Review of Existing Regulations

DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR Chapter II

Review of Existing Regulations

AGENCY: Minerals Management Service (MMS), Interior.

ACTION: Review of regulations; request for comment.

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

SUMMARY: Since 1994, MMS has been performing annual reviews of its

significant regulations and asking the public to participate in these

reviews. The purpose of the reviews is to identify and eliminate

regulations that are obsolete, ineffective or burdensome. In addition,

the reviews are meant to identify essential regulations that should be

revised because they are either unclear, inefficient or interfere with

normal market conditions.

The purpose of this document is to: Provide the public an

opportunity to comment on MMS regulations that should be eliminated or

revised, and provide a status update of the actions MMS has taken on

comments previously received from the public in response to documents

published March 1, 1994 (59 FR 9718), March 28, 1995 (60 FR 15888), and

May 20, 1996 (61 FR 25160).

DATES: Written comments must be received by June 23, 1997.

[[Page 19962]]

ADDRESSES: Mail written comments to Department of the Interior;

Minerals Management Service; Mail Stop 4230; 1849 C Street NW.,

Washington, DC 20240; Attention: Bettine Montgomery, MMS Regulatory

Coordinator, Policy and Management Improvement.

FOR FURTHER INFORMATION CONTACT: Bettine Montgomery, Policy and

Management Improvement, telephone (202) 208-3976; Fax (202) 208-4891.

SUPPLEMENTARY INFORMATION: MMS began a review of its regulations in

early 1994 under the directives contained in the President's Executive

Order 12866. The Executive Order calls for periodic regulatory reviews

to ensure that all significant regulations are efficient and effective,

impose the least possible burden upon the public, and are tailored no

broader than necessary to meet the agency's objectives and Presidential

priorities.

We invited the public to participate in the regulatory review. The

invitation was sent out via different media, namely a Federal Register

document dated March 1, 1994 (59 FR 9718), MMS and independent

publications, and public speeches by MMS officials during that time.

MMS received approximately 40 public comments which were almost

equally divided between its Royalty Management and Offshore Minerals

Management Programs. We acknowledged the comments in a July 15, 1994,

document (59 FR 36108) and set forth our planned actions to address the

comments, along with an estimated timetable for these actions.

In the March 28, 1995, document (60 FR 15888) and May 20, 1996,

document (61 FR 25160), MMS: (a) asked for further public comments on

its regulations, and (b) provided a status update of actions it had

taken on the major public comments received to date. We received 10

responses from the March 28, 1995, document and 5 responses from the

May 20, 1996, document. A number of the commentators expressed

appreciation for our streamlining efforts and responsiveness to

suggestions from our regulated customers.

This document updates the MMS planned actions and related

timetables on the major comments received to date. It also solicits

additional comments from the public concerning regulations that should

be either eliminated or revised. Since some of the public responses

received in response to prior documents contained comments on very

specific and detailed parts of the regulations, this document does not

address every one received. For information on any comment submitted

which is not addressed in this document, please contact Mrs. Montgomery

at the number and location stated in the forward sections of this

document.

MMS regulations are found at Title 30 in the Code of Federal

Regulations. Parts 201 through 243 contain regulations applicable to

MMS' Royalty Management Program; Parts 250 through 282 are applicable

to MMS' Offshore Minerals Management; and Part 290 is applicable to

Administrative Appeals.

Status Report

The following is a status report by program area on the comments

MMS has received, to date, on its regulations.

A. Offshore Minerals Management (OMM) Program

OMM is currently reviewing the following 15 sections of OMM

regulations, and also revising a lease document.

1. Regulations Applicable to Production in Deepwater (30 CFR Part 250,

Subpart H, Production)

Comments Received--(a) ``Revise current regulations to provide for

approval of extended flaring periods under certain situations (e.g.,

deepwater prospects, well tests, etc.) and clarify criteria for flaring

or venting small amounts of gas,''

(b) ``Revise requirements associated with subsea installations * *

*,'' etc.

Action Taken or Planned--MMS' workgroup on deepwater development

issued a final report which was approved by management in May 1995. The

report recommended that MMS evaluate and regulate deepwater production

activities through a ``total systems'' approach. Under this

recommendation, MMS issued a Notice to Lessees on August 9, 1996,

requiring lessees to submit a Deepwater Operations Plan for all

deepwater development projects, and projects using subsea production

technology. This plan will provide information demonstrating that the

lessee will develop a deepwater project in an acceptable manner. The

guidelines for these plans were developed by MMS in conjunction with

industry. This requirement was effective August 19, 1996.

As a followup issue, MMS and industry also worked together on a

Notice to Lessees on resource conservation. This notice provided

guidance on the information that the lessee must submit regarding

resource conservation for deepwater or subsea development projects. The

effective date of the notice was October 1, 1996.

Timetable--Completed.

2. Regulations Applicable to Blowout Preventer (BOP) Testing and

Maintenance Requirements (30 CFR 250.56 and 57)

Comments Received--``Revise BOP testing regulations to allow for

less frequent and shorter tests. Allow 14 day BOP test interval vs.

current 7 day * * *.''

Action Taken or Planned--On January 31, 1997, MMS issued a Notice

to Lessees allowing lessees to begin testing BOP equipment on intervals

up to 14 days. This action revised the longstanding requirement for

weekly testing of BOP's. MMS made the decision to allow the extended

testing timeframe based on a recently completed study of BOP

performance by an engineering consulting firm. The study concluded that

no statistical difference in failure rates existed between BOP's tested

every 7 days and those tested between the 8- to 14-day interval. The

new testing timeframe applies to drilling, sidetrack, and completion

activities, but not to workover activities since they were not examined

in the performance study.

Timetable--MMS has already begun the rulemaking process to

promulgate the testing timeframe requirements into the regulations and

plans to publish a proposed rule by mid-1997.

3. Regulations Governing Safety and Pollution Prevention Equipment

(SPPE) (30 CFR Subpart H)

Comments Received--(a) ``Reduce associated administrative burden on

lessees and operators by eliminating unnecessary recordkeeping

requirements (i.e., inventory lists, paperwork notifications, etc.).''

(b) ``Revise regulations governing Safety Valves to increase time

between test and allowable leakage rates.''

Action Taken or Planned--(a) On December 18, 1996 (61 FR 66639), we

published a proposed rule to revise the regulations governing SPPE.

This proposed rule addressed the concerns raised regarding

recordkeeping. The rule establishes the requirement for all lessees to

install quality assurance certified SPPE in wells after April 1, 1998.

For wells that have noncertified SPPE, the lessee must replace it with

certified SPPE when the equipment: (1) Fails during normal operations

or testing; or (2) is removed from service for any other reason.

(b) We are planning a research study in cooperation with industry

on the surface safety valves and subsurface

[[Page 19963]]

safety valves. This study will address the comment regarding safety

valves.

Timetable--(a) MMS will publish the final rule in the Federal

Register by December 1997. (b) The research study on the safety valves

will begin in the summer of 1997.

4. Regulations Governing Conservation of Resources and Diligence (30

CFR 250 Subpart A, General, and Subpart K, Oil and Gas Production

Rates)

Comments Received--(a) ``Revise Suspension of Production approval/

lease holding criteria * * *,'' (b) ``Revise Determination of Well

Producibility to make wireline testing and/or mud logging analysis

optional * * *,'' (c) ``revise current regulations to provide for

approval of extended flaring periods * * *,'' (d) ``Relax restrictions

on commingling reservoirs in a common wellbore * * *,'' (e) ``Allow

flexibility in the methods of testing subsea wells. * * *,'' (f) ``MMS

[should] determine and specify allowable volumes of liquid hydrocarbons

that lessees could burn without requesting approval.'' (g) ``consider

comments from the 11/30/95 MMS sponsored workshop to formulate policy

for granting SOP (suspension of production) approvals based on host

capacity delays, non-contiguous unitization, and market conditions/

economic viability.'' (h) ``Expand definition of lease holding activity

to include 3D seismic work.''

Action Taken or Planned--For (a) above, MMS published a final rule

on October 30, 1996 (61 FR 55885), to extend the period for holding a

lease beyond its primary term from 90 to 180 days. For (b), and (g)

above, MMS is currently rewriting Subpart A and Subpart K in plain

English. This effort will also include any changes needed to the

regulations. We will take into consideration industry's ideas on

changes, including the comments from the 11/30/95 workshop. For (d)

above, we issued a Notice to Lessees on April 24, 1995, that allowed

greater flexibility in dealing with commingling issues. For (e) above,

MMS will not change the regulations. Current regulations allow

operators to request that different testing methods be allowed when

conventional testing is impractical. For (c) and (f) above, MMS

addressed the flaring of gas and burning of liquid hydrocarbons in a

final rule that was published on May 20, 1996 (61 FR 25147). For (h)

above, MMS sent a Letter to Lessees on July 25, 1996, which addressed

this comment.

Timetable--Proposed rules rewriting Subparts A and K will be

published by December 1997.

5. Regulations Regarding Construction and Removal of Platforms and

Structures (30 CFR 250 Subpart I, Platforms and Structures)

Comments Received--(a) ``Modify platform design wave return period

calculation by placing a cap of 100 years on the field life calculation

* * *,'' (b) ``Adopt API RP2A (20th edition) Section 14, Surveys, in

its entirety * * *,'' (c) ``Revise site clearance requirements * * *,''

(d) ``Revise requirements for placing protective domes over well stubs

* * *,'' etc.

Action Taken or Planned--For (a), (c), and (d) above, MMS is

reviewing the draft proceedings for the International Workshop on

Offshore Lease Abandonment and Platform Disposal: Technology,

Regulation, and Environmental Effects, held on April 14-17, 1996. There

is a varying amount of research in progress at present to be followed

by rulemaking. For (b) above, we have adopted API RP2A (19th edition)

and are working with industry and the American Petroleum Institute

(API) on changes to the 20th edition. After the document is revised, we

will decide whether to incorporate it into our rules.

Timetable--For (a), (c), and (d) above, the Proceedings will be

published by summer 1997. For (b) above, Ongoing.

6. Regulations Applicable to Directional Surveys (30 CFR 250.51)

Comments Received--``Revise directional survey requirements to

allow a composite measurement-while-drilling directional survey to be

acceptable * * *.''

Action Taken or Planned--MMS is rewriting the regulations governing

Oil and Gas Drilling Operations, found in Subpart D, in plain English.

The rule is also being rewritten to keep pace with current technology.

Timetable--We plan to publish a proposed rule by December 1997.

7. Regulations Applicable to Daily Pollution Inspection Requirements

(30 CFR 250.41)

Comments Received--``Revise current requirements for daily

pollution inspection of unmanned production facilities * * *.''

Action Taken or Planned--On February 15, 1996, MMS issued a Notice

to Lessees regarding the pollution inspection frequency for unmanned

facilities. The current regulations allow operators to request a waiver

from the daily inspection of unmanned facilities. The Notice to Lessees

reviewed the criteria MMS uses in determining whether or not to grant

the waiver.

Timetable--MMS has no plans to change the regulations in this area.

8. Regulations Applicable to Production Safety System Training (30 CFR

250.214)

Comments Received --(a) ``Revise training regulations to reduce the

associated burden on operators by modifying requirements (e.g.,

frequency, refresher requirements, structure, etc.) and allow expanded

training delivery modes.'' (b) ``* * * training regulations (well-

control) are not clearly stated and often not relevant * * *.''

Action Taken or Planned--MMS rewrote the entire section (subpart O)

of training regulations in a plain English format and published a final

rule in the Federal Register on February 5, 1997 (62 FR 5320). This

revised rule addresses the concerns in comments (a) and (b) above. In

addition, we are considering developing a performance based training

program which would rely on industry to design its training needs. We

would monitor the program through tests and audits.

Timetable--Completed. Performance based training program still in

discussion stage.

9. Regulations Applicable to Pipelines and Pipeline Rights-of-Way (30

CFR 250 Subpart J)

Comments Received--Revise regulations to avoid duplication of

requirements between the Department of the Interior and the Department

of Transportation.

Action Taken or Planned--MMS has worked with the Department of

Transportation and other interested parties to develop a new memorandum

of understanding between the Department of the Interior and Department

of Transportation. The memorandum of understanding became effective on

December 10, 1996, and was published on February 14, 1997 (62 FR 7037).

MMS will clarify rules and remove redundant requirements.

Timetable--The agencies will begin new rulemaking to devise

compatible regulations during 1997.

10. Safety System Design and Installation (30 CFR 250.122)

Comments Received--``Revise approval process associated with

production safety system installations and routine modifications to

allow periodic updates recognizing compliance with API RP 75 (1st

Edition) * * *.''

Action Taken or Planned--We believe this comment was made in

connection with the Safety and Environmental Program (SEMP) initiative.

On July 18, 1996 (61 FR 37493), MMS published a notice recognizing the

efforts of many

[[Page 19964]]

offshore operators to adopt the SEMP initiative, as embodied in API RP

75 (1st Edition). In this notice we noted, however, that a lack of

strong evidence showing implementation of the SEMP plans prevented us

from declaring the industry's voluntary efforts to be successful at

that point. We are continuing to promote widespread adoption of SEMP

and are cooperating in an industrywide survey on SEMP implementation.

Timetable--Ongoing. The survey results will be available by summer

1997.

11. Model Unit Agreement (30 CFR 250.194)

Comments Received--``In several instances within the Model Unit

Agreement language, the defined terms are not used when it seems

appropriate. We recommend that the defined terms be used to avoid

confusion when reviewing the agreements.''

Action Taken or Planned--On July 3, 1996 (61 FR 28525), MMS

published a final rule which removed the Model Unit Agreement from the

Code of Federal Regulations. We have no plans to revise the Agreement

at this time. If there are any problems with the Agreement, send

specific comments for us to consider.

Timetable--Will consider specific comments when received.

12. Revision of the Process for Incorporating Codes and Standards by

Reference (30 CFR 250.1)

Comments Received--``* * * review individual documents when changed

and recommend adoption or rejection to reduce confusion as to the

standard that should be used.''

Action Taken or Planned--We agree with the intent of this

suggestion. We will investigate it from a legal and administrative

standpoint to see if it can be done.

Timetable--Ongoing.

13. Shallow Hazards Requirements (NTL No. 83-3)

Comments Received--``* * * revise NTL No. 83-3 which relates to

shallow hazards requirements. Industry has requested that MMS allow use

of navigational positioning equipment in lieu of buoying pipelines.''

Action Taken or Planned--We are revising NTL No. 83-3 and are in

the process of developing guidance for navigational positioning

equipment technology. MMS realizes the problem that this Navigational

Positioning equipment is not accurate unless it is calibrated

frequently.

Timetable--Ongoing.

14. Allocation Meter Facility Requirements (30 CFR 250.180(e))

Comments Received--``We suggest that the regulations be revised to

recognize the use of liquid turbine meters and the inability to

physically make adjustments to these types of meters, and to clarify

that samples should be taken proportional to flow to reflect present

industry practice.''

Action Taken or Planned--MMS published a proposed rule, ``Oil and

Gas Production Measurement, Surface Commingling, and Security,'' on

February 26, 1997 (62 FR 8665), that addresses this comment.

Timetable--The comment period on this proposed rule closes May 27.

15. Approval and Reporting Processes for Well-Completion Operations (30

CFR 250.83)

Comments Received--``* * * a recompletion operation requires that a

Well Summary report MMS-125 be filed within 30 days. Much of this data

is repetitious of data previously submitted on the Sundry Notice MMS-

124. The process could be changed to provide only data that has

changed.''

Action Taken or Planned--We will study this process to decide

whether or not to change reporting requirements through rulemaking.

Timetable--Ongoing.

16. Other MMS/Offshore Minerals Management Actions

MMS plans to review its Offshore lease document (MMS-2005) which

has not been revised since 1986. In addition to revising the language

into ``plain English,'' we will consider changes to the lease

provisions to reflect current policies and to address any issues that

may arise during this review. We welcome any comments on specific

changes that we should consider.

B. Royalty Management Program (RMP)

RMP is reviewing regulations in the following 11 subject areas.

1. Statute of Limitations and Record Retention

Comments Received

--``Statute of limitations is unclear.''

--``Establish a reciprocal 5-year statute of limitations from the date

an obligation becomes due.''

--``Absence of a record retention program creates some confusion.

Regulations should require record retention to coincide with the 5-year

statute of limitations.''

Action Taken or Planned--The Federal Oil and Gas Royalty

Simplification and Fairness Act (Act) was signed into law on August 13,

1996. The Act contains language to implement a 7-year statute of

limitations for MMS processes. We are determining what changes to make

to current accounting, compliance, and enforcement processes to comply

with the new requirements. After our review, we will be changing

processes, developing implementation plans, and making regulatory

changes.

Timetable--Ongoing.

2. Interest on Overpayments

Comment Received--``Interest accrual should be equitable between

the Agency and industry.''

Action Taken or Planned--The Act provides for the payment of

interest on overpayments for oil and gas leases on Federal lands. MMS

is designing system changes to implement the requirements of the Act

and preparing regulations to be published as proposed rules.

Timetable--Ongoing.

3. Gas Valuation

Comments Received

--(a) ``Define gross proceeds more equitably and clearly in this ever

changing gas marketing environment.''

--(b) ``It is important that the Federal Gas Valuation Rule final rule

not discriminate against producers which are affiliated with marketing

companies and are party to non-arms-length contracts.''

--(c) ``Extend the elimination of processing and transportation

allowance forms to oil.''

--(d) ``* * * commends the MMS on their use of negotiated rulemaking

process to address the valuation of gas. Rule should result in

administrative cost savings for all parties.''

--(e) ``If the Takes vs. Entitlements policy stays in effect, MMS

should strictly enforce reporting on actual quantities taken for all

industry participants.''

--(f) ``Eliminate Transportation and Processing Allowance Forms for

Indians.''

Action Taken or Planned--For (c) above, Revisions of the Valuation

Regulations Governing Allowances was published in the Federal Register

as a final rule on February 12, 1996 (61 FR 5448). This rule eliminated

most allowance forms filing requirements for oil, gas, and coal

produced from Federal leases.

For (a) above, on July 31, 1996 (61 FR 39931), MMS published a

proposed rule clarifying what deductions may be taken from gross

proceeds for the costs of transportation under Federal Energy

Regulatory Commission (FERC) Order

[[Page 19965]]

No. 636. We plan to publish the final rule by fall 1997.

For (a), (b), (d), and (e) above, the Federal Gas Valuation

proposed rule was published in the Federal Register on November 6, 1995

(60 FR 56007), and the comment period closed on February 5, 1996. The

proposed rule represents the consensus of the Federal Gas Valuation

Negotiated Rulemaking Committee with representation from MMS, industry,

and the States. The proposed rule would provide alternatives to using

gross proceeds as a basis for gas valuation, such as published natural

gas index prices.

MMS decided to reopen the public comment period and announced this

in a document published on May 21, 1996 (61 FR 25421). In this

document, we requested comments on five options which were developed

after evaluating the comments received on the proposed rule. MMS is

presently reviewing the comments on the options and determining how to

proceed.

For (f) above, a proposed rule developed by the Indian Gas

Valuation Negotiated Rulemaking Committee was published on September

23, 1996 (61 FR 49894). This rule addressed the valuation for royalty

purposes of natural gas produced from Indian leases. The rule proposes

to eliminate the transportation and allowance reporting forms for gas

from Indian leases. The proposed rule would add a methodology to

calculate the major portion value and an alternative methodology for

dual accounting as required by Indian lease terms. The proposed

rulemaking would simplify and add certainty to the valuation of

production from Indian leases.

On March 6, 1997 (62 FR 10247), MMS published a document reopening

the public comment period until April 4, 1997, and reconvening the

Indian Gas Valuation Negotiated Rulemaking Committee on March 26, 1997.

Timetable--Ongoing.

4. Reporting Procedures and Threshold

Comments Received

--``Eliminate or streamline MMS Form 2014 reporting.''

--``Report prior period adjustments on a `net' basis.''

--``Change estimated payment from lease level to payor level.''

--``Assess interest at the payor level--for the Indian leases on the

basis of each Indian Tribe.''

--``Eliminate Payor Information Form (PIF) Filings. This is an

unnecessary and costly reporting requirement.''

--``MMS should modify the regulations and system tolerances/thresholds

so that only those exceptions that are cost beneficial for MMS to

pursue are generated.''

--``Set thresholds or tolerances for regulations to save costs to both

MMS and industry. (Example: Invoices are sent for less than $1.00.)''

--``MMS should not implement regulations until its systems are

programmed to handle the new regulations.''

--``* * * the prompt implementation of the recommendations of the

Royalty Policy Committee Audit and Royalty Reporting and Production

Accounting Subcommittees will achieve those simplification and

streamlining goals * * *.''

Action Taken or Planned--MMS has revised its billing thresholds and

assessments policy to reduce administrative costs, and we continue to

review these issues through the Royalty Policy Committee, an advisory

group to the Secretary of the Interior, which was formed in September

1995. The Committee's membership includes representatives from States,

tribes, allottee associations, industry trade groups, and other

agencies. At their initial meeting, a Royalty Reporting and Production

Accounting Subcommittee was established.

The Subcommittee had its first meeting in November 1995 and agreed

to review all royalty and production reporting forms and policies. To

assure all areas were addressed, four workgroups were formed to review

the Payor Information Form, royalty reporting, oil and gas production

reporting, and solids production reporting.

The preliminary recommendations from the workgroups cover

streamlining of all reporting forms; reducing or eliminating redundant

data collection; changing estimates; and reviewing thresholds for

allowance and interest billings.

Timetable--The Subcommittee recommendations were finalized and

forwarded to the full committee for their review and approval in June

1996. The recommendations are under review for possible implementation

by MMS. In particular, we will pursue recommendations that can be

implemented in the short term without significant cost.

5. Refunds Due to Industry Which Are Controlled by Section 10 of the

Outer Continental Shelf Lands Act

Comments Received--``Section 10 refund requirements should be

eliminated. The refund process used for onshore properties should be

established for offshore properties.''

--``* * * we would urge the MMS to facilitate elimination of the

Section 10 recoupment procedures in its entirety. The current practice

is administratively burdensome and not cost effective for the industry

or MMS.''

--``Eliminate documentation requirements for refund requests over $250

M and/or increase this threshold to $500 M; raise the refund request

limit to $5 M. Exempt pure accounting adjustments for items such as

production date adjustments and incorrect AID (Accounting

Identification) numbers; exempt unit revisions because these revisions

are often made more than 2 years after the date of production;

establish a time limit on MMS for review of a refund request to

expedite the process; and overpayments on OCS properties should be

allowed to be offset against any OCS underpayment.''

Action Taken or Planned--The Act repeals the Section 10 refund

procedures of the Outer Continental Shelf Lands Act. On November 25,

1996, we mailed a Dear Payor letter with guidelines on refund

procedures. We are presently developing a proposed rule implementing

the new refund procedures.

Timetable--We plan to publish a proposed rule by summer of 1997.

6. Interest Assessments

Comments Received--``A de minimis provision should be established

for the assessment of interest.''

--``* * * MMS should enhance their existing interest assessment system

to allow for the offsetting of prior period adjustments made on the MMS

Form 2014 before calculating applicable interest.''

Action Taken or Planned--The Act not only provides for the payment

of interest on overpayments for oil and gas leases on Federal lands,

but allows industry to calculate the correct interest assessment. Also,

the Act allows interest that has accrued on overpayments to be applied

to reduce underpayments. MMS is designing system changes to implement

the requirements of the Act and preparing regulations to be published

as proposed rules.

Timetable--Ongoing.

7. Electronic Data Exchange

Comments Received--``* * * MMS (should) continue their ongoing

effort to exchange data by electronic means rather than hard copy

thereby enabling the industry to adjust the data elements to integrate

with each company's systems.''

[[Page 19966]]

Action Taken or Planned--We continue to encourage the exchange of

data electronically. Our Reporter and Payor Training sessions stress

the benefits of electronic reporting and provide reporters and payors

with options for reporting by electronic data interchange, diskette, or

magnetic tape. We also publicize electronic reporting on the MMS/

Royalty Management Program internet website.

Timetable--Reporter and Payor Training sessions are planned for the

summer of 1997, and Royalty Management Program's redesigned website

went online in March 1997.

8. Parameters for Identifying Improper MMS Form 2014 Adjustments

Comments Received--``The MMS currently inquires as to any variances

between any Form 2014 adjustments and its original Form 2014 entry that

exceed $1.00, which is an insignificant amount. It is suggested that

the MMS's review should be relevant to the amount of the adjustment

such as a given percentage.''

Action Taken or Planned--At this time, MMS does not plan to make

changes in this procedure. We need to ensure accuracy and integrity in

the accounting systems, and retain precise records for the auditors.

9. Publish Final Rules Expeditiously

Comments Received--``* * * primary recommendation is the

expeditious completion and publication of pending final rules, for

example, the proposed rules on administrative offset and limitations on

credit adjustments, and the proposed rule on payor liability. * * *

Certainly, publication of the final federal (and Indian) gas valuation

rule should be facilitated to the maximum extent possible.''

--``* * * it would be extremely beneficial for MMS to publish its

proposed rule implementing the Federal Energy Regulatory Commission's

(FERC) Order 636 as soon as possible because of its impact on and

relationship to the federal gas valuation rule.''

Action Taken or Planned--We are in the process of reviewing the

comments and determining how to proceed on the two valuation rules--Gas

Valuation of Production from Federal Leases and Gas Valuation of

Production from Indian Leases.

We are also in the process of reviewing the comments and preparing

a final rule to implement FERC Order 636.

New language in the Act will cause a number of changes in the Payor

Liability rule and the Administrative Offset and Limitations on Credit

Adjustments rule. We are in the process of studying the effects of the

Act on these rules before we publish them as final rules.

Timetable--We plan to come to a decision on the two valuation rules

by the end of 1997. The FERC Order 636 rule will be published as a

final rule by fall of 1997. Work on the other two rules is ongoing.

10. The Appeals Process

Comments Received--``Current appeals process is too long.''

Action Taken or Planned--The Act imposed a 33-month time frame for

the Department of the Interior to decide appeals involving royalties on

Federal oil and gas leases. This deadline does not apply to appeals on

royalties involving Indian leases and Federal leases for minerals other

than oil and gas.

On October 28, 1996 (61 FR 55607), MMS published a proposed rule

establishing a 16-month deadline for MMS to decide all appeals to the

Director, including Indian leases and appeals for royalties on minerals

other than oil and gas. After MMS' decision, the appellants can further

appeal to the Interior Board of Land Appeals. The comment period for

this proposed rule ended on March 27.

The Royalty Policy Committee established a subcommittee to study

the appeals process. The report they presented to the Committee on

March 21 was accepted with only minor changes. This report proposes

even further changes to the appeals process. The Department and MMS

will be studying the proposals to determine what areas we will

incorporate in our final rulemaking.

Timetable--We plan to finalize the Administrative Appeals Process

rule by early 1998.

11. Other MMS/Royalty Management Program Regulatory Actions

The Act expanded the authorities and responsibilities that the

Secretary of the Interior may delegate to the States. To implement

this, we are planning to publish a proposed rule in April 1997 on

Delegation of Royalty Management Functions to the States.

We invite you to comment on our existing regulations and also the

actions we have taken in response to comments and recently enacted

legislation. And, we invite you stay further informed on many of the

topics discussed in this status report by visiting the MMS Internet

Website at www.mms.gov.

Dated: April 17, 1997.

Cynthia Quarterman,

Director.

[FR Doc. 97-10667 Filed 4-23-97; 8:45 am]

BILLING CODE 4310-MR-P