Aa02 Ss 011712

Supporting Statement for Paperwork Reduction Act Submissions
30 CFR Part 1205, Takes vs. Entitlements
OMB Control Number 1012-NEW
Terms of Clearance: None
General Instructions
A Supporting Statement, including the text of the notice to the public required by 5 CFR
1320.5(a)(i)(iv) and its actual or estimated date of publication in the Federal Register, must
accompany each request for approval of a collection of information. The Supporting
Statement must be prepared in the format described below, and must contain the information
specified in Section A below. When statistical methods are employed, section B of the
Supporting Statement must be completed. The Office of Management and Budget (OMB)
reserves the right to require the submission of additional information with respect to any
request for approval.
Specific Instructions
A. Justification
1. Explain the circumstances that make the collection of information necessary. Identify
any legal or administrative requirements that necessitate the collection. Attach a copy of
the appropriate section of each statute and regulation mandating or authorizing the
collection of information.
The Secretary of the U.S. Department of the Interior is responsible for collecting royalties
from lessees who produce minerals from leased Federal lands. The Secretary is required by
various laws to manage mineral resources production on Federal lands, collect the royalties
due, and distribute the funds in accordance with those laws. The Office of Natural Resources
Revenue (ONRR) [formerly Minerals Revenue Management (MRM), a program of the
predecessor organization, Minerals Management Service (MMS)] performs the minerals
revenue management functions for the Secretary.
Minerals produced from Federal leases vary greatly in the nature of occurrence, markets
served, and production and processing methods. When a company or an individual enters
into a lease to explore, develop, produce, and dispose of minerals from Federal lands, that
company or individual agrees to pay the lessor a share of the value (royalty) received from
production from the leased lands. The information ONRR collects includes data necessary to
ensure that companies appropriately pay the royalties. The ONRR is responsible for ensuring
that all revenues from Federal mineral leases are accurately collected, accounted for, and
disbursed to recipients.
The ONRR proposes to amend its regulations to provide guidance to lessees and designees
for the purposes of reporting royalties on the required volume allocations of Federal oil and
gas production. On August 13, 1996, Congress enacted the Federal Oil and Gas Royalty

Simplification and Fairness Act (RSFA), Pub. L. 104-185, as corrected by Pub. L. 104-200—
Sept. 22, 1996. The RSFA amends portions of the Federal Oil and Gas Royalty Management
Act of 1982 (FOGRMA), 30 U.S.C. 1701 et seq.
The proposed rule, RIN 1012-AA02, would remove Federal leases from
30 CFR 1202.100(e)(2), establish a new part 1205 containing new information collections,
and make a technical amendment to the table at §1210.10 by adding the OMB control
number for the new ICR. This new information collection request (ICR) would collect
information necessary to implement section 6(d) of RSFA and change the way all lessees and
designees report and pay on the required volume allocations of Federal oil and gas
production. The ONRR submits this ICR to OMB for review and approval as required by the
Paperwork Reduction Act of 1995 (PRA).
Section 6(d) of RSFA requires lessees or designees of a 100-percent Federal unit or
communitization agreement to report on the basis of takes (based on the actual volume of
production sold by, or on behalf of, the lessee). It also requires a lessee or designee of a
mixed unit or communitization agreement to report on the basis of entitlements (based on the
volume of oil and gas produced from such agreement and allocated to the lease in accordance
with the terms of the agreement). Further, it allows a lessee to submit a request for an
alternative method of royalty reporting and payment for units or communitization
agreements, provided that all lessees contractually agree to such method and as long as such
alternative method does not reduce the amount of the royalty obligation to the Federal
Government. Finally, section 6(d) provides for a marginal property reporting exception that
would allow lessees to report and pay on their take volume each month and adjust to their
entitled volume after the end of the calendar year rather than reporting and paying based on
their entitled volume each month.
Applicable citations pertaining to the taking and selling of the Federal Government’s royalty
share of mineral leases include:







30 U.S.C. 1701 et seq.—Jan. 12, 1983 (FOGRMA);
Public Law 104-185—Aug. 13, 1996 (RSFA);
The Mineral Leasing Act of 1920, Section 36, as amended (30 U.S.C. 192);
Outer Continental Shelf Lands Act of 1953, Section 27, as amended (43 U.S.C.
1353);
30 U.S.C. 189 pertaining to Public Lands; and
30 U.S.C. 359 pertaining to Acquired Lands.

These citations can be viewed at http://www.onrr.gov/Laws_R_D/PublicLawsAMR.htm.
Relevant regulations from title 30 of the Code of Federal Regulations (CFR) include parts
1202, 1205, and 1210. [Note that ONRR’s regulations were moved from 30 CFR chapter II
to chapter XII, effective October 1, 2010.]

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2. Indicate how, by whom, and for what purpose the information is to be used. Except for
a new collection, indicate the actual use the agency has made of the information received
from the current collection. [Be specific. If this collection is a form or a questionnaire,
every question needs to be justified.]
Under the proposed regulations, ONRR would require a request from a lessee of a 100percent Federal agreement in order to use an alternative method of royalty reporting and
payment and to certify that all lessees agree to the alternative method of royalty reporting and
payment. Based on the information in the request, we would determine whether to allow the
lessee to use the alternative method. We would require requests only from lessees of Federal
agreements for which the lessees or designees want to obtain approval for an alternative
method of royalty reporting and payment. We would require lessees to submit a similar
request when they wished to discontinue reporting under the alternative method.
If a lessee of a Federal agreement, with concurrence of all lessees, desires to request or
discontinue an alternative method of royalty reporting and payment, the lessee would submit
the written request to ONRR requesting to begin or discontinue this alternative method of
royalty reporting and payment. The lessee would submit the following: (1) company name,
address, phone number, and contact name; (2) agreement number of the property being
considered for beginning or terminating the alternative method of royalty reporting and
payment; and (3) documentation of the concurrence of all lessees to begin or terminate such
alternative method. The lessee also would submit a description of the alternative method and
documentation that demonstrated the alternative method would not reduce the amount of
royalty obligation.
The ONRR would review the information provided by the lessee, consulting with the
delegated state, if applicable, prior to making a decision. We would use the information the
lessee of an agreement provided in the request for an alternative method to report and pay in
order to: (1) identify the company that makes the request; (2) identify the agreement to
which the alternative method of royalty reporting and payment would apply; (3) determine if
all lessees of the agreement contractually agree to such alternative method; (4) determine if
the alternative method would reduce the royalty obligation; (5) determine whether ONRR
should approve or deny the alternative method; and (6) update ONRR’s records to reflect any
alternative method of reporting and payment it approved.
If ONRR approved the request, lessees would begin using the alternative method of royalty
reporting and payment for the production month after they received written approval from
ONRR. Likewise, if we approved the request to stop using the approved alternative method,
lessees would stop using the method beginning with the production month after they receive
written notice of ONRR’s approval to return to using the reporting and payment requirements
under §1205.101(a)(2).

3

3. Describe whether, and to what extent, the collection of information involves the use of
automated, electronic, mechanical, or other technological collection techniques or other
forms of information technology, e.g., permitting electronic submission of responses, and
the basis for the decision for adopting this means of collection. Also, describe any
consideration of using information technology to reduce burden [and specifically how this
collection meets GPEA requirements].
The Government Paperwork Elimination Act Plan indicates that we should evaluate our
information collection requests for electronic submission. However, the information ONRR
would require a lessee of a Federal agreement to include in a request for an alternative
method of royalty reporting and payment would not be standardized. To minimize the
burden, lessees of Federal agreements could e-mail or fax their requests, as long as they
provided all required information. For the alternative method of royalty reporting and
payment, we would accept responses by electronic mail and expect to receive, on an average,
25 percent of the responses electronically. Submission by electronic mail is the most
efficient and immediate means for submission of the notification or relief request.
4. Describe efforts to identify duplication. Show specifically why any similar information
already available cannot be used or modified for use for the purposes described in Item 2
above.
The information collected would be unique. The ONRR would need the information to
accurately collect and distribute royalties. The proposed information collection would be the
minimum information necessary to efficiently process the lessee’s request for an alternative
method of royalty reporting and payment. Moreover, there is no other source of this
information available, nor is there any other Government agency currently collecting similar
information for other purposes that would serve our needs. No duplication of information is
proposed.
We would not require information from the lessees to use the marginal property reporting
exception.
5. If the collection of information impacts small businesses or other small entities,
describe any methods used to minimize burden.
The information collection would have an insignificant economic effect on small businesses,
or other small entities. The ONRR has carefully analyzed the new information collection
requirements to ensure that the information requested would be the minimum necessary and
would place the least possible burden on industry. The information we requested would be
the minimum necessary to efficiently (1) carry out our mission to fulfill our responsibility
and (2) process the lessees’ requests for an alternative method of royalty reporting and
payment. Respondents, including small businesses or other small entities, would have the
flexibility to submit information to us by way of hard copy or electronic submission by
e-mail.

4

The ONRR expects the majority of the alternative method requests would be from larger
entities having more sophisticated and complex accounting considerations. These entities
may desire to keep their agreement reporting consistent between the 100-percent Federal and
the mixed agreements to avoid major system revisions. It would be in a company’s best
interest to request the alternative method since, if approved, it would prevent the associated
lessees and designees from making costly system changes or preparing manual royalty
reports to comply with RSFA-mandated takes and entitlements reporting.
6. Describe the consequence to Federal program or policy activities if the collection is not
conducted or is conducted less frequently, as well as any technical or legal obstacles to
reducing burden.
In this ICR, there would be no technical obstacles to reducing the burden. However, the
legal obstacles would be substantial.
If ONRR did not collect the requested information as proposed, we could not determine
whether to approve lessees’ and designees’ requests for an alternative method of royalty
reporting and payment as required under RSFA section 6(d)(3). Not collecting the
information also would limit the Secretary's ability to discharge the fiduciary duties of the
Office and could result in loss of royalty payments. Moreover, lessees and designees could
incur additional system costs in order to convert their systems to comply with RSFAmandated takes and entitlements reporting requirements, which could create an economic
hardship for smaller entities.
Since ONRR’s approval of a request for an alternative method of royalty reporting and
payment would continue until terminated, the lessee would file the request only once.
7. Explain any special circumstances that would cause an information collection to be
conducted in a manner:
(a) requiring respondents to report information to the agency more often than
quarterly.
Not applicable in this collection.
(b) requiring respondents to prepare a written response to a collection of information
in fewer than 30 days after receipt of it.
Not applicable in this collection.
(c) requiring respondents to submit more than an original and two copies of any
document.
Not applicable in this collection.

5

(d) requiring respondents to retain records, other than health, medical, government
contract, grant-in-aid, or tax records, for more than 3 years.
Section 4(f) of RSFA, 30 U.S.C. 1724(f), requires that Federal oil and gas lessees/operators
maintain records for 7 years after the royalty obligation becomes due. When ONRR
approves the lessees’ alternative method of reporting and payment request, which applies to
all periods from the date of approval until such time the alternative method terminated, we
would require lessees to keep all records pertaining to the request for an alternative method
until 7 years after termination of the alternative method.
(e) in connection with a statistical survey, that is not designed to produce valid and
reliable results that can be generalized to the universe of study.
Not applicable in this collection.
(f) requiring the use of statistical data classification that has been reviewed and
approved by OMB.
There would be no special circumstances with respect to 5 CFR 1320.5(d)(2)(v) through
(viii) as the collection would not be a statistical survey and would not use statistical data
classification.
(g) that includes a pledge of confidentiality that is not supported by authority
established in statute or regulation, that is not supported by disclosure and data security
policies that are consistent with the pledge, or which unnecessarily impedes sharing of
data with other agencies for compatible confidential use.
This collection would not include a pledge of confidentiality not supported by statute or
regulation.
(h) requiring respondents to submit proprietary trade secrets or other confidential
information unless the agency can demonstrate that it has instituted procedures to protect
the information’s confidentiality to the extent permitted by law.
This collection would not require proprietary, trade secret, or other confidential information
not protected by agency procedures. The information would be protected under the standards
identified in Item 10 below.
8. If applicable, provide a copy and identify the date and page number of publication in
the Federal Register of the agency’s notice, required by 5 CFR 1320.8(d), soliciting
comments on the information collection prior to submission to OMB. Summarize public
comments received in response to that notice [and in response to the PRA statement
associated with the collection over the past 3 years] and describe actions taken by the
agency in response to these comments. Specifically address comments received on cost
and hour burden.

6

Describe efforts to consult with persons outside the agency to obtain their views on the
availability of data, frequency of collection, the clarity of instructions and recordkeeping,
disclosure, or reporting format (if any), and on the data elements to be recorded, disclosed,
or reported. [Please list the names, titles, addresses, and phone numbers of persons
contacted.] Consultation with representatives of those from whom information is to be
obtained or those who must compile records should occur at least once every 3 years—
even if the collection of information activity is the same as in prior periods. There may be
circumstances that may preclude consultation in a specific situation. These circumstances
should be explained.
As required in 5 CFR 1320.8(d), ONRR would publish a proposed rulemaking notice for
review and comment in the Federal Register. We would address any comments from the
public in the final rulemaking.
9. Explain any decision to provide any payment or gift to respondents, other than
remuneration of contractors or grantees.
We would not provide any payment or gift to respondents in this collection.
10. Describe any assurance of confidentiality provided to respondents and the basis for the
assurance in statute, regulation, or agency policy.
Commercial or financial information provided to ONRR, relative to minerals removed from
Federal leases, could be proprietary. Trade secrets and proprietary and other information
would be protected under the Trade Secrets (18 U.S.C. 1905), FOGRMA, as amended
(30 U.S.C. 1733), and Freedom of Information Act [5 U.S.C. 552(b)(4)]; and its
implementing regulations (43 CFR 2). In addition, ONRR would have strict security
measures in place regarding the storage of, and access to, proprietary information.
11. Provide additional justification for any questions of a sensitive nature, such as sexual
behavior and attitudes, religious beliefs, and other matters that are commonly considered
private. This justification should include the reasons why the agency considers the
questions necessary, the specific uses to be made of the information, the explanation to be
given to persons from whom the information is requested, and any steps to be taken to
obtain their consent.
This information collection would not include sensitive or private questions.
12. Provide estimates of the hour burden of the collection of information. The statement
should:
(a) Indicate the number of respondents, frequency of response, annual hour burden,
and an explanation of how the burden was estimated. Unless directed to do so, agencies
should not conduct special surveys to obtain information on which to base hour burden
estimates. Consultation with a sample (fewer than 10) of potential respondents is
desirable. If the hour burden on respondents is expected to vary widely because of

7

differences in activity, size, or complexity, show the range of estimated hour burden, and
explain the reasons for the variance. Generally, estimates should not include burden
hours for customary and usual business practices.
Summary of Information Collections
Information Collections

Number of
Respondents

1. Request for alternative method of
reporting and payment.
[§1205.202]
2. Termination of alternative method
of reporting and payment
[§1205.206]
TOTAL

Number of
Responses

250

250

2
252

2
252

We estimate approximately 250 lessees would request an alternative method of royalty
reporting and payment on agreements (200 offshore and 50 onshore Federal). We estimate
that the lessees would submit 250 responses, allowing lessees to continue to report on an
entitlements basis rather than changing to a takes-reporting basis as required by RSFA. In
future years, we would expect the number of requests to decrease annually, thus lowering the
cost to industry. We also estimate that two lessees would submit annually one termination
request each for their alternative method.
Responses generally would be on occasion, weekly, monthly, or annually. The frequency of
responses would vary at times, as necessary.
We estimate lessees would take approximately 10 hours to complete the submission of each
request and would incur an additional one-quarter hour for recordkeeping. We estimate the
lessees’ annual burden for the alternative method would be 2,563 reporting and
recordkeeping hours = (250 requests x 10 reporting hours) + (250 requests x
0.25 recordkeeping hours).
We also estimate the lessees’ annual burden for the termination requests would be
21 reporting and recordkeeping hours = (2 requests x 10 reporting hours) + (2 requests x
0.25 recordkeeping hours).
Therefore, the total annual burden would be 2,584 hours = 2,563 + 21.
(b) If this request for approval covers more than one form, provide separate hour
burden estimates for each form and aggregate the hour burdens.
There would be no form for this information collection.

8

(c) Provide estimates of annualized cost to respondents for the hour burdens for
collections of information, identifying and using appropriate wage rate categories. The
cost of contracting out or paying outside parties for information collection activities should
not be included here. Instead, this cost should be included in Item 14.
We expect approximately 252 responses in the first year, including 2 termination requests.
We estimate the total annual burden hours would be 2,584 hours We estimate the total
industry costs for requests for alternative reporting and payment and terminations would be
$118,864 = 2,584 hours x $46 per hour [cost for industry accountant]. The industry labor
cost factor for accountants would be approximately $46 per hour ($32.83 [mean hourly
wage] x 1.4 [benefits cost factor]). We used tables from the Bureau of Labor Statistics to
estimate the hourly cost of $46 per hour for industry accountants in a metropolitan area. We
used a multiplier of 1.4 for industry benefits.
The following table shows the estimated burden hours by CFR section and paragraph.
SECTION A.12 BURDEN BREAKDOWN

30 CFR

Reporting and Recordkeeping
Requirement

Hour
Burden

Average
Number of
Annual
Responses

Annual
Burden
Hours

PART 1205—REPORTING AND PAYING ROYALTIES ON FEDERAL LEASES
Subpart B—Reporting and Paying Royalties on Federal Leases
1205.101
(a) Unless you qualify for the exceptions in
Hour burden covered under
(a)(1),
subparts C and D of this part, you must report OMB Control No. 1012-0004
(a)(2), and
and pay royalties . . . .
(formerly 1010-0139).
(a)(3)
1205.105
The volume allocated to a lease or
(a)
agreement under a BLM or BSEE
commingling approval is the volume on which
you and all other lessees must report and pay
under §1205.101(a)(1) through (3).
1205.106
(a) and (b)

There are two exceptions to the reporting and
payment requirements in this subpart: (a)
You may qualify for an alternative to the
royalty reporting and payment requirements
for 100-percent Federal agreements under
§1205.101(a)(2) if you meet certain
requirements. The requirements for
alternative reporting are explained in subpart
C; or (b) You may qualify to report on your
take volume rather than entitled volume, with
appropriate adjustments after year-end, if
your mixed agreement is a marginal property.
Requirements for the marginal property
reporting exception are explained in
subpart D.

9

AUDIT PROCESS. See note.

30 CFR

Reporting and Recordkeeping
Requirement

Hour
Burden

Average
Number of
Annual
Responses

Annual
Burden
Hours

Subpart C—Reporting and Paying Royalties on Federal Leases Under an
Alternative Method for a 100-percent Federal Agreement
1205.201
You may qualify for an alternative to the
AUDIT PROCESS. See note.
(a)
royalty reporting and payment requirements
for agreements under subpart B if:
(a) You are in a 100-percent Federal
agreement;
1205.201
(b) You and all other lessees in the
Hour burden covered under
(b)
agreement concur in writing to the alternative
30 CFR 1205.202.
method; and
1205.201
(c) The alternative does not reduce the total
AUDIT PROCESS. See note.
(c)
monthly royalty obligation reported and paid
to ONRR.

10

30 CFR

1205.202
(a), (b),
and (c)

1205.204
(a)

Reporting and Recordkeeping
Requirement

(a) To obtain approval to use an alternative
method of royalty reporting and payment, you
must submit one written request to ONRR on
behalf of all lessees of leases in the
agreement.
(b) The request you submit under paragraph
(a) of this section must contain the following
documents and information:
(1) A description of the proposed alternative
reporting and payment method.
(2) The agreement number and a list of the
leases in the agreement.
(3) A list of all lessees and their ownership
interest in the leases in the agreement.
(4) A copy of the lessees’ written concurrence
to the alternative method required under
§1205.201(b).
(5) Documentation showing that the proposed
alternative method does not reduce the total
monthly royalty obligation reported and paid
to ONRR for the leases in the agreement.
(6) A non-refundable processing fee of
$2,400 for each request you make for an
agreement under this section:
(i) You must pay the processing fee to ONRR
following the requirements for making
payments found in 30 CFR 1218.51. You are
not required to use Electronic Funds Transfer
(EFT) for these payments.
(ii) If you do not remit the full amount of the
processing fee with your request, ONRR will
return your request unprocessed. If ONRR
returns your unprocessed request for failure
to pay the fee, you may not appeal the return
of your request.
(iii) The ONRR may adjust the processing fee
by providing notice in the Federal Register.
(c) You must retain all records pertaining to
your request for an alternative method for
7 years after termination of the alternative
method.
When ONRR receives your request for
alternative reporting and payment under
§1205.202, ONRR will notify you in writing as
follows:
(a) If your request for alternative reporting
and payment is complete, ONRR may
approve, deny, or modify your request in
writing. . . .

11

Hour
Burden

10.25

Average
Number of
Annual
Responses

250

Annual
Burden
Hours

2,563

AUDIT PROCESS. See note.

30 CFR

1205.204
(b)(1) and
(4)

1205.205
(a) and (b)

1205.206
(a) and (b)

1205.207
(a) and (b)

Reporting and Recordkeeping
Requirement

(b) If your request for alternative reporting
and payment is not complete, ONRR will
notify you in writing that your request is
incomplete and identify any missing
information.
(1) You must submit the missing information
within 60 days of your receipt of ONRR’s
notice. . . .
(4) You may submit a new request . . . .
(a) If you are a lessee for a lease in an
agreement when you submit a request under
§1205.202, you must begin using the
alternative method of royalty reporting and
payment for the production month after you
receive written approval from ONRR.
(b) If you become a lessee for a lease in an
agreement for which there is an approved
alternative method of royalty reporting and
payment, you must begin reporting under the
alternative method for the production month
in which you become a lessee.
If you want to stop using the approved
alternative method of royalty reporting and
payment, you must:
(a) Obtain written concurrence from all
lessees in the agreement to stop using the
alternative method; and
(b) Provide a copy of the written concurrence
to ONRR and the delegated state, if
applicable.
(a) If you request to stop using the approved
alternative method under §1205.206, then
you must stop using the approved alternative
method of royalty reporting and payment
beginning with the production month after you
provide a copy of the written concurrence to
ONRR and the delegated state, if applicable.
(b) You must stop using the approved
alternative method of royalty reporting and
payment within 60 days after you receive
written notice from BLM or BSEE notifying
you that a non-Federal tract or a tract with a
different royalty rate or funds distribution has
been added to your agreement.

12

Hour
Burden

Average
Number of
Annual
Responses

Annual
Burden
Hours

Hour burden covered under
30 CFR 1205.202.

Hour burden covered under
OMB Control No. 1012-0004.

10.25

2

21

30 CFR

Reporting and Recordkeeping
Requirement

Hour
Burden

Average
Number of
Annual
Responses

Annual
Burden
Hours

Subpart D—Reporting and Paying Royalties on Marginal Properties
Hour burden covered under
1205.301
(a) The marginal property exception allows
OMB Control No. 1012-0004.
(a), (b),
you to report and pay on your take volume
and (c)
each month and adjust to your entitled
volume after the end of the calendar year
rather than reporting and paying based on
your entitled volume each month as required
under §1205.101(a)(3).
(b) You may use the marginal property
exception if:
(1) Your lease is in a mixed agreement; and
(2) The mixed agreement qualifies as a
marginal property under this subpart.
(c) You may report and pay using the
marginal property exception regardless of
whether any other lessee or designee who
pays royalties for that marginal property uses
the exception.
1205.305
(a)
1205.306
(a) and (b)

(a) If you start using the marginal property
exception. . . then you must report and
pay. . . .
If you want to report and pay under the
marginal property exception, you must:
(a) First, determine your take volume from
the qualifying marginal property under
§1205.102.
(b) Second, report and pay for each of your
Federal leases in the qualifying marginal
property by allocating the take volume
determined in paragraph (a) of this section to
all of your leases in the agreement based on
the approved agreement allocation schedule.

13

30 CFR

1205.307
(a), (b),
and (c)

1205.309
(a) and (b)

Reporting and Recordkeeping
Requirement

If the take volume you reported under
§1205.306(b) does not equal your entitled
volume for the calendar year, for each of your
Federal leases in the qualifying marginal
property, you must:
(a) Calculate the difference between the take
volume you reported under the marginal
property exception and your entitled volume
for the calendar year in which you used the
exception; and
(b) Report the difference calculated in
paragraph (a) of this section:
(1) On Form MMS-2014, Report of Sales and
Royalty Remittance.
(2) By June 30 of the calendar year
immediately following the calendar year for
which you used the marginal property
exception.
(3) As a positive amount on Form MMS-2014
when your total takes are less than your
entitlements, or a negative amount on Form
MMS-2014 when your total takes exceed
your entitlements.
(4) As a single-line entry for each lease and
product from the lease.
(5) Using the correct adjustment reason code
for reporting under this section.
(6) Using the December sales month of the
calendar year for which you used the
marginal property exception.
(c) Do not adjust the monthly royalty lines you
reported under §1205.306(b) if the take
volumes you reported were accurate.
If the difference you report under §1205.307
is positive and you underpaid royalties for the
qualifying marginal property, then you:
(a) Must pay the additional royalty owed
when you report the difference under
§1205.307; and
(b) Will owe interest on the additional royalty
you reported and paid under paragraph (a) of
this section at the rate prescribed under part
1218 of this title. You will owe interest
beginning January 1 of the calendar year
following the calendar year for which you
used the marginal property exception until the
date you paid the additional royalties due.

14

Hour
Burden

Average
Number of
Annual
Responses

Annual
Burden
Hours

Hour burden covered under
OMB Control No. 1012-0004.

30 CFR

1205.311
(a), (b),
and (c)

1205.312
(a), (b),
and (c)

Reporting and Recordkeeping
Requirement

Hour
Burden

Average
Number of
Annual
Responses

Annual
Burden
Hours

If you erroneously report using the marginal
Hour burden covered under
property exception on a property that is not a
OMB Control No. 1012-0004.
qualified marginal property, you:
(a) Must amend all erroneously submitted
Form MMS-2014s to report your entitled
volume for each calendar month;
(b) Will owe any associated interest
calculated under part 1218 of this title; and
(c) May be subject to civil penalties under
part 1241 of this title.
AUDIT PROCESS. See note.
(a) Your property must qualify for the
marginal property exception under this
subpart for each calendar year based on
production during the base period.
(b) If you find that your property is no longer
eligible for the marginal property exception
because production increased in the most
recent base period, you must stop using the
exception as of December 31 of the year in
which the most recent base period ends.
(c) If you do not stop using the marginal
property exception as required under
paragraph (b) of this section, then you:
(1) Will owe late payment interest determined
under part 1218 of this title from the date you
were required to stop using the exception
under paragraph (b).
(2) May be subject to civil penalties under
part 1241 of this title.
BURDEN HOUR TOTAL
252
2,584

NOTE: AUDIT PROCESS—The Office of Regulatory Affairs determined that the audit process is exempt
from the Paperwork Reduction Act of 1995 because ONRR staff asks non-standard questions to resolve
exceptions (5 CFR 1320.4(a)(2).

13. Provide an estimate of the total annual [non-hour] cost burden to respondents or
recordkeepers resulting from the collection of information. (Do not include the cost of any
hour burden shown in Items 12 and 14.)
(a) The cost estimate should be split into two components: (1) a total capital and startup cost component (annualized over its expected useful life) and (2) a total operation and
maintenance and purchase of services component. The estimates should take into account
costs associated with generating, maintaining, and disclosing or providing the information
[including filing fees paid]. Include descriptions of methods used to estimate major cost
factors including system and technology acquisition, expected useful life of capital
equipment, the discount rate(s), and the time period over which costs will be incurred.
Capital and start-up costs include, among other items, preparations for collecting
information such as purchasing computers and software; monitoring, sampling, drilling
and testing equipment; and record storage facilities.

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(b) If cost estimates are expected to vary widely, agencies should present ranges of cost
burden and explain the reasons for the variance. The cost of purchasing or contracting
out information collection services should be a part of this cost burden estimate. In
developing cost burden estimates, agencies may consult with a sample of respondents
(fewer than 10), utilize the 60-day pre-OMB submission public comment process and use
existing economic or regulatory impact analysis associated with the rulemaking containing
the information collection, as appropriate.
(c) Generally, estimates should not include purchases of equipment or services, or
portions thereof, made: (1) prior to October 1, 1995, (2) to achieve regulatory compliance
with requirements not associated with the information collection, (3) for reasons other
than to provide information or keep records for the government, or (4) as part of
customary and usual business or private practices.
We would collect a fee of $2,400 each time to process a request for the alternative method of
royalty reporting and payment. We estimate that industry would submit 250 requests for this
alternative method. Therefore, the total estimated “non-hour” cost to these 250 Federal
lessees would be $600,000 = 250 x $2,400.
14. Provide estimates of annualized cost to the Federal Government. Also, provide a
description of the method used to estimate cost, which should include quantification of
hours, operational expenses (such as equipment, overhead, printing, and support staff),
and any other expense that would not have been incurred without this collection of
information. Agencies also may aggregate cost estimates from Items 12, 13, and 14 in a
single table.
To analyze and review information, the Federal Government would spend an average of
40 hours for each request submitted by a lessee for the alternative method of reporting and
payment. Based on first-year cost estimates, the total estimated Federal Government time
burden would be 10,000 hours = 250 requests x 40 hours, based on time or effort needed to
handle, review, confirm, and approve 250 requests for the alternative method of reporting
and payment. Most of the requirements are performed by a Government accountant at the
Grade 12 level. Based on the United States 2011 General Schedule, Grade 12, Step 5, pay
scale for a Government accountant in the Denver, Colorado, area, the estimated hourly labor
cost is $60 ($40.10 per hour x 1.5 benefit cost factor = $60.15, rounded to $60). We used a
multiplier of 1.5 for Federal benefits. The total estimated cost burden to the Federal
Government would be $600,000 = 10,000 hours x $60 per hour. The costs of processing
termination requests would be miniscule.

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15. Explain the reasons for any program changes or adjustments reported.
(a) Annual Hour Burden
Currently Approved
OMB Burden Hour
Inventory
0

Program Change
Estimated
Burden Hours
2,584

Adjustment Change
Estimated
Burden Hours
0

Total
Estimated
Burden Hours
2,584

There would be a program change increase of 2,584 hours because of the new requirements
we are adding to 30 CFR in the new part 1205.
(b) Annual Cost Burden: The non-hour cost burden would be a program increase of
$600,000.
16. For collections of information whose results will be published, outline plans for
tabulation and publication. Address any complex analytical techniques that will be used.
Provide the time schedule for the entire project, including beginning and ending dates of
the collection of information, completion of report, publication dates, and other actions.
The data collected would not be tabulated and published for statistical use. The ONRR
would not use any complex analytical techniques.
17. If seeking approval to not display the expiration date for OMB approval of the
information collection, explain the reasons that display would be inappropriate.
This is not applicable to this information collection. This collection would concern
regulatory requirements.
18. Explain each exception to the certification statement identified in Item 19,
“Certification for Paperwork Reduction Act Submissions.”
To the extent that topics apply to this collection of information, we would not be making any
exceptions to the “Certification for Paperwork Reduction Act Submissions.”

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