82 FR 16325 - Federal Oil and Gas and Federal and Indian Coal Valuation

DEPARTMENT OF THE INTERIOR
Office of Natural Resources Revenue

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

The Office of Natural Resources Revenue (ONRR) requests comments and suggestions from affected parties and the interested public on whether revisions to the regulations governing the valuation, for royalty purposes, of oil and gas produced from Federal onshore and offshore leases and coal produced from Federal and Indian leases, are needed and, if so, what specific revisions should be considered. On July 1, 2016, ONRR published a final rule, Consolidated Federal Oil and Gas and Federal and Indian Coal Valuation Reform (2017 Valuation Rule). ONRR subsequently stayed the effective date of that rule pending resolution of litigation. As a result of the stay, the regulations in effect prior to January 1, 2017 (``pre-existing regulations'') remain in effect. In a separate notice, ONRR is seeking comments on a proposed rule to repeal the 2017 Valuation Rule to maintain the status quo in which the pre-existing regulations remain in effect while ONRR reconsiders whether changes made by the 2017 Valuation Rule are needed or appropriate.

[Federal Register Volume 82, Number 63 (Tuesday, April 4, 2017)]
[Proposed Rules]
[Pages 16325-16327]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-06600]


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DEPARTMENT OF THE INTERIOR

Office of Natural Resources Revenue

30 CFR Parts 1202 and 1206

[Docket No. ONRR-2017-0002; DS63644000 DR2000000.CH7000 178D0102R2]
RIN 1012-AA21


Federal Oil and Gas and Federal and Indian Coal Valuation

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

ACTION: Advance Notice of Proposed Rulemaking (ANPRM).

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SUMMARY: The Office of Natural Resources Revenue (ONRR) requests 
comments and suggestions from affected parties and the interested 
public on whether revisions to the regulations governing the valuation, 
for royalty purposes, of oil and gas produced from Federal onshore and 
offshore leases and coal produced from Federal and Indian leases, are 
needed and, if so, what specific revisions should be considered. On 
July 1, 2016, ONRR published a final rule, Consolidated Federal Oil and 
Gas and Federal and Indian Coal Valuation Reform (2017 Valuation Rule). 
ONRR subsequently stayed the effective date of that rule pending 
resolution of litigation. As a result of the stay, the regulations in 
effect prior to January 1, 2017 (``pre-existing regulations'') remain 
in effect. In a separate notice, ONRR is seeking comments on a proposed 
rule to repeal the 2017 Valuation Rule to maintain the status quo in 
which the pre-existing regulations remain in effect while ONRR 
reconsiders whether changes made by the 2017 Valuation Rule are needed 
or appropriate.

DATES: You must submit your comments by May 4, 2017.

ADDRESSES: You may submit comments to ONRR on this ANPRM by any of the 
following methods. Please reference the Regulation Identifier Number 
(RIN) 1012-AA21 in your comments.
     Electronically: Go to http://www.regulations.gov. In the 
entry titled ``Enter Keyword or ID,'' enter ``ONRR-2017-0002,'' then 
click ``Search.'' Follow the instructions to submit public comments. We 
will post all comments.
     Email comments to Luis Aguilar, Regulatory Specialist, at 
[email protected].

[[Page 16326]]

     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 questions on procedural issues, 
contact Luis Aguilar, Regulatory Specialist, ONRR, at (303) 231-3418 or 
email to [email protected]. For questions on technical issues, 
contact Michael DeBerard, Asset Valuation, ONRR, at (303) 231-3884 or 
email to [email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    The Secretary of the Interior's authority to establish the value of 
Federal oil and gas production through regulations is contained in the 
mineral leasing statutes (43 U.S.C. 1334; 30 U.S.C. 189 and 359). 
Likewise, the Secretary of the Interior's authority to establish the 
value of Federal and Indian coal production through regulations is 
contained in the Indian Mineral Leasing Act of 1938, the Mineral 
Leasing Act, and the Mineral Leasing Act for Acquired Lands (25 U.S.C. 
396d; 30 U.S.C. 189 and 359). In addition, virtually all Federal oil 
and gas and Federal and Indian coal leases expressly reserve to the 
Secretary the authority to establish the reasonable value of production 
or provide that the royalty value be set by regulation.
    The 2017 Valuation Rule addressed Federal oil and gas and Federal 
and Indian coal valuation in one rulemaking. The 2017 Valuation Rule 
sought to (1) offer greater simplicity, certainty, clarity, and 
consistency in product valuation for mineral lessees and mineral 
revenue recipients; (2) ensure that Indian mineral lessors receive the 
maximum revenues from coal resources on their land, consistent with the 
Secretary's trust responsibility and lease terms; (3) decrease lessees' 
cost of compliance and ONRR's cost to ensure compliance; and (4) 
provide early certainty to ONRR and stakeholders. Whether the 2017 
Valuation Rule is repealed or retained, ONRR seeks to accomplish the 
goals outlined in that rulemaking. For additional information, see 81 
FR 43338, dated July 1, 2016.
    This ANPRM is intended to solicit comments and suggestions for two 
possible scenarios. If the 2017 Valuation Rule is repealed, ONRR seeks 
comments regarding whether a new valuation rule is needed and, if so, 
what particular issues the new valuation rule should address. 
Alternatively, if the 2017 Valuation Rule is not repealed, ONRR is 
seeking comments as to what changes should be made to ONRR's valuation 
regulations in 30 CFR parts 1202 and 1206, as amended by the 2017 
Valuation Rule. Please segregate comments to each of these two 
scenarios.
    Soliciting comments and involving all affected stakeholders early 
in the rulemaking process are the hallmarks of good government and 
smart business practice. The purpose of this rulemaking process is to 
provide regulations that would (1) offer greater simplicity, certainty, 
clarity, and consistency in production valuation for mineral lessees 
and mineral revenue recipients; (2) be easy to understand; (3) decrease 
industry's cost of compliance; and (4) provide early certainty to 
industry, ONRR, and stakeholders.

II. Public Comment Procedures

    ONRR is not obligated to consider comments that we receive after 
the close of the comment period for this ANPRM, or comments that are 
delivered to an address other than those listed in the ADDRESSES 
section of this notice. After the comment period for this ANPRM closes, 
ONRR will review all comment submissions. Upon consideration, ONRR may 
publish a notice of proposed rulemaking.

A. Written Comment Guidelines

    We are particularly interested in receiving comments and 
suggestions about the topics identified in section III, Description of 
Information Requested. Your written comments should: (1) Be specific; 
(2) explain the reason for your comments and suggestions; (3) address 
the issues outlined in this notice; and (4) where possible, refer to 
the specific provision, section, or paragraph of statutory law, case 
law, lease term, or existing regulations that you are addressing.
    The comments and recommendations that are most useful and have 
greater likelihood of influencing decisions on the content of a 
possible future proposed rule are: (1) Comments and recommendations 
supported by quantitative information or studies; and (2) comments that 
include citations to, and analyses of, the applicable laws, lease 
terms, and regulations.

B. 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 review, we cannot guarantee that we will be 
able to do so.

III. Description of Information Requested

    We are interested in submission of proposals that will lead to 
improved efficiencies for lessees, ONRR, and other stakeholders. In 
considering proposed changes to the existing Federal oil and gas 
royalty valuation regulations at 30 CFR parts 1202 and 1206, we have 
three goals in mind, as follows:
     Provide clear regulations that are understandable and 
consistent with fulfilling the Secretary's responsibility to ensure 
fair value for the public's resources.
     Provide valuation methods that are as efficient as 
practicable for lessees to use.
     Provide early certainty that correct payment has been 
made.
    As discussed above, ONRR requests comments on two possible 
scenarios pending the outcome of the proposed rule to repeal the 2017 
Valuation Rule. We recognize the outcome of the proposed rule to repeal 
the 2017 Valuation Rule may not be known by the closing date of this 
ANPRM. Therefore, we encourage commenters to consider both of the two 
possible outcomes of that rulemaking when preparing their submissions 
as follows.
    1. If the 2017 Valuation Rule is repealed, ONRR requests comments 
regarding whether a new rulemaking would be beneficial or is necessary. 
If commenters believe that a new rulemaking would be beneficial, ONRR 
requests comments regarding specific changes to the Federal oil and gas 
and Federal and Indian coal valuation regulations.
    2. If the 2017 Valuation Rule is not repealed, ONRR requests 
comments regarding whether potential changes to the 2017 Valuation Rule 
are needed. Possible topics include, but are not limited to:
     Whether ONRR should have one rule addressing Federal oil 
and gas and Federal and Indian coal valuation, or separate rulemakings.
     How best to value non-arm's-length coal sales and/or sales 
between affiliates.
     Whether ONRR should update the valuation regulations 
governing non-arm's-length dispositions of Federal gas, and if so, how.
     Whether ONRR should address marketable condition and/or 
unbundling, and if so, how.

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     Whether ONRR should have a default provision clarifying 
how ONRR will exercise Secretarial authority to determine value for 
royalty purposes in cases where there is misconduct, breach of duty to 
market, or ONRR cannot otherwise verify value. Other potential 
valuation methods or necessary changes to ONRR valuation regulations.
    ONRR appreciates your participation and looks forward to receiving 
your comments.

    Dated: March 30, 2017.
Amy Holley,
Acting Assistant Secretary for Policy, Management and Budget.
[FR Doc. 2017-06600 Filed 4-3-17; 8:45 am]
 BILLING CODE 4335-30-P