NYMEX price,
                                           plus the roll, adjusted for applicable location and quality
                                           differentials and transportation costs under Sec.   1206.112.
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1206.103(e)(1) and (e)(2)...............  (e) Production delivered to your refinery and the NYMEX price              330               2             660
                                           or ANS spot price is an unreasonable value. (1) . . . you may
                                           apply to the ONRR Director to establish a value (2) You must
                                           provide adequate documentation and evidence demonstrating the
                                           market value at the refinery. representing the market at the
                                           refinery if:
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1206.105................................  What records must I keep to support my calculations of value     Burden covered under OMB Control Number 1012-
                                           under this subpart?                                                                 0004.
                                          If you determine the value of your oil under this subpart, you
                                           must retain all data relevant to the determination of royalty
                                           value.
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1206.107(a).............................  How do I request a value determination?                                     40              10             400
                                          (a) You may request a value determination from ONRR.
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1206.109(c)(2)..........................  When may I take a transportation allowance in determining                    8               2              16
                                           value?
                                          (c) Limits on transportation allowances. (2) You may ask ONRR
                                           to approve a transportation allowance in excess of the
                                           limitation in paragraph (c)(1) of this section. . . . Your
                                           application for exception (using Form MMS-4393, Request to
                                           Exceed Regulatory Allowance Limitation) must contain all
                                           relevant and supporting documentation necessary for ONRR to
                                           make a determination.
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1206.110(a).............................  How do I determine a transportation allowance under an arm's-              AUDIT PROCESS. See note.
                                           length transportation contract?
                                          (a) . . . You must be able to demonstrate that your or your
                                           affiliate's contract is at arm's length.
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1206.110(d)(3)..........................  (d) If your arm's-length transportation contract includes more              20               2              40
                                           than one liquid product, and the transportation costs
                                           attributable to each product cannot be determined.
                                          (3) You may propose to ONRR a cost allocation method.
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[[Page 14829]]

 
1206.110(e).............................  (e) If your arm's-length transportation contract includes both              20               1              20
                                           gaseous and liquid products, and the transportation costs
                                           attributable to each product cannot be determined from the
                                           contract, then you must propose an allocation procedure to
                                           ONRR.
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1206.110(e)(1) and (e)(2)...............  (e)(1) . . . If ONRR rejects your cost allocation, you must      Burden covered under OMB Control Number 1012-
                                           amend your Form MMS-2014.                                                           0004.
                                          (2) You must submit your initial proposal, including all
                                           available data, within 3 months after first claiming the
                                           allocated deductions on Form MMS-2014.
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1206.110(g)(2)..........................  (g) If your arm's-length sales contract includes a provision                 5               1               5
                                           reducing the contract price by a transportation factor,
                                          (2) You must obtain ONRR approval before claiming a
                                           transportation factor in excess of 50 percent of the base
                                           price of the product.
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1206.111(g).............................  How do I determine a transportation allowance if I do not have              30               1              30
                                           an arm's-length transportation contract or arm's-length
                                           tariff?
                                          (g) To compute depreciation, you may elect to use either . . .
                                           After you make an election, you may not change methods
                                           without ONRR approval.
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1206.111(k)(2)..........................  (k)(2) You may propose to ONRR a cost allocation method on the              30               1              30
                                           basis of the values.
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1206.111(l)(1) and (l)(3)...............  (l)(1) Where you transport both gaseous and liquid products                 20               1              20
                                           through the same transportation system, you must propose a
                                           cost allocation procedure to ONRR. . . .
                                          (3) You must submit your initial proposal, including all
                                           available data, within 3 months after first claiming the
                                           allocated deductions on Form MMS-2014.
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1206.111(l)(2)..........................  (l)(2) . . . If ONRR rejects your cost allocation, you must      Burden covered under OMB Control Number 1012-
                                           amend your Form MMS-2104 for the months that you used the                           0004.
                                           rejected method and pay any additional royalty and interest
                                           due.
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1206.112(a)(1)(ii)......................  What adjustments and transportation allowances apply when I                 80               1              80
                                           value oil production from my lease using NYMEX prices or ANS
                                           spot prices?
                                          (a)(1)(ii) . . . under an exchange agreement that is not at
                                           arm's length, you must obtain approval from ONRR for a
                                           location and quality differential.
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1206.112(a)(1)(ii)......................  (a)(1)(ii) . . . If ONRR prescribes a different differential,               20               2              40
                                           you must apply. . . . You must pay any additional royalties
                                           owed . . . plus the late payment interest from the original
                                           royalty due date, or you may report a credit.
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1206.112(a)(3) and (a)(4)...............  (a)(3) If you transport or exchange at arm's length (or both                80               4             320
                                           transport and exchange) at least 20 percent, but not all, of
                                           your oil produced from the lease to a market center,
                                           determine the adjustment between the lease and the market
                                           center for the oil that is not transported or exchanged (or
                                           both transported and exchanged) to or through a market center
                                           as follows:
                                          (4) If you transport or exchange (or both transport and
                                           exchange) less than 20 percent of your crude oil produced
                                           from the lease between the lease and a market center, you
                                           must propose to ONRR an adjustment between the lease and the
                                           market center for the portion of the oil that you do not
                                           transport or exchange (or both transport and exchange) to a
                                           market center. . . . If ONRR prescribes a different
                                           adjustment. . . . You must pay any additional royalties owed
                                           . . . plus the late payment interest from the original
                                           royalty due date, or you may report a credit.
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[[Page 14830]]

 
1206.112(b)(3)..........................  (b)(3) . . . you may propose an alternative differential to                 80               4             320
                                           ONRR. . . . If ONRR prescribes a different differential. . .
                                           . You must pay any additional royalties owed . . . plus the
                                           late payment interest from the original royalty due date, or
                                           you may report a credit.
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1206.112(c)(2)..........................  (c)(2) . . . If quality bank adjustments do not incorporate or              80               2             160
                                           provide for adjustments for sulfur content, you may make
                                           sulfur adjustments, based on the quality of the
                                           representative crude oil at the market center, of 5.0 cents
                                           per one-tenth percent difference in sulfur content, unless
                                           ONRR approves a higher adjustment.
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1206.114................................  What are my reporting requirements under an arm's-length
                                           transportation contract?
                                         ---------------------------------------------------------------------------------------------------------------
                                          You or your affiliate must use a separate entry on Form MMS-     Burden covered under OMB Control Number 1012-
                                           2014 to notify ONRR of an allowance based on transportation                         0004.
                                           costs you or your affiliate incur.
                                         ---------------------------------------------------------------------------------------------------------------
                                          ONRR may require you or your affiliate to submit arm's-length              AUDIT PROCESS. See note.
                                           transportation contracts, production agreements, operating
                                           agreements, and related documents.
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1206.115(a).............................  What are my reporting requirements under a non-arm's-length      Burden covered under OMB Control Number 1012-
                                           transportation arrangement?                                                         0004.
                                          (a) You or your affiliate must use a separate entry on Form
                                           MMS-2014 to notify ONRR of an allowance based on
                                           transportation costs you or your affiliate incur.
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1206.115(c).............................  (c) ONRR may require you or your affiliate to submit all data              AUDIT PROCESS. See note.
                                           used to calculate the allowance deduction.
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                                                                 Subpart D--Federal Gas
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1206.152(b)(1)(i) and (b)(1)(iii).......  Valuation standards--unprocessed gas.                                      AUDIT PROCESS. See note.
                                          (b)(1)(i) . . . The lessee shall have the burden of
                                           demonstrating that its contract is arm's-length. . . . (iii)
                                           . . . When ONRR determines that the value may be
                                           unreasonable, ONRR will notify the lessee and give the lessee
                                           an opportunity to provide written information justifying the
                                           lessee's value.
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1206.152(b)(2)..........................  (b)(2) . . . The lessee must request a value determination in               80               1              80
                                           accordance with paragraph (g) of this section for gas sold
                                           pursuant to a warranty contract;
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1206.152(b)(3)..........................  (b)(3) ONRR may require a lessee to certify that its arm's-                AUDIT PROCESS. See note.
                                           length contract provisions include all of the consideration
                                           to be paid by the buyer, either directly or indirectly, for
                                           the gas.
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1206.152(e)(1)..........................  (e)(1) Where the value is determined pursuant to paragraph (c)   Burden covered under OMB Control Number 1012-
                                           of this section, the lessee shall retain all data relevant to                       0004.
                                           the determination of royalty value.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.152(e)(2)..........................  206.152(e)(2) Any Federal lessee will make available upon                  AUDIT PROCESS. See note.
                                           request to the authorized ONRR or State representatives, to
                                           the Office of the Inspector General of the department of the
                                           Interior, or other person authorized to receive such
                                           information, arm's-length sales and volume data for like-
                                           quality production sold, purchased or otherwise obtained by
                                           the lessee from the field or area or from nearby fields or
                                           areas.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.152(e)(3)..........................  (e)(3) A lessee shall notify ONRR if it has determined value                10              10             100
                                           pursuant to paragraph (c)(2) or (c)(3) of this section.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.152(g).............................  (g) The lessee may request a value determination from ONRR. .               40               5             200
                                           . . The lessee shall submit all available data relevant to
                                           its proposal.
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[[Page 14831]]

 
1206.153(b)(1)(i) and (b)(1)(iii).......  Valuation standards--processed gas.                                        AUDIT PROCESS. See note.
                                          (b)(1)(i) . . . The lessee shall have the burden of
                                           demonstrating that its contract is arm's-length.
                                          (iii) . . . When ONRR determines that the value may be
                                           unreasonable, ONRR will notify the lessee and give the lessee
                                           an opportunity to provide written information justifying the
                                           lessee's value.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.153(b)(2)..........................  (b)(2) . . . The lessee must request a value determination in               80               1              80
                                           accordance with paragraph (g) of this section for gas sold
                                           pursuant to a warranty contract;
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.153(b)(3)..........................  (b)(3) ONRR may require a lessee to certify that its arm's-                AUDIT PROCESS. See note.
                                           length contract provisions include all of the consideration
                                           to be paid by the buyer, either directly or indirectly, for
                                           the residue gas or gas plant product.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.153(e)(1)..........................  (e)(1) Where the value is determined pursuant to paragraph (c)   Burden covered under OMB Control Number 1012-
                                           of this section, the lessee shall retain all data relevant to                       0004.
                                           the determination of royalty value.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.153(e)(2)..........................  (e)(2) Any Federal lessee will make available upon request to              AUDIT PROCESS. See note.
                                           the authorized ONRR or State representatives, to the Office
                                           of the Inspector General of the Department of the Interior,
                                           or other persons authorized to receive such information,
                                           arm's-length sales and volume data for like-quality residue
                                           gas and gas plant products sold, purchased or otherwise
                                           obtained by the lessee from the same processing plant or from
                                           nearby processing plants.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.153(e)(3)..........................  (e)(2) A lessee shall notify ONRR if it has determined any                  10               2              20
                                           value pursuant to paragraph (c)(2) or (c)(3) of this section.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.153(g).............................  206.153(g) The lessee may request a value determination from                80              15           1,200
                                           ONRR. . . . The lessee shall submit all available data
                                           relevant to its proposal.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.154(c)(4)..........................  Determination of quantities and qualities for computing                     40               1              40
                                           royalties.
                                          (c)(4) . . . A lessee may request ONRR approval of other
                                           methods for determining the quantity of residue gas and gas
                                           plant products allocable to each lease.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.156(c)(3)..........................  Transportation allowances--general.                                         40               3             120
                                          (c)(3) Upon request of a lessee, ONRR may approve a
                                           transportation allowance deduction in excess of the
                                           limitation prescribed by paragraphs (c)(1) and (c)(2) of this
                                           section. . . . An application for exception (using Form MMS-
                                           4393, Request to Exceed Regulatory Allowance Limitation) must
                                           contain all relevant and supporting documentation necessary
                                           for ONRR to make a determination.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.157(a)(1)(i).......................  Determination of transportation allowances.
                                         ---------------------------------------------------------------------------------------------------------------
                                          (a) Arm's-length transportation contracts. (1)(i) . . . The                AUDIT PROCESS. See note.
                                           lessee shall have the burden of demonstrating that its
                                           contract is arm's-length.
                                         ---------------------------------------------------------------------------------------------------------------
                                          The lessee must claim a transportation allowance by reporting    Burden covered under OMB Control Number 1012-
                                           it on a separate line entry on the Form MMS-2014.                                   0004.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.157(a)(1)(iii).....................  (a)(1)(iii) . . . When ONRR determines that the value of the               AUDIT PROCESS. See note.
                                           transportation may be unreasonable, ONRR will notify the
                                           lessee and give the lessee an opportunity to provide written
                                           information justifying the lessee's transportation costs.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.157(a)(2)(ii)......................  (a)(2)(ii) . . . the lessee may propose to ONRR a cost                      40               1              40
                                           allocation method on the basis of the values of the products
                                           transported.
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 14832]]

 
1206.157(a)(3)..........................  (a)(3) If an arm's-length transportation contract includes                  40               1              40
                                           both gaseous and liquid products and the transportation costs
                                           attributable to each cannot be determined from the contract,
                                           the lessee shall propose an allocation procedure to ONRR. . .
                                           . The lessee shall submit all relevant data to support its
                                           proposal.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.157(a)(5)..........................  (a)(5) . . . The transportation factor may not exceed 50                    10               3              30
                                           percent of the base price of the product without ONRR
                                           approval.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.157(b)(1)..........................  (b) Non-arm's-length or no contract. (1) The lessee must claim   Burden covered under OMB Control Number 1012-
                                           a transportation allowance by reporting it on a separate line                       0004.
                                           entry on the Form MMS-2014.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.157(b)(2)(iv) and (b)(2)(iv)(A)....  (b)(2)(iv) . . . After a lessee has elected to use either                  100               1             100
                                           method for a transportation system, the lessee may not later
                                           elect to change to the other alternative without approval of
                                           the ONRR.
                                          (A) . . . After an election is made, the lessee may not change
                                           methods without ONRR approval.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.157(b)(3)(i).......................  (b)(3)(i) . . . Except as provided in this paragraph, the                  100               1             100
                                           lessee may not take an allowance for transporting a product
                                           which is not royalty bearing without ONRR approval.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.157(b)(3)(ii)......................  (b)(3)(ii) . . . the lessee may propose to the ONRR a cost                 100               1             100
                                           allocation method on the basis of the values of the products
                                           transported.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.157(b)(4)..........................  (b)(4) Where both gaseous and liquid products are transported              100               1             100
                                           through the same transportation system, the lessee shall
                                           propose a cost allocation procedure to ONRR. . . . The lessee
                                           shall submit all relevant data to support its proposal.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.157(b)(5)..........................  (b)(5) You may apply for an exception from the requirement to              100               1             100
                                           compute actual costs under paragraphs (b)(1) through (b)(4)
                                           of this section.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.157(c)(1)(i).......................  (c) Reporting Requirements. (1) Arm's-length contracts. (i)      Burden covered under OMB Control Number 1012-
                                           You must use a separate entry on Form MMS-2014 to notify ONRR                       0004.
                                           of a transportation allowance.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.157(c)(1)(ii)......................  (c)(1)(ii) ONRR may require you to submit arm's-length                     AUDIT PROCESS. See note.
                                           transportation contracts, production agreements, operating
                                           agreements, and related documents.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.157(c)(2)(i).......................  (c)(2) Non-arm's-length or no contract. (i) You must use a       Burden covered under OMB Control Number 1012-
                                           separate entry on Form MMS-2014 to notify ONRR of a                                 0004.
                                           transportation allowance.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.157(c)(2)(iii).....................  (c)(2)(iii) ONRR may require you to submit all data used to                AUDIT PROCESS. See note.
                                           calculate the allowance deduction.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.157(e)(2), (e)(3), and (f)(1)......  (e) Adjustments. (2) For lessees transporting production from    Burden covered under OMB Control Number 1012-
                                           onshore Federal leases, the lessee must submit a corrected                          0004.
                                           Form MMS-2014 to reflect actual costs, together with any
                                           payment, in accordance with instructions provided by ONRR.
                                           (3) For lessees transporting gas production from leases on
                                           the OCS, if the lessee's estimated transportation allowance
                                           exceeds the allowance based on actual costs, the lessee must
                                           submit a corrected Form MMS-2014 to reflect actual costs,
                                           together with its payments, in accordance with instructions
                                           provided by ONRR.
                                          (f) Allowable costs in determining transportation allowances.
                                           . . . (1) Firm demand charges paid to pipelines. . . . if you
                                           receive a payment or credit from the pipeline for penalty
                                           refunds, rate case refunds, or other reasons, you must reduce
                                           the firm demand charge claimed on the Form MMS-2014 by the
                                           amount of that payment. You must modify Form MMS-2014 by the
                                           amount received or credited for the affected reporting period
                                           and pay any resulting royalty and late payment interest due;
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 14833]]

 
1206.158(c)(3)..........................  Processing allowances--general.                                             80               8             640
                                          (c)(3) Upon request of a lessee, ONRR may approve a processing
                                           allowance in excess of the limitation prescribed by paragraph
                                           (c)(2) of this section. . . . An application for exception
                                           (using Form MMS-4393, Request to Exceed Regulatory Allowance
                                           Limitation) shall contain all relevant and supporting
                                           documentation for ONRR to make a determination.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.158(d)(2)(i).......................  (d)(2)(i) If the lessee incurs extraordinary costs for                      80               1              80
                                           processing gas production from a gas production operation, it
                                           may apply to ONRR for an allowance for those costs.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.158(d)(2)(ii)......................  (d)(2)(ii) . . . to retain the authority to deduct the           Burden covered under OMB Control Number 1012-
                                           allowance the lessee must report the deduction to ONRR in a                         0004.
                                           form and manner prescribed by ONRR.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.159(a)(1)(i).......................  Determination of processing allowances.
                                         ---------------------------------------------------------------------------------------------------------------
                                          (a) Arm's-length processing contracts.                                     AUDIT PROCESS. See note.
                                          (1)(i). . .The lessee shall have the burden of demonstrating
                                           that its contract is arm's-length.
                                         ---------------------------------------------------------------------------------------------------------------
                                          The lessee must claim a processing allowance by reporting it     Burden covered under OMB Control Number 1012-
                                           on a separate line entry on the Form MMS-2014.                                      0004.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.159(a)(1)(iii).....................  (a)(1)(iii) . . . When ONRR determines that the value of the               AUDIT PROCESS. See note.
                                           processing may be unreasonable, ONRR will notify the lessee
                                           and give the lessee an opportunity to provide written
                                           information justifying the lessee's processing costs.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.159(a)(3)..........................  (a)(3) If an arm's-length processing contract includes more                 20               1              20
                                           than one gas plant product and the processing costs
                                           attributable to each product cannot be determined from the
                                           contract, the lessee shall propose an allocation procedure to
                                           ONRR. . . . The lessee shall submit all relevant data to
                                           support its proposal.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.159(b)(1)..........................  (b) Non-arm's-length or no contract. (1). . . The lessee must    Burden covered under OMB Control Number 1012-
                                           claim a processing allowance by reflecting it as a separate                         0004.
                                           line entry on the Form MMS-2014.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.159(b)(2)(iv) and (b)(2)(iv)(A)....  (b)(2)(iv) . . . When a lessee has elected to use either                   100               1             100
                                           method for a processing plant, the lessee may not later elect
                                           to change to the alternative without approval of the ONRR.
                                          (A) . . . After an election is made, the lessee may not change
                                           methods without ONRR approval.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.159(b)(4)..........................  (b)(4) A lessee may apply to ONRR for an exception from the                100               1             100
                                           requirements that it compute actual costs in accordance with
                                           paragraphs (b)(1) through (b)(3) of this section.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.159(c)(1)(i).......................  (c) Reporting requirements--(1) Arm's-length contracts. (i)      Burden covered under OMB Control Number 1012-
                                           The lessee must notify ONRR of an allowance based on incurred                       0004.
                                           costs by using a separate line entry on the Form MMS-2014.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.159(c)(1)(ii)......................  (c)(1)(ii) ONRR may require that a lessee submit arm's-length              AUDIT PROCESS. See note.
                                           processing contracts and related documents.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.159(c)(2)(i).......................  (c)(2) Non-arm's-length or no contract. (i) The lessee must      Burden covered under OMB Control Number 1012-
                                           notify ONRR of an allowance based on incurred costs by using                        0004.
                                           a separate line entry on the Form MMS-2014.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1206.159(c)(2)(iii).....................  (c)(2)(iii) Upon request by ONRR, the lessee shall submit all              AUDIT PROCESS. See note.
                                           data used to prepare the allowance deduction.
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 14834]]

 
1206.159(e)(2) and (e)(3)...............  (e) Adjustments . . . (2) For lessees processing production      Burden covered under OMB Control Number 1012-
                                           from onshore Federal leases, the lessee must submit a                               0004.
                                           corrected Form MMS-2014 to reflect actual costs, together
                                           with any payment, in accordance with instructions provided by
                                           ONRR. (3) For lessees processing gas production from leases
                                           on the OCS, if the lessee's estimated processing allowance
                                           exceeds the allowance based on actual costs, the lessee must
                                           submit a corrected Form MMS-2014 to reflect actual costs,
                                           together with its payment, in accordance with instructions
                                           provided by ONRR.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                             Oil and Gas Valuation Subtotal                                                          117           8,672
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          TOTAL                                                                      127           9,198
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: AUDIT PROCESS--The Office of Regulatory Affairs determined that the audit process is exempt from the Paperwork Reduction Act of 1995 because ONRR
  staff asks non-standard questions to resolve exceptions.

    Estimated Annual Reporting and Recordkeeping ``Non-hour'' Cost 
Burden: We have not identified a ``non-hour'' cost burden associated 
with the collection of information.
    Public Disclosure Statement: The PRA (44 U.S.C. 3501 et seq.) 
provides that an agency may not conduct or sponsor, and a person does 
not have 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 60-day notice in the Federal Register * * * 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 that ONRR collects; 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 that you use to estimate (1) Major cost factors, 
including system and technology acquisition, (2) expected useful life 
of capital equipment, (3) discount rate(s), and (4) the period over 
which you incur costs. Capital and startup costs include, among other 
items, computers and software that you purchase to prepare for 
collecting information and 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 Federal 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. We also will post the ICR at 
http://www.onrr.gov/Laws_R_D/FRNotices/FRInfColl.htm.
    Public Comment Policy: We will post all comments, including names 
and addresses of respondents, at http://www.regulations.gov. Before 
including your address, phone number, email address, or other personal 
identifying information in your comment, you should be aware that your 
entire comment--including your personal identifying information--may be 
made publicly available at any time. While you can ask us, in your 
comment, to withhold your personal identifying information from public 
view, we cannot guarantee that we will be able to do so.
    Office of the Secretary, Information Collection Clearance Officer: 
David Alspach (202) 219-8526.

    Dated: February 26, 2013.
Gregory J. Gould,
Director, Office of Natural Resources Revenue.
[FR Doc. 2013-05286 Filed 3-6-13; 8:45 am]
BILLING CODE 4310-T2-P