82_FR_16386 82 FR 16323 - Repeal of Consolidated Federal Oil & Gas and Federal & Indian Coal Valuation Reform

82 FR 16323 - Repeal of Consolidated Federal Oil & Gas and Federal & Indian Coal Valuation Reform

DEPARTMENT OF THE INTERIOR
Office of Natural Resources Revenue

Federal Register Volume 82, Issue 63 (April 4, 2017)

Page Range16323-16325
FR Document2017-06617

The Office of Natural Resources Revenue (ONRR) proposes to repeal the Consolidated Federal Oil & Gas and Federal & Indian Coal Valuation Reform Rule that was published in the Federal Register on July 1, 2016 (``2017 Valuation Rule''). Repeal of the 2017 Valuation Rule would maintain the current regulatory status quo by keeping the longstanding pre-existing regulations in effect.

Federal Register, Volume 82 Issue 63 (Tuesday, April 4, 2017)
[Federal Register Volume 82, Number 63 (Tuesday, April 4, 2017)]
[Proposed Rules]
[Pages 16323-16325]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-06617]



[[Page 16323]]

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DEPARTMENT OF THE INTERIOR

Office of Natural Resources Revenue

30 CFR Parts 1202 and 1206

[Docket No. ONRR-2017-0001; DS63644000 DR2000000.CH7000 178D0102R2]
RIN 1012-AA20


Repeal of Consolidated Federal Oil & Gas and Federal & Indian 
Coal Valuation Reform

AGENCY: Office of Natural Resources Revenue, Interior.

ACTION: Proposed rule.

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SUMMARY: The Office of Natural Resources Revenue (ONRR) proposes to 
repeal the Consolidated Federal Oil & Gas and Federal & Indian Coal 
Valuation Reform Rule that was published in the Federal Register on 
July 1, 2016 (``2017 Valuation Rule'').
    Repeal of the 2017 Valuation Rule would maintain the current 
regulatory status quo by keeping the longstanding pre-existing 
regulations in effect.

DATES: You must submit comments on or before May 4, 2017.

ADDRESSES: You may submit comments to ONRR on this proposed rulemaking 
by any of the methods listed below. Please reference the Regulation 
Identifier Number (RIN) 1012-AA20 in your comments. See also Public 
Availability of Comments under Procedural Matters.
     Electronically: Go to www.regulations.gov. In the entry 
titled ``Enter Keyword or ID,'' enter ``ONRR-2017-0002,'' and then 
click ``Search.'' Follow the instructions to submit public comments. We 
will post all comments.
     [Egr]mail comments to Armand Southall, Regulatory 
Specialist, at armand.southall@onrr.gov.
     Hand-carry or mail comments, using an overnight courier 
service, to the Office of Natural Resources Revenue, Building 53, 
Entrance E-20, Denver Federal Center, West 6th Ave. and Kipling St., 
Denver, Colorado 80225.

FOR FURTHER INFORMATION CONTACT: For comments or questions on 
procedural issues, contact Armand Southall, ONRR, at (303) 231-3221, or 
email to armand.southall@onrr.gov.

SUPPLEMENTARY INFORMATION:

I. Background

    On July 1, 2016, ONRR published in the Federal Register the 
Consolidated Federal Oil & Gas and Federal & Indian Coal Valuation 
Reform Rule, which was effective on January 1, 2017 (2017 Valuation 
Rule). 81 FR 43338. The 2017 Valuation Rule changes how Federal oil and 
gas and Federal and Indian coal lessees value production for royalty 
purposes. It also revises revenue-reporting requirements.
    On December 29, 2016, three different sets of petitioners filed 
three separate petitions challenging the 2017 Valuation Rule in the 
United States District Court for the District of Wyoming. In those 
lawsuits the petitioners allege that certain provisions of the 2017 
Valuation Rule are arbitrary, capricious, and contrary to the law. The 
petitioners raise serious questions concerning the validity or prudence 
of certain provisions of the 2017 Valuation Rule, such as the expansion 
of the ``default provision'' and the use of the sales price of 
electricity to value coal.
    In addition to initiating litigation, on February 17, 2017, the 
petitioners sent a joint letter to the ONRR Director. In that letter 
the petitioners asserted that the 2017 Valuation Rule's new reporting 
and payment requirements would be difficult or impossible to comply 
with by the royalty reporting-deadline, a problem that would be 
exacerbated by the fact that non-compliant lessees may be exposed to 
significant civil penalties.
    The petitioners' lawsuits and correspondence echoed the concerns 
voiced by many industry representatives in workshops during the public 
comment period that preceded the 2017 Valuation Rule's promulgation. 
Records of those workshops, industry comments, and other public 
comments may be viewed at https://onrr.gov/Laws_R_D/FRNotices/AA13.htm.
    On February 27, 2017, in response to the petitioners' lawsuits and 
their request to ONRR to stay implementation of the 2017 Valuation 
Rule, ONRR postponed implementation of the 2017 Valuation Rule, pending 
judicial review, by notice published in the Federal Register. 82 FR 
11823.
    ONRR is now proposing to repeal the 2017 Valuation Rule in its 
entirety. Repeal would be consistent with the President's January 30, 
2017, Executive Order on Reducing Regulation and Controlling Regulatory 
Costs. It would (a) preserve the regulatory status quo while ONRR 
reconsiders whether revisions are appropriate or needed to the pre-
existing regulations governing royalty values; (b) avoid the costs to 
both government and industry of converting to controversial new royalty 
reporting and payment systems while the reconsideration takes place; 
(c) eliminate the need for continued and uncertain litigation over the 
validity of the 2017 Valuation Rule, and (d) enhance the lessees' 
ability to timely and accurately report and pay royalties, because they 
would continue to use a well-known system that has been in place for 
decades.
    ONRR's original intent behind the 2017 Rule was to offer greater 
simplicity, certainty, clarity, and consistency in product valuation 
and reporting for mineral lessees. But ONRR has since identified 
several areas in the rule that warrant reconsideration to meet policy 
and implementation objectives, including but not limited to, how to 
value coal production in certain non-arm's length transactions, how to 
value coal when the first arm's-length sale of the coal is electricity, 
how to value gas in certain no-sale situations, and under what 
circumstances, and on whom, ONRR's valuation determinations are 
binding. The repeal would allow ONRR to reconsider whether the changes 
made by the 2017 Valuation Rule are needed, while providing certainty 
and clarity to the regulated community during that reconsideration by 
continuing to require compliance with lawful, longstanding, and well 
known procedures. Absent repeal, ONRR would also be required to 
continue litigation over the 2017 Valuation Rule, even though that Rule 
may not reflect ONRR's current conclusions on how best to value 
production for royalty purposes. Concurrently with this notice, ONRR is 
publishing an Advance Notice of Proposed Rulemaking seeking comments on 
whether revisions are appropriate or needed to the pre-existing 
regulations governing royalty values, including comments on whether the 
2017 Valuation Rule should ultimately be retained or repromulgated, in 
whole or in part.
    ONRR's pre-existing valuation rules are still authorized by, and 
consistent with, applicable law, including 5 U.S.C. 301 et seq., 25 
U.S.C. 396 et seq., 396a et seq., 2101 et seq.; 30 U.S.C. 181 et seq., 
351 et seq., 1001 et seq., 1701 et seq.; 31 U.S.C. 9701; 43 U.S.C. 1301 
et seq., 1331 et seq., and 1801 et seq.

II. Explanation of Proposed Amendments

    ONRR proposes to repeal the 2017 Valuation Rule in its entirety. 
If, following public comment, ONRR publishes a final rule repealing the 
2017 Valuation Rule in its entirety, then 30 CFR parts 1202 and 1206 
would revert to read as they did before ONRR promulgated the 2017 
Valuation Rule. Part 1202 would read as published in the July 1, 2015, 
edition of title 30 of the Code of Federal Regulations (CFR), which is 
at https://www.thefederalregister.org/fdsys/pkg/CFR-2015-title30-vol3/pdf/CFR-

[[Page 16324]]

2015-title30-vol3-part1202.pdf. Part 1206 would read as published in 
the July 1, 2015, edition of title 30 of the Code of Federal 
Regulations, which is at https://www.thefederalregister.org/fdsys/pkg/CFR-2015-title30-vol3/pdf/CFR-2015-title30-vol3-part1206.pdf.

III. Section-by-Section Analysis

    The proposed and final rules for the 2017 Valuation Rule, including 
their section-by-section analyses, are at https://onrr.gov/Laws_R_D/FRNotices/AA13.htm. A repeal of the 2017 Valuation Rule would return 
each section to its reading prior to the July 1, 2016, publication of 
the 2017 Valuation Rule. With repeal, the section-by-section analyses 
may be found in the preambles for ONRR's and its predecessors' prior 
rulemakings as published in the Federal Register. The Federal Register 
volume and page number citations for those prior rulemakings, including 
their preambles, may be found in the Code of Federal Regulations, 30 
CFR parts 1202 and 1206, as they existed before the July 1, 2016, 
publication of the 2017 Valuation Rule. For part 1202 the Federal 
Register citations are at https://www.thefederalregister.org/fdsys/pkg/CFR-2015-title30-vol3/pdf/CFR-2015-title30-vol3-part1202.pdf. For part 1206, the 
Federal Register citations are at https://www.thefederalregister.org/fdsys/pkg/CFR-2015-title30-vol3/pdf/CFR-2015-title30-vol3-part1206.pdf.

IV. Procedural Matters

1. Summary Cost and Royalty Impact Data

    Repeal would negate the cost and royalty impact of the 2017 
Valuation Rule. That cost and royalty impact is described in the final 
2017 Valuation Rule, under Procedural Matters, item 1, starting at 81 
FR 43359.

2. Regulatory Planning and Review (Executive Orders 12866, 13563, and 
Executive Order 13771 on Reducing Regulation and Controlling Regulatory 
Costs Dated January 30, 2017)

    Executive Order (E.O.) 12866 provides that the Office of 
Information and Regulatory Affairs (OIRA) of the Office of Management 
and Budget (OMB) will review all significant rules. The Office of 
Information and Regulatory Affairs has determined that this rule is not 
significant.
    Executive Order 13563 reaffirms the principles of E.O. 12866, while 
calling for improvements in the Nation's regulatory system to promote 
predictability, to reduce uncertainty, and to use the best, most 
innovative, and least burdensome tools for achieving regulatory ends. 
The Executive Order directs agencies to consider regulatory approaches 
that reduce burdens and maintain flexibility and freedom of choice for 
the public where these approaches are relevant, feasible, and 
consistent with regulatory objectives. E.O. 13563 emphasizes further 
that regulations must be based on the best available science and that 
the rulemaking process must allow for public participation and an open 
exchange of ideas. We developed this proposed rule in a manner 
consistent with these requirements.
    The President's January 30, 2017, Executive Order on Reducing 
Regulation and Controlling Regulatory Costs, as implemented under 
February 2, 2017, Interim Guidance issued by OIRA, imposes certain 
requirements for every rule considered significant under E.O. 12866. 
First, every new significant rule requires the repeal of two rules. 
Second, an agency must fully offset the total incremental cost of 
significant new regulations, including repealed regulations, finalized 
in fiscal year 2017. Since this proposed rule--which is itself a repeal 
of an existing rule--is not a significant rule under E.O. 12866, it 
does not require the repeal of two other existing rules, and the agency 
is not required to offset its cost against the cost of other fiscal 
year 2017 rules.

3. Regulatory Flexibility Act

    The Department of the Interior certifies that this proposed rule 
would not have a significant economic effect on a substantial number of 
small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.). See the 2017 Valuation Rule, Procedural Matters, item 1, 
starting at 81 FR 43359, and item 3, starting at 81 FR 43367.

4. Small Business Regulatory Enforcement Fairness Act

    This proposed rule is not a major rule under 5 U.S.C. 804(2), the 
Small Business Regulatory Enforcement Fairness Act. This proposed rule:
    a. Would not have an annual effect on the economy of $100 million 
or more. We estimate the maximum effect as a reverse of the impacts 
described in the 2017 Valuation Rule, under Procedural Matters, item 1, 
starting at 81 FR 43359, and item 4, 81 FR 43368.
    b. Would not cause a major increase in costs or prices for 
consumers, individual industries, Federal, State, or local government 
agencies, or geographic regions. See the 2017 Valuation Rule, under 
Procedural Matters, item 1, starting at 81 FR 43359, and item 4, 81 FR 
43368.
    c. Would not have significant adverse effects on competition, 
employment, investment, productivity, innovation, or the ability of 
U.S.-based enterprises to compete with foreign-based enterprises. This 
proposed rule would benefit U.S.-based enterprises.

5. Unfunded Mandates Reform Act

    This proposed rule would not impose an unfunded mandate on State, 
local, or Tribal governments, or the private sector of more than $100 
million per year. This proposed rule would not have a significant or 
unique effect on State, local, or Tribal governments, or the private 
sector. Therefore, we are not required to provide a statement 
containing the information set out in the Unfunded Mandates Reform Act 
(2 U.S.C. 1501 et seq.). See the 2017 Valuation Rule, under Procedural 
Matters, item 1, starting at 81 FR 43359, and item 5 at 81 FR 43368.

6. Takings (E.O. 12630)

    Under the criteria in E.O. 12630, this proposed rule would not have 
significant takings implications. This proposed rule would apply to 
Federal oil, Federal gas, Federal coal, and Indian coal leases only. 
This proposed rule would not be a governmental action capable of 
interference with constitutionally protected property rights. This 
proposed rule does not require a Takings Implication Assessment.

7. Federalism (E.O. 13132)

    Under the criteria in E.O. 13132, this proposed rule would not have 
sufficient Federalism implications to warrant the preparation of a 
Federalism Assessment. The management of Federal oil and gas leases and 
Federal and Indian coal leases is the responsibility of the Secretary 
of the Interior. This proposed rule would not impose administrative 
costs on States or local governments. This proposed rule also does not 
substantially and directly affect the relationship between the Federal 
and State governments. Because this rule, if promulgated as a final 
rule, would not alter that relationship, it does not require a 
Federalism summary impact statement.

8. Civil Justice Reform (E.O. 12988)

    This proposed rule would comply with the requirements of E.O. 
12988, for the reasons we outline in the following paragraphs. 
Specifically, this proposed rule:
    a. Would meet the criteria of Sec.  3(a), which requires that we 
review all regulations to eliminate errors and

[[Page 16325]]

ambiguity and to write them to minimize litigation.
    b. Would meet the criteria of Sec.  3(b)(2), which requires that we 
write all regulations in clear language using clear legal standards.

9. Consultation With Indian Tribal Governments (E.O. 13175)

    The Department strives to strengthen its government-to-government 
relationship with the Indian Tribes through a commitment to 
consultation with the Indian Tribes and recognition of their right to 
self-governance and Tribal sovereignty. Under the Department's 
consultation policy and the criteria in E.O. 13175, we evaluated this 
proposed rule and determined that it would potentially affect 
Federally-recognized Indian Tribes. We determined that this rule would 
restore the historical valuation methodology for coal produced from 
Indian leases. Our previous and planned activities include:
    (a) As described in the 2017 Valuation Rule under Procedural 
Matters, item 9, at 81 FR 43368, we consulted with the affected Tribes 
on a government-to-government basis in preparing the 2017 Valuation 
Rule. We also will consult with the affected Tribes about potential 
repeal of the 2017 Valuation Rule.
    (b) We will fully consider Tribal views in the final rule.

10. Paperwork Reduction Act

    This proposed rule:
    (a) Does not contain any new information collection requirements.
    (b) Does not require a submission to OMB under the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3501 et seq). See 5 CFR 1320.4(a)(2).
    This proposed rule, if promulgated as a final rule, will leave in 
tack the information collection requirements that OMB already approved 
under OMB Control Numbers 1012-0004, 1012-0005, and 1012-0010.

11. National Environmental Policy Act of 1969 (NEPA)

    This proposed rule would not constitute a major Federal action, 
significantly affecting the quality of the human environment. We are 
not required to provide a detailed statement under NEPA because this 
rule qualifies for categorically exclusion under 43 CFR 46.210(i) in 
that this is ``. . . of an administrative, financial, legal, technical, 
or procedural nature. . . .'' This rule also qualifies for 
categorically exclusion under Departmental Manual, part 516, section 
15.4.(C)(1) in that its impacts are limited to administrative, 
economic, or technological effects. We also have determined that this 
rule is not involved in any of the extraordinary circumstances listed 
in 43 CFR 46.215 that would require further analysis under NEPA. The 
procedural changes resulting from the repeal of the 2017 Valuation Rule 
would have no consequences on the physical environment. This proposed 
rule would not alter, in any material way, natural resources 
exploration, production, or transportation.

12. Effects on the Energy Supply (E.O. 13211)

    This proposed rule would not be a significant energy action under 
the definition in E.O. 13211, and, therefore, would not require a 
Statement of Energy Effects.

13. Clarity of This Regulation

    Executive Orders 12866 (section 1(b)(12)), 12988 (section 
3(b)(1)(B)), and 13563 (section 1(a)), and the Presidential Memorandum 
of June 1, 1998, would require us to write all rules in Plain Language. 
This means that each rule that we publish must: (a) Have logical 
organization; (b) use the active voice to address readers directly; (c) 
use clear language rather than jargon; (d) use short sections and 
sentences; and (e) use lists and tables wherever possible.
    If you feel that we have not met these requirements, send your 
comments to armand.southall@onrr.gov. To better help us revise this 
rule, make your comments as specific as possible. For example, you 
should tell us the numbers of the sections or paragraphs that you think 
we wrote unclearly, which sections or sentences are too long, the 
sections where you feel lists or tables would be useful, etc.

14. Public Availability of Comments

    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.

List of Subjects in 30 CFR Parts 1202 and 1206

    Coal, Continental shelf, Government contracts, Indian lands, 
Mineral royalties, Natural gas, Oil, Oil and gas exploration, Public 
lands--mineral resources, Reporting and recordkeeping requirements.

    Dated: March 30, 2017.
Amy Holley,
Acting Assistant Secretary for Policy, Management and Budget.
[FR Doc. 2017-06617 Filed 4-3-17; 8:45 am]
 BILLING CODE 4335-30-P



                                                                           Federal Register / Vol. 82, No. 63 / Tuesday, April 4, 2017 / Proposed Rules                                             16323

                                                 DEPARTMENT OF THE INTERIOR                              Valuation Rule). 81 FR 43338. The 2017                 and accurately report and pay royalties,
                                                                                                         Valuation Rule changes how Federal oil                 because they would continue to use a
                                                 Office of Natural Resources Revenue                     and gas and Federal and Indian coal                    well-known system that has been in
                                                                                                         lessees value production for royalty                   place for decades.
                                                 30 CFR Parts 1202 and 1206                              purposes. It also revises revenue-                        ONRR’s original intent behind the
                                                                                                         reporting requirements.                                2017 Rule was to offer greater
                                                 [Docket No. ONRR–2017–0001; DS63644000                     On December 29, 2016, three different               simplicity, certainty, clarity, and
                                                 DR2000000.CH7000 178D0102R2]
                                                                                                         sets of petitioners filed three separate               consistency in product valuation and
                                                 RIN 1012–AA20                                           petitions challenging the 2017 Valuation               reporting for mineral lessees. But ONRR
                                                                                                         Rule in the United States District Court               has since identified several areas in the
                                                 Repeal of Consolidated Federal Oil &                    for the District of Wyoming. In those                  rule that warrant reconsideration to
                                                 Gas and Federal & Indian Coal                           lawsuits the petitioners allege that                   meet policy and implementation
                                                 Valuation Reform                                        certain provisions of the 2017 Valuation               objectives, including but not limited to,
                                                                                                         Rule are arbitrary, capricious, and                    how to value coal production in certain
                                                 AGENCY:  Office of Natural Resources                    contrary to the law. The petitioners raise             non-arm’s length transactions, how to
                                                 Revenue, Interior.                                      serious questions concerning the                       value coal when the first arm’s-length
                                                 ACTION: Proposed rule.                                  validity or prudence of certain                        sale of the coal is electricity, how to
                                                                                                         provisions of the 2017 Valuation Rule,                 value gas in certain no-sale situations,
                                                 SUMMARY:   The Office of Natural                        such as the expansion of the ‘‘default                 and under what circumstances, and on
                                                 Resources Revenue (ONRR) proposes to                    provision’’ and the use of the sales price             whom, ONRR’s valuation
                                                 repeal the Consolidated Federal Oil &                   of electricity to value coal.                          determinations are binding. The repeal
                                                 Gas and Federal & Indian Coal                              In addition to initiating litigation, on            would allow ONRR to reconsider
                                                 Valuation Reform Rule that was                          February 17, 2017, the petitioners sent                whether the changes made by the 2017
                                                 published in the Federal Register on                    a joint letter to the ONRR Director. In                Valuation Rule are needed, while
                                                 July 1, 2016 (‘‘2017 Valuation Rule’’).                 that letter the petitioners asserted that              providing certainty and clarity to the
                                                    Repeal of the 2017 Valuation Rule                    the 2017 Valuation Rule’s new reporting                regulated community during that
                                                 would maintain the current regulatory                   and payment requirements would be                      reconsideration by continuing to require
                                                 status quo by keeping the longstanding                  difficult or impossible to comply with                 compliance with lawful, longstanding,
                                                 pre-existing regulations in effect.                     by the royalty reporting-deadline, a                   and well known procedures. Absent
                                                 DATES: You must submit comments on                      problem that would be exacerbated by                   repeal, ONRR would also be required to
                                                 or before May 4, 2017.                                  the fact that non-compliant lessees may                continue litigation over the 2017
                                                 ADDRESSES: You may submit comments                      be exposed to significant civil penalties.             Valuation Rule, even though that Rule
                                                 to ONRR on this proposed rulemaking                        The petitioners’ lawsuits and                       may not reflect ONRR’s current
                                                 by any of the methods listed below.                     correspondence echoed the concerns                     conclusions on how best to value
                                                 Please reference the Regulation                         voiced by many industry representatives                production for royalty purposes.
                                                 Identifier Number (RIN) 1012–AA20 in                    in workshops during the public                         Concurrently with this notice, ONRR is
                                                 your comments. See also Public                          comment period that preceded the 2017                  publishing an Advance Notice of
                                                 Availability of Comments under                          Valuation Rule’s promulgation. Records                 Proposed Rulemaking seeking
                                                 Procedural Matters.                                     of those workshops, industry comments,                 comments on whether revisions are
                                                    • Electronically: Go to                              and other public comments may be                       appropriate or needed to the pre-
                                                 www.regulations.gov. In the entry titled                viewed at https://onrr.gov/Laws_R_D/                   existing regulations governing royalty
                                                 ‘‘Enter Keyword or ID,’’ enter ‘‘ONRR–                  FRNotices/AA13.htm.                                    values, including comments on whether
                                                 2017–0002,’’ and then click ‘‘Search.’’                    On February 27, 2017, in response to                the 2017 Valuation Rule should
                                                 Follow the instructions to submit public                the petitioners’ lawsuits and their                    ultimately be retained or repromulgated,
                                                 comments. We will post all comments.                    request to ONRR to stay implementation                 in whole or in part.
                                                    • Email comments to Armand                           of the 2017 Valuation Rule, ONRR                          ONRR’s pre-existing valuation rules
                                                 Southall, Regulatory Specialist, at                     postponed implementation of the 2017                   are still authorized by, and consistent
                                                 armand.southall@onrr.gov.                               Valuation Rule, pending judicial review,               with, applicable law, including 5 U.S.C.
                                                    • Hand-carry or mail comments,                       by notice published in the Federal                     301 et seq., 25 U.S.C. 396 et seq., 396a
                                                 using an overnight courier service, to                  Register. 82 FR 11823.                                 et seq., 2101 et seq.; 30 U.S.C. 181 et
                                                                                                            ONRR is now proposing to repeal the                 seq., 351 et seq., 1001 et seq., 1701 et
                                                 the Office of Natural Resources
                                                                                                         2017 Valuation Rule in its entirety.                   seq.; 31 U.S.C. 9701; 43 U.S.C. 1301 et
                                                 Revenue, Building 53, Entrance E–20,
                                                                                                         Repeal would be consistent with the                    seq., 1331 et seq., and 1801 et seq.
                                                 Denver Federal Center, West 6th Ave.
                                                                                                         President’s January 30, 2017, Executive
                                                 and Kipling St., Denver, Colorado                                                                              II. Explanation of Proposed
                                                                                                         Order on Reducing Regulation and
                                                 80225.                                                                                                         Amendments
                                                                                                         Controlling Regulatory Costs. It would
                                                 FOR FURTHER INFORMATION CONTACT:  For                   (a) preserve the regulatory status quo                    ONRR proposes to repeal the 2017
                                                 comments or questions on procedural                     while ONRR reconsiders whether                         Valuation Rule in its entirety. If,
                                                 issues, contact Armand Southall, ONRR,                  revisions are appropriate or needed to                 following public comment, ONRR
                                                 at (303) 231–3221, or email to                          the pre-existing regulations governing                 publishes a final rule repealing the 2017
                                                 armand.southall@onrr.gov.                               royalty values; (b) avoid the costs to                 Valuation Rule in its entirety, then 30
nlaroche on DSK30NT082PROD with PROPOSALS




                                                 SUPPLEMENTARY INFORMATION:                              both government and industry of                        CFR parts 1202 and 1206 would revert
                                                                                                         converting to controversial new royalty                to read as they did before ONRR
                                                 I. Background                                           reporting and payment systems while                    promulgated the 2017 Valuation Rule.
                                                    On July 1, 2016, ONRR published in                   the reconsideration takes place; (c)                   Part 1202 would read as published in
                                                 the Federal Register the Consolidated                   eliminate the need for continued and                   the July 1, 2015, edition of title 30 of the
                                                 Federal Oil & Gas and Federal & Indian                  uncertain litigation over the validity of              Code of Federal Regulations (CFR),
                                                 Coal Valuation Reform Rule, which was                   the 2017 Valuation Rule, and (d)                       which is at https://www.gpo.gov/fdsys/
                                                 effective on January 1, 2017 (2017                      enhance the lessees’ ability to timely                 pkg/CFR-2015-title30-vol3/pdf/CFR-


                                            VerDate Sep<11>2014   15:42 Apr 03, 2017   Jkt 241001   PO 00000   Frm 00017   Fmt 4702   Sfmt 4702   E:\FR\FM\04APP1.SGM   04APP1


                                                 16324                     Federal Register / Vol. 82, No. 63 / Tuesday, April 4, 2017 / Proposed Rules

                                                 2015-title30-vol3-part1202.pdf. Part                    achieving regulatory ends. The                            c. Would not have significant adverse
                                                 1206 would read as published in the                     Executive Order directs agencies to                    effects on competition, employment,
                                                 July 1, 2015, edition of title 30 of the                consider regulatory approaches that                    investment, productivity, innovation, or
                                                 Code of Federal Regulations, which is at                reduce burdens and maintain flexibility                the ability of U.S.-based enterprises to
                                                 https://www.gpo.gov/fdsys/pkg/CFR-                      and freedom of choice for the public                   compete with foreign-based enterprises.
                                                 2015-title30-vol3/pdf/CFR-2015-title30-                 where these approaches are relevant,                   This proposed rule would benefit U.S.-
                                                 vol3-part1206.pdf.                                      feasible, and consistent with regulatory               based enterprises.
                                                                                                         objectives. E.O. 13563 emphasizes
                                                 III. Section-by-Section Analysis                                                                               5. Unfunded Mandates Reform Act
                                                                                                         further that regulations must be based
                                                    The proposed and final rules for the                 on the best available science and that                   This proposed rule would not impose
                                                 2017 Valuation Rule, including their                    the rulemaking process must allow for                  an unfunded mandate on State, local, or
                                                 section-by-section analyses, are at                     public participation and an open                       Tribal governments, or the private sector
                                                 https://onrr.gov/Laws_R_D/FRNotices/                    exchange of ideas. We developed this                   of more than $100 million per year. This
                                                 AA13.htm. A repeal of the 2017                          proposed rule in a manner consistent                   proposed rule would not have a
                                                 Valuation Rule would return each                        with these requirements.                               significant or unique effect on State,
                                                 section to its reading prior to the July 1,                The President’s January 30, 2017,                   local, or Tribal governments, or the
                                                 2016, publication of the 2017 Valuation                 Executive Order on Reducing                            private sector. Therefore, we are not
                                                 Rule. With repeal, the section-by-section               Regulation and Controlling Regulatory                  required to provide a statement
                                                 analyses may be found in the preambles                  Costs, as implemented under February                   containing the information set out in the
                                                 for ONRR’s and its predecessors’ prior                  2, 2017, Interim Guidance issued by                    Unfunded Mandates Reform Act (2
                                                 rulemakings as published in the Federal                 OIRA, imposes certain requirements for                 U.S.C. 1501 et seq.). See the 2017
                                                 Register. The Federal Register volume                   every rule considered significant under                Valuation Rule, under Procedural
                                                 and page number citations for those                     E.O. 12866. First, every new significant               Matters, item 1, starting at 81 FR 43359,
                                                 prior rulemakings, including their                      rule requires the repeal of two rules.                 and item 5 at 81 FR 43368.
                                                 preambles, may be found in the Code of                  Second, an agency must fully offset the
                                                 Federal Regulations, 30 CFR parts 1202                                                                         6. Takings (E.O. 12630)
                                                                                                         total incremental cost of significant new
                                                 and 1206, as they existed before the July               regulations, including repealed                           Under the criteria in E.O. 12630, this
                                                 1, 2016, publication of the 2017                        regulations, finalized in fiscal year 2017.            proposed rule would not have
                                                 Valuation Rule. For part 1202 the                       Since this proposed rule—which is                      significant takings implications. This
                                                 Federal Register citations are at https://              itself a repeal of an existing rule—is not             proposed rule would apply to Federal
                                                 www.gpo.gov/fdsys/pkg/CFR-2015-                         a significant rule under E.O. 12866, it                oil, Federal gas, Federal coal, and Indian
                                                 title30-vol3/pdf/CFR-2015-title30-vol3-                 does not require the repeal of two other               coal leases only. This proposed rule
                                                 part1202.pdf. For part 1206, the Federal                existing rules, and the agency is not                  would not be a governmental action
                                                 Register citations are at https://                      required to offset its cost against the cost           capable of interference with
                                                 www.gpo.gov/fdsys/pkg/CFR-2015-                         of other fiscal year 2017 rules.                       constitutionally protected property
                                                 title30-vol3/pdf/CFR-2015-title30-vol3-                                                                        rights. This proposed rule does not
                                                 part1206.pdf.                                           3. Regulatory Flexibility Act
                                                                                                                                                                require a Takings Implication
                                                 IV. Procedural Matters                                     The Department of the Interior                      Assessment.
                                                                                                         certifies that this proposed rule would
                                                 1. Summary Cost and Royalty Impact                                                                             7. Federalism (E.O. 13132)
                                                                                                         not have a significant economic effect
                                                 Data                                                    on a substantial number of small entities                 Under the criteria in E.O. 13132, this
                                                   Repeal would negate the cost and                      under the Regulatory Flexibility Act (5                proposed rule would not have sufficient
                                                 royalty impact of the 2017 Valuation                    U.S.C. 601 et seq.). See the 2017                      Federalism implications to warrant the
                                                 Rule. That cost and royalty impact is                   Valuation Rule, Procedural Matters,                    preparation of a Federalism Assessment.
                                                 described in the final 2017 Valuation                   item 1, starting at 81 FR 43359, and item              The management of Federal oil and gas
                                                 Rule, under Procedural Matters, item 1,                 3, starting at 81 FR 43367.                            leases and Federal and Indian coal
                                                 starting at 81 FR 43359.                                                                                       leases is the responsibility of the
                                                                                                         4. Small Business Regulatory
                                                                                                                                                                Secretary of the Interior. This proposed
                                                 2. Regulatory Planning and Review                       Enforcement Fairness Act
                                                                                                                                                                rule would not impose administrative
                                                 (Executive Orders 12866, 13563, and                       This proposed rule is not a major rule               costs on States or local governments.
                                                 Executive Order 13771 on Reducing                       under 5 U.S.C. 804(2), the Small                       This proposed rule also does not
                                                 Regulation and Controlling Regulatory                   Business Regulatory Enforcement                        substantially and directly affect the
                                                 Costs Dated January 30, 2017)                           Fairness Act. This proposed rule:                      relationship between the Federal and
                                                   Executive Order (E.O.) 12866 provides                   a. Would not have an annual effect on                State governments. Because this rule, if
                                                 that the Office of Information and                      the economy of $100 million or more.                   promulgated as a final rule, would not
                                                 Regulatory Affairs (OIRA) of the Office                 We estimate the maximum effect as a                    alter that relationship, it does not
                                                 of Management and Budget (OMB) will                     reverse of the impacts described in the                require a Federalism summary impact
                                                 review all significant rules. The Office                2017 Valuation Rule, under Procedural                  statement.
                                                 of Information and Regulatory Affairs                   Matters, item 1, starting at 81 FR 43359,              8. Civil Justice Reform (E.O. 12988)
                                                 has determined that this rule is not                    and item 4, 81 FR 43368.
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                                                 significant.                                              b. Would not cause a major increase                    This proposed rule would comply
                                                   Executive Order 13563 reaffirms the                   in costs or prices for consumers,                      with the requirements of E.O. 12988, for
                                                 principles of E.O. 12866, while calling                 individual industries, Federal, State, or              the reasons we outline in the following
                                                 for improvements in the Nation’s                        local government agencies, or                          paragraphs. Specifically, this proposed
                                                 regulatory system to promote                            geographic regions. See the 2017                       rule:
                                                 predictability, to reduce uncertainty,                  Valuation Rule, under Procedural                         a. Would meet the criteria of § 3(a),
                                                 and to use the best, most innovative,                   Matters, item 1, starting at 81 FR 43359,              which requires that we review all
                                                 and least burdensome tools for                          and item 4, 81 FR 43368.                               regulations to eliminate errors and


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                                                                           Federal Register / Vol. 82, No. 63 / Tuesday, April 4, 2017 / Proposed Rules                                                  16325

                                                 ambiguity and to write them to                          not involved in any of the extraordinary                Dated: March 30, 2017.
                                                 minimize litigation.                                    circumstances listed in 43 CFR 46.215                  Amy Holley,
                                                   b. Would meet the criteria of § 3(b)(2),              that would require further analysis                    Acting Assistant Secretary for Policy,
                                                 which requires that we write all                        under NEPA. The procedural changes                     Management and Budget.
                                                 regulations in clear language using clear               resulting from the repeal of the 2017                  [FR Doc. 2017–06617 Filed 4–3–17; 8:45 am]
                                                 legal standards.                                        Valuation Rule would have no                           BILLING CODE 4335–30–P

                                                 9. Consultation With Indian Tribal                      consequences on the physical
                                                 Governments (E.O. 13175)                                environment. This proposed rule would
                                                                                                         not alter, in any material way, natural                DEPARTMENT OF THE INTERIOR
                                                    The Department strives to strengthen                 resources exploration, production, or
                                                 its government-to-government                            transportation.                                        Office of Natural Resources Revenue
                                                 relationship with the Indian Tribes
                                                 through a commitment to consultation                    12. Effects on the Energy Supply (E.O.                 30 CFR Parts 1202 and 1206
                                                 with the Indian Tribes and recognition                  13211)
                                                                                                                                                                [Docket No. ONRR–2017–0002; DS63644000
                                                 of their right to self-governance and                     This proposed rule would not be a                    DR2000000.CH7000 178D0102R2]
                                                 Tribal sovereignty. Under the                           significant energy action under the
                                                 Department’s consultation policy and                                                                           RIN 1012–AA21
                                                                                                         definition in E.O. 13211, and, therefore,
                                                 the criteria in E.O. 13175, we evaluated                would not require a Statement of Energy                Federal Oil and Gas and Federal and
                                                 this proposed rule and determined that                  Effects.                                               Indian Coal Valuation
                                                 it would potentially affect Federally-
                                                 recognized Indian Tribes. We                            13. Clarity of This Regulation                         AGENCY: Office of Natural Resources
                                                 determined that this rule would restore                                                                        Revenue (ONRR), Interior.
                                                 the historical valuation methodology for                   Executive Orders 12866 (section                     ACTION: Advance Notice of Proposed
                                                 coal produced from Indian leases. Our                   1(b)(12)), 12988 (section 3(b)(1)(B)), and             Rulemaking (ANPRM).
                                                 previous and planned activities include:                13563 (section 1(a)), and the
                                                    (a) As described in the 2017 Valuation               Presidential Memorandum of June 1,                     SUMMARY:    The Office of Natural
                                                 Rule under Procedural Matters, item 9,                  1998, would require us to write all rules              Resources Revenue (ONRR) requests
                                                 at 81 FR 43368, we consulted with the                   in Plain Language. This means that each                comments and suggestions from affected
                                                 affected Tribes on a government-to-                     rule that we publish must: (a) Have                    parties and the interested public on
                                                 government basis in preparing the 2017                  logical organization; (b) use the active               whether revisions to the regulations
                                                 Valuation Rule. We also will consult                    voice to address readers directly; (c) use             governing the valuation, for royalty
                                                 with the affected Tribes about potential                clear language rather than jargon; (d) use             purposes, of oil and gas produced from
                                                 repeal of the 2017 Valuation Rule.                      short sections and sentences; and (e) use              Federal onshore and offshore leases and
                                                    (b) We will fully consider Tribal                    lists and tables wherever possible.                    coal produced from Federal and Indian
                                                 views in the final rule.                                   If you feel that we have not met these              leases, are needed and, if so, what
                                                                                                         requirements, send your comments to                    specific revisions should be considered.
                                                 10. Paperwork Reduction Act                                                                                    On July 1, 2016, ONRR published a final
                                                                                                         armand.southall@onrr.gov. To better
                                                    This proposed rule:                                  help us revise this rule, make your                    rule, Consolidated Federal Oil and Gas
                                                    (a) Does not contain any new                         comments as specific as possible. For                  and Federal and Indian Coal Valuation
                                                 information collection requirements.                    example, you should tell us the                        Reform (2017 Valuation Rule). ONRR
                                                    (b) Does not require a submission to                 numbers of the sections or paragraphs                  subsequently stayed the effective date of
                                                 OMB under the Paperwork Reduction                       that you think we wrote unclearly,                     that rule pending resolution of
                                                 Act of 1995 (44 U.S.C. 3501 et seq). See                which sections or sentences are too                    litigation. As a result of the stay, the
                                                 5 CFR 1320.4(a)(2).                                                                                            regulations in effect prior to January 1,
                                                                                                         long, the sections where you feel lists or
                                                    This proposed rule, if promulgated as                                                                       2017 (‘‘pre-existing regulations’’) remain
                                                                                                         tables would be useful, etc.
                                                 a final rule, will leave in tack the                                                                           in effect. In a separate notice, ONRR is
                                                 information collection requirements that                14. Public Availability of Comments                    seeking comments on a proposed rule to
                                                 OMB already approved under OMB                                                                                 repeal the 2017 Valuation Rule to
                                                 Control Numbers 1012–0004, 1012–                          Before including your address, phone                 maintain the status quo in which the
                                                 0005, and 1012–0010.                                    number, email address, or other                        pre-existing regulations remain in effect
                                                                                                         personal identifying information in your               while ONRR reconsiders whether
                                                 11. National Environmental Policy Act                   comment, you should be aware that                      changes made by the 2017 Valuation
                                                 of 1969 (NEPA)                                          your entire comment—including your                     Rule are needed or appropriate.
                                                   This proposed rule would not                          personal identifying information—may                   DATES: You must submit your comments
                                                 constitute a major Federal action,                      be made publicly available at any time.                by May 4, 2017.
                                                 significantly affecting the quality of the              While you can ask us, in your comment,
                                                                                                                                                                ADDRESSES: You may submit comments
                                                 human environment. We are not                           to withhold your personal identifying
                                                                                                                                                                to ONRR on this ANPRM by any of the
                                                 required to provide a detailed statement                information from public view, we                       following methods. Please reference the
                                                 under NEPA because this rule qualifies                  cannot guarantee that we will be able to               Regulation Identifier Number (RIN)
                                                 for categorically exclusion under 43                    do so.                                                 1012–AA21 in your comments.
                                                 CFR 46.210(i) in that this is ‘‘. . . of an             List of Subjects in 30 CFR Parts 1202                     • Electronically: Go to http://
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                                                 administrative, financial, legal,                       and 1206                                               www.regulations.gov. In the entry titled
                                                 technical, or procedural nature. . . .’’                                                                       ‘‘Enter Keyword or ID,’’ enter ‘‘ONRR–
                                                 This rule also qualifies for categorically                Coal, Continental shelf, Government                  2017–0002,’’ then click ‘‘Search.’’
                                                 exclusion under Departmental Manual,                    contracts, Indian lands, Mineral                       Follow the instructions to submit public
                                                 part 516, section 15.4.(C)(1) in that its               royalties, Natural gas, Oil, Oil and gas               comments. We will post all comments.
                                                 impacts are limited to administrative,                  exploration, Public lands—mineral                         • Email comments to Luis Aguilar,
                                                 economic, or technological effects. We                  resources, Reporting and recordkeeping                 Regulatory Specialist, at Luis.Aguilar@
                                                 also have determined that this rule is                  requirements.                                          onrr.gov.


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Document Created: 2017-04-03 23:53:55
Document Modified: 2017-04-03 23:53:55
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionProposed Rules
ActionProposed rule.
DatesYou must submit comments on or before May 4, 2017.
ContactFor comments or questions on procedural issues, contact Armand Southall, ONRR, at (303) 231-3221, or email to [email protected]
FR Citation82 FR 16323 
RIN Number1012-AA20
CFR Citation30 CFR 1202
30 CFR 1206
CFR AssociatedCoal; Continental Shelf; Government Contracts; Indian Lands; Mineral Royalties; Natural Gas; Oil; Oil and Gas Exploration; Public Lands-Mineral Resources and Reporting and Recordkeeping Requirements

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