0002_Supporting Statement A

Supporting Statement A
30 CFR Parts 1202, 1206, and 1207, Indian Oil and Gas Valuation
OMB Control Number 1012-0002

Terms of Clearance: None.
General Instructions

A completed Supporting Statement A 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 below. If an item is not applicable, provide a brief
explanation. 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.
The Secretary of the United States Department of the Interior is responsible for mineral resource
development on Federal and Indian lands and the Outer Continental Shelf (OCS). Various laws
require the Secretary to manage mineral resource production from Federal and Indian lands and
the OCS, collect the royalties and other mineral revenues due, and distribute the funds collected
in accordance with applicable laws.
The Secretary also has a trust responsibility to manage Indian lands and seek advice and
information from Indian beneficiaries. The Office of Natural Resources Revenue (ONRR)
performs the minerals revenue management functions for the Secretary and assists the Secretary
in carrying out the Department’s trust responsibility for Indian lands.
When a company or an individual enters into a lease to explore, develop, produce, and dispose of
minerals from Federal or Indian lands, that company or individual agrees to pay the lessor a
share in a value of production from the leased lands. The applicable regulations require the
lessee to report various kinds of information to the lessor relative to the disposition of the leased
minerals. Such information is generally available within the records of the lessee or others
involved in developing, transporting, processing, purchasing, or selling of such minerals. We
collect this information to ensure that lessees accurately value production and appropriately pay
royalties.

1

The information collections that we cover in this information collection request (ICR) are found
at 30 CFR part 1202, subparts C and J, which pertain to royalties; part 1206, subparts B and E,
which govern the valuation of oil and gas produced from leases on Indian lands; and part 1207,
which pertains to recordkeeping. Indian Tribes and individual Indian mineral owners receive all
royalties generated from their lands. Determining product valuation is essential to ensure that
Indian Tribes and individual Indian mineral owners receive payment on the full value of the
minerals removed from their lands. Failure to collect the data that we describe in this ICR could
result in the undervaluation of leased minerals on Indian lands. All data reported is subject to
subsequent audit and adjustment.
Applicable laws pertaining to mineral leases on Indian lands include 25 U.S.C. 396d (Chapter
12—Lease, Sale, or Surrender of Allotted or Unallotted Lands); 25 U.S.C. 2103 (Indian Mineral
Development Act of 1982); and Pub. L. 97-451—Jan. 12, 1983 (Federal Oil and Gas Royalty
Management Act of 1982 [FOGRMA]). Laws pertaining to mineral leases on Federal and Indian
lands are available at http://www.onrr.gov/Laws_R_D/PublicLawsAMR.htm.
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.
ONRR is requesting OMB's approval to continue to collect this information described below.
All data collected is necessary when ONRR performs its minerals revenue management
functions for the Secretary as discussed in detail below.
Indian Oil
Regulations at title 30 CFR part 1206, subpart B, govern the valuation for royalty purposes of all
oil produced from Indian oil and gas leases (tribal and allotted), except leases on the Osage
Indian Reservation, and are consistent with mineral leasing laws, other applicable laws, and lease
terms. Generally, these regulations provide that lessees determine the value of oil based upon the
higher of (1) the gross proceeds under an arm’s-length contract; or (2) major portion analysis.
The value that a lessee determine may be eligible for a transportation allowance.
Form MMS-4110, Oil Transportation Allowance Report
(submitted on occasion)
Under certain circumstances, the regulations authorize lessees to deduct from royalty payments
the reasonable actual costs of transporting the royalty portion of produced minerals from the
lease to a sales point, not in the immediate lease area. The regulations establish a limit on
transportation allowances for oil at 50 percent of the oil value at the point of sale. From
information collected on Form MMS-4110, ONRR and tribal audit personnel evaluate
(1) whether lessee-reported transportation allowances are within regulatory allowance limitations
and calculated under applicable regulations; and (2) whether the lessee reported and paid the
proper amount of royalty. Lessees must use Form MMS-4110 for both arm’s-length and nonarm’s-length contracts.
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To receive an oil transportation allowance, lessees must submit Form MMS-4110 before or in
the same month that they report the transportation allowance on Form MMS-2014, Report of
Sales and Royalty Remittance (OMB Control Number 1012-0004). After the initial reporting
period and for succeeding reporting periods, lessees must submit page one of Form MMS-4110
(and Schedule 1) within 3 months after the end of the calendar year, or after the applicable
contract or rate terminates or is modified or amended, whichever is earlier, unless ONRR
approves a longer period. Lessees summarize actual operating, maintenance, and overhead
costs, as well as depreciation and undepreciated capital investment costs, on Form MMS-4110
and applicable schedules.
Indian Gas
Regulations at title 30 CFR part 1206, subpart E, govern the valuation for royalty purposes of
natural gas produced from Indian oil and gas leases (tribal and allotted). These regulations apply
to all gas production from Indian oil and gas leases, except leases on the Osage Indian
Reservation.
Form MMS-4410, Accounting for Comparison [Dual Accounting]
(submitted on occasion)
Most Indian leases contain the requirement to perform accounting for comparison (dual
accounting) for gas produced from the lease. Lessees must elect to perform actual dual
accounting as defined in 30 CFR 1206.176, or alternative dual accounting as defined in 30 CFR
1206.173.
According to 30 CFR 1206.176(a), dual accounting is defined, as the greater of the following
two values:
“(1) The combined value of the following products: (i) The residue gas and gas plant
products resulting from processing the gas...less any applicable allowances; and (ii) Any drip
condensate associated with the processed gas recovered downstream of the point of royalty
settlement without resorting to processing, less applicable allowances.
(2) The value of the gas prior to processing...including any applicable allowances...”
Lessees use Form MMS-4410 to certify that dual accounting is not required on an Indian lease,
or to make an election for actual or alternative dual accounting for Indian leases.
Form MMS-4410 (Part A), Certification for Not Performing Dual Accounting, requires lessees
to identify the ONRR-designated areas where the leases are located and provide specific
justification for not performing dual accounting. Part A is a one-time notification, until any
changes occur in gas disposition. Part A lists the following acceptable reasons for not
performing dual accounting: (1) the lease terms do not require dual accounting; (2) none of the
gas from the lease is ever processed; (3) gas has a Btu content of 1,000 Btu's per cubic foot or
less at the lease's facility measurement point(s); (4) none of the gas from the lease is processed
until after gas flows into a pipeline with an index located in an index zone; and (5) none of the
3

gas from the lease is processed until after gas flows into a mainline pipeline not located in an
index zone.
Form MMS-4410 (Part B), Election to Perform Actual Dual Accounting or Alternative Dual
Accounting, allows ONRR to collect the lessee’s elections to perform actual dual accounting or
alternative dual accounting. A lessee makes an election by checking either the actual or
alternative dual accounting box for each ONRR-designated area where its leases are located.
Part B also includes the lessee’s lease prefixes within each ONRR-designated area to assist
lessees in making the appropriate election. The election to perform actual or alternative dual
accounting applies to all of a lessee's Indian leases in each ONRR-designated area. The first
election to use the alternative dual accounting is effective from the time of election through the
end of the following calendar year. Thereafter, each election to use the alternative dual
accounting methodology must remain in effect for 2 calendar years. However, lessees may
return to the actual dual accounting methodology only at the beginning of the next election
period or with written approval from ONRR and the tribal lessors for tribal leases, and from
ONRR for Indian allotted leases in the ONRR-designated area (30 CFR 1206.173(a)).
Form MMS-4411, Safety Net Report
(submitted annually)
The safety net calculation establishes the minimum value, for royalty purposes, of natural gas
production from Indian oil and gas leases. This reporting requirement ensures that Indian lessors
receive all royalties due and aids ONRR compliance efforts.
The regulations require lessees to submit Form MMS-4411 when they sell gas production from
an Indian oil or gas lease beyond the first index pricing point. The lessee submits safety net
prices, for the previous calendar year, to ONRR annually (by June 30) using this form.
Form MMS-4295, Gas Transportation Allowance Report
(submitted annually)
Under certain circumstances, the regulations authorize lessees to deduct from royalty payments
the reasonable actual costs of transporting the royalty portion of produced minerals from the
lease to a processing or sales point, not in the immediate lease area. The regulations establish a
limit on transportation allowance deductions for gas at 50 percent of the gas value at the point of
sale. From information collected on Form MMS-4295, ONRR and tribal personnel evaluate
(1) whether lessee-reported transportation allowances are within regulatory allowance limitations
and calculated under applicable regulations; and (2) whether the lessee reported and paid the
proper amount of royalty. To take a non-arm’s-length or no contract transportation deduction, a
lessee must submit Form MMS-4295, within 3 months, after the end of the 12-month period to
which the lessee applied the allowance.
Form MMS-4109, Gas Processing Allowance Summary Report
(submitted annually)
When gas is processed for the recovery of gas plant products, lessees may claim a processing
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allowance. The regulations establish a limit of 66⅔ percent of the value of each gas plant
product as an allowable gas processing deduction.
ONRR normally accepts the cost as stated in the lessee's arm's-length processing contract as
being representative of the cost of the processing allowance. In those instances where gas is
processed through a lessee-owned plant, the lessee must base processing costs on the actual plant
operating and maintenance expenses, depreciation, and a reasonable return on investment. The
allowance is expressed as a cost per unit of individual gas plant products. Lessees may take
processing allowances as a deduction from royalty payments.
From information collected on Form MMS-4109, ONRR and tribal personnel evaluate
(1) whether lessee-reported processing allowances are within regulatory allowance limitations
and calculated under applicable regulations; and (2) whether the lessee reported and paid the
proper amount of royalty. To take a non-arm’s-length or no contract processing deduction,
lessees must submit Form MMS-4109, within 3 months, after the end of the 12-month period to
which the lessee applied the allowance.
Indian Oil and Gas
Form MMS-4393, Request to Exceed Regulatory Allowance Limitation
(submitted on occasion)
Lessees must submit Form MMS-4393 for both Federal and Indian leases to request to exceed
the regulatory allowance limitation. Most of the burden hours are incurred on Federal leases;
therefore, the form is approved under OMB Control Number 1012-0005. Burden hours for
Indian leases using this form are included in this ICR.
Upon receiving a proper application from the lessee, ONRR may approve an oil or gas
transportation allowance in excess of 50 percent (Federal or Indian), or a gas processing
allowance in excess of 66⅔ percent (Federal only). To request permission to exceed a regulatory
allowance limit, lessees must (1) submit a letter to ONRR explaining why a higher allowance
limit is necessary; and (2) provide supporting documentation, including a completed Form
MMS-4393. This form provides ONRR with the data necessary to make a decision whether to
approve or deny the request and track deductions on subsequent royalty reports.
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.
We have available electronic copies of Forms MMS-4109, MMS-4110, MMS-4295, MMS-4410,
and MMS-4411 on our Internet website for respondents to print and complete. We have a
reasonable expectation that 5 percent may use an email option in the future.

5

Further information technology enhancements are not applicable for this ICR at this time
because we receive very few submissions per year. Most of the information collected applies to
exceptions to standard procedures, which are relatively few, infrequent, and non-standard and,
therefore, not conducive to electronic submission. It is not cost effective for us to enhance our
current computer system design to process a minimum number of forms.
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.
No other Federal or State agency collects the same or similar information. The primary
information necessary for the evaluation of specific transportation and/or processing proposals is
available only within the records of the applicant, and the use of such data is unique to our
mission. No other Federal agency collects similar information that can be modified for this
collection. The information is not available from any other source.
5. If the collection of information impacts small businesses or other small entities, describe
any methods used to minimize burden.
Small organizations are among the potential respondents. ONRR has carefully analyzed its
requirements to ensure that the information requested is the minimum necessary and places the
least possible burden on industry. There are no special reporting provisions or significant
economic impacts on small businesses or other small entities. We provide toll-free telephone
assistance and schedule annual training free of charge in various geographic areas to assist
reporters in complying with valuation and reporting requirements.
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.
By delegation of the Secretary's trust responsibilities under Indian lease terms, ONRR is
responsible for ensuring the proper valuation of production from Indian leases. Not collecting
this information would limit the Secretary's ability to discharge fiduciary duties and may also
result in the inability to confirm the accurate royalty value to Indian tribes and individual Indian
mineral owners.
7. Explain any special circumstances that would cause an information collection to be
conducted in a manner:
* requiring respondents to report information to the agency more often than quarterly.
Not applicable in this collection.
* requiring respondents to prepare a written response to a collection of information in
fewer than 30 days after receipt of it.

6

Not applicable in this collection.
* requiring respondents to submit more than an original and two copies of any document.
There are no special circumstances with respect to 5 CFR 1320.5(d)(2)(iii).
* requiring respondents to retain records, other than health, medical, government
contract, grant-in-aid, or tax records, for more than three years.
In accordance with 30 U.S.C. 1713(b), lessees must maintain their Indian oil and gas records for
6 years after they generate the records unless the Secretary notifies the record holder that they
must maintain such records for a longer period due to an ongoing audit or investigation.
* 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.
There are no special circumstances with respect to 5 CFR 1320.5(d)(2)(v).
* requiring the use of statistical data classification that OMB has not reviewed and
approved.
There are no special circumstances with respect to 5 CFR 1320.5(d)(2)(vi) as this collection is
not a statistical survey and does not use statistical data classification.
* 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.
There are no special circumstances with respect to 5 CFR 1320.5(d)(2)(vii) as this collection
does not include a pledge of confidentiality not supported by statute or regulation.
* 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.
There are no special circumstances with respect to 5 CFR 1320.5(d)(2)(viii) as this collection
does not require proprietary, trade secret, or other confidential information not protected by
agency procedures.
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 three years, and describe actions taken by the agency in response to these
comments. Specifically, address comments received on cost and hour burden.
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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 three 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 published a 60-day notice in the Federal Register on
December 8, 2011 (76 FR 76746). We published an additional notice in the Office of the
Federal Register on December 15, 2011 (76 FR 78033), correcting the submission date for
comments. We did not receive any comments in response to the Federal Register notice from
www.regulations.com.
On December 27, 2011, ONRR emailed the following industry personnel and received no
replies:




Marvinette Ponder of Devon Energy [[email protected]]
Maritta Perkins, [email protected], of Conoco Phillips
Donna Sandry, [email protected], of Binger

We also emailed the following industry personnel listed below, and they submitted the following
comments on burden hour estimates and other aspects of this collection.


12/27/2011 E-mail to Kristin Macarthur, [email protected], of Anadarko Petroleum
with no reply. 1/24/2012 Called Kristin, 303-799-9828. She said to merely update an existing
MMS-4109 it takes approximately 100 hours between her time and the time from the people she
would need to contact to gather the information. In order for them to complete the form for a new
or purchased plant the form would take approximately 300 hours.



1//11/2012 Called Daniel Kong, 713-420-3993, of El Paso. Followed up with an e-mail to him, to
[email protected] to which he replied "It takes about 40 hours to complete the form MMS4109 and related schedules if the data is available. The instruction about the form is not very
clear."



1/11/2012 Called Jaime Gonzalez, 214-242-1191, of CDX Rio LLC number was not working.



1/11/2012 Called Thomas Murphy, 303-799-98/28, of the Rim Companies. Followed up with an
email to him to [email protected] with no reply. 1/24/12, Called back and left message.



1/24/2012 Called Steve Keim, 918-661-7896, of Conoco Phillips. Followed up with an e-mail, to
[email protected]. Steve responded via e-mail 1/26/12 to complete the 4109.
Among the tasks included in this estimate are:
o

Review of ONRR regulations.

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

o

Identification and capture of annual Overhead, Maintenance and Operating expenses
and Capital related activities.

o

Analysis and determination of the allowable portion of the above items. This
determination is based on analysis of plant activities by our Plant operation personnel.

o

Determination of Natural Gas Processors Tax.

o

Review and calculation of annual depreciation and return on investment using historical
plant values.

o

Identification of annual plant liquid volumes.

o

Review and analysis of operational and other plant related activities that may impact the
allowance calculation process.

o

Calculation of the annual plant processing allowance rate.

o

Identification and compiling of Tribal liquid volumes from plant processing.

o

Preparation of annual 4109 reports.

o

Distribution of the annual 4109 reports.

“Est. hours required to complete the above processes on an annual basis = 640 hours."

ONRR Response: We did increase the burden hours for Form MMS-4109, given that there were
three responses. The variation between the responses was quite considerable. The response of
the 300-hour burden estimate only pertains to the situation in which the respondent had not filed
a previous form, which is not the usual circumstance. ONRR requires that industry file these
forms annually. We did not consider the 300-hour burden estimate but did consider the three
burden estimates of 40 hours, 100 hours, and 640 hours. We used the median number of 100
hours as the burden estimate.
ONRR maintains regular ongoing contact with companies. We also provide toll-free telephone
assistance and encourage customer feedback as we respond to questions regarding requirements.
We address issues as they come up and continually improve our processes.
9. Explain any decision to provide any payment or gift to respondents, other than
remuneration of contractors or grantees.
We will 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 that lessees provide to ONRR, relative to minerals they
removed from Federal and Indian leases, may be proprietary. The FOGRMA, as amended (30
U.S.C. 1733), and the Freedom of Information Act (5 U.S.C. 552(b)(4)) and its implementing
regulations (43 CFR 2) established standards to protect trade secrets and proprietary and other
information. In addition, the Indian Mineral Development Act of 1982 (25 U.S.C. 2103)
9

provides that the Department shall hold as privileged and proprietary information all information
in its possession related to Indian minerals agreement the Act covers. Strict security measures at
ONRR control 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.
The collection does not include sensitive or private questions.
12. Provide estimates of the hour burden of the collection of information. The statement
should:
* 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
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.
We estimate approximately 148 respondents (Indian oil and gas lessees) who may submit the
required information annually and on occasion (see charts below for breakout of data by form
and by information collection). Based on current data, we estimate the average number of
annual responses is 148, and the annual reporting burden is 1,309 hours.

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* If this request for approval covers more than one form, provide separate hour burden
estimates for each form and aggregate the hour burdens.
Reference
30 CFR
1206.180(b)(1)(ii)
1206.57(c)(1)(i) and (iii)
1206.57(c)(2)(i) and (iii)

Form Number
MMS-4109
MMS-4110
Arm’s-length contract (AL)
Non-arm’s length contract
(NAL)
MMS-4295
MMS-43931
MMS-4410

Hour Burden
per Response
100

Annual
Responses
12

4
6

2
2

Annual
Burden Hours
1,200
20
(8 AL
+ 12 NAL)

1206.178(b)(1)(ii)
15
5
75
1206.56(b)(2)
4
1
4
1206.172(b)(1)(ii)
4
58
232
1206.172(e)(6)(i) and
MMS-4411
3
11
33
(iii)
1
Form MMS-4393 is used for both Federal and Indian leases and is approved under OMB Control No.
1012-0005 for Federal leases, where most of the burden hours for this form are incurred. Form MMS4393 citations and burden hours for Indian leases were previously included in 1012-0005, but now are
listed in this ICR in the estimated burden hours chart under §1206.56(b)(2).

11

* 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.
Reference
30 CFR
206.180
cites2 and
206.181(c)
206.57
cites2

206.178
cites2

206.56
(b)(2);
206.177
(c)(2) and
(c)(3)
206.172
(b)(1)(ii);
206.173
(a)(1)

206.172
(e)(6)(i)
and (iii)
206.59

206.172
(f)(1)(ii),
(f)(2), and
(f)(3)
206.174(f)

202.551
(c);
206.175
(d)(4)

Information Collections (IC)
1. Indian Gas Processing
Allowance
(Form MMS-4109 and any other
required documentation)
2. Indian Oil Transportation
Allowance
(Form MMS-4110 and any other
required documentation)
3. Indian Gas Transportation
Allowance
(Form MMS-4295 and any other
required documentation)
4. Exceed Transportation
Allowance (Oil and Gas)
(Form MMS-4393 and any other
required documentation)
5. Indian Gas Valuation (No
Dual Accounting, Actual Dual
Accounting, or Alternative
Method)
(Form MMS-4410 and any other
required documentation)
6. Indian Gas Valuation (Safety
Net Reporting)
(Form MMS-4411 and any other
required documentation)
7. Indian Oil Valuation
(Required documentation; no
form)
8. Indian Gas Valuation
(Exclusion or Termination of
Exclusion from Valuation)
(Required documentation; no
form)
9. Indian Gas Valuation
Guidance
(Required documentation; no
form)
10. Indian Gas Production
(Request to Report Entitlements
or Request Different Allocation
of Gas)
(Required documentation; no
form)

Requirement to
Respond
Obtain a
benefit

Frequency
of
Response
Annually

Obtain a
benefit

Number
of
Responses
19

Annual
Burden
Hours
1,342

Annual
Cost
1
($46/hr)
61,732

On
occasion

12

220

10,120

Obtain a
benefit

Annually

30

293

13,478

Obtain a
benefit

On
occasion

1

4

184

Mandatory

On
occasion

70

256

11,776

Mandatory

Annually

11

33

1,518

Obtain a
benefit

On
occasion

1

20

920

Obtain a
benefit

On
occasion

1

40

1,840

Obtain a
benefit

On
occasion

1

40

1,840

Obtain a
benefit

On
occasion

2

21

966

148

2,269

$104,374

TOTAL
1

Cost estimates are based on the expectation that all requirements will be performed by an accountant. See
calculations for hourly costs for industry accountants below.
2
See chart below for complete listing of citations for this IC.

12

We expect that an industry accountant, in a metropolitan area, will perform all work. We
estimate the total annual reporting burden is 2,269 hours. We used Bureau of Labor Statistics
(BLS) National Occupational Employment and Wage Estimates (available at
http://www.bls.gov/bls/wages.htm) to estimate the hourly cost for industry accountants in a
metropolitan area. We used a multiplier of 1.4 (based on BLS news release available at
www.bls.gov/ect) for benefits. We estimate the hourly labor cost is $46, which we calculated as
follows:
$32.83 [mean hourly wage] x 1.4 [benefits cost factor] = $45.96 [rounded to $46]
We estimate the total annual cost to industry is $104,374, as follows:
2,269 hours [reporting hours] x $46 [for industry accountants] = $104,374
The burden estimates include the time for reviewing instructions; searching existing data
sources; gathering and maintaining the data needed; and completing and reviewing the collection
of information. There are no additional recordkeeping costs associated with this information
collection. We have not included in our estimates certain requirements performed in the normal
course of business and considered usual and customary. The following chart shows the
estimated burden hours by CFR section and paragraph:
Respondents’ Estimated Annual Burden Hours

30 CFR

1202.101

1202.551
(b)

1202.551
(c)
1202.558
(a) and
(b)

Reporting and
Recordkeeping Requirement

Hour
Burden

Average
Number of
Annual
Responses

Annual
Burden
Hours

Part 1202—ROYALTIES
Subpart C—Federal and Indian Oil
Burden covered under OMB
Standards for reporting and paying
Control Number 1012-0004
royalties.
Oil volumes are to be reported in barrels of (expires 12/31/2012). Burden
covered under §1210.52.
clean oil of 42 standard U.S. gallons
(231 cubic inches each) at 60 ºF. . . .
Subpart J—Gas Production From Indian Leases
Burden covered under OMB
How do I determine the volume of
Control Number 1012-0004.
production for which I must pay royalty
if my lease is not in an approved Federal Burden covered under §1210.52.
unit or communitization agreement
(AFA)?
(b) You and all other persons paying
royalties on the lease must report and pay
royalties based on your takes. . . .
(c) You and all other persons paying
1
1
1
royalties on the lease may ask ONRR for
permission . . . . to report entitlements . . .
Burden covered under OMB
What standards do I use to report and
Control Number 1012-0004.
pay royalties on gas?
Burden covered under §1210.52.
(a) You must report gas volumes as

13

30 CFR

1206.56
(b)(2)

1206.57
(a)(1)(i)

1206.57
(a)(1)(i)

1206.57
(a)(1)(iii)

1206.57
(a)(2)(i)

1206.57
(a)(2)(ii)

Reporting and
Recordkeeping Requirement

Hour
Burden

Average
Number of
Annual
Responses

Annual
Burden
Hours

follows: . . .
(b) You must report residue gas and gas
plant product volumes as follows: . . .
Part 1206—PRODUCT VALUATION
Subpart B—Indian Oil
4
1
Transportation allowances—general.
(b)(2) Upon request of a lessee, ONRR
may approve a transportation allowance
deduction in excess of the limitation
prescribed by paragraph (b)(1) of this
section. . . . An application for exception
(using Form MMS-4393, Request to
Exceed Regulatory Allowance Limitation)
must contain all relevant and supporting
documentation necessary for ONRR to
make a determination. . . .
AUDIT PROCESS. See note.
Determination of transportation
allowances.
(a) Arm’s-length transportation contracts.
(1)(i) . . . The lessee shall have the burden
of demonstrating that its contract is arm’slength.
(a) Arm’s-length transportation contracts.
Burden covered under
(1)(i) . . . Before any deduction may be
§1206.57(c)(1)(i) and (iii).
taken, the lessee must submit a completed
page one of Form MMS-4110 (and
Schedule 1), Oil Transportation Allowance
Report . . .
(a) Arm’s-length transportation contracts.
AUDIT PROCESS. See note.
(1)(iii) . . . When ONRR determines that
the value of the transportation may be
unreasonable, ONRR will notify the lessee
and give the lessee an opportunity to
provide written information justifying the
lessee’s transportation costs.
(a) Arm’s-length transportation contracts.
Burden covered under
(2)(i) . . . Except as provided in this
§1206.57(a)(3).
paragraph, no allowance may be taken for
the costs of transporting lease production
which is not royalty-bearing without ONRR
approval.
(a) Arm’s-length transportation contracts.
20
1
(2)(ii) Notwithstanding the requirements of
paragraph (i), the lessee may propose to
ONRR a cost allocation method on the
basis of the values of the products
transported. . . .

14

4

20

30 CFR

1206.57
(a)(3)

1206.57
(b)(1)

1206.57
(b)(1)

1206.57
(b)(2)(iv)

1206.57
(b)(2)(iv)
(A)
1206.57
(b)(3)(i)

1206.57
(b)(3)(ii)

1206.57
(b)(4)

Reporting and
Recordkeeping Requirement

Hour
Burden

(a) Arm’s-length transportation contracts.
(3) If an arm’s-length transportation
contract includes both gaseous and liquid
products, and the transportation costs
attributable to each product cannot be
determined from the contract, the lessee
shall propose an allocation procedure to
ONRR. . . . The lessee shall submit all
available data to support its proposal. . . .
(b) Non-arm’s-length or no contract.
(1) . . . A transportation allowance may be
claimed retroactively for a period of not
more than 3 months prior to the first day of
the month that Form MMS-4110 is filed
with ONRR, unless ONRR approves a
longer period upon a showing of good
cause by the lessee. . . .
(b) Non-arm’s-length or no contract.
(1) . . . When necessary or appropriate,
ONRR may direct a lessee to modify its
actual transportation allowance deduction.
(b) Non-arm’s-length or no contract.
(2)(iv) . . . After a lessee has elected to use
either method for a transportation system,
the lessee may not later elect to change to
the other alternative without approval of
ONRR.
(b) Non-arm’s-length or no contract.
(2)(iv)(A) . . . After an election is made, the
lessee may not change methods without
ONRR approval. . . .
(b) Non-arm’s-length or no contract.
(3)(i) . . . Except as provided in this
paragraph, the lessee may not take an
allowance for transporting lease production
which is not royalty bearing without ONRR
approval.
(b) Non-arm’s-length or no contract.
(3)(ii) Notwithstanding the requirements of
paragraph (i), the lessee may propose to
ONRR a cost allocation method on the
basis of the values of the products
transported. . . .
(b) Non-arm’s-length or no contract.
(4) Where both gaseous and liquid
products are transported through the same
transportation system, the lessee shall
propose a cost allocation procedure to
ONRR. . . . The lessee shall submit all
available data to support its proposal. . . .

15

40

Average
Number of
Annual
Responses
1

Annual
Burden
Hours
40

Burden covered under
§1206.57(c)(2)(i) and (iii).

Burden covered under OMB
Control Number 1012-0004.
Burden covered under §1210.52.
20

1

20

20

1

20

40

1

40

20

1

20

20

1

20

30 CFR

1206.57
(b)(5)

1206.57
(c)(1)(i)

1206.57
(c)(1)(iii)

1206.57
(c)(1)(iv)

Reporting and
Recordkeeping Requirement

20

Average
Number of
Annual
Responses
1

4

1

4

4

1

4

Hour
Burden

(b) Non-arm’s-length or no contract.
(5) A lessee may apply to ONRR for an
exception from the requirement that it
compute actual costs in accordance with
paragraphs (b)(1) through (b)(4) of this
section. . . .
(c) Reporting requirements.
(1) Arm’s-length contracts. (i) With the
exception of those transportation
allowances specified in paragraphs
(c)(1)(v) and (c)(1)(vi) of this section, the
lessee shall submit page one of the initial
Form MMS-4110 (and Schedule 1), Oil
Transportation Allowance Report, prior to,
or at the same time as, the transportation
allowance determined, under an arm’slength contract, is reported on Form MMS2014, Report of Sales and Royalty
Remittance. . . .
(c) Reporting requirements.
(1) Arm’s-length contracts. (iii) After the
initial reporting period and for succeeding
reporting periods, lessees must submit
page one of Form MMS-4110 (and
Schedule 1) within 3 months after the end
of the calendar year, or after the applicable
contract or rate terminates or is modified or
amended, whichever is earlier, unless
ONRR approves a longer period (during
which period the lessee shall continue to
use the allowance from the previous
reporting period).
(c) Reporting requirements.
(1) Arm’s-length contracts. (iv) ONRR may
require that a lessee submit arm’s-length
transportation contracts, production
agreements, operating agreements, and
related documents. Documents shall be
submitted within a reasonable time, as
determined by ONRR.

16

Annual
Burden
Hours

AUDIT PROCESS. See note.

20

30 CFR

1206.57
(c)(2)(i)

1206.57
(c)(2)(iii)

1206.57
(c)(2)(iv)

1206.57
(c)(2)(v)

1206.57
(c)(2)(vi)

Reporting and
Recordkeeping Requirement

6

Average
Number of
Annual
Responses
1

6

1

Hour
Burden

(c) Reporting requirements.
(2) Non-arm’s-length or no contract.
(i) With the exception of those
transportation allowances specified in
paragraphs (c)(2)(v), (c)(2)(vii) and
(c)(2)(viii) of this section, the lessee shall
submit an initial Form MMS-4110 prior to,
or at the same time as, the transportation
allowance determined under a non-arm’slength contract or no-contract situation is
reported on Form MMS-2014. . . . The
initial report may be based upon estimated
costs.
(c) Reporting requirements.
(2) Non-arm’s-length or no contract.
(iii) For calendar-year reporting periods
succeeding the initial reporting period, the
lessee shall submit a completed Form
MMS-4110 containing the actual costs for
the previous reporting period. If oil
transportation is continuing, the lessee
shall include on Form MMS-4110 its
estimated costs for the next calendar year.
. . . ONRR must receive the Form MMS4110 within 3 months after the end of the
previous reporting period, unless ONRR
approves a longer period (during which
period the lessee shall continue to use the
allowance from the previous reporting
period).
(c) Reporting requirements.
(2) Non-arm’s-length or no contract.
(iv) For new transportation facilities or
arrangements, the lessee’s initial Form
MMS-4110 shall include estimates of the
allowable oil transportation costs for the
applicable period. . . .
(c) Reporting requirements.
(2) Non-arm’s-length or no contract.
(v) . . . only those allowances that have
been approved by ONRR in writing . . .
(c) Reporting requirements.
(2) Non-arm’s-length or no contract.
(vi) Upon request by ONRR, the lessee
shall submit all data used to prepare its
Form MMS-4110. The data shall be
provided within a reasonable period of
time, as determined by ONRR.

17

Annual
Burden
Hours

Burden covered under
§1206.57(c)(2)(i).

Burden covered under
§1206.57(c)(2)(i).

AUDIT PROCESS. See note.

6

6

30 CFR

1206.57
(c)(4)
and
(e)(2)

1206.59

1206.61
(a) and
(b)

1206.172
(b)(1)(ii)

1206.172
(e)(6)(i)
and (iii)

Average
Annual
Number of
Burden
Annual
Hours
Responses
Burden covered under OMB
Control Number 1012-0004.
Burden covered under §1210.52.

Reporting and
Recordkeeping Requirement

Hour
Burden

(c) Reporting requirements.
(4) Transportation allowances must be
reported as a separate line item on Form
MMS-2014, . . .
(e) Adjustments.
(2) For lessees transporting production
from Indian leases, the lessee must submit
a corrected Form MMS-2014 to reflect
actual costs, . . .
20
1
20
May I ask ONRR for valuation
guidance?
You may ask ONRR for guidance in
determining value. You may propose a
value method to ONRR. Submit all
available data related to your proposal
and any additional information ONRR
deems necessary. . . .
AUDIT PROCESS. See note.
What records must I keep and
produce?
(a) On request, you must make
available sales, volume, and
transportation data for production you
sold, purchased, or obtained from the
field or area. You must make this data
available to ONRR, Indian representatives,
or other authorized persons.
(b) You must retain all data relevant
to the determination of royalty value. . . .
Part 1206—PRODUCT VALUATION
Subpart E—Indian Gas
4
58
232
How do I value gas produced from
leases in an index zone?
(b) Valuing residue gas and gas before
processing.
(1)(ii) Gas production that you certify on
Form MMS-4410, . . . is not processed
before it flows into a pipeline with an index
but which may be processed later; . . .
(e) Determining the minimum value for
royalty purposes of gas sold beyond the
first index pricing point.
(6)(i) You must report the safety net price
for each index zone to ONRR on Form
MMS-4411, Safety Net Report, no later
than June 30 following each calendar year;
...
(iii) ONRR may order you to amend your
safety net price within one year from the
date your Form MMS-4411 is due or is
filed, whichever is later. . . .

18

3

11

33

30 CFR

Reporting and
Recordkeeping Requirement

1206.172
(e)(6)(ii)

(e) Determining the minimum value for
royalty purposes of gas sold beyond the
first index pricing point.
(6)(ii) You must pay and report on Form
MMS-2014 additional royalties due no later
than June 30 following each calendar year;
...
(f ) Excluding some or all tribal leases from
valuation under this section.
(1) An Indian tribe may ask ONRR to
exclude some or all of its leases from
valuation under this section. . . .
(ii) If an Indian tribe requests exclusion
from an index zone for less than all of its
leases, ONRR will approve the request
only if the excluded leases may be
segregated into one or more groups based
on separate fields within the reservation.
(2) An Indian tribe may ask ONRR S to
terminate exclusion of its leases from
valuation under this section. . . .
(3) The Indian tribe’s request to ONRR
under either paragraph (f)(1) or (2) of this
section must be in the form of a tribal
resolution. . . .
How do I calculate the alternative
methodology for dual accounting?
(a) Electing a dual accounting method.
(1) . . . You may elect to perform the dual
accounting calculation according to either
§1206.176(a) (called actual dual
accounting), or paragraph (b) of this
section (called the alternative methodology
for dual accounting).
(a) Electing a dual accounting method.
(2) You must make a separate election to
use the alternative methodology for dual
accounting for your Indian leases in each
ONRR S-designated area. . . .
How do I value gas production when an
index-based method cannot be used?
(a) Situations in which an index-based
method cannot be used.
(4)(ii) If the major portion value is higher,
you must submit an amended Form MMS2014 to ONRR by the due date specified in
the written notice from ONRR of the major
portion value. . . .

1206.172
(f)(1)(ii),
(f)(2),
and (f)(3)

1206.173
(a)(1)

1206.173
(a)(2)

1206.174
(a)(4)(ii)

Average
Annual
Number of
Burden
Annual
Hours
Responses
Burden covered under OMB
Control Number 1012-0004.
Burden covered under §1210.52.
Hour
Burden

19

40

1

40

2

12

24

Burden covered under
§1206.173(a)(1).

Burden covered under OMB
Control Number 1012-0004.
Burden covered under §1210.52.

30 CFR

Reporting and
Recordkeeping Requirement

1206.174
(b)(1)(i)
and (iii);
(b)(2);
(d)(2)

(b) Arm’s-length contracts.
(1)(i) You have the burden of
demonstrating that your contract is arm’slength. . . .
(iii) . . . In these circumstances, ONRR will
notify you and give you an opportunity to
provide written information justifying your
value. . . .
(2) ONRR may require you to certify that
your arm’s-length contract provisions
include all of the consideration the buyer
pays, either directly or indirectly, for the
gas, residue gas, or gas plant product.
(d) Supporting data.
(2) You must make all such data available
upon request to the authorized ONRR or
Indian representatives, to the Office of the
Inspector General of the Department, or
other authorized persons. . . .
(d) Supporting data. If you determine the
value of production under paragraph (c) of
this section, you must retain all data
relevant to determination of royalty value.
(f) Value guidance. You may ask ONRR
for guidance in determining value. You
may propose a valuation method to ONRR.
Submit all available data related to your
proposal and any additional information
ONRR deems necessary. . . .
How do I determine quantities and
qualities of production for computing
royalties?
(d)(4) You may request ONRR approval of
other methods for determining the quantity
of residue gas and gas plant products
allocable to each lease. . . .
How do I perform accounting for
comparison?
(b) If you are required to account for
comparison, you may elect to use the
alternative dual accounting methodology
provided for in §1206.173 instead of the
provisions in paragraph (a) of this section.
(c) . . . If you do not perform dual
accounting, you must certify to ONRR that
gas flows into such a pipeline before it is
processed.

1206.174
(d)

1206.174
(f)

1206.175
(d)(4)

1206.176
(b)

1206.176
(c)

Average
Annual
Number of
Burden
Annual
Hours
Responses
AUDIT PROCESS. See note.
Hour
Burden

20

Burden covered under OMB
Control Number 1012-0004.

40

1

40

20

1

20

Burden covered under
§1206.173(a)(1).

Burden covered under
§1206.172(b)(1)(ii).

30 CFR

Reporting and
Recordkeeping Requirement

Hour
Burden

Average
Number of
Annual
Responses

Annual
Burden
Hours

TRANSPORTATION ALLOWANCES
1206.177
(c)(2)
and
(c)(3)

1206.178
(a)(1)(i)

1206.178
(a)(1)(iii)

1206.178
(a)(2)(i)
and (ii)

What general requirements regarding
transportation allowances apply to me?
(c)(2) If you ask ONRR, ONRR may
approve a transportation allowance
deduction in excess of the limitation in
paragraph (c)(1) of this section. . . .
(3) Your application for exception (using
Form MMS-4393, Request to Exceed
Regulatory Allowance Limitation) must
contain all relevant and supporting
documentation necessary for ONRR to
make a determination.
How do I determine a transportation
allowance?
(a) Determining a transportation allowance
under an arm’s-length contract.
(1)(i) . . . You are required to submit to
ONRR a copy of your arm’s-length
transportation contract(s) and all
subsequent amendments to the contract(s)
within 2 months of the date ONRR
receives your report which claims the
allowance on the Form MMS-2014.
(a) Determining a transportation allowance
under an arm’s-length contract.
(1)(iii) If ONRR determines that the
consideration paid under an arm’s-length
transportation contract does not reflect the
value of the transportation because of
misconduct by or between the contracting
parties . . . In these circumstances, ONRR
will notify you and give you an opportunity
to provide written information justifying
your transportation costs.
(a) Determining a transportation allowance
under an arm’s-length contract.
(2)(i) . . . you cannot take an allowance for
the costs of transporting lease production
that is not royalty bearing without ONRR
approval, or without lessor approval on
tribal leases.
(ii) As an alternative to paragraph (a)(2)(i)
of this section, you may propose to ONRR
a cost allocation method based on the
values of the products transported. . . .

21

Burden covered under
§1206.56(b)(2).

1

18

18

AUDIT PROCESS. See note.

20

1

20

30 CFR

Reporting and
Recordkeeping Requirement

1206.178
(a)(3)(i)
and (ii)

(a) Determining a transportation allowance
under an arm’s-length contract.
(3)(i) If your arm’s-length transportation
contract includes both gaseous and liquid
products and the transportation costs
attributable to each cannot be determined
from the contract, you must propose an
allocation procedure to ONRR. . . .
(ii) You are required to submit all relevant
data to support your allocation proposal.
...
(b) Determining a transportation allowance
under a non-arm’s-length contract or no
contract.
(1)(ii) . . . You must submit the actual cost
information to support the allowance to
ONRR on Form MMS-4295, Gas
Transportation Allowance Report, within
3 months after the end of the 12-month
period to which the allowance applies. . . .
(b) Determining a transportation allowance
under a non-arm’s-length contract or no
contract.
(2)(iv) You may use either depreciation
with a return on undepreciated capital
investment or a return on depreciable
capital investment. . . . you may not later
elect to change to the other alternative
without ONRR approval.
(b) Determining a transportation allowance
under a non-arm’s-length contract or no
contract.
(2)(iv)(A) . . . Once you make an election,
you may not change methods without
ONRR approval. . . .
(b) Determining a transportation allowance
under a non-arm’s-length contract or no
contract.
(3)(i) . . . Except as provided in this
paragraph, you may not take an allowance
for transporting a product that is not royalty
bearing without ONRR approval.
(b) Determining a transportation allowance
under a non-arm’s-length contract or no
contract.
(3)(ii) As an alternative to the requirements
of paragraph (b)(3)(i) of this section, you
may propose to ONRR a cost allocation
method based on the values of the
products transported. . . .

1206.178
(b)(1)(ii)

1206.178
(b)(2)(iv)

1206.178
(b)(2)(iv)
(A)

1206.178
(b)(3)(i)

1206.178
(b)(3)(ii)

40

Average
Number of
Annual
Responses
1

15

5

75

20

1

20

20

1

20

40

1

40

20

1

20

Hour
Burden

22

Annual
Burden
Hours
40

30 CFR

Reporting and
Recordkeeping Requirement

1206.178
(b)(5)

(b) Determining a transportation allowance
under a non-arm’s-length contract or no
contract.
(5) If you transport both gaseous and liquid
products through the same transportation
system, you must propose a cost allocation
procedure to ONRR. . . . You are required
to submit all relevant data to support your
proposal. . . .
(d) Reporting your transportation
allowance.
(1) If ONRR requests, you must submit all
data used to determine your transportation
allowance . . .
(d) Reporting your transportation
allowance.
(2) You must report transportation
allowances as a separate entry on Form
MMS-2014. . . .
(e) Adjusting incorrect allowances. If for
any month the transportation allowance
you are entitled to is less than the amount
you took on Form MMS-2014, you are
required to report and pay additional
royalties due, plus interest computed under
30 CFR 1218.54 from the first day of the
first month you deducted the improper
transportation allowance until the date you
pay the royalties due. . . .
(f) Determining allowable costs for
transportation allowances. . . .
(1) Firm demand charges paid to pipelines.
. . . You must modify the Form MMS-2014
by the amount received or credited for the
affected reporting period.

1206.178
(d)(1)

1206.178
(d)(2),
(e), and
(f)(1)

Hour
Burden
40

Average
Number of
Annual
Responses
1

Annual
Burden
Hours
40

AUDIT PROCESS. See note.

Burden covered under OMB
Control Number 1012-0004.
Burden covered under §1210.52.

PROCESSING ALLOWANCES
1206.180
(a)(1)(i)

How do I determine an actual
processing allowance?
(a) Determining a processing allowance if
you have an arm’s-length processing
contract.
(1)(i) . . . You have the burden of
demonstrating that your contract is arm’slength. You are required to submit to
ONRR a copy of your arm’s-length
contract(s) and all subsequent
amendments to the contract(s) within 2
months of the date ONRR receives your
first report that deducts the allowance on
the Form MMS-2014.

23

1

2

2

30 CFR

Reporting and
Recordkeeping Requirement

1206.180
(a)(1)(iii)

(a) Determining a processing allowance if
you have an arm’s-length processing
contract.
(1)(iii) If ONRR determines that the
consideration paid under an arm’s-length
processing contract does not reflect the
value of the processing because of
misconduct by or between the contracting
parties . . . In these circumstances, ONRR
will notify you and give you an opportunity
to provide written information justifying
your processing costs.
(a) Determining a processing allowance if
you have an arm’s-length processing
contract.
(3) If your arm’s-length processing contract
includes more than one gas plant product
and the processing costs attributable to
each product cannot be determined from
the contract, you must propose an
allocation procedure to ONRR. . . . You are
required to submit all relevant data to
support your proposal. . . .
(b) Determining a processing allowance if
you have a non-arm’s-length contract or no
contract.
(1)(ii) . . . You must submit the actual cost
information to support the allowance to
ONRR on Form MMS-4109, Gas
Processing Allowance Summary Report,
within 3 months after the end of the 12month period for which the allowance
applies. . . .
(b) Determining a processing allowance if
you have a non-arm’s-length contract or no
contract.
(2)(iv) You may use either depreciation
with a return on undepreciable capital
investment or a return on depreciable
capital investment. . . . you may not later
elect to change to the other alternative
without ONRR approval.
(b) Determining a processing allowance if
you have a non-arm’s-length contract or no
contract.
(2)(iv)(A) . . . Once you make an election,
you may not change methods without
ONRR approval. . . .

1206.180
(a)(3)

1206.180
(b)(1)(ii)

1206.180
(b)(2)(iv)

1206.180
(b)(2)(iv)
(A)

Average
Annual
Number of
Burden
Annual
Hours
Responses
AUDIT PROCESS. See note.
Hour
Burden

24

40

1

40

100

12

1,200

20

1

20

20

1

20

30 CFR

Reporting and
Recordkeeping Requirement

1206.180
(b)(3)

(b) Determining a processing allowance if
you have a non-arm’s-length contract or no
contract.
(3) Your processing allowance under this
paragraph (b) must be determined based
upon a calendar year or other period if you
and ONRR agree to an alternative.
(c) Reporting your processing allowance.
(1) If ONRR requests, you must submit all
data used to determine your processing
allowance. . . .
(c) Reporting your processing allowance.
(2) You must report gas processing
allowances as a separate entry on the
Form MMS-2014. . . .
(d) Adjusting incorrect processing
allowances. If for any month the gas
processing allowance you are entitled to is
less than the amount you took on Form
MMS-2014, you are required to pay
additional royalties, plus interest computed
under 30 CFR 1218.54 from the first day of
the first month you deducted a processing
allowance until the date you pay the
royalties due. . . .
How do I establish processing costs for
dual accounting purposes when I do not
process the gas?
(c) A proposed comparable processing fee
submitted to either the tribe and ONRR (for
tribal leases) or ONRR (for allotted leases)
with your supporting documentation
submitted to ONRR. If ONRR does not
take action on your proposal within 120
days, the proposal will be deemed to be
denied and subject to appeal to the ONRR
Director under 30 CFR part 1290.

1206.180
(c)(1)

1206.180
(c)(2)
and (d)

1206.181
(c)

Hour
Burden
20

Average
Number of
Annual
Responses
1

Annual
Burden
Hours

AUDIT PROCESS. See note.

Burden covered under OMB
Control Number 1012-0004.
Burden covered under §1210.52.

40

1

PART 1207—SALES AGREEMENTS OR CONTRACTS GOVERNING THE
DISPOSAL OF LEASE PRODUCTS
Subpart A—General Provisions
1207.4
AUDIT PROCESS. See note.
Contracts made pursuant to old form
(b)
leases.
(b) The stipulation, the substance of which
must be included in the contract, or be
made the subject matter of a separate
instrument properly identifying the leases
affected thereby, is as follows . . .

25

20

40

30 CFR

1207.5

Reporting and
Recordkeeping Requirement

Average
Annual
Number of
Burden
Annual
Hours
Responses
AUDIT PROCESS. See note.
Hour
Burden

Contract and sales agreement retention.
Copies of all sales contracts, posted price
bulletins, etc., and copies of all
agreements, other contracts, or other
documents which are relevant to the
valuation of production are to be
maintained by the lessee and made
available upon request during normal
working hours to authorized ONRR, State
or Indian representatives, other ONRR or
BLM officials, auditors of the General
Accounting Office, or other persons
authorized to receive such documents, or
shall be submitted to ONRR within a
reasonable period of time, as determined
by ONRR. Any oral sales arrangement
negotiated by the lessee must be placed in
written form and retained by the lessee.
Records shall be retained in accordance
with 30 CFR part 1212.

TOTAL BURDEN

148

2,269

Note: AUDIT PROCESS—The Office of Regulatory Affairs determined that the audit process is
exempt from the Paperwork Reduction Act of 1995 because MMS staff asks non-standard questions to
resolve exceptions.

26

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 already reflected in Item 12.)
* The cost estimate should be split into two components: (1) a total capital and start-up
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 for form processing]. 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.
* If cost estimates are expected to vary widely, agencies should present ranges of cost
burdens 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.
* 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 have identified no “non-hour” cost burdens for this collection of information.

27

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.
We estimate the annualized cost to the Federal Government is $136,140 [$60 per hour x 2,269
hours = $136,140].
We estimate approximately 148 repondents annually. We estimate that the total annual reporting
burden for industry is 2,269 hours, and that the Federal Government will require 1 hour of a
Government accountant’s time for each burden hour for industry to review forms then verify
allowances, dual accounting elections, and safety net prices.
We expect that a Government accountant will perform the work at the United States 2012
General Schedule, Grade 12/Step 5 pay scale for the Denver, Colorado, area. We used a
multiplier of 1.5 for benefits. We estimate the hourly labor cost is $60 [$40.10 per hour x 1.5
benefit cost factor = $60.15, rounded to $60]. The estimated annual cost to the Federal
Government is $136,140 [$60 per hour x 2,269 hours = $136,140].
15. Explain the reasons for any program changes or adjustments in hour or cost burden.
The current OMB-approved inventory is 1,074 annual burden hours. Our current estimate of the
burden hours is 2,269 burden hours, resulting in a total adjustment increase of 1,195 hours.
There is no program change for this information collection.
We analyzed our current data and the solicited comments received and found an increase in the
time that industry takes to complete the requirements for Forms MMS-4109, MMS-4295, MMS4410, and MMS-4411. We also decreased the burden hour estimates to complete Form MMS4110 based on industry's established history of compliance and our regular ongoing contact and
interaction with companies to resolve questions as they arise.
Specific adjustment changes are identified as follow, due to current information:
Citation
30 CFR part 1206
1206.57(c)(1)(i)
1206.57(c)(1)(iii)
1206.57(c)(2)(iii)
1206.172(b)(1)(ii)
1206.172(e)(6)(i)
1206.173(a)(1)
1206.178(a)(1)(i)
1206.178(b)(1)(ii)
1206.180(a)(1)(i)
1206.180(b)(1)(ii)
Total

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Adjustment
Increase(+)/Decrease(-)
Of Burden Hours
-12
-12
-12
+132
+3
-14
-7
+30
-13
+1,100
+1,195

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 ONRR will not publish the data.
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.
Not applicable to this collection.
18. Explain each exception to the certification statement identified in “Certification for
Paperwork Reduction Act Submissions.”
To the extent that the topics apply to this collection of information, we are not making any
exceptions to the “Certification for Paperwork Reduction Act Submissions.”

29