# Call for Comment on Proposed Policy Options and Announcement of Related Workshop for Outer Continental Shelf (OCS) Natural Gas and Oil Resource Management

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URL: https://www.frixlaw.com/law-library/documents/fr%3A95-9704

## Record

- **Collection:** Federal Register
- **Document type:** Notice
- **Published:** April 20, 1995
- **Citation:** 60 FR 19767

## Text

DEPARTMENT OF THE INTERIOR

Call for Comment on Proposed Policy Options and Announcement of
Related Workshop for Outer Continental Shelf (OCS) Natural Gas and Oil
Resource Management

AGENCY: Minerals Management Service (MMS), Department of the Interior.

ACTION: Call for Comment on proposed policy options and announcement of
workshop.

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SUMMARY: On December 7, 1993, the MMS published a Call for Public
Comment on General Leasing Policies in the Central and Western Gulf of
Mexico Planning Areas. The MMS has reviewed the comments it received
and conducted additional analyses. In this Call for Comment, the MMS
describes specific policy options being considered.
The primary objectives to be met are to slow expected declines in
infrastructure and production in producing areas, to promote
development of infrastructure in certain non-producing areas, and to
assure continued receipt of fair market value for OCS leases.
Implementation of one new policy, expanding the tract-specific data
made available to all prospective bidders prior to a sale, has just
begun. Other options under consideration are to publish specific
guidelines for the treatment of applications for royalty relief, to
offer more flexible royalty terms on some new leases, to increase
flexibility to respond to requests for extensions in lease terms, to
modify rental and minimum bid policies, to revise bid adequacy
procedures, and to propose coastal impact assistance.
A 2-day workshop to discuss current policy options will be held in
the Gulf of Mexico region in mid-June 1995. The first day will be
devoted to an overall discussion of the various options. The second day
will be spent on the guidelines being developed by the MMS for royalty
relief on active leases. Details will be published in a second Federal
Register Notice later this month.

DATES: Written responses should be received by July 19, 1995. Comments
also may be presented in person at the workshop announced in this
notice.

ADDRESSES: Written responses should be mailed to the Acting Deputy
Associate Director, Resources and Environmental Management, Minerals
Management Service (MS-4430), 381 Elden Street, Herndon, VA 22070. Hand
deliveries may be made at 381 Elden Street, Room 3408, Herndon,
Virginia (dial 1178 from lobby telephone). Envelopes or packages should
be marked ``Comments on Proposed Policy Options for the Gulf of
Mexico.'' If any privileged or proprietary information is submitted
that the respondent wishes to be treated as confidential, both the
envelope and the contents should be marked ``Confidential
Information.''

FOR FURTHER INFORMATION CONTACT: For information pertaining to this
Call for Comment on Proposed Policy Options and Announcement of
Workshop, telephone Marshall Rose or Mary Vavrina, Economic Evaluation
Branch, at (703) 787-1536.

SUPPLEMENTARY INFORMATION: In the December 7, 1993, Call for Public
Comment on General Leasing Policies in the Central and Western Gulf of
Mexico Planning Areas, suggestions and comments were requested from
States, local governments, Federal agencies, the oil and gas industry,
environmental groups, and other interested individuals and groups to
assist the MMS and the Department of the Interior in planning for the
Central and Western GOM sales remaining under the Comprehensive OCS
Natural Gas and Oil Resource Management Program for 1992-1997. After
considering the comments received and conducting additional internal
analyses, the MMS and the Department decided that, overall, the
regulations and policies already in place were appropriate. However,
the MMS did identify several areas where improvement was possible and
has developed a number of options for further consideration.
The MMS has decided that the current approach of offering annual,
area-wide sales in the Central and Western GOM is the most appropriate
leasing system for those planning areas at this time. In other planning
areas, the MMS may hold narrowly targeted sales, more typical tract
selection sales, or tract nomination sales (where all tracts
specifically nominated are offered, absent environmental or other
concerns).
The MMS also has decided that an extension of the period used to
evaluate bids from a lease sale is no longer needed. Its Resource
Evaluation staff now has sufficient training in the use of new computer
systems and interpretation of technical data to complete the evaluation
of bids within the existing 90-day requirement.
Several commenters supported impact assistance. The Administration
recognizes that coastal states and localities can incur impacts
disproportionate to their share of the national benefits. The
Administration supports impact assistance as a means to more equitably
share the benefits and burdens of OCS production, protect coastal and
marine resources, and strengthen the Federal-State partnership. The
critical issue in designing an impact assistance program, however, is
the budget offsets required so that there is no net impact on the
Federal Treasury. The Administration is currently reviewing impact
assistance but does not have a proposal at this time.

Primary Objectives

In considering the main purpose of the OCS oil and gas program (to
contribute to the Nation's energy supply) and the range of
opportunities currently available to make beneficial changes within its
existing authority, the MMS decided to focus on three objectives:

--Slow expected declines in infrastructure and production in the
producing portions of the Central and Western GOM
--Promote development of infrastructure in promising deep-water
portions of the Central and Western GOM (and possibly in frontier
planning areas) to encourage the domestic market to replenish reserves
and to increase its ability to [[Page 19768]] respond to sudden
decreases in the availability of moderately priced supplies of oil and
gas from foreign sources
--Assure receipt of fair market value for OCS leases.

Policy Options for Comment

I. New Policy: Information on Tracts with Indicated Hydrocarbons

The MMS believes that early identification of available tracts with
low geologic risk (those with indicated hydrocarbons) would be a
service to potential bidders and would result in greater competition
for some tracts. Scarce resources may make it difficult for some
potential bidders to identify the tracts on their own. Fifty percent of
the tracts with high bids rejected between 1990-92 had well bores with
confirmed resources. In subsequent sales, both the number of bids per
tract and high bids, on average, increased significantly. These
findings suggest that wider dissemination of relevant geologic data on
discovered resources would increase the bidding competition and high
bid amounts in future sales.
An initial Indicated Hydrocarbon List has been prepared and
distributed that identifies relevant unleased tracts by class in the
Central GOM. The three classes are those that were fields or portions
of fields that produced; those with well bores that qualified under 30
CFR 250.11 but did not produce; and those with well bores that the MMS
believes would qualify under 30 CFR 250.11 but were never classified
and never produced. Basic information relating to production, well
bores, and pay range for every tract in each class also is included in
the list. The data are available in hard copy and digital format. An
updated list will be available to the public approximately 3 months
before each GOM sale.
Specific Information Requested
The MMS would like two kinds of information on this new policy:
evaluations of the usefulness of the information provided for the May
1995 Central GOM sale and suggestions for improvement or expansion. If
the information has not been useful, why not? Are there ways to make it
more useful? Are there other kinds of useful, non-proprietary data that
could be provided by the MMS that are not readily available on the
private market?

II. Royalty Policies for Active Leases

The MMS is authorized by the OCS Lands Act to reduce or eliminate
royalties on oil-, gas-, and sulphur-producing leases in order to
increase production from those leases. The MMS is considering
guidelines for such royalty relief that would distinguish between two
categories of requests. One is relief for expense type projects, which
is designed to promote continued production from a lease by lowering
lease royalty rates for a relatively short duration. The other is
relief for capital investment projects, which focuses on encouraging
incremental production from specific projects on the lease by lowering
reservoir or lease royalty rates for extended periods. Royalty relief
would be granted only for leases already in production.
For expense type projects, MMS would try to set royalty rates so
that operators would more than cover their cost of continuing
operations. For capital investment projects, to the extent possible
through adjusting royalties, MMS will seek to ensure a targeted rate of
return on the new capital invested before all but a nominal royalty
becomes due.
Qualification for relief under expense type projects typically
would require that the lease has a negative operating cash flow that is
expected to persist for subsequent periods. Depending upon the
anticipated stability of future prices and costs, MMS may use either a
fixed or variable adjustment in the royalty rate for qualifying
projects.
Under either approach for expense type projects, the MMS would
calculate the minimal amount of relief needed to stimulate continuing
operations, e.g., a royalty rate at which the lessee retains 25 percent
of the difference between revenues and operating costs (excluding
royalties). At about the point where the lease revenues would cover
operating costs with the full royalty (the break-even operating level),
the original lease royalty rate would apply.
When prices and/or costs are expected to be highly variable, or the
interval between review periods is extended, then a variable royalty
rate system would be considered. In this approach, the royalty rate
that applies in any period could vary as product prices and production
levels change. As with the case of the fixed royalty modification, the
functional form of the royalty rate would reflect only that amount of
relief needed to induce continued production, e.g., the lessee retains
25 percent of the difference between revenues and operating costs
(excluding royalties), up to about the break-even operating level.
Qualification for relief under capital investment projects would
require the lessee to demonstrate that the eligible project is not
expected to generate an adequate rate of return to justify the needed
expenditures which would promote increased production. In those cases
where MMS is convinced that the additional production directly
attributable to the proposed project is not economical under existing
royalty terms, it would first determine whether royalty relief would
make the proposed project worth pursuing.
If this appears to be the case, then the project may qualify for
relief. Following documented payments for the development activities,
incremental production would be charged a royalty at a predetermined
lower rate, e.g., one-twenty fourth of the wellhead value of
production. This rate would remain in effect until the project earned a
specified rate of return, e.g., equal to the BBB bond rate, allowing
for realized receipts, actual investment and transportation costs, and
predetermined allowances for operating and overhead costs.
Production value in excess of the break-even operating level at the
reduced royalty rate subsequently would be charged at the original
royalty rate. Further, the lessee incurs a repayment obligation if the
project proves, in retrospect, not to have needed the full amount of
relief. Over the production interval between the investment break-even
point at the reduced royalty rate and the break-even point at the
original royalty rate, the lessee will incur an obligation to repay an
increasing proportion of the difference in royalties owing to approval
of the original application for relief. The required repayment will be
the amount needed to provide the lessee with the specified return on
investment up to that point. No additional obligation beyond the
original royalty rate is incurred thereafter.
The repayment obligation would need to be paid either at the time
the project ceases producing commercial amounts of production in excess
of the investment break-even operating level at the modified royalty
rate, or at the time the project generates sufficient revenues to break
even on the original investment at the original royalty rate, whichever
occurs first. The lessee could further manage the size and timing of
the repayment obligation by requesting that the terms of the royalty
modification cease earlier than planned and possibly forwarding payment
at that time for any incurred or anticipated repayment obligations.
In addition, studies are underway to estimate the extent to which a
particular category of reserves known as ``behind-the-pipe,'' tend to
be left in the ground when the producing reserves are abandoned.
``Behind-the-pipe'' reserves [[Page 19769]] are those through which an
operator has drilled--but is not producing--to get to another reservoir
that is producing. If it is not economic to produce these reservoirs
through an existing wellbore, it is highly unlikely that in the future
they would justify the cost of drilling a new well, plus the attendant
costs of completion and production. The following additional options
may be considered for behind-the-pipe reserves:
A. Develop general (across-the-board or interpretive) guidelines
for royalty relief for this category of reserves.
B. Develop procedures for case-by-case review of royalty rate
requests for ``behind-the-pipe'' and related reserves that involve
reductions in royalties and periodic reviews.
C. Initiate administrative reviews of development and conservation
issues that could substitute for or supplement royalty relief in
inducing lessees to produce socially beneficial reserves. Specifically,
a lessee's plan to abandon a well or move to a new horizon would be
reviewed in more depth to ensure that economically recoverable reserves
are not left behind.
Specific Information Requested
The MMS is seeking comments on several questions pertaining to the
proposed more specific interpretive guidelines for granting royalty
relief on active leases.
1. Is the demarcation by the two types of projects the best
approach? Are there other types of projects not adequately addressed by
the proposed guidelines?
2. Are there particular categories of tracts that should be
considered?
3. Would the establishment of more specific, interpretive
guidelines encourage more lessees to apply for such relief? If so, how
much additional production of oil, gas, and sulphur might result from
expense-type projects? From capital investment projects? Would this
appreciably affect the kind and level of infrastructure in the GOM?
4. Are there aspects of the proposal that would be burdensome or
that would otherwise discourage lessees from applying? For example,
would the documentation or payback requirements be problems?
5. A fee might be charged to cover the costs of processing
applications. How high could this fee be without discouraging
applicants?

III. Royalty Policies for New Leases

During the past 10 years, about 240 tracts have been relinquished
despite the discovery of potentially economical reserves. An estimated
2 billion barrels of oil equivalent have been discovered but not
produced on 30 deep-water leases. The Government holds in its inventory
over 700 tracts in water depths of at least 200 meters each of which
has, at least once, received a bonus bid of more than one million
dollars. Thus, more flexible royalty policies might encourage
production of discovered reserves when the price of the oil and gas
exceeds the cost, excluding royalties, of bringing those resources to
market.
The following options are being considered:
A. Offer reduced or deferred royalties on tracts that have a
history of prior discoveries without production.
B. In deep-water areas, offer tracts with suspensions of royalties
on substantial volumes or market values of production.
C. Offer suspension of royalties on tracts that have never received
a bid or have not received a bid for over 10 years.
The MMS intends to seek the flexibility to offer royalty
suspensions or lower fixed royalty rates for new leases. The OCS Lands
Act requires for specified bidding systems that leases stipulate an
initial royalty rate of at least 12\1/2\ percent. However, alternative
bidding systems can be implemented under Section 8 of the OCS Lands Act
[43 U.S.C. 1337(a)(1)(H)], as long as they are consistent with the duty
to assure receipt of fair market value and help accomplish the purposes
and policies of the Act. The new bidding systems could provide for
leases containing royalty suspensions or lower fixed royalty rates for
all tracts in deep water or for selected tracts, such as previously
relinquished tracts with qualifying wells or marginal tracts in shallow
waters.
By offering the same favorable royalty terms to all bidders, the
MMS should be able to obtain correspondingly higher bonus bids for such
leases. (Bid adequacy procedures would remain in effect.) At the same
time, those who are successful in both bidding and exploration would
face lower royalty costs, allowing them to develop and produce
discoveries that would otherwise be uneconomic.
The MMS may want to provide additional or stronger incentives for
exploration and production in some frontier areas, where the value to
the Nation as a whole--but not the potential revenues for the lessee--
would exceed the private costs of developing and producing certain
discoveries. Additional exploration provides important information
about the geology and prospective nature of the area. Each discovery
that goes into production provides transportation and other
infrastructure that generates an increase in the value of blocks in the
vicinity of the development. Getting one or more leases in frontier
areas into production could reduce the perceived risk of subsequent
exploratory drilling and significantly improve the economics for future
production on other leases. Because the incentives are meant to help
compensate for the risks and costs that must be borne by those
undertaking early investment in exploration and infrastructure
development, they might be eliminated or offered in reduced amounts for
leases offered after the initial discoveries and development in a
targeted area.
For high-cost areas (such as the deep-water GOM) or frontier areas,
the MMS also is considering the possibility of offering tracts that are
larger than the standard size, in addition to favorable royalty terms
or other incentives.
Possible Rulemaking
The MMS is likely to publish a Notice of Proposed Rulemaking before
the end of the fiscal year that would propose changing the bidding
systems for newly offered tracts under the OCS Lands Act to permit the
MMS to (1) lower the prescribed minimum initial royalty rate below
12\1/2\ percent; (2) allow operating allowances in determining receipts
subject to royalty; (3) suspend or defer royalty for periods, volumes,
or values of production; and (4) extend the forms for calculating
royalty rates under variable rate systems to include product prices, as
well as value and amount of production. Ideally, the MMS would like to
have any regulatory changes in place in time to accommodate proposed
sale design options for the 1996 Central and Western GOM sales.
However, given the obstacles inherent in the current regulatory
process, an implementation target of 1997 sales may be more realistic.
Specific Information Requested
The MMS would like respondents to provide comments and suggestions
both on the additional authority it seeks and on the new policy options
it is considering.
First, which of the policy options above are most likely to help
achieve the stated objectives or other relevant objectives? To what
extent are they likely to make a difference? Are there ways to make
them more effective or more efficient? Are there other policy options
the MMS should be considering?
Second, if the MMS should be considering other alternative bidding
systems or related policy options for which it has general rulemaking
[[Page 19770]] authority, what regulatory changes would be most
appropriate?

IV. Increased Flexibility in Length of Lease Terms, With Possible
Changes in Rental Rates and Minimum Bids

Several industry respondents to the December 1993 Federal Register
Call for Public Comment requested increased flexibility involving
Suspensions of Operations (SOOs), Suspensions of Production (SOPs), and
similar provisions, particularly for leases on deep-water tracts. Some
lessees also have asked for more flexibility where sub-salt prospects
exist. Lessees have complained that technical data and information
developed for a prospect cannot always be evaluated in time to identify
optimal drill sites and commence drilling to better develop exploratory
targets within the primary lease term. There may be some benefit to
providing industry more time for analysis or other tasks leading to
exploration or development where adverse or unusual conditions exist.
However, there is an inventory of 3,000 undrilled tracts in
industry hands. Most leases in the GOM are either explored early in
their primary lease term or held undrilled until the end of their term.
Less than 1 percent of the deep-water leases that were issued for $50
per acre or less since 1982 have been drilled. The MMS would like to
grant additional flexibility where it is needed but also, where
possible, to encourage earlier drilling or relinquishment so that
tracts are not kept off the market by lessees who are unlikely to
undertake exploration activity. Changes in minimum bid and rental
policies, in combination with other new policies, may be an effective
way to achieve this.
Currently, leases are issued with 5-year, 8-year, and 10-year terms
for water depths of 400 meters or less, 400-900 meters, and greater
than 900 meters, respectively. The 8-year leases require that an
exploratory well be drilled within the first 5 years. With a few
exceptions, the lessee must demonstrate a qualifying discovery to hold
a lease beyond the primary term. Undrilled leases will be continued in
effect if the lease is part of a unit agreement with other leases with
a discovery, where there is continuous drilling, or as long as the
leases in the unit are under a SOO or an SOP. No regulation
specifically allows suspensions for the purpose of conducting analysis.
At present, the MMS is considering several options to increase
flexibility and/or to encourage diligence:
A. Offer 7- or 8-year leases on some tracts in less than 400 meters
of water based on pre-sale identification or post-sale evidence of
``adverse conditions,'' such as sub-salt prospects. Higher rental rates
(e.g., $25-$50 per acre, per year) could be charged in years 6-8.
B. Amend 30 CFR 250.13(b), by deleting the words ``where
environmental conditions warrant,'' to authorize MMS Regional Directors
to approve a period of time greater than 180 days between termination
of production, drilling, or well-reworking operations and the
commencement of production, new drilling, or well-reworking operations
in cases that are in the national interest. Escalating rental rates
could be imposed for the additional years.
C. Develop general guidelines for escalating rentals that would
apply to broad categories of tracts (e.g., 5-year lease term, 8-year
lease term, etc.) in combination with a reduced minimum bid level
(e.g., $10 per acre) so that the net present value of the reduced
minimum bid and escalating rentals would be about equal to the present
value of a $25 per acre minimum bid and $5 per-acre, per-year rental
during the first 2-3 years of the lease. In addition, the escalating
rental provision could substitute for the rigid requirement to initiate
exploration drilling by the fifth year of leases with an 8-year term.
If escalating rental rates are imposed, another option would be to
allow the additional rental payments to be applied to future royalty
obligations from the same lease.
Possible Rulemaking
The MMS may issue a Notice of Proposed Rulemaking to delete the
words ``where environmental conditions warrant'' from 30 CFR 250.13(b)
and insert language specifically granting the Regional Director
authority to require higher rental (or minimum royalty) rates during
the additional time requested by, and granted to, the lessee under this
regulation. Other appropriate changes to 30 CFR 250.13 and to 30 CFR
250.10 may be considered as well.
Specific Information Requested
Respondents may wish to consider the following questions.
1. What flexibility not now available to lessees would help
increase production and develop or maintain infrastructure? In what
cases should the flexibility be available? In what cases should it not
be available (e.g., where it merely allows delays that deprive other
companies the opportunity to lease and expeditiously develop the
resources)?
2. Are there cases where this need might be temporary? For example,
will new technology and additional experience make it possible to
evaluate sub-salt prospects in less time?
3. What can the MMS do to provide flexibility where needed without
ignoring its responsibility to enforce statutory diligence
requirements? Should the MMS be considering other changes in its
regulations?
4. When combined with additional flexibility, would rentals of $25-
$50 per acre for additional years be appropriate? Would they provide
incentives for diligence or would they be too low to influence timing
decisions? Would they defeat the purpose of providing the flexibility?
5. Would a lower minimum bid, combined with an increasing rental
rate help increase production without imposing undesirable timing
constraints? If so, what levels of minimum bid and rentals would be
effective and appropriate?

V. Bid Adequacy Procedures

The Bid Adequacy decision procedures have essentially remained the
same since the advent of the area-wide leasing program in 1983. In
recent years, it has been shown that rejected tracts, on average,
receive much higher bids in subsequent sales. (This finding takes into
account the foregone original bids for those few rejected tracts not
receiving bids in subsequent sales.) Use of the 3-Bid Rule and the Bid
Averaging Rule occasionally has resulted in the acceptance of some
tracts that were highly valued by the MMS but received relatively low
bids. The Office of the Inspector General has expressed concern that
the Bid Averaging Rule places too much emphasis on losing bids in
determining whether to accept the high bid on tracts about which the
MMS has relatively good information.
In Phase 1 of the two-phased bid adequacy procedures, a high bid on
a wildcat or confirmed tract can be accepted without further MMS
evaluation if the tract receives three or more bids. The 3-Bid Rule was
originally adopted to place reliance on the market to ensure receipt of
fair market value when there was a sufficient number of competitive
bids. Also, the rule was adopted to devote scarce tract evaluation
resources on those cases where competition was weakest (i.e., tracts
receiving one or two bids) or where MMS data were considered most
reliable and some bidders might have an informational advantage over
the rest of the market (i.e., drainage and development tracts).
Possible changes in Phase 1 procedures that are being considered
include eliminating the 3-Bid Rule and [[Page 19771]] applying the 3-
Bid Rule to wildcat tracts only.
In Phase 2 of the two-phased bid adequacy procedures, the MMS
estimate of tract value is averaged (geometrically) with the bids
submitted. If the high bid exceeds the ``average'' bid, it is accepted.
This averaging rule is applied to wildcat and confirmed tracts
receiving two bids and to drainage and development tracts receiving
three or more bids.
The three options currently being considered for Phase 2 procedures
include replacing the geometric average with the median of the MMS
tract value estimate and a lower percentile parameter as the number of
bids on the tract increases, replacing the geometric average with an
arithmetic average in the GOM Region and with the median elsewhere, and
eliminating the geometric average with no replacement.
Whether or not changes are made in its bid adequacy procedures, the
MMS is likely to adopt or retain at least one criterion incorporating
market information provided by bids. In the past, changes in bid
adequacy procedures have applied uniformly to all OCS lease sales,
regardless of the planning area.
Should a decision be made to change the status quo, a notice to
prospective bidders would be published in the Federal Register, and a
discussion of the changes would be included in the appropriate Notice
of Sale.
Specific Information Requested
The MMS would like any information that would help it, in the face
of changing conditions, to continue to fulfill its obligation under the
OCS Lands Act to assure the receipt of fair market value for oil and
gas leases. Given the high return on rejected bids, what changes if any
might be appropriate in current bid adequacy procedures? Are there
options not identified above that MMS should consider?

Request for Comments

Specific kinds of comments are requested at the end of each of the
five groups of policy options identified immediately above. In general,
it would be helpful to the MMS for respondents to focus on the extent
to which the options would help to achieve the objectives stated in
this Call for Comment.
The MMS also requests any information indicating that certain
options may have the potential for important negative consequences or
would be less effective or less efficient than other actions under MMS
control.
In addition to comments on the workability and possible
effectiveness of individual options, the MMS would appreciate any
suggestions for combinations of policies that might be superior to any
individual options in achieving the stated objectives.
Respondents should not limit themselves to addressing the questions
in this Call for Comment and should feel free to respond through the
workshop, through written comments, or both. None of the policies
discussed in this Call for Comment, with the exception of publishing
the Indicated Hydrocarbon List, will receive final approval until after
the comment period has closed and all comments--whether made at the
workshop or submitted in writing--have been considered fully.

Workshop on Proposed Policy Options

A 2-day workshop to discuss the options presented in this Call for
Comment will be held in the Gulf of Mexico region in mid-June 1995. The
most likely site is Houston, with Metairie, Louisiana, as an alternate,
and the tentative dates are June 14-15. The dates, exact location, and
agenda will be announced in a Federal Register Notice later this month.
The first day of the workshop will be devoted to an overall
discussion of the full set of options in this Call for Comment. This
will include a limited discussion of the proposed guidelines for
royalty relief on active leases and the purposes they are designed to
achieve. The second day will be reserved for a more detailed discussion
of how the proposed guidelines for royalty relief on active leases
would work. All interested parties are invited to both sessions, but it
would be especially valuable for those who might write the applications
for royalty relief under the new guidelines to attend on the second
day.
While the workshop is open, free of charge, to anyone who wishes to
attend, the MMS requests that those wishing to attend any part of the
two-day session register in advance. Registration information will be
provided in the upcoming Notice announcing details of the workshop.
Assuming that a decision is made to issue specific royalty relief
guidelines after comments have been analyzed, a training session will
be held to explain the plan for implementation of the final guidelines.

Timing and Means of Implementation

As mentioned above, the MMS may issue two Notices of Proposed
Rulemaking to gain more flexibility in the implementation of existing
statutory authority for royalty rates and the effective length of lease
terms. The decision to seek additional regulatory flexibility should
not be interpreted as a decision to implement any particular policy
option.
Most of the other options being considered could be implemented
under existing authority. If, after considering the responses to this
Call for Comment and any information gained from the workshop, a
decision is made to change existing policies, the MMS hopes to announce
in the Federal Register a package of proposals in time for
implementation in the mid-1996 Western GOM sale (Sale 161) and
subsequent GOM sales. Ideally, any decisions to change policies toward
active leases would be made at the same time.
However, the MMS is not committed to adopting any specific options
or to meeting a specific schedule for implementation. Regardless of any
preferred timing, the MMS will assure that it has had adequate
opportunity to hear and consider comments from industry, States, and
other affected parties prior to any final decisions. In addition, the
MMS will provide affected parties sufficient time to adjust to the
decisions that eventually come out of this process.
Cynthia Quarterman,
Director, Minerals Management Service.
[FR Doc. 95-9704 Filed 4-19-95; 8:45 am]
BILLING CODE 4310-MR-P

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A95-9704. Public record. Not legal advice.