Amendments to Regulations Governing Collection of Royalties, Rentals, Bonuses, and Other Monies Due the Federal Government

DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR Part 218

RIN 1010-AC01

Amendments to Regulations Governing Collection of Royalties,

Rentals, Bonuses, and Other Monies Due the Federal Government

AGENCY: Minerals Management Service (MMS), Interior.

ACTION: Final rulemaking.

-----------------------------------------------------------------------

SUMMARY: MMS is amending its regulations that specify how payments are

made for mineral lease royalties, rentals, and bonuses. The changes are

needed to incorporate revised U.S. Treasury requirements. Also, MMS has

clarified language for other parts of this regulation.

DATES: Effective date May 22, 1997.

FOR FURTHER INFORMATION CONTACT: David S. Guzy, Chief, Rules and

Procedures Staff, phone (303) 231-3432, FAX (303) 231-3194, e-Mail

David__G[email protected].

SUPPLEMENTARY INFORMATION: The principal authors of this rule are David

J. Menard of the Reports and Financial Division, Financial Branch, Jim

McNamee of the Office of Policy and Management Improvement, and David

S. Guzy of the Rules and Procedures Staff, Lakewood, Colorado.

I. Background

The purpose of this final rule is to comply with the U.S.

Treasury's final rule amending 31 CFR Part 206, Management of Federal

Agency Receipts, Disbursements, and Operation of the Cash Management

Improvement Fund (59 FR 4536, 1/31/94). That rule requires executive

agencies to use effective, efficient disbursement mechanics,

principally Electronic Funds Transfer (EFT), in making their payments.

That rule also requires executive agencies to use EFT for collecting

funds.

MMS has written this rule in plain English.

II. Comments on Proposed Rule

MMS published a proposed rule on April 19, 1996, at 61 FR 17267.

The proposed rulemaking provided for a 60-day comment period, which

ended June 18, 1996, and was extended to July 19, 1996, by a Federal

Register Notice (61 FR 28829, June 6, 1996).

General Comments

Commenters believe writing the rule in plain English improves

clarity and makes the rule easier to understand. Commenters stated they

will continue to work with MMS to identify the most efficient and

practical way to make payments to MMS.

Response. We appreciate these comments and will continue the plain

English concept in all future rulemakings.

Specific Comments

Comment on Sec. 218.51(a). One commenter did not think it is

necessary to define person or payment when used in their common or

ordinary meaning.

Response. MMS has determined that these definitions lend clarity

and conform with other MMS rules. No change will be made in the final

rule.

Comment on Sec. 218.51(b). The same commenter pointed out that the

word general was misspelled.

Response. We will correct the spelling in the final rule.

Comment on Sec. 218.51(b)(1). Five commenters responded as follows:

(1) The section is vague and arbitrary. Sentence is circular and

describes a discretionary standard. As written, the payer must use EFT

anytime MMS requires EFT regardless of the reasoning or criteria or

basis for the decision. They suggested alternative language.

(2) The requirement is in conflict with the preamble. Their opinion

is that making all payments by EFT is neither cost effective nor

practicable. They said many Indian payments cost more to process than

the invoice they are paying and adding the cost of making these

payments by EFT would not be cost effective. They recommend a threshold

of $10,000.

(3) They feel there is a conflict with Sec. 218.51(b) which says

``to the extent it is cost effective and practicable,'' and this

section which says if instructed you must pay by EFT. They recommend a

threshold of $10,000.

(4) They feel the statement of ``If MMS instructs you to use * *

*.'' conflicts with the general spirit of the preamble. They feel the

additional cost of making EFT payments is not justifiable from the

company standpoint. They recommend the $10,000 limit be maintained.

(5) They do not believe the additional cost of making EFT payments

is justifiable from the company standpoint. They recommend retaining

the current $10,000 threshold.

Response. MMS does not intend to be arbitrary in implementing the

Treasury EFT requirement. The Treasury rule does not allow for any type

of stated threshold. Our elimination of the threshold is based on

Treasury's requirement that we increase our efficiency in collecting

Government monies. We feel the new rule is consistent with the Treasury

rule.

We are aware of the cost and technical issues associated with

making EFT payments. The U.S. Treasury is working with the banking

industry to broaden the use of EFT. MMS believes our record of working

with payors in implementing EFT has not been arbitrary or burdensome.

It has not been our policy nor will it be our policy to unduly burden

industry with EFT payment requirements. As EFT becomes more widespread,

the cost should decrease; therefore, EFT will be more beneficial to

industry and the Government.

Comment on Sec. 218.51(b)(3). One commenter stated that the

paragraph is confusing and should be rewritten to clearly define

intent. The commenter asked two questions: (1) ``Does this statement

mean that separate reports or report lines are required? (2) Are

separate checks or separate lines on the check stub or other payment

document needed?''

Response. The intent of this paragraph is to emphasize the fact

that you must not mix Federal and Indian lease payments on a payment

document. In other words, you must not include any Indian lease

payments in your Federal payment documents or any Federal lease

payments in your Indian payment documents. This proposed rule deals

only with payments and does not change any reporting requirements.

[[Page 19498]]

Comment on Sec. 218.51(b)(5). One commenter recommended adding the

word document to the end of the sentence.

Response. We do not believe the suggested change adds to or

clarifies the sentence.

Comment on Sec. 218.51(c)(2). One commenter thought the word ``it''

was vague and open to more than one interpretation and that the

sentence contained repetitive statements. They suggested alternative

language.

Response. Because this word was not clear in its meaning, we

replaced the word ``it'' with the words ``your payment.''

Comment on Sec. 218.51(c)(4). One commenter pointed out that the

proposed wording does not agree with Sec. 218.51(d)(1) which says use

the address supplied by a tribe. Section 218.51(c)(4) says to use

address supplied by MMS.

Response. MMS agrees that the proposed rule is not consistent on

the source of the address. There may be instances where the tribe will

change banks or have to change the lockbox address. MMS intends to

notify payors of this change as promptly as possible, but you may

receive your first notification from the tribe. The lockbox agreements

are with the tribes and their banks and payors should follow the

tribe's instructions for a lockbox address. We will change

Sec. 218.51(d)(1) to eliminate the inconsistency.

Comment on Sec. 218.51(f). One commenter felt that the word

document should be added to the end of the first sentence.

Response. We do not believe the suggested change adds to or

clarifies the sentence.

Comment on Sec. 218.51 (e) through (g). One commenter pointed out

that the first sentence repeats what is in the title. The commenter

felt that any address change for courier deliveries would require a

rulemaking because the address is included in the regulation. The

commenter also suggested using declarative sentences for (c), (f), and

(g).

Comment on Sec. 218.51(f)(3)(ii). One commenter stated that the

section has been oversimplified; similarly, paragraphs (f) and (g) have

been oversimplified. The commenter recommends alternative language.

Comment on Sec. 218.51(f)(4)(iii). One commenter recommended

rewriting the paragraph to improve clarity.

Response. MMS agrees and reworded the paragraphs for clarification

in the final rule. As to the comment on a change of address requiring a

rulemaking, no policy nor procedure would be affected since MMS can

notify payors of an address change outside of the rulemaking process.

Comment on Sec. 218.51(g)(3). One commenter stated that an entity

is responsible for its own actions and a payor should not be

responsible for banks' actions.

Response. MMS does and will continue to hold the payor responsible

for the actions of your agent for making accurate and timely payments

on your behalf.

III. Procedural Matters

The Regulatory Flexibility Act

The Department certifies that this rule will 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.). The rule is needed

to comply with U.S. Treasury requirements.

Executive Order 12630

The Department certifies that the rule is not a governmental action

capable of interference with constitutionally protected property

rights. Thus, a Takings Implication Assessment need not be prepared

under Executive Order 12630, ``Governmental Actions and Interference

with Constitutionally Protected Property Rights.''

Executive Order 12988

The Department has certified to the Office of Management and Budget

that these proposed regulations meet the applicable standards provided

in section 2(a) and (b)(2) of Executive Order 12988.

Executive Order 12866

This document has been reviewed under Executive Order 12866 and is

not a significant regulatory action.

Paperwork Reduction Act

The rule has been examined under the Paperwork Reduction Act of

1995 and has been found to contain no new reporting and information

collection requirements.

Unfunded Mandate Reform Act of 1995

The Department has determined and certifies according to the

Unfunded Mandates Reform Act, 2 U.S.C. 1502 et seq., that this rule

will not impose a cost of $100 million or more in any given year on

State, local, and tribal governments, or the private sector.

National Environmental Policy Act of 1969

We have determined that this rulemaking is not a major Federal

action significantly affecting the quality of the human environment,

and a detailed statement under section 102(2)(C) of the National

Environmental Policy Act of 1969 [42 U.S.C. 4332 (2)(C)] is not

required.

List of Subjects in 30 CFR Part 218

Coal, Continental shelf, Electronic funds transfers, Geothermal

energy, Government contracts, Indian lands, Mineral royalties, Oil and

gas exploration, Public lands--mineral resources.

Dated: April 14, 1997.

Bob Armstrong,

Assistant Secretary--Land and Minerals Management.

For the reasons set out in the preamble, 30 CFR Part 218 is amended

as follows:

PART 218--COLLECTION OF ROYALTIES, RENTALS, BONUSES AND OTHER

MONIES DUE THE FEDERAL GOVERNMENT

1. The authority citation for part 218 is revised to read as

follows:

Authority: 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.A. 3335; 43 U.S.C. 1301 et seq. 1331 et seq., 1801 et seq.

2. Section 218.51 is revised to read as follows:

Sec. 218.51 How to make payments.

(a) Definitions.

ACH--Automated Clearing House. A type of EFT using the ACH network.

Courtesy Notice--An MMS-issued notice of rental or bonus due.

Deferred Bonus Payment--Lease bonus paid in equal annual

installments over a specified number of years.

EFT--Electronic Funds Transfer. Any paperless transfer of funds a

bank initiates through an electronic terminal. For MMS purposes, EFT is

limited to FEDWIRE and ACH transfers.

FEDWIRE--A type of EFT using the Federal Reserve Wire network.

Invoice Document Identification--The MMS-assigned invoice document

identification (four alpha and eight numeric characters).

Payment--Any monies for royalty, bonus, rental, late payment

charge, assessment, penalty, or other money sent to MMS.

Person--Any individual, firm, corporation, association,

partnership, consortium, or joint venture (when established as a

separate entity). The term does not include Federal agencies.

Report--Form MMS-2014, Report of Sales and Royalty Remittance.

RIK--Royalty in kind.

(b) General Instructions. You must make all payments to MMS

[[Page 19499]]

electronically to the extent it is cost effective and practical. If you

pay money to MMS or to an Indian tribe or allottee, you must follow

these procedures:

(1) If MMS instructs you to use EFT, you must use EFT for all

payments to MMS and/or a tribe.

(2) Contact MMS before using EFT. MMS will provide you with EFT

payment instructions.

(3) Separate any payments on a Federal lease from any payments on

an Indian lease.

(4) If you are not required to use EFT, use one of the following

types of payment documents. MMS prefers that you use these payment

documents in the order presented:

(i) Commercial check drawn on a solvent bank;

(ii) Certified check;

(iii) Cashier's check;

(iv) Money order;

(v) Bank draft drawn on a solvent bank; or

(vi) Federal Reserve check.

(5) You must include your payor code on all payments.

(6) You must pay in U.S. dollars.

(c) How to complete a non-EFT payment. (1) Make any payment on a

Federal lease payable to: ``Department of the Interior-Minerals

Management Service'' or ``DOI-MMS.''

(2) For an Indian allottee payment, send a separate payment for

each Bureau of Indian Affairs (BIA) agency or area office represented

by the leases on your report or invoice document. You must include the

name of the applicable BIA agency or area office on your payment. Make

your payment document payable to: ``Department of the Interior-Minerals

Management Service for BIA [Name] Agency (allotted)'' or ``DOI-MMS for

BIA [Name] Agency (allotted).''

(3) For an Indian tribal payment other than a lockbox payment, send

a separate payment for each tribe represented by the leases on your

report or invoice document. You must include the name of the Indian

tribe on your payment. Make it payable to: ``Department of the

Interior-Minerals Management Service for BIA [Name of Tribe]'' or

``DOI-MMS for BIA [Name of Tribe].''

(4) For an Indian tribal lockbox payment, follow the instructions

MMS provides you on how to report and make the lockbox payment. These

instructions are specific to each tribe's lockbox written agreement

with the bank authorized to receive payments on the tribe's mineral

leases. You will receive these instructions from MMS when you are

required to use a tribal lockbox for reports and payments.

(d) Where to send a non-EFT payment when you use the U.S. Postal

Service. (1) For a payment to an Indian tribal lockbox, send your

payment to the appropriate tribal lockbox address.

(2) For a Federal nonproducing lease rental or deferred bonus

payment, send it to:

Minerals Management Service, Royalty Management Program, P.O.

Box 5640, Denver, CO 80217-5640.

(3) For all other Federal and Indian lease payments other than

those going to an Indian tribal lockbox, send them to:

Minerals Management Service, Royalty Management Program, P.O.

Box 5810, Denver, CO 80217-5810.

(e) Where to send a non-EFT payment when you use a courier or

overnight delivery service. You should send this type of payment to:

Minerals Management Service, Royalty Management Program,

Building 85, Denver Federal Center, Room A-212, Denver, CO 80225-

0165.

(f) How to prepare and what to include on your payment document.

(1) For Form MMS-2014 payments, you must include both your payor code

(block 2) and your payor-assigned document number (block 3a).

(2) For invoice payments, including RIK invoice payments, you must

include both your payor code and invoice document identification (four-

letter prefix and eight-digit number).

(3) For bonus payments:

(i) For one-fifth bonus payments for offshore oil, gas, and sulphur

leases, follow the instructions in the Notice of Lease Offering.

(ii) For payment of the four-fifths bonus for an offshore lease,

use EFT and follow the instructions in Sec. 218.155(c).

(iii) For the successful bidder's bonus in the competitive sale of

a coal, geothermal, or offshore mineral (other than oil, gas or sulfur)

lease, follow the instructions and terms of the Notice of Competitive

Lease Sale.

(iv) For installment payments of deferred bonuses, you must use

EFT.

(4) If you are paying a lease rental you must:

(i) See 30 CFR 218.155(c) for instructions on how to pay first-year

rentals of an offshore oil, gas, or sulfur lease; (ii) See the Notice

of Lease Offering for instructions on how to pay first-year rentals

other than those covered in paragraph (f)(4)(i) of this section.

(iii) Include the MMS Courtesy Notice, when provided, or write your

payor code and government-assigned lease number on the payment document

when paying a rental that is not reported on Form MMS-2014 and not paid

by EFT.

(g) When is a payment to MMS due? (1) All payments are due to MMS

at the time law, regulation, or lease terms require unless MMS approves

a change according to 30 CFR 243.2, ``Suspensions of orders or

decisions pending appeal.'' If you file an appeal, and the requirement

to submit payment is suspended, the original payment due date for

purposes such as calculating late payment interest is not changed.

(2) If you use the U.S. Postal Service, courier, or overnight mail

to send your payment, it is due at the MMS addresses in paragraphs (d)

and (e) of this section before 4 p.m. Mountain Time on the due date,

regardless of when you sent it.

(3) If you use EFT to send your payment, it is due in the MMS

account by the payment due date. You are responsible for your actions

or your bank's actions that cause a late or incorrect payment. You will

not be held responsible for mechanical or system failures of EFT

payments.

(h) What happens if payments are late or overdue?

(1) If MMS receives your payment late, MMS will impose a late-

payment interest charge under 30 CFR 218.54.

(2) If you do not pay an amount you owe, MMS may assess civil

penalties under 30 CFR 241.20 and 241.51 or other applicable

regulations.

3. Paragraph (b)(1) of Sec. 218.155 is amended by revising the last

sentence to read as follows:

Sec. 218.155 Method of payment.

* * * * *

(b)(1) * * * EFT may be used as a method of payment for the one-

fifth bonus bid amount.

* * * * *

[FR Doc. 97-10388 Filed 4-21-97; 8:45 am]

BILLING CODE 4310-MR-P