issue-1996-02-12•Federal Register final rules — 1996-02-12
Federal Register final rules — 1996-02-12
issue-1996-02-12Federal Register final rules — 1996-02-12Regulation
Published Federal Register documents, not public-inspection drafts. The GPO XML/text rendition is a research aid; the linked complete official PDF retains the printed layout and all graphics. Graphics are retained in that PDF and are not independently reproduced in this text rendition. Publication does not establish that every provision remains legally in force.
FR Doc. 96-3003 48 CFR Parts 1815, 1816, 1819, 1823, 1827, 1835, 1837 and 1852
[Federal Register Volume 61, Number 29 (Monday, February 12, 1996)]
[Rules and Regulations]
[Pages 5312-5315]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-3003]
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NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 1815, 1816, 1819, 1823, 1827, 1835, 1837 and 1852
Acquisition Regulation; Miscellaneous Amendments to NASA FAR
Supplement
AGENCY: Office of Procurement, National Aeronautics and Space
Administration (NASA).
ACTION: Final rule.
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SUMMARY: This document amends the NASA Federal Acquisition Regulation
Supplement (NFS) to reflect a number of miscellaneous changes dealing
with NASA internal or administrative matters, such as promotion of
compliance with current Federal-wide policies on Government property,
revision of headings, and delegation of authority.
EFFECTIVE DATE: March 13, 1996.
FOR FURTHER INFORMATION CONTACT:
David K. Beck, (202) 358-0482.
SUPPLEMENTARY INFORMATION:
Background
NASA is reviewing and rewriting 48 CFR chapter 18, the NASA FAR
Supplement, in its entirety in order to implement recommendations of
the National Performance Review. During this review, NASA is
eliminating reporting requirements and making other changes in order to
reduce and simplify the regulation. This rule is part of the effort to
simplify NASA's regulations.
Summary of Changes
Section 1837.204 is added to delegate authority to make the
determinations of non-availability of personnel under FAR 37.204 (FAC
90-33, Item II, 60 FR 49720 and 49723, 9-26-95). In addition, section
1815.413-2 is revised, in the context of FAR 37.203 and 37.204, to
refer to the determinations to be made under the new section 1837.204.
To promote compliance with Federal-wide policy, a reference is
added in 1815.970(b) to the policy under FAR 45.302-3(c) on excluding
the cost of facilities when contracting officers calculate a profit or
fee objective prior to contract negotiation.
The prescription is revised in 1815.7002 for the ombudsman clause
in order to remove the reference to Section L of the solicitation. NASA
will instruct contracting officers to place the clause in Section I
which is more appropriate for information that may be useful before and
after contract award.
Section 1816.505 is added (per FAC 90-33, Item III, 60 FR 49723, 9-
26-95) on task and delivery order contracts in order to enable persons
to identify the appropriate NASA ombudsman.
In order to conform to changes in the FAR made by FAC 90-32, Item V
(60 FR 48206, 9-18-95) headings are changed in part 1819.
This rule increases from $25,000 to the ``simplified acquisition
threshold'' the dollar amount at which the Safety and Health clause of
1852.223-70 is automatically included in construction contracts and
subcontracts. Regardless of dollar amount, the clause is included when
there are known hazards.
This rule removes paragraph (b) of 1835.003 which refers to a NASA
Management Instruction entitled ``Recoupment Policy for the Sale, Use,
Lease, or Other Transfer of NASA-Developed Technologies.'' The NASA
Management Instruction has been canceled because we know of no occasion
where the policy has been used by NASA to recoup R&D or other
nonrecurring costs.
Section 1852.227-15 is redesignated as 1852.227-17 because the
section provides a paragraph to be added to the basic clause at FAR
52.227-17.
Impact
NASA certifies that this regulation will not have a significant
economic effect on a substantial number of small entities under the
Regulatory Flexibility Act (5 U.S.C. 601 et seq.). The regulation
imposes no burdens on the public under the Paperwork Reduction Act of
1995, as implemented under 5 CFR part 1320.
List of Subjects in 48 CFR Parts 1815, 1816, 1819, 1823, 1827,
1835, 1837, 1852
Government procurement.
Tom Luedtke,
Deputy Associate Administrator for Procurement.
Accordingly, 48 CFR parts 1815, 1816, 1819, 1823, 1827, 1835, 1837,
and 1852 are amended as follows:
1. The authority citation for 48 CFR Parts 1815, 1816, 1819, 1823,
1827, 1835, 1837, and 1852 continues to read as follows:
Authority: 42 U.S.C. 2473(c)(1).
[[Page 5313]]
PART 1815--CONTRACTING BY NEGOTIATION
2. Section 1815-413-2 is revised to read as follows:
1815.413-2 Alternate II.
(a) General. This section prescribes the policy and procedures
pertaining to the use of individuals from outside the Government as
evaluators of proposals. The references in FAR 15.413-2 to the
provision at FAR 52.215-12 shall be considered to be references to the
provision at 48 CFR 1852.215-72.
(b) Policy. It is NASA policy to have proposals evaluated by the
most competent technical and management sources available. Qualified
proposal evaluators will normally be available from within the
Government. However, from time-to-time it may be necessary to make a
determination of non-availability of qualified Government evaluators as
required by 48 CFR 1837.204 and to disclose proposal information to
non-Government evaluators.
(c) Approval to release proposal outside the Government. (1)
Regarding proposals and proposal information resulting from Requests
For Proposals, after the determination of non-availability is made (48
CFR 1837.204) and a copy of the determination is included in the
procurement file, the Procurement Officer, with the concurrence of the
Chief Counsel, may authorize the release of the proposals and proposal
information to non-Government evaluators. Under FAR 37.203(d), the
determination of non-availability of qualified personnel need not be
made when the proposal information is released to a JPL employee for
evaluation.
(2) Information from SBIR, STTR, NRA, AO and unsolicited proposals
may be authorized for disclosure to non-Government evaluators by the
NASA program official one level higher than the official responsible
for the evaluation without making the determination of non-availability
as required by 48 CFR 1837.204.
(d) Appointing non-Government evaluators as special Government
employees. (1) Except for JPL employees, evaluators of proposal
information resulting from an RFP shall be appointed as special
Government employees.
(2) Appointment as a Special Government employee is a separate
action from the approval required by paragraph (c) of this section and
may be processed concurrently. Appointment as a special Government
employee shall be made by:
(i) The NASA Headquarters personnel office when the release of
proposal information is to be made by a NASA Headquarters office; or
(ii) The Field Installation personnel office when the release of
proposal information is to be made by the Field Installation.
(3) Non-Government evaluators need not be appointed as special
Government employees when they evaluate information from SBIR, STTR,
NRA, AO, and unsolicited proposals.
(e) Release of proposal information. The written approvals required
by paragraphs (c)(1) and (c)(2) of this section shall be provided to
the contracting officer before the actual release of the proposal
information. As a minimum, the approval shall:
(1) Identify the precise proposal information being released;
(2) Identify the person receiving the proposal information and
include a statement that the person has been appointed a special
Government employee or a statement of the applicable exception under
paragraph (d)(3) of this section;
(3) Provide a justification of the need for disclosure of the
proposal information to the non-Government evaluator(s); and
(4) Provide a statement that a signed ``Agreement and Conditions
for Evaluation of Proposals (August 1993),'' in accordance with
paragraph (f) of this section, will be obtained prior to the proposal
to the evaluator.
(f) Agreements. For any proposal information, (i.e., RFP, SBIR,
STTR, NRA, AO and unsolicited proposals) the NASA official who actually
releases/transfers the proposal information to a non-Government
evaluator, including employees of JPL, shall, prior to such disclosure,
require each non-Government evaluator to sign the following ``Agreement
and Conditions for Evaluation of Proposals (April 1993),'' and to
complete and sign a ``Procurement Integrity Certification for
Procurement Officials'' (Optional Form 333), in accordance with FAR
3.104-12.
Agreement and Conditions for Evaluation of Proposals (August 1993)
(1) The recipient agrees to use proposal information for NASA
evaluation purposes only. This limitation does not apply to
information that is otherwise available without restrictions to the
Government, another competing contractor, or the public.
(2) The recipient agrees that the NASA proposal cover sheet
notice (FAR 15.413-2(e) and NFS 1815.413(a)), and any notice that
may have been placed on the proposal by its originator, shall be
applied to any reproduction or abstract of any proposal information
furnished.
(3) Upon completion of the evaluation, the recipient agrees to
return all copies of proposal information or abstracts, if any, to
the NASA office that initially furnished the proposal information
for evaluation.
(4) Unless authorized in writing by the NASA official releasing
the proposal information, the recipient agrees not to contact either
the business entities originating the proposals or any of their
employees, representatives, or agents concerning any aspect of the
proposal information or extracts covered by this agreement.
(5) The recipient agrees to review his or her financial
interests relative to the entities whose proposal information NASA
furnishes for evaluation. At any time the recipient becomes aware
that he or she or a person with a close personal relationship
(household family members, business partners, or associates) has or
acquires a financial interest in the entities whose proposal
information is subject to this agreement, the recipient shall
immediately advise the NASA official releasing the proposal
information, protect the proposal information, and cease evaluation
activities pending a NASA decision resolving the conflict of
interest.
(6) I understand that the term ``leave the Government'' in the
last sentence of the Procurement Integrity Certification for
Procurement Officials, Optional Form 333, means ``cease to function
as a procurement official.''
Signature:-------------------------------------------------------------
Name typed or printed:-------------------------------------------------
Date:------------------------------------------------------------------
[End of Agreement]
(g) Affixing of a protection notice. The official who actually
releases/transfers the proposal information shall review each proposal
or the extracted item of proposal information that is to be released
and ensure that the notice at FAR 15.413-2(e) (See 48 CFR 1815.413(a))
is affixed to each proposal or the extracted item of proposal
information before it is released/transferred.
[[Page 5314]]
(h) JPL. If JPL personnel, in evaluating proposal information
obtained from a standard RFP released to them by NASA, must obtain
assistance from non-JPL, non-Government evaluators, JPL must obtain
written approval from the Procurement Officer before releasing the
information; except that information from SBIR, STTR, NRA, AO, and
unsolicited proposals may be disclosed outside JPL with prior written
approval, in compliance with paragraph (c)(2) of this section.
3. The last sentence of paragraph (b) of 1815.970 is revised to
read as follows:
1815.970 NASA structured approach for profit or fee objective.
(a) * * *
(b) * * * Neither the cost of facilities (see FAR 45.302-3(c)) nor
the amount calculated for the cost of money for facilities capital is
to be included as part of the cost base in column 1.(a) in the
computation of profit.
* * * * *
4. The last sentence of 1815.7002 is revised to read as follows:
1815.7002 Commerce Business Daily announcements, solicitations and
contracts.
* * * Also, a clause substantially the same as the one at 48 CFR
1852.215-84 shall be included in solicitations, including draft
solicitations, and in all contracts.
PART 1816--TYPES OF CONTRACTS
5. Section 1816.505 is added to read as follows:
1816.505 Ordering.
The ombudsman referred to in FAR 16.505(b)(4) is the ombudsman of
the installation issuing the solicitation and its resultant contract.
See 48 CFR part 1815, subparts 1815.70 and 1852.215-84.
6. The headings for part 1819, section 1819.505, and subpart 1819.7
are revised to read as follows:
PART 1819--SMALL BUSINESS PROGRAMS
1819.505 Rejecting Small Business Administration recommendations.
Subpart 1819.7--Subcontracting With Small Business, Small
Disadvantaged Business and Women-Owned Small Business Concerns
PART 1823--ENVIRONMENT, CONSERVATION, OCCUPATIONAL SAFETY, AND
DRUG-FREE WORKPLACE
7. Section 1823.7004 is amended by republishing paragraph (c)
introductory text and revising paragraphs (c)(2), (c)(3), and (c)(4) to
read as follows:
1823.7004 Contract clause.
* * * * *
(c) Except as provided in paragraph (d) of this section, the clause
at 48 CFR 1852.223-70 shall be included in--
(1) * * *
(2) All construction, repair, or alteration contracts in excess of
the simplified acquisition threshold;
(3) All contracts having, within their total requirement,
construction, repair, or alteration tasks in excess of the simplified
acquisition threshold; and
(4) Any procurement regardless of dollar amount when--
(i) Any deliverable contract end item is of a hazardous nature, or
(ii) During the life of the contract it can reasonably be expected
that hazards will be generated within the operational environment and
the contracting officer or safety and health representative determines
that they warrant inclusion of the clause.
* * * * *
PART 1827--PATENTS, DATA, AND COPYRIGHTS
8. Paragraph (c) of 1827.405 is revised to read as follows:
1827.405 Other data rights provisions.
* * * * *
(c) Production of special works. Paragraph (f) of the clause at 48
CFR 1852.227-17 is to be added to the clause at FAR 52.227-17, Rights
in Data--Special Works, whenever that clause is used in any NASA
contract.
PART 1835--RESEARCH AND DEVELOPMENT CONTRACTING
9. Section 1835.003 is revised to read as follows:
1835.003 Policy.
See NHB 5800.1, NASA Grant and Cooperative Agreement Handbook, for
policy regarding the use of grants and cooperative agreements.
PART 1837--SERVICE CONTRACTING
10. Section 1837.204 is added to read as follows:
1837.204 Guidelines for determining availability of personnel.
(a) The NASA official one level above the NASA program official
responsible for the evaluation shall make the determination of non-
availability of personnel under FAR 37.204 (a) and (b). For field
installations, the concurrence of the Office of Chief Counsel shall be
obtained and for Headquarters actions, the concurrence of the Office of
Associate General Counsel for Contracts shall be obtained. The
contracting officer shall ensure that a copy of the determination is in
the procurement file prior to issuance of a solicitation.
(b) Outside peer review evaluators may be used to evaluate SBIR,
STTR, NRA, AO, and unsolicited proposals without making the
determination required by FAR 37.204.
(c) The agreement required by FAR 37.204(c) shall be made by the
program official responsible for the evaluation and the contracting
officer.
(d) Class determinations under FAR 37.204(e) shall be made by the
Associate Administrator for Procurement. The installation procurement
office shall forward its request with an explanation of the necessity
for the use of outside evaluators as outlined in FAR 37.204(b) to Code
HS.
(e) See (NFS) 48 CFR 1815.413-2 Alternate II, for instructions
concerning--
(1) The authority to release proposals resulting from RFP's outside
the Government and
(2) The requisite nondisclosure statements.
[[Page 5315]]
PART 1852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
11. Section 1852.223-70 is amended by revising the date of the
clause to read ``(February 1996)'' and revising paragraph (e)(2) of the
clause to read as follows:
1852.223-70 Safety and Health.
* * * * *
(e) * * *
(1) * * *
(2) require construction, repair, or alteration in excess of the
simplified acquisition threshold, or
* * * * *
1852.227-15 [Redesignated as 1852.227-17]
12. Section 1852.227-15 is redesignated as 1852.227-17.
[FR Doc. 96-3003 Filed 2-9-96; 8:45 am]
BILLING CODE 7510-01-M
Complete official Federal Register PDF
FR Doc. 96-2988 Airspace and Flight Operations Requirements for the 1996 Summer Olympic Games, Atlanta, GA
[Federal Register Volume 61, Number 29 (Monday, February 12, 1996)]
[Rules and Regulations]
[Pages 5492-5499]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-2988]
[[Page 5491]]
_______________________________________________________________________
Part III
Department of Transportation
_______________________________________________________________________
Federal Aviation Administration
_______________________________________________________________________
14 CFR Part 91
1996 Summer Olympic Games, Atlanta, GA; Airspace and Flight Operations
Requirements; Final Rule
Federal Register / Vol. 61, No. 29 / Monday, February 12, 1996 /
Rules and Regulations
[[Page 5492]]
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 91
[Docket No. 28420 Special Federal Aviation Regulation (SFAR) No. 74]
RIN 2120-AGO2
Airspace and Flight Operations Requirements for the 1996 Summer
Olympic Games, Atlanta, GA
AGENCY: Federal Aviation Administration (FAA), DOT.
ACTION: Final rule.
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SUMMARY: This Special Federal Aviation Regulation (SFAR), applicable
May 15, 1996, through August 11, 1996, establishes airspace and flight
operations requirements for the XXVI Olympic Games. The FAA believes
this regulation is necessary for the security of the venues, safe
operation, and management of aircraft operating to, within, and from
these areas, and to prevent any unsafe congestion of sightseeing and
other aircraft over the various game sites.
EFFECTIVE DATE: March 13, 1996.
FOR FURTHER INFORMATION CONTACT:
Janet Apple, Air Traffic Rules Branch, ATP-230, Airspace Rules and
Aeronautical Information Division, Federal Aviation Administration, 800
Independence Avenue SW., Washington, DC 20591; telephone (202) 267-
8783.
SUPPLEMENTARY INFORMATION:
Background
The 1996 Olympic Games will be held from July 19 through August 4,
1996, primarily in the Atlanta, Georgia, area and will mark the 100th
anniversary of the modern Olympic Games. The event is the largest
single, peace-time event in the history of the world. Over 350,000
visitors a day are expected to attend the games. In terms of air
traffic demand, the pregame, game, and postgame activities from July 19
through August 4 are expected to generate substantial increases in
aircraft operations in the Atlanta area as well as other sites in the
United States. Those sites are:
The Olympic Village--Atlanta, GA
The Olympic Ring--Atlanta, GA
Wolf Creek Skeet Range--Atlanta, GA
Atlanta Beach--Jonesboro, GA
International Horsepark--Covington, GA
Stone Mountain Park--Stone Mountain, GA
Lake Sidney Lanier--Gainesville, GA
Sanford Stadium--Athens, GA
Golden Park--Columbus, GA
Lee College--Cleveland, TN
U.S. Highway 64--Tennessee
Ocoee River--Tennessee
Legion Field--Birmingham, AL
The Olympic Village--Savannah, GA
Sail Harbor and Wilmington River Transit Zone--Savannah, GA
Sailing Venue--Savannah, GA
The Citrus Bowl--Orlando, FL
The Orange Bowl--Miami, FL
RFK Stadium--Washington, DC
The Olympic Village--Davie, FL
The Olympic Village--Columbus, GA
The Special Federal Aviation Regulation (SFAR)
This rule establishes an SFAR to provide for the security of
persons and property in the air and on the ground, and for the safe and
efficient movement of air traffic during the Olympic period. To
accomplish this goal, the SFAR is designed for flexibility and
adaptability.
Traffic Management Arrival/Departure Slot Reservation System
During the busy Olympic period, the FAA must ensure continued safe
and efficient use of airspace and air traffic control capacity. To
achieve this objective while minimizing disruption to the air traveling
public, the FAA establishes an arrival/departure slot reservation
system for fixed-wing aircraft to manage air traffic into and out of
key airports in the Atlanta area.
For purposes of this SFAR the following definitions apply: (1)
Domestic air transportation (domestic)--the carriage by aircraft of
persons or property as a common carrier for compensation or hire, or
the carriage of mail by aircraft, in commerce originating in the United
States and commencing any place within the United States. (2) Foreign
air transportation (foreign)--the carriage by aircraft of persons or
property as a common carrier for compensation or hire, or carriage of
mail by aircraft, in commerce between a place in the United States and
any place outside of the United States. (3) Scheduled operations--
foreign and domestic air carrier and cargo operations published in the
Official Air Line Guide (OAG) as of June 30, 1996, and/or routine
consistent operations operated same time, day and number of days per
week as in regularly scheduled cargo operations. This category also
includes additional operations by scheduled operators at the same
airport if those operations are listed in the OAG as of June 30, 1996.
(4) Non-scheduled operations--foreign and domestic charters and cargo
operations not published in the OAG as of June 30, 1996, and/or not
operated on a routine consistent basis during the same time, day and
number of days per week, excluding helicopters. This category also
includes additional operations by scheduled operators at the same
airport that are not listed in the OAG as of June 30, 1996. (5) Other
operations--all operations conducted by operators that do not hold
either an air carrier certificate or an operating certificate for
common carriage issued under SFAR 38-2 or Part 119 of the Federal
Aviation Regulations or any operations conducted under Part 129 of the
Federal Aviation Regulations. These operations exclude helicopters and
include, but are not limited to, general aviation and business
operations conducted under Part 91.
The slot reservation system will be applicable to visual flight
rules (VFR) arrivals at four specified airports, VFR departures at four
specified airports, and to non-scheduled instrument flight rules (IFR)
operations at 11 specified airports. As with most special events,
airborne holding will not be authorized in lieu of a ground delay.
Thus, aircraft without reservations may anticipate lengthy delays at
departure airports.
VFR arrival slot reservations are required for: Cobb County-
McCollum Field Airport (RYY), Marietta, GA; DeKalb-Peachtree Airport
(PDK), Atlanta, GA; Fulton County-Brown Field Airport (FTY), Atlanta,
GA; and Gwinnett County-Briscoe Field Airport (LZU), Lawrenceville, GA.
VFR departure slot reservations are required for: Cobb County
Airport-McCollum Field (RYY), Marietta, GA; DeKalb-Peachtree Airport
(PDK), Atlanta, GA; Fulton County-Brown Field Airport (FTY), Atlanta,
GA; and Gwinnett County-Briscoe Field Airport (LZU), Lawrenceville, GA.
Non-scheduled IFR slot reservations are required for: Clayton
County-Tara Field Airport (4A7), Hampton, GA; Cobb County-McCollum
Field Airport (RYY), Marietta, GA; Covington Municipal Airport (9A1),
Covington, GA; DeKalb-Peachtree Airport (PDK), Atlanta, GA; Ben Epps
Field Airport (AHN), Athens, GA; Peachtree City-Falcon Field Airport
(FFC), Peachtree City, GA; Fulton County Airport-Brown Field Airport
(FTY), Atlanta; GA; Lee Gilmer Memorial Airport (GVL), Gainesville, GA;
Gwinnett County-Briscoe Field Airport (LZU), Lawrenceville, GA; the
William B. Hartsfield Atlanta International Airport (ATL), Atlanta, GA;
and Richard B. Russell Airport (RMG), Rome, GA.
Beginning May 15, 1996, through June 30, 1996, non-scheduled
operators may submit their request for slot reservations for the
affected airports via Internet
[[Page 5493]]
address [[email protected]] or facsimile number [(770) 946-
7938]. Request confirmations will be provided within 72 hours of
receipt via the form of request. From the period July 1 through July
13, 1996, the FAA will not receive any requests. However, beginning
July 14, 1996, 7:00 a.m. (EDT), all operators can reserve VFR arrival
and departure or IFR arrival and departure slots at these airports by
calling 1-800-96FAA96 (1-800-963-2296), 24 hours a day. Reservation
slots may be reserved no sooner than 72 hours before your estimated
time of arrival or departure.
The following information must be provided for all requests
(reservation requests beginning May 15 through June 30, 1996, via
Internet address or facsmile number, and via the telephone number as of
July 14, 1996): Arrival Reservations: destination airport, estimated
time of arrival, call sign, direction of arrival to the Atlanta area
and type aircraft; Departure Reservations: departure airport, estimated
time of departure, call sign, destination airport, first fix after
departure and type aircraft; and Confirmation Method: operator's
Internet address or facsimile number for return confirmation for
arrival and departure reservations for those reservations processed
prior to July 1, 1996.
Temporary Flight Restriction (TFR) Areas
The FAA establishes TFR areas over the Olympic Villages and
competition sites. The establishment of TFR areas over the competition
venues would result in the restriction of aircraft operations in these
areas; however, access to these areas may be accommodated with an
appropriate authorization from the designated using agency. Aircraft
operating under exclusions approved by the Administrator are required
to contact the designating using agency for appropriate authorization
to enter a TFR. ATC will retain the ability to manage aircraft through
the TFR areas in accordance with normal traffic flows.
Operating restrictions within the airspace overlying competition
venues are established for the period from three hours before to three
hours after each event. The additional time that the restrictions are
imposed, before and after each event, will accommodate the observation
and planning of ground traffic movement as well as facilitate the
orderly movement of aircraft in and through the airspace above each
event. Flight operations will be restricted within the airspace from
the surface to approximately 2500 feet above the ground (AGL) to
provide a safe environment.
These TFR areas generally will be circular areas of 1 to 4 NM in
radius from the surface to approximately 2,500 AGL. Aircraft operations
through, into, or out of these TFR areas will not be allowed during the
effective dates and times unless specifically authorized by the
designated using agency or ATC.
The locations, dimensions, effective times of the TFR area will be
published for use by all pilots on air navigation charts and in the
Federal Register with specific details disseminated by NOTAM. Requests
for access to the airspace areas can be obtained by contacting the
using agency for the particular venue as designated via NOTAM.
Certain Olympic venues fall within Class B surface area;
specifically, RFK Stadium in Washington, DC, Wolf Creek Skeet Range in
Atlanta, GA, and The Orange Bowl in Miami, Fl. These venues will be
charted along with those outside of Class B airspace to ensure
consistency.
Exceptions
This SFAR contains provisions to provide flexible and efficient
management and control of air tariff, such as the authority to give
priority to or exclude from certain requirements of the special
regulation, flight operations dealing with or containing essential
military, medical emergency, rescue, law enforcement, public health and
welfare, Presidential, Olympic family, and heads of state. However,
regardless of any exclusion of a requirement of this SFAR, the
requirement to contact the designated using agency for access to a TFR
is mandatory.
Discussion of Comments
The proposed Airspace and Flight Operations requirements for the
1996 Summer Olympic Games were published in a notice of proposed
rulemaking (NPRM) on December 29, 1995 (60 FR 67506).
The FAA received seven written comments in reference to the NPRM.
Responding to the notice were the Aircraft Owners and Pilots
Association (AOPA), Federal Express (FedEx), Delta Air Lines, Air
France, Scandinavian Airlines System (SAS), National Air Carrier
Association, Inc. (NACA), and Georgia Emergency Management Agency
(GEMA). AOPA commented that it does not oppose the establishment of
TFRs and reservation requirements outlined in the NPRM. Several
commenters supported the NPRM in concept and acknowledged that the slot
reservations, as proposed, were essential.
The following is representative of the issues presented to the
docket: FedEx believes that the imposition of regulatory barriers would
impede its ability to conduct special, non-scheduled air cargo
operations into and out of Atlanta, GA. FedEx also expressed concern
that the slot reservation program would adversely impact its ability to
service the Atlanta area. As a result, FedEx recommends that scheduled
cargo service operations be exempted from the slot reservation program.
The FAA is unclear of FedEx's definition of `special non-scheduled'
operation. The final rule specifies that Scheduled cargo operations,
such as those conducted by FedEx, are exempt from the slot reservation
program. The definition of a Scheduled operation includes domestic
cargo operations that are routine consistent operations operated same
time, day and number of days per week. Non-scheduled operations have
the opportunity to request a slot beginning May 15 through June 30,
1996, via Internet address or facsimile number or by telephone on July
14, 1996. However, any operation not published in the OAG as of June
30, 1996, and not operated in a routine consistent manner would
constitute an operation under the Other category and would still
require a slot reservation. Operations are restricted under this SFAR
for the period July 17 through August 6, 1996.
Delta Air Lines commented that since Atlanta is a primary hub for
Delta, it is necessary that the following activities be conducted
without meeting the slot reservation requirement: (1) pilot training
conducted during Olympic off peak hours, (2) ferry flights into or out
of Atlanta to meet contractual obligations, (3) unanticipated routine
mechanical diversions, and (4) unanticipated aircraft diversions due to
weather. Delta stated that these operations may result in an additional
5 to 10 flights per day. Also, Delta commented that an additional 5 to
10 commercial flights per day may be needed to accommodate Olympic
traffic.
The FAA has determined that flights conducted during off peak hours
will have minimal problems operating within their preferred time;
however, reservations will be required. For those unscheduled flights
during peak Olympic hours, the FAA contends that slot reservations
remain necessary for these operations to provide for the safe operation
and management of aircraft operating to, within, and from these areas,
and to prevent any unsafe
[[Page 5494]]
congestion in the Atlanta area. Therefore, Delta's above-described
activities will not be exempted from the requirements of this SFAR.
Air France recognizes and supports the FAA's concern for the safety
of operations during the Olympic games. However, Air France and SAS
suggest that the language in the SFAR clarify the slot reservation
requirements for Scheduled and Non-scheduled international operations.
Air France suggested the establishment of a procedure that will allow
carriers such as Air France to request a slot at least 120 days in
advance of scheduled arrival or departure and allow for a trade of
slots (one for one) but that the slots not be bought or sold.
The FAA agrees with their request for clarification on the slot
reservation requirements and has defined Scheduled, Non-scheduled, and
Other operations in the rule. Furthermore, the rule specifies the
procedures for Non-scheduled operations to request a slot reservation
beginning May 15 through June 30, 1996, via Internet address or
facsimile number. The telephone slot reservation system will be
available to all operators starting July 14, 1996.
The FAA disagrees with the request by Air France to allow 120 days
in advance to request a slot reservation. The FAA contends that the 60
days advance provision is adequate for Non-scheduled operations.
The FAA agrees with Air France's request to trade slots on a (one-
for-one basis) and that slots should not be bought or sold. The FAA
provides further clarification by restricting the trade of slots only
within the same company or air carrier.
NACA agrees that the slot reservation system is essential; however,
it is concerned that all operations have equal access to slots and that
those Scheduled operations not included in the OAG are not considered
Scheduled for the purpose of this SFAR. NACA suggested that the
submitted schedule for Miami Air International be included in the OAG
information.
The FAA has defined Scheduled operations to include those
operations published in the OAG as of June 30, 1996, and/or routine
consistent operations operated same time, day and number of days per
week. Miami Air International will be treated on an equal and
consistent basis as any other Non-scheduled operator. Miami Air
International's schedule information may be submitted beginning May 15,
1996, via Internet address or facsimile number. The FAA is unable to
incorporate that schedule information under this SFAR rulemaking.
GEMA objected to the proposed broad scope of exclusions to the SFAR
that may be granted at the discretion of the Administrator listed in
the amendatory section, section A.3(b) (1)-(8). GEMA commented that
aircraft operating under an exemption of this SFAR could enter and exit
the TFRs without any communication or coordination with the using
agency. It stated that unidentified aircraft operating within the
designated TFR area would present a major security problem. GEMA
suggested exemptions not be granted under this paragraph.
The FAA does not concur with GEMA's recommendation to disallow
exclusion authority in this SFAR. The FAA believes that the exclusion
authority is necessary for unusual situations and that it is imperative
to have that authority in the interest of aviation safety. For
additional clarification, the rule states that aircraft granted an
exclusion to this SFAR are not relieved of the responsibility to
contact the designated using agency for authorization prior to entering
a TFR.
In addition, GEMA recommended that VFR slot reservations not apply
to public safety aircraft. It stated that many public safety flights
are conducted in response to emergency situations for which there can
be no prior coordination. The FAA responds that aircraft operating in
an emergency capacity will be given priority handling and will not be
required to obtain a slot reservation. An emergency operation would be
handled the same as in today's air traffic environment.
Obtaining U.S. Air Navigation Charts
The following provides information on how to obtain the special air
navigation charts for the Olympic Games as well as other air navigation
charts for use in the U.S.
The National Ocean Service (NOS) publishes and distributes
aeronautical charts of the U.S. National airspace system (NAS). Charts
are readily available through a network of sales agents located at and
near principal civil airports. Because of the large variety, all NOS
products may not be available locally; users can procure these products
directly from NOS. Chart prices, subscription rates, and catalogs of
related publications are available on request and are obtainable by
writing to: National Oceanic and Atmospheric Administration, National
Ocean Service, Distribution Branch, N/CG33, Riverdale, Maryland 20737,
USA, Phone (301) 436-6990--General Information: (301) 436-6993,
Subscription Only: (301) 436-8194--One Time Sales Only.
NOS products will be shipped via United Parcel Service, First Class
Mail, or priority package within the U.S. For foreign surface shipment
to addresses in other countries, please add 5 percent to the total cost
of order. Please write to NOS for a transportation cost quotation if
faster foreign delivery is required. All mail order purchases must be
accompanied by check or money order made payable to ``NOS, Department
of Commerce, N/CG33''. Remittance must be made in U.S. funds; i.e., by
check payable on a U.S. bank, or by international money order. Returned
checks will result in cancellation of orders.
Chart sales offices are maintained at the following locations:
National Ocean Service, Chart Sales & Control Data Office, 701 C
Street, Anchorage, Alaska 99513, USA
National Ocean Service, Chart Sales Office, 6501 Lafaytte Avenue,
Riverdale, Maryland 20737, USA
Pacific Marine Center, National Ocean Service, 1801 Fairview Avenue
East, Seattle, Washington 98102, USA
Atlantic Marine Center, National Ocean Service, 439 West York Street,
Norfolk, Virginia 23510, USA.
Chart prices are subject to recomputation, based on cost of
production, in accordance with Federal law. Price changes, when
required, will be published 60 days in advance of the effective date.
The first of 13 charts that will show some of the Olympic TFR's
will be published beginning with an effective date of February 1, 1996.
Notice to Airmen (NOTAM) Information
ATC and air traffic flow management systems will monitor and assess
the air traffic demand so that restrictions are kept to an essential
minimum. To assure maximum flexibility, NOTAMs will be issued to
announce all restrictions and other actions including the lifting of
any restrictions taken by the FAA in response to changing airport and
air traffic conditions.
Time-critical aeronautical information that is of a temporary
nature or is not sufficiently known in advance to permit publication on
aeronautical charts or in other operational publications, receives
immediate dissemination via the National NOTAM system. All domestic
operators planning flight to the Olympics need to pay particular
attention to NOTAM D and Flight Data Center (FDC) NOTAM information.
NOTAM D information could affect a pilot's decision to make a flight.
NOTAM D pertains to information on
[[Page 5495]]
airports, runways, navigational aids, radar services, and other
information essential to flight. An FDC NOTAM will contain information
which is regulatory in nature, such as amendments to aeronautical
charts and restrictions to flight. FDC NOTAM and NOTAM D information
will also be provided to international operators in the form of
International NOTAMs. NOTAMs are distributed through the National
Communications Center in Kansas City, Missouri, USA, for transmission
to all air traffic facilities having telecommunications access.
Pilots and operators should consult the biweekly Notices to Airmen
Domestic/International publication. This publication contains the NOTAM
FDC and D NOTAMs. Special information, including graphics, will be
published in the biweekly publication several weeks in advance of the
Olympics. In addition, a booklet will be published detailing
information about the different venues. Distribution will be the same
as for the biweekly publication. For more detailed information
concerning the NOTAM system, refer to the Aeronautical Information
Manual, ``Preflight'' Section.
Other U.S. Laws and Regulations
Aircraft operators should clearly understand that the SFAR is in
addition to other laws and regulations of the U.S. The SFAR will not
waive or supersede any U.S. law or obligation. When operating within
the jurisdictional limits of the U.S., operators of foreign aircraft
must conform with all applicable requirements of U.S. Federal, State,
and local governments. In particular, aircraft operators planning
flights into the U.S. must be aware of and conform to the rules and
regulations established by the:
1. U.S. Civil Aeronautics Board regarding flights entering the
U.S.;
2. U.S. Customs Service, Immigration and other authorities
regarding customs, immigrations, health, firearms, and imports/exports;
3. U.S. FAA regarding flight in or into U.S. airspace. This
includes compliance with Federal Aviation Regulations regarding
operations into or within the U.S. through air defense identification
zones, and compliance with general flight rules; and
4. Airport management authorities regarding use of airports and
airport facilities.
Environmental Effects
This rule establishes TFR areas for safety and security purposes
and will curtail or limit certain aircraft operations within designated
areas at defined dates and times, rather than require aircraft to be
operated along specified routings or in accordance with specific
procedures. Additionally, this regulation will be temporary in nature
and effective only for the dates and times necessary to provide for the
safety and protection of participants and spectators on the ground, as
well as law enforcement and security personnel operating in the air at
Olympic game venues. ATC will retain the ability to direct aircraft
through the restricted areas in accordance with normal traffic flows.
The FAA believes, therefore, that the establishment of temporary flight
restriction areas will have minimal impact on ATC routings or
procedures.
Further, this action will result in a reduction in aircraft
activity in the vicinity of the Olympic games by restricting aircraft
operations. Therefore, there will be fewer aircraft operations in the
vicinity of the Olympic games than will have occurred if the restricted
areas were not in place and noise levels associated with that greater
aircraft activity will also be reduced. Additionally, aircraft avoiding
the restricted areas will not be routed over any specific area. This
rule will, therefore, not result in any long-term action which will
routinely route aircraft over noise-sensitive areas. For the reasons
stated above, the FAA concludes that this rule will not significantly
affect the quality of the human environment.
International Civil Aviation Organization and Joint Aviation
Regulations
In keeping with U.S. obligations under the Convention on
International Civil Aviation, it is FAA policy to comply with
International Civil Aviation organization Standards and Recommended
Practices (SARP) to the maximum extent practicable.
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995 (Pub. L.
104-13), the small amount of paper burden associated with the rule will
be submitted to the Office of Management and Budget for review.
Regulatory Evaluation
This regulatory evaluation examines the costs and benefits of the
SFAR applicable for the period July 19 through August 4, 1996, the SFAR
establishes TFR's overlying the various competition venues for the 1996
Olympic games. This rule requires slot reservations for arrivals and
departures at specified airports in the vicinity of the Olympics. Since
the impacts of the changes are relatively minor this economic summary
constitutes the analysis and no regulatory evaluation will be placed in
the docket.
Costs and Benefits
There are two major areas where economic impacts are likely: Slot
Reservation System and Temporary Flight Restrictions.
A. Slot Reservation System
During the Olympic period, the FAA must assure the continued safe
and efficient use of airspace over the affected areas. To achieve this
objective while minimizing disruption to the air traveling public, the
FAA will establish an arrival and departure slot reservation system to
manage air traffic into and out of airports serving the Olympic Games.
As a result of the slot reservation system some flights may be
canceled and others rerouted. The cost of the cancellations will be the
value of the flights to airlines and passengers less aircraft operating
cost to conduct the flights. Other flights may be diverted to other
airports in the Olympic Games area. Diversions will result in
additional costs of trips to and from places of intended lodging and
possible extra aircraft operation costs. The major economic impact in
the case of a diversion will be an inconvenience to operators who may
have wanted to land at a given airport. Because such occurrences are of
limited duration, the FAA believes that costs associated with any
diversions from one airport to another in the affected area will
probably be minimal. The additional FAA administrative workload
generated by the rule will be absorbed by current personnel and
equipment resources. The slot provision will not require any additional
air traffic controllers nor additional radar control equipment.
The benefits of the slot reservation system will be better control
of the airspace over Atlanta and other areas affected by the Olympics.
Arrivals are expected to increase 25 percent during the 3 weeks of the
Olympic season. There will be an increased risk of accidents due to
this unprecedented congestion in the Atlanta area if greater controls
are not implemented. There is also the potential benefit of reduced
delay times for operators attempting to land in the Atlanta area. The
slot provision will assure that the FAA will have sufficient capacity
to handle the many possible extra flights carrying spectators,
athletes, media personnel, and dignitaries during the Olympic period
without unnecessary delay.
[[Page 5496]]
B. Temporary Flight Restriction Areas
Due to the substantial increase in aircraft operations that are
expected in the Atlanta area as well as other sites, the FAA will
establish TFR areas over the Olympic village and competition sites. The
establishment of TFR's over competition venues will result in the
restriction of aircraft operations from the surface to 2500 feet.
The major economic impact of circumnavigation in this case will be
an inconvenience to operators who may have wanted to operate within the
area of the TFR. Because such occurrences are of limited duration and
the restricted areas are limited in size, the FAA believes that any
circumnavigation cots will be negligible. An aircraft operator could
avoid the restricted airspace by flying over it without significantly
deviating from their current routes or by circumnavigating the
restricted airspace.
The benefits of the TFR airspace primarily will be enhanced safety
to the public. Enhanced safety will take the form of the reduced
possibility of fatalities and property damage as a result of a lowered
risk of accidents due to increased positive control of TFR airspace.
While benefits cannot be quantified, the FAA believes the benefits are
commensurate with the small costs attributed to the temporary
inconvenience of the flight restrictions for operators near the TFR.
Regulatory Flexibility Act Determination
The Regulatory Flexibility Act of 1980 (RFA) ensures that
government regulations do not needlessly and disproportionately burden
small businesses. The RFA requires the FAA to review each rule that may
have a significant economic impact on a substantial number of small
entities.
The FAA's criteria for a ``substantial number'' is a number that is
not less than 11 and that is more than one third of the small entities
subject to the rule. The small entities that could be potentially
affected by the implementation of the proposed rule are operators of
aircraft for hire owning nine or fewer aircraft. Because of the
negligible impact of this regulatory action, the FAA initially
determines that this proposed amendment would not have a significant
impact on a substantial number of small entities.
Federalism Implications
The regulation set forth herein will not have substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government. Therefore, in
accordance with Executive Order 12612, it is determined that this
regulation will not have sufficient federalism implications to warrant
the preparation of a Federalism Assessment.
International Trade Impact Assessment
This rule will not constitute a barrier to international trade,
including the export of U.S. goods and services to foreign countries
and the import of foreign goods and services to the United States. This
rule will not impose additional temporary costs to aircraft operators.
There should be no effect on U.S. or foreign aircraft manufacturers.
Therefore, the FAA has determined that the rule will neither have an
effect on the sale of foreign aviation products nor services in the
United States, nor will it have an effect on the sale of U.S. products
or services in foreign countries.
Conclusion
For the reasons discussed in the preamble, and based on the
findings in the Regulatory Flexibility Determination and the
International Trade Impact Assessment, the FAA has determined that this
regulation is not a ``significant regulatory action'' under Executive
Order 12866. The FAA has determined that the rule will impose temporary
additional costs to the public. The magnitude of these costs, while
undetermined, are negligible. The benefits will be increased aviation
safety resulting from a lower risk of accidents due to increased
congestion during the Olympics. In addition, the FAA certifies that
this regulation will not have a significant economic impact, positive
or negative, on a substantial number of small entities under the
criteria of the Regulatory Flexibility Act. This regulation is not
considered significant under DOT Order 2100.5, Policies and Procedures
for Simplification, Analysis, and Review of Regulations. A Regulatory
Flexibility Determination and International Impact Assessment are set
out above. Because the economic impact of this rule is likely to be
minimal, no formal regulatory evaluation has been prepared.
List of Subjects in 14 CFR Part 91
Aircraft flight, Airspace, Aviation safety, Air Traffic Control.
The Special Federal Aviation Regulation (SFAR)
In consideration of the foregoing, the Federal Aviation
Administration proposes to amend 14 CFR part 91 as follows:
PART 91--[AMENDED]
1. The authority citation for part 91 continues to read as follows:
Authority: 49 U.S.C. 106(g), 40103, 40113, 40120, 44101, 44111,
44701, 44709, 44711, 44712, 44715, 44716, 44717, 44722, 46306,
46315, 46316, 46502, 46504, 46506-46507, 47122, 47508, 47528-47531.
2. By adding Special Federal Aviation Regulation No. 74 to read as
follows:
SFAR No. 74 Airspace and Flight Operations Requirements for the 1996
Summer Olympic Games, Atlanta, Georgia
A. General
1. Each person shall be familiar with all NOTAMs issued pursuant
to this SFAR and all other available information concerning that
operation before conducting any operation into or out of an airport
or area specified in this SFAR or in NOTAMs pursuant to this SFAR.
In addition, each person operating an international flight that will
enter the U.S. shall be familiar with any international NOTAMs
issued pursuant to this SFAR. NOTAMs are available for inspection at
operating FAA air traffic facilities and regional air traffic
division offices.
2. Notwithstanding any provision of the Federal Aviation
Regulations to the contrary, no person may operate an aircraft
contrary to any restriction procedure specified in this SFAR or by
the Administrator, through a NOTAM issued pursuant to this SFAR.
3. As conditions warrant, the Administrator is authorized to--
(a) Restrict, prohibit, or permit IFR/VFR operations at any
airport, terminal, or enroute airspace area designated in this SFAR
or in a NOTAM issued pursuant to this SFAR;
(b) Give priority to or exclude the following flights from
certain provisions of this SFAR and NOTAMs issued pursuant to this
SFAR: (The requirement to contact the designated using agency for
authorization to enter a TFR is mandatory.)
(1) Essential military.
(2) Medical and rescue.
(3) Essential public health and welfare.
(4) Presidential and Vice Presidential.
(5) Flights carrying visiting heads of state.
(6) Flights in the service of the Olympic Committee and media
flights whose planned activities have been coordinated and
accredited by the Atlanta Committee for the Olympic Games.
(7) Law enforcement and security.
(8) Flights authorized by the Director, Air Traffic Service;
and/or
(c) Implement flow control management procedures.
4. For security purposes, the Administrator may issue NOTAMs
during the effective period of this SFAR to cancel or modify
provisions of this SFAR and NOTAMs issued pursuant to this SFAR if
such action is
[[Page 5497]]
consistent with the safe and efficient use of airspace and the
safety and security of persons and property on the ground as
affected by air traffic.
5. No person may operate an aircraft to or from an airport
listed in this SFAR or NOTAM issued pursuant to this SFAR unless
that person complies with the requirements of this SFAR and NOTAMs
issued pursuant to this SFAR that are applicable to his/her
operations.
B. Slot Reservation System
1. General Description
Slot reservations for arrivals and departures at specified
airports in the vicinity of the Olympic Games are required for the
period July 17 through August 6, 1996. The FAA believes this action
is necessary for the security of the venues, safe operation and
management of aircraft operating to, within, and from these areas,
and to prevent any unsafe congestion of sightseeing and other
aircraft over the various venues.
2. Definitions
For purposes of this SFAR the following definitions apply:
(a) Domestic air transportation (domestic)--the carriage by
aircraft of persons or property as a common carrier for compensation
or hire, or the carriage of mail by aircraft, in commerce
originating in the United States and commencing any place within the
United States.
(b) Foreign air transportation (foreign)--the carriage by
aircraft of persons or property as a common carrier for compensation
or hire, or carriage of mail by aircraft, in commerce between a
place in the United States and any place outside of the United
States.
(c) Scheduled operations--foreign and domestic air carrier and
cargo operations published in the Official Air Line Guide (OAG) as
of June 30, 1996, and/or routine consistent operations operated same
time, day and number of days per week as in regularly scheduled
cargo operations. This category also includes additional operations
by scheduled operators at the same airport if those operations are
listed in the OAG as of June 30, 1996.
(d) Non-scheduled operations--foreign and domestic charters and
cargo operations not published in the OAG as of June 30, 1996, and/
or not operated on a routine consistent basis during the same time,
day and number of days per week, excluding helicopters. This
category also includes additional operations by scheduled operators
at the same airport that are not listed in the OAG as of June 30,
1996.
(e) Other operations--all operations conducted by operators that
do not hold either an air carrier certificate or an operating
certificate for common carriage issued under SFAR 38-2 or part 119
of the Federal Aviation Regulations or any operations conducted
under part 129 of the Federal Aviation Regulations. These operations
exclude helicopters and include, but are not limited to, general
aviation and business operations conducted under part 91.
3. Method
Beginning May 15 through June 30, 1996, non-scheduled operations
may submit their request for slot reservations for the affected
airports via Internet address [[email protected]] or
facsimile number [(770) 946-7938]. Request confirmation will be
provided within 72 hours of receipt via the form of request. From
the period July 1 through July 13, 1996, the FAA will not receive
any requests.
Beginning July 14, 1996, 7:00 a.m. (EDT), all operators can
reserve VFR arrival and departure or IFR arrival and departure slots
at these airports by calling 1-800-96FAA96 (963-2296), 24 hours a
day. Reservation slots may be reserved no sooner than 72 hours
before your estimated time of arrival or departure.
4. Necessary Information
The following information must be provided for all requests
(reservation requests beginning May 15 through June 30, 1996, via
Internet address or facsimile number, and via the telephone number
as of July 14, 1996): Arrival Reservations: destination airport,
estimated time of arrival, call sign, direction of arrival to the
Atlanta area and type aircraft; Departure Reservations: departure
airport, estimated time of departure, call sign, destination
airport, first fix after departure and type aircraft; Confirmation
Method: operator's Internet address or facsimile number for return
confirmation for arrival and departure reservations.
5. Affected Airports
For purposes of the SFAR:
(a) Airports and airspace areas associated with Olympic activity
which require restriction or prohibition of aviation activity will
be designated in NOTAMs issues pursuant to this SFAR.
(b) Airports listed below and in NOTAMs issued pursuant to this
SFAR are identified as:
VFR Arrival Slot Reservation Airports
Cobb County-McCollum Field Airport (RYY), Marietta, GA
DeKalb-Peachtree Airport (PDK), Atlanta, GA
Fulton County Airport-Brown Field Airport (FTY), Atlanta, GA
Gwinnett County-Briscoe Field Airport (LZU), Lawrenceville, GA
VFR Departure Slot Reservation Airports
Cobb County-McCollum Field Airport (RYY), Marietta, GA
DeKalb-Peachtree Airport (PDK), Atlanta, GA
Fulton County Airport-Brown Field Airport (FTY), Atlanta, GA
Gwinnett County-Briscoe Field Airport (LZU), Lawrenceville, GA
Non-Scheduled IFR Slot Reservation Airports
Clayton County-Tara Field Airport (4A7), Hampton, GA
Cobb County-McCollum Field Airport (RYY), Marietta, GA
Covington Municipal Airport (9A1), Covington, GA
DeKalb-Peachtree Airport (PDK), Atlanta, GA
Ben Epps Field Airport (AHN), Athens, GA
Peachtree City-Falcon Field Airport (FFC), Peachtree City, GA
Fulton County Airport-Brown Field Airport (FTY), Atlanta, GA
Lee Gilmer Memorial Airport (GVL), Gainesville, GA
Gwinnett County-Briscoe Field Airport (LZU), Lawrenceville, GA
The William B. Hartsfield Atlanta International Airport (ATL),
Atlanta, GA
Richard B. Russell Airport (RMG), Rome, GA
C. Temporary Flight Restriction (TFR) Areas
The FAA establishes TFR areas over the Olympic Village and
competition sites. The establishment of TFR areas over the
competition venues will result in the restriction of aircraft
operations in these areas; however, access to these areas may be
accommodated with an appropriate authorization from the designated
using agency. Aircraft operating under exclusions approved by the
Administrator are required to contact the designated using agency
for appropriate authority to enter a TFR. ATC will retain the
ability to manage aircraft through the TFR areas in accordance with
normal traffic flow.
Operating restrictions within the airspace overlying competition
venues are for the period from 3 hours before to 3 hours after each
event. The additional time that the restrictions are to be imposed,
before and after each event, will accommodate the observation and
planning of ground traffic movement as well as facilitate the
orderly movement of aircraft in and through the airspace above each
event. Flight operations will be restricted within the airspace from
the surface to approximately 2500 feet AGL to provide a safe
environment.
At the following locations, flight is restricted during the
times of designation:
1. The Olympic Village; Atlanta, Georgia
That airspace within a 1 NM radius of latitude (lat.) 33 deg.
46' 35'' N, longitude (long.) 84 deg. 23' 52'' W (ATL 012R/8.5 NM
distance measuring equipment (DME) fix).
Designated altitudes: Surface to but not including 3,500 feet
mean sea level (MSL).
Times of Designation: July 6, 1996, to August 11, 1996, 24 hours
per day.
Using agency: Georgia State Patrol.
Contact: SFC W.S. Smith (770) 919-9929
2. The Olympic Ring; Atlanta, Georgia
That airspace within a 3 NM radius of lat. 33 deg. 45' 27'' N,
long. 84 deg. 24' 05'' W (ATL 013R/7.4 NM DME fix).
Designated altitudes. Surface to but not including 3,500 feet
MSL.
Times of Designation. July 19, 1996, from 7:00 p.m. local time
to July 20, 1996 at 2:00 a.m.; July 20, 1996 until August 5, 1996,
5:00 a.m. until 2:00 a.m.
Using agency: Georgia State Patrol.
Contact: SFC W.S. Smith (770) 919-9929.
3. Wolf Creek Skeet Range; Atlanta, Georgia
That airspace within a 1 NM radius of lat. 33 deg. 40' 12'' N
long. 84 deg. 33' 54'' W, (ATL 286R/6 NM DME fix).
Designated altitudes: Surface to but not including 2,500 feet
MSL.
Times of Designation:
July 20, 1996, from 8:00 a.m. until 8:00 p.m.
July 21, 1996, from 8:00 a.m. until 8:00 p.m.
July 22, 1996, from 8:00 a.m. until 4:30 p.m.
[[Page 5498]]
July 23, 1996, from 8:00 a.m. until 7:00 p.m.
July 24, 1996, from 8:00 a.m. until 5:30 p.m.
July 25, 1996, from 8:00 a.m. until 8:30 p.m.
July 26, 1996, from 8:00 a.m. until 7:00 p.m.
July 27, 1996, from 12:00 a.m. until 7:00 p.m.
Using agency: Georgia State Patrol.
Contact: SFC W.S. Smith (770) 919-9929.
4. Stone Mountain Park, Stone Mountain, Georgia
That airspace within a 3 NM radius of lat. 33 deg. 48' 24'' N,
long. 84 deg. 08' 06'' W (PDK 117R/9 NM DME fix).
Designated altitudes. Surface to and including 2,500 feet AGL.
Times of Designation:
July 22, 1996, from 9:00 a.m. until 9:00 p.m.
July 23, 1996, from 9:00 a.m. until 9:00 p.m.
July 24, 1996, from 9:00 a.m. until 9:00 p.m.
July 25, 1996, from 9:00 a.m. until 9:00 p.m.
July 26, 1996, from 9:00 a.m. until 9:00 p.m.
July 27, 1996, from 8:00 a.m. until 9:00 p.m.
July 28, 1996, from 8:00 a.m. until 9:00 p.m.
July 29, 1996, from 8:00 a.m. until 11:00 p.m.
July 30, 1996, from 8:00 a.m. until 11:00 p.m.
July 31, 1996, from 9:00 a.m. until 7:00 p.m.
August 1, 1996, from 9:00 a.m. until 8:00 p.m.
August 2, 1996, from 9:00 a.m. until 9:00 p.m.
August 3, 1996, from 9:00 a.m. until 12:00 a.m.
Using agency: Georgia State Patrol.
Contact: SFC W.S. Smith, (770) 919-9929.
5. Atlanta Beach; Jonesboro, Georgia
That airspace within a 1 NM radius of lat. 33 deg.31'23'' N,
long. 84 deg.18'39'' W (ATL 137R/9 NM DME fix).
Designated altitudes. Surface to but not including 3,500 feet
MSL.
Times of Designation:
July 23, 1996, from 6:00 a.m. until 9:00 p.m.
July 24, 1996, from 6:00 a.m. until 9:00 p.m.
July 25, 1996, from 6:00 a.m. until 9:00 p.m.
July 26, 1996, from 6:00 a.m. until 9:00 p.m.
July 27, 1996, from 6:00 a.m. until 9:00 p.m.
July 28, 1996, from 8:00 a.m. until 9:00 p.m.
Using agency: Georgia State Patrol.
Contact: SFC W.S. Smith, (770) 919-9929.
6. International Horsepark; Covington, Georgia
That airspace within a 3 NM radius of lat. 33 deg.40'28'' N,
long. 83 deg.56'58'' W (ATL 084R/24 NM. DME fix) excluding that
airspace along and south of Interstate 20.
Designated altitudes. Surface to and including 2,500 feet AGL.
Times of Designation:
July 21, 1996, from 9:00 a.m. until 6:00 p.m.
July 22, 1996, from 9:00 a.m. until 6:00 p.m.
July 23, 1996, from 9:00 a.m. until 5:00 p.m.
July 24, 1996, from 8:30 a.m. until 11:00 p.m.
July 25, 1996, from 9:00 a.m. until 4:00 p.m.
July 26, 1996, from 9:00 a.m. until 1:00 p.m.
July 27, 1996, from 8:00 a.m. until 6:00 p.m.
July 28, 1996, from 9:00 a.m. until 6:00 p.m.
July 29, 1996, from 9:00 a.m. until 6:00 p.m.
July 30, 1996, from 8:00 a.m. until 9:30 p.m.
July 31, 1996, from 9:00 a.m. until 5:00 p.m.
August 1, 1996, from 8:00 a.m. until 7:30 p.m.
August 4, 1996, from 9:00 a.m. until 4:00 p.m.
Using agency: Georgia State Patrol.
Contact: SFC W.S. Smith, (770) 919-9929.
7. Lake Sidney Lanier; Gainesville, Georgia
That airspace within a 2 NM radius of lat. 34 deg.21'00'' N,
long. 83 deg.47'11'' W (PDK 042R/38 NM DME fix).
Designated altitudes. Surface to and including 2,500 feet AGL.
Times of Designation:
July 21, 1996, from 8:00 a.m. until 2:00 p.m.
July 22, 1996, from 8:00 a.m. until 1:30 p.m.
July 23, 1996, from 8:00 a.m. until 1:00 p.m.
July 24, 1996, from 8:00 a.m. until 11:30 a.m.
July 25, 1996, from 8:00 a.m. until 12:30 p.m.
July 26, 1996, from 8:00 a.m. until 12:30 p.m.
July 27, 1996, from 7:30 a.m. until 1:30 p.m.
July 28, 1996, from 7:30 a.m. until 1:30 p.m.
Using agency: Georgia State Patrol.
Contact: SFC W.S. Smith, (770) 919-9929.
8. Sanford Stadium; Athens, Georgia
That airspace with a 1 NM radius of lat. 33 deg.56'59'' N, long.
83 deg.22'24'' W (AHN 258R/2 NM DME fix).
Designated altitudes: Surface to and including 2,500 feet AGL.
Times of Designation:
July 31, 1996, from 2:00 p.m. until 7:00 p.m.
August 1, 1996, from 9:00 a.m. until 7:00 p.m.
August 2, 1996, from 9:00 a.m. until 6:00 p.m.
August 3, 1996 from 12:00 p.m. until 6:00 p.m.
Using agency: Georgia State Patrol
Contact: SFC W.S. Smith (770) 919-9929.
9. Golden Park; Columbus, Georgia
That airspace within a 1 NM radius of lat. 32 deg.27'09'' N,
long. 84 deg.59'30'' W (CSG 172R/10 NM DME fix).
Designated altitudes: Surface to and including 2,500 feet AGL.
Times of Designation:
July 21, 1996, through July 27, 1996, 8:00 a.m. until 11:30 p.m.;
July 29, 1996, from 5:30 p.m. until 11:30 p.m.
July 30, 1996, from 3:30 p.m. until 11:00 p.m.
Using agency: Georgia State Patrol
Contact: SFC W.S. Smith (770) 919-9929.
10. Olympic Village; Columbus, Georgia.
That airspace within a 1 NM radius of lat. 32 deg.21'44'' N,
long. 84 deg.58'15'' W (CSG 171R/16 NM DME fix).
Designated altitudes. Surface to and including 2,000 feet AGL.
Times of Designation: July 5, 1996, through August 8, 1996, when
Ft. Benning Class D airspace is not effective.
Using agency: Georgia State Patrol
Contact: SFC W.S. Smith (770) 919-9929.
11. Lee College; Cleveland, Tennessee
That airspace within a 0.5 NM radius of lat. 35 deg.09'58'' N,
long. 84 deg.52'13'' W (CHA 049R/18 NM DME fix).
Designated altitudes: Surface to and including 2,500 feet AGL.
Times of Designation: July 6, 1996, from 6:00 a.m. until July
30, 1996, at 12:00 a.m.
Using agency: Ocoee River Venue Law Enforcement Committee
(ORVLEC)
Contact: William J. Ferris III (423) 265-3601.
12. U.S. Highway 64; Tennessee
0.5 NM on either side of U.S. Highway 64 from Cleveland, Lee
College, TN., latitude 35 deg.09'58'' N, longitude 84 deg.52'13'' W,
thence following U.S. Highway 64 to latitude 35 deg.04'02'' N,
longitude 84 deg.28'37'' W.
Designated altitudes. Surface to and including 2,500 feet AGL.
Times of Designation: July 26, 1996, through July 28, 1996, from
dawn until dusk.
Using agency: ORVLEC
Contact: William J. Ferris III (423) 265-3601.
13. Ocoee River; Tennessee
That airspace within a 2 NM radius of lat. 35 deg.04'02'' N,
long. 84 deg.27'37'' W (CHA 080R/34 NM DME fix).
Designated altitudes. Surface to and including 2,500 feet AGL.
Times of Designation: July 26, 1996, through July 28, 1996, from
dawn until dusk.
Using agency: ORVLEC
Contact: William J. Ferris III (423) 265-3601.
14. Legion Field; Birmingham, Alabama
That airspace within a 1 NM radius of lat. 33 deg.30'42'' N,
long. 86 deg.50'34'' W (VUZ 160R/10 NM DME fix).
Designated altitudes: Surface to 2,000 feet AGL.
Times of designation:
July 20, 1996, from 3:30 p.m. until 11:00 p.m.,
July 21, 1996, from 10:30 a.m. until 8:30 p.m.,
July 22, 1996, from 3:30 p.m. until 11:00 p.m.,
July 23, 1996, from 1:30 p.m. until 11:30 p.m.,
July 24, 1996, from 3:30 p.m. until 11:00 p.m.,
July 25, 1996, from 2:30 p.m. until 12:30 a.m. July 26, 1996,
July 27, 1996, from 3:30 p.m. until 11:00 p.m.,
July 28, 1996, from 12:00 p.m. until 7:30 p.m.
Using agency: Federal Bureau of Investigation
Contact: Jim Brant (205) 252-7705.
15. The Olympic Village; Savannah, Georgia
That airspace within a 1 NM radius of lat. 32 deg.04'45'' N,
long. 81 deg.04'50'' W (SAV 158R/6 NM DME fix).
Designated altitudes. Surface to and including 2,000 feet AGL.
Times of Designation: July 6, 1996, until August 7, 1996, 24
hours a day.
Using agency: Georgia State Patrol
Contact: SFC W.S. Smith (770) 919-9929.
16. Sail Harbor and Wilmington River Transit Zone; Savannah, Georgia
That airspace within a 1 NM radius of lat. 32 deg.00'20'' N,
long. 81 deg.00'00'' W (SAV 147R/11 NM DME fix). Airspace within a 1
NM radius of the Sheraton Hotel, and airspace over the Wilmington
River from this point south to Wassaw Sound.
Designated altitudes. Surface to and including 2,000 feet AGL.
Times of Designation: July 12, 1996, until August 4, 1996,
during daylight hours.
Using agency: Georgia State Patrol
[[Page 5499]]
Contact: SFC W.S. Smith (770) 919-9929.
17. Sailing Venue; Savannah, Georgia
That airspace within a 4 NM radius of lat. 31 deg.55'00'' N,
long. 80 deg.53'00'' W (SAV 141R/19 NM DME fix).
Designated altitudes. Surface to and including 2,000 feet AGL.
Times of Designation: July 22, 1996, until August 1, 1996,
during daylight hours.
Using agency. Georgia State Patrol
Contact: SFC W.S. Smith (770) 919-9929.
18. The Citrus Bowl; Orlando, Florida
That airspace within a 1 NM radius of lat. 28 deg.32'20'' N,
long. 81 deg.24'10'' W (ORL 260R/4 NM DME fix).
Designated altitudes: Surface to but not including 1,600 feet
MSL.
Times of Designation:
July 20, 1996, from 2:00 p.m. until 8:00 p.m.,
July 21, 1996, from 2:00 p.m. until 10:30 p.m.,
July 22, 1996, from 5:00 p.m. until 11:00 p.m.,
July 23, 1996, from 5:00 p.m. until 1:30 p.m.,
July 24, 1996, from 5:00 p.m. until 11:00 p.m.,
July 25, 1996, from 5:00 p.m. until 1:30 a.m.
Using agency: Orange County Sheriff Office.
Contact: Cmdr. Richard Silverman (407) 836-3820.
19. Olympic Village; Davie, Florida.
That airspace within a 1 NM radius of lat. 26 deg.04'29'' N,
long. 80 deg.14'31'' W (FLL 270R/05 NM DME fix).
Designated altitudes. Surface to and including 2,000 feet MSL.
Times of Designation: July 6, 1996, until July 31, 1996, 24
hours a day.
Using Agency. Davie Police Department
Contact: Lt. Steve Seefchak (305) 797-1224.
20. The Orange Bowl; Miami, Florida
That airspace within a 1 NM radius of lat. 25 deg.46'40'' N,
long. 80 deg.13'12'' W (DHP 100R/7 NM DME fix).
Designated altitudes. Surface to and including 2,500 feet MSL.
Times of Designation:
July 20, 1996, from 12:00 p.m. until 11:00 p.m.,
July 21, 1996, from 1:00 p.m. until 11:00 p.m.,
July 22, 1996, from 4:00 p.m. until 12:00 a.m.,
July 23, 1996, from 3:00 p.m. until 1:00 a.m.,
July 24, 1996, from 4:00 p.m. until 12:00 a.m.,
July 25, 1996, from 3:00 p.m. until 2:00 a.m.,
July 27, 1996, from 3:00 p.m. until 11:00 p.m.,
July 28, 1996, from 3:00 p.m. until 11:00 p.m.
Using agency. Miami Police Department.
Contact: Capt. Paul Shepard (305) 579-6181.
21. RFK Stadium; Washington, DC
That airspace within a 1 NM radius of lat. 38 deg.53'23'' N,
long. 76 deg.58'19'' W (DCA 067R/3.5 NM DME fix).
Designated altitudes. Surface to and including 2,500 feel AGL.
Times of Designation:
July 20, 1996, from 11:30 p.m. until 5:30 p.m.,
July 21, 1996, from 11:30 p.m. until 8:00 p.m.,
July 22, 1996, from 5:00 p.m. until 11:00 p.m.,
July 23, 1996, from 5:00 p.m. until 1:30 a.m.,
July 24, 1996, from 5:00 p.m. until 11:00 p.m.,
July 25, 1996, from 5:00 p.m. until 1:30 a.m.
Using agency: Special Operations Division of the Washington, DC,
Metropolitan Police.
Contact: Don Pope (202) 727-4582 or Aviation Division (301) 248-
7585.
D. Expiration Date
This SFAR expires on August 12, 1996.
Issued in Washington, DC on February 6, 1996.
David R. Hinson,
Administrator.
[FR Doc. 96-2988 Filed 2-7-96; 2:57 pm]
BILLING CODE 4910-13-M
Complete official Federal Register PDF
FR Doc. 96-2975 Approval and Promulgation of Implementation Plans; State of Nebraska
[Federal Register Volume 61, Number 29 (Monday, February 12, 1996)]
[Rules and Regulations]
[Pages 5297-5299]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-2975]
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[NE-7-1-71549; FRL-5399-7]
Approval and Promulgation of Implementation Plans; State of
Nebraska
AGENCY: Environmental Protection Agency (EPA).
ACTION: Direct final rule.
-----------------------------------------------------------------------
SUMMARY: By this action the EPA gives full approval to the State
Implementation Plan (SIP) submitted by the state of Nebraska for the
purpose of fulfilling the requirements set forth in the EPA's General
Conformity rule. The SIP was submitted by the state to satisfy the
Federal requirements in 40 CFR 51.852 and 93.151.
DATES: This action is effective April 12, 1996 unless by March 13, 1996
adverse or critical comments are received.
ADDRESSES: Copies of the documents relevant to this action are
available for public inspection during normal business hours at the:
Environmental Protection Agency, Air Planning and Development Branch,
726 Minnesota Avenue, Kansas City, Kansas 66101; and EPA Air &
Radiation Docket and Information Center, 401 M Street, SW., Washington,
DC 20460.
FOR FURTHER INFORMATION CONTACT: Lisa V. Haugen at (913) 551-7877.
SUPPLEMENTARY INFORMATION: Section 176(c) of the Clean Air Act, as
amended (the Act), requires the EPA to promulgate criteria and
procedures for demonstrating and ensuring conformity of Federal actions
to an applicable implementation plan developed pursuant to section 110
and Part D of the Act. Conformity to an SIP is defined in the Act as
meaning conformity to an SIP's purpose of eliminating or reducing the
severity and number of violations of
[[Page 5298]]
the National Ambient Air Quality Standards (NAAQS), and achieving
expeditious attainment of such standards. The Federal agency
responsible for the action is required to determine if its actions
conform to the applicable SIP. On November 30, 1993, the EPA
promulgated the final rule (hereafter referred to as the General
Conformity rule), which establishes the criteria and procedures
governing the determination of conformity for all Federal actions,
except Federal highway and transit actions.
The General Conformity rule also establishes the criteria for EPA
approval of SIPs. See 40 CFR 51.851 and 93.151. These criteria provide
that the state provisions must be at least as stringent as the
requirements specified in EPA's General Conformity rule, and that they
can be more stringent only if they apply equally to Federal and non-
Federal entities (section 51.851(b)).
On November 6, 1991, the EPA promulgated a nonattainment
designation for the area surrounding the Asarco lead refinery in Omaha,
Nebraska, in response to violations of the lead NAAQS. Sections 51.851
and 93.151 of the General Conformity rule require that states submit an
SIP revision containing the criteria and procedures for assessing the
conformity of Federal actions to the applicable SIP, within 12 months
after November 30, 1993. As the rule applies to all nonattainment areas
and maintenance areas, an SIP revision which addresses the requirements
of the General Conformity rule became due on November 30, 1994.
On June 14, 1995, the state of Nebraska submitted an SIP revision
meeting the requirements of Secs. 51.851 and 93.151 of the General
Conformity rule. The submission adopts by reference 40 CFR part 93,
subpart B, except 40 CFR 93.151. The omitted section contains the
criteria for EPA approval of General Conformity SIP revisions, and also
states the effect of EPA approval of an SIP revision. It is not a
necessary component of the state's substantive rules governing general
conformity determinations.
The Nebraska rule also modifies 40 CFR 93.160(f) and 40 CFR
93.160(g) to adapt the language in the Federal regulations to the state
rule. It deletes the language in 93.160(f) stating that the
``implementation plan revision required in Sec. 93.151 shall provide
that,'' and retains the substantive requirement in paragraph (f). It
also revises paragraph (g) to refer to adoption and approval of the
Nebraska SIP revision, in place of the reference in EPA's rule to SIP
revisions generally.
This SIP revision was adopted by the Nebraska Environmental Council
on December 2, 1994. The rule was signed by the Governor on May 24,
1995, and became effective on May 29, 1995.
Because the Nebraska rule adopts the substantive requirements of
EPA's rule by reference, it meets the criteria in Secs. 51.851 and
93.151 for approval of General Conformity SIP revisions.
EPA Action
By this action EPA grants full approval of Nebraska's June 14,
1995, submittal. This SIP revision meets all of the requirements set
forth in 40 CFR 51.851 and 93.151.
The EPA is publishing this action without prior proposal because
the Agency views this as a noncontroversial amendment and anticipates
no adverse comments. However, in a separate document in the Federal
Register publication, the EPA is proposing to approve the SIP revision
should adverse or critical comments be filed.
If the EPA receives such comments, this action will be withdrawn
before the effective date by publishing a subsequent notice that will
withdraw the final action. All public comments received will then be
addressed in a subsequent final rule, based on this action serving as a
proposed rule. The EPA will not institute a second comment period on
this action. Any parties interested in commenting on this action should
do so at this time.
Nothing in this action should be construed as permitting or
allowing or establishing a precedent for any future request for
revision to any SIP. Each request for revision to the SIP shall be
considered separately in light of specific technical, economic, and
environmental factors, and in relation to relevant statutory and
regulatory requirements.
Under the Regulatory Flexibility Act, 5 U.S.C. 600 et. seq., EPA
must prepare a regulatory flexibility analysis assessing the impact of
any proposed or final rule on small entities (5 U.S.C. 603 and 604).
Alternatively, EPA may certify that the rule will not have a
significant impact on a substantial number of small entities. Small
entities include small businesses, small not-for-profit enterprises,
and government entities with jurisdiction over populations of less than
50,000.
SIP approvals under section 110 and subchapter I, Part D of the CAA
do not create any new requirements, but simply approve requirements
that the state is already imposing. Therefore, because the Federal SIP
approval does not impose any new requirements, EPA certifies that it
does not have a significant impact on any small entities affected.
Moreover, due to the nature of the Federal-state relationship under the
CAA, preparation of a regulatory flexibility analysis would constitute
Federal inquiry into the economic reasonableness of state action. The
CAA forbids EPA to base its actions concerning SIPs on such grounds
(Union Electric Co. v. U.S.E.P.A., 427 U.S. 246, 256-66 (S.Ct. 1976);
42 U.S.C. 7410(a)(2)).
This action has been classified as a Table 3 action for signature
by the Regional Administrator under the procedures published in the
Federal Register on January 19, 1989 (54 FR 2214-2225), as revised by a
July 10, 1995, memorandum from Mary Nichols, Assistant Administrator
for Air and Radiation. The Office of Management and Budget has exempted
this regulatory action from E.O. 12866 review.
Unfunded Mandates
Under sections 202, 203, and 205 of the Unfunded Mandates Reform
Act of 1995 (``Unfunded Mandates Act''), signed into law on March 22,
1995, EPA must undertake various actions in association with proposed
or final rules that include a Federal mandate that may result in
estimated costs of $100 million or more to the private sector, or to
state, local, or tribal governments in the aggregate. Through
submission of this SIP, the state has elected to adopt the program
provided for under section 110 of the CAA. These rules may bind state
and local governments to perform certain actions and also require the
private sector to perform certain duties. To the extent that the rules
being finalized for approval by this action will impose new
requirements, sources are already subject to these regulations under
state law. Accordingly, no additional costs to state or local
governments, or to the private sector, result from this final action.
EPA has also determined that this final action does not include a
mandate that may result in estimated costs of $100 million or more to
state or local governments in the aggregate or to the private sector.
EPA has determined that these rules result in no additional costs to
tribal government.
Under section 307(b)(1) of the CAA, petitions for judicial review
of this action must be filed in the United States Court of Appeals for
the appropriate circuit by April 12, 1996. Filing a petition for
reconsideration by the Administrator of this final rule does not affect
the finality of this rule for the purposes of judicial review, nor does
it extend the time within which a petition for judicial review may be
filed, and
[[Page 5299]]
shall not postpone the effectiveness of such rule or action. This
action may not be challenged later in proceedings to enforce its
requirements. (See section 307(b)(2).)
List of Subjects in 40 CFR Part 52
Environmental protection, Air pollution control, Incorporation by
reference, Intergovernmental relations, Lead, Reporting and
recordkeeping requirements.
Dated: November 14, 1996.
Dennis Grams,
Regional Administrator.
Part 52, chapter I, title 40 of the Code of Federal Regulations is
amended as follows:
PART 52--[AMENDED]
1. The authority citation for part 52 continues to read as follows:
Authority: 42 U.S.C. 7401-7671q.
Subpart CC--Nebraska
2. Section 52.1420 is amended by adding paragraph (c)(42) to read
as follows:
Sec. 52.1420 Identification of plan.
* * * * *
(c) * * *
(42) A Plan revision was submitted by the Nebraska Department of
Environmental Quality on June 14, 1995, which incorporates by reference
EPA's regulations relating to determining conformity of general Federal
actions to State or Federal Implementation Plans.
(i) Incorporation by reference.
(A) A revision to title 129, adding chapter 40, entitled ``General
Conformity'' was adopted by the Environmental Quality Council on
December 2, 1994, and became effective on May 29, 1995.
[FR Doc. 96-2975 Filed 2-9-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-2974 Approval and Promulgation of Implementation Plans; Arizona State Implementation Plan Revision, Maricopa County Environmental Services Department
[Federal Register Volume 61, Number 29 (Monday, February 12, 1996)]
[Rules and Regulations]
[Pages 5286-5288]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-2974]
-----------------------------------------------------------------------
[[Page 5287]]
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[AZ 43-1-7199; FRL-5336-5]
Approval and Promulgation of Implementation Plans; Arizona State
Implementation Plan Revision, Maricopa County Environmental Services
Department
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: EPA is finalizing the approval of revisions to the Arizona
State Implementation Plan (SIP) proposed in the Federal Register on
July 26, 1995. The revisions concern rules from the Maricopa County
Environmental Services Department (MCESD). The rules control VOC
emissions from rubber sports ball manufacturing and metal casting
operations. This approval action will incorporate these rules into the
federally approved SIP. The intended effect of approving these rules is
to regulate emissions of volatile organic compounds (VOCs) in
accordance with the requirements of the Clean Air Act, as amended in
1990 (CAA or the Act). In addition, the final action on these rules
serves as a final determination that the finding of nonsubmittal for
these rules has been corrected and that on the effective date of this
action, any Federal Implementation Plan (FIP) clock is stopped. Thus,
EPA is finalizing the approval of these revisions into the Arizona SIP
under provisions of the CAA regarding EPA action on SIP submittals,
SIPs for national primary and secondary ambient air quality standards,
and plan requirements for nonattainment areas.
EFFECTIVE DATE: This action is effective on March 13, 1996.
ADDRESSES: Copies of the rules and EPA's evaluation report for each
rule are available for public inspection at EPA's Region IX office
during normal business hours. Copies of the submitted rules are
available for inspection at the following locations:
Rulemaking Section (A-5-3), Air and Toxics Division, U.S. Environmental
Protection Agency, Region IX, 75 Hawthorne Street, San Francisco, CA
94105.
Environmental Protection Agency, Air Docket (6102), 401 ``M'' Street,
S.W., Washington, D.C. 20460.
Arizona Department of Environmental Quality, 3033 North Central Avenue,
Phoenix, AZ 85012.
Maricopa County Department of Environmental Services, 2406 South 24th
Street, Suite E-204, Phoenix, AZ 85034-6822.
FOR FURTHER INFORMATION CONTACT: Duane F. James, Rulemaking Section (A-
5-3), Air and Toxics Division, U.S. Environmental Protection Agency,
Region IX, 75 Hawthorne Street, San Francisco, CA 94105-3901,
Telephone: (415) 744-1191, email: [email protected].
SUPPLEMENTARY INFORMATION:
Background
On July 26, 1995, in 60 FR 38293, EPA proposed to approve the
following rules into the Arizona SIP: MCESD's Rule 334, ``Rubber Sports
Ball Manufacturing,'' and Rule 341, ``Metal Casting'' (the NPRM). The
MCESD adopted Rule 334 on September 20, 1994, and Rule 341 on August 5,
1994. These rules were submitted by the Arizona Department of
Environmental Quality to EPA on August 16, 1994 (Rule 341) and December
19, 1994 (Rule 334). These rules were submitted in response to EPA's
1988 SIP-Call and the CAA section 182(b)(2)(C) requirement that
nonattainment areas submit RACT rules for all major stationary sources
of VOCs by November 15, 1992 (the RACT catch-up requirement). A
detailed discussion of the background for each of the above rules and
nonattainment areas is provided in the NPRM cited above.
EPA has evaluated all of the above rules for consistency with the
requirements of the CAA and EPA regulations and EPA interpretation of
these requirements as expressed in the various EPA policy guidance
documents referenced in the NPRM cited above. EPA has found that the
rules meet the applicable EPA requirements. A detailed discussion of
the rule provisions and evaluations has been provided in the NPRM and
in technical support documents available at EPA's Region IX office,
dated March 27, 1995.
Response to Public Comments
A 30-day public comment period was provided in the NPRM. EPA
received no comments on Rules 334 and 341.
EPA Action
EPA is finalizing action to approve the above rules for inclusion
into the California SIP. EPA is approving the submittal under section
110(k)(3) as meeting the requirements of section 110(a) and Part D of
the CAA. This approval action will incorporate these rules into the
federally approved SIP. In addition, on the effective date of this
action, any FIP clock associated with the finding of nonsubmittal is
stopped. The intended effect of approving these rules is to regulate
emissions of VOCs in accordance with the requirements of the CAA.
Nothing in this action should be construed as permitting or
allowing or establishing a precedent for any future request for
revision to any state implementation plan. Each request for revision to
the state implementation plan shall be considered separately in light
of specific technical, economic, and environmental factors and in
relation to relevant statutory and regulatory requirements.
Regulatory Process
This action has been classified as a Table 3 action for signature
by the Regional Administrator under the procedures published in the
Federal Register on January 19, 1989 (54 FR 2214-2225), as revised by a
July 10, 1995 memorandum from Mary Nichols, Assistant Administrator for
Air and Radiation. The Office of Management and Budget (OMB) has
exempted this regulatory action from Executive Order 12866 review.
List of Subjects in 40 CFR Part 52
Environmental protection, Air pollution control, Hydrocarbons,
Incorporation by reference, Intergovernmental relations, Ozone,
Reporting and recordkeeping requirements, Volatile organic compounds.
Note: Incorporation by reference of the State Implementation
Plan for the State of California was approved by the Director of the
Federal Register on July 1, 1982.
Dated: November 8, 1995.
Felicia Marcus,
Regional Administrator.
Part 52, chapter I, title 40 of the Code of Federal Regulations is
amended as follows:
PART 52--[AMENDED]
1. The authority citation for part 52 continues to read as follows:
Authority: 42 U.S.C. 7401-7671q.
Subpart D--Arizona
2. Section 52.120 is amended by revising paragraph (c)(77) and
adding paragraph (c)(81) to read as follows:
Sec. 52.120 Identification of plan.
* * * * *
(c) * * *
(77) Amended regulations for the following agency were submitted on
December 19, 1994, by the Governor's designee.
(i) Incorporation by reference.
(A) Maricopa County Environmental Services Department.
(1) Rule 310, adopted on September 20, 1994.
[[Page 5288]]
(2) Rule 334, adopted on September 20, 1994.
* * * * *
(81) Amended regulation for the following agency was submitted on
August 16, 1994, by the Governor's designee.
(i) Incorporation by reference.
(A) Maricopa County Environmental Services Department.
(1) Rule 341, adopted on August 5, 1994.
* * * * *
[FR Doc. 96-2974 Filed 2-9-96; 8:45 am]
BILLING CODE 6560-50-W
Complete official Federal Register PDF
FR Doc. 96-2969 Approval and Promulgation of State Implementation Plans; California State Implementation Plan Revision, Santa Barbara County, Ventura County, Monterey Bay Unified, and Placer County Air Pollution Control Districts; and Yolo-Solano Air Quality Management District
[Federal Register Volume 61, Number 29 (Monday, February 12, 1996)]
[Rules and Regulations]
[Pages 5288-5291]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-2969]
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[CA 33-3-7130a; FRL-5339-7]
Approval and Promulgation of State Implementation Plans;
California State Implementation Plan Revision, Santa Barbara County,
Ventura County, Monterey Bay Unified, and Placer County Air Pollution
Control Districts; and Yolo-Solano Air Quality Management District
AGENCY: Environmental Protection Agency (EPA).
ACTION: Direct final rule.
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SUMMARY: EPA is taking direct final action on revisions to the
California State Implementation Plan (SIP). The revisions concern rules
from the following districts: Santa Barbara County Air Pollution
Control District (SBCAPCD), Ventura County Air Pollution Control
District (VCAPCD), Monterey Bay Unified Air Pollution Control District
(MBUAPCD), Yolo-Solano Air Quality Management District (YSAQMD), and
Placer County Air Pollution Control District (PCAPCD). This approval
action will incorporate these rules into the federally approved SIP.
The intended effect of approving these rules is to regulate emissions
of volatile organic compounds (VOCs) in accordance with the
requirements of the Clean Air Act, as amended in 1990 (CAA or the Act).
In addition, the final action on three of these rules, MBUAPCD's Rule
416, 433, and 434, serves as a final determination that the finding of
nonsubmittal for the rules has been corrected and that on the effective
date of this action, any Federal Implementation Plan (FIP) clock is
stopped. The revised rules control VOC emissions from operations
involving the following: the coating or assembly of aircraft or
aerospace vehicle parts and products, the use of organic solvents and
organic solvent cleaners, the coating of miscellaneous metal parts and
products, the application of adhesives, and the coating of flat wood
paneling. Thus, EPA is finalizing the approval of these revisions into
the California SIP under provisions of the CAA regarding EPA action on
SIP submittals, SIPs for national primary and secondary ambient air
quality standards and plan requirements for nonattainment areas.
DATES: This action is effective on April 12, 1996, unless adverse or
critical comments are received by March 13, 1996. If the effective date
is delayed, a timely notice will be published in the Federal Register.
ADDRESSES: Copies of the rule revisions and EPA's evaluation report for
each rule are available for public inspection at EPA's Region IX office
during normal business hours. Copies of the submitted rule revisions
are available for inspection at the following locations:
Rulemaking Section (A-5-3), Air and Toxics Division, U.S.
Environmental Protection Agency, Region IX, 75 Hawthorne Street, San
Francisco, CA 94105.
Environmental Protection Agency, Air Docket (6102), 401 ``M''
Street, S.W., Washington, D.C. 20460.
California Air Resources Board, Stationary Source Division, Rule
Evaluation Section, 2020 ``L'' Street, Sacramento, CA 92123-1095.
Placer County Air Pollution Control District, 11464 B Avenue,
Auburn, CA 95603.
Monterey Bay Unified Air Pollution Control District, 24580 Silver
Cloud Court, Monterey, CA 93940.
Santa Barbara County Air Pollution Control District, 26 Castilian
Drive B-23, Goleta, CA 93117.
Ventura County Air Pollution Control District, 669 County Square
Drive, Ventura, CA 93003.
Yolo-Solano Air Quality Management District, 1947 Galileo Court,
Suite 103, Davis, CA 95616.
FOR FURTHER INFORMATION CONTACT: Helen Liu, Rulemaking Section (A-5-3),
Air and Toxics Division, U.S. Environmental Protection Agency, Region
IX, 75 Hawthorne Street, San Francisco, CA 94105, Telephone: (415) 744-
1199.
SUPPLEMENTARY INFORMATION:
Applicability
The rules being approved into the California SIP include: SBCAPCD
Rule 337--Surface Coating of Aircraft or Aerospace Vehicle Parts and
Products, VCAPCD Rule 74.13--Aerospace Assembly and Component
Manufacturing Operations, MBUAPCD Rule 416--Organic Solvents, MBUAPCD
Rule 433--Organic Solvent Cleaning, MBUAPCD Rule 434--Coating of Metal
Parts and Products, YSAQMD Rule 2.25--Metal Parts and Products Coating
Operations, YSAQMD Rule 2.33--Adhesives Operations, PCAPCD Rule 238--
Factory Coating of Flat Wood Paneling.
Background
On March 3, 1978, EPA promulgated a list of ozone nonattainment
areas under the provisions of the Clean Air Act, as amended in 1977
(1977 Act or pre-amended Act), that included the Santa Barbara, Ventura
County, Monterey Bay, and Sacramento Metro areas. 43 FR 8964, 40 CFR
81.305. On May 26, 1988, EPA notified the Governor of California,
pursuant to section 110(a)(2)(H) of the 1977 Act, that the above
districts' portions of the California SIP were inadequate to attain and
maintain the ozone standard and requested that deficiencies in the
existing SIP be corrected (EPA's SIP-Call). On November 15, 1990, the
Clean Air Act Amendments of 1990 were enacted. Public Law 101-549, 104
Stat. 2399, codified at 42 U.S.C. 7401-7671q. In amended section
182(a)(2)(A) of the CAA, Congress statutorily adopted the requirement
that nonattainment areas fix their deficient reasonably available
control technology (RACT) rules for ozone and established a deadline of
May 15, 1991 for states to submit corrections of those deficiencies. In
amended section 182(b)(2) of the CAA, Congress also statutorily
required nonattainment areas to submit RACT rules for all VOC sources
covered by any control technique guideline (CTG) by November 15, 1992
(the RACT ``catch-up'' requirement).
Section 182(a)(2)(A) applies to areas designated as nonattainment
prior to enactment of the amendments and classified as marginal or
above as of the date of enactment. It requires such areas to adopt and
correct RACT rules pursuant to pre-amended section 172 (b) as
interpreted in pre-amendment guidance.1 EPA's SIP-Call used that
guidance to indicate the necessary corrections for specific
nonattainment areas. The Santa Barbara Area and the Monterey Bay Area
are classified as moderate, the Ventura County Area and the Sacramento
Metro Area are classified as severe; 2 therefore, these
[[Page 5289]]
areas were subject to the RACT fix-up requirement and the May 15, 1991
deadline. These areas were also subject to RACT catch-up requirement
and the November 15, 1992 deadline.3
\1\ Among other things, the pre-amendment guidance consists of
those portions of the proposed post-1987 ozone and carbon monoxide
policy that concern RACT, 52 FR 45044 (November 24, 1987); ``Issues
Relating to VOC Regulation Cutpoints, Deficiencies, and Deviations,
Clarification to Appendix D of November 24, 1987 Federal Register
Notice'' (Blue Book) (notice of availability was published in the
Federal Register on May 25, 1988); and the existing control
technique guidelines (CTGs).
\2\ The Santa Barbara, Ventura County, Monterey Bay, and
Sacramento Metro areas retain their designation of nonattainment and
were classified by operation of law pursuant to sections 107(d) and
181(a) upon the date of enactment of the CAA. See 55 FR 56694
(November 6, 1991). The Sacramento Metro Area was reclassified from
serious to severe [60 FR 20237] April 25, 1995.
\3\ California did not make the required SIP submittal to
Monterey by November 15, 1992. On June 8, 1993, the EPA made a
finding of failure to make a submittal pursuant to section
179(a)(1), which started an 18-month sanction clock. Three rules
from Monterey Bay being acted on in this direct final rule were
submitted in response to the EPA finding of failure to submit.
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The State of California submitted many revised RACT rules for
incorporation into its SIP. The following table includes the dates of
when the districts adopted the rules, the dates that CARB submitted
them to EPA, and the dates that they were found to be complete pursuant
to EPA's completeness criteria that are set forth in 40 CFR part 51,
appendix V: 4
\4\ EPA adopted the completeness criteria on February 16, 1990
(55 FR 5830) and, pursuant to section 110(k)(1)(A) of the CAA,
revised the criteria on August 26, 1991 (56 FR 42216).
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Rule Adoption Submittal Completeness
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SBCAPCD 337............................................ 10/20/94 1/24/95 2/24/95
VCAPCD 74.13........................................... 1/22/91 4/5/91 5/21/91
MBUAPCD 416............................................ 4/20/94 7/13/94 9/12/94
MBUAPCD 433............................................ 6/15/94 9/28/94 11/22/94
MBUAPCD 434............................................ 6/15/94 9/28/94 11/22/94
YSAQMD 2.25............................................ 4/27/94 11/30/94 1/30/95
YSAQMD 2.33............................................ 9/14/94 11/30/94 1/30/95
PCAPCD 238............................................. 6/18/95 10/13/95 11/28/95
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This notice addresses EPA's direct-final approval action for the above-
mentioned rules.
All of these rules control VOC emissions from certain operations
listed above. VOCs contribute to the production of ground level ozone
and smog. These rules were originally adopted as part of the districts'
efforts to achieve the National Ambient Air Quality Standard (NAAQS)
for ozone and in response to EPA's SIP-Call and the section
182(a)(2)(A) CAA requirement. The following is EPA's evaluation and
final action for this rule.
EPA Evaluation and Action
In determining the approvability of a VOC rule, EPA must evaluate
the rule for consistency with the requirements of the CAA and EPA
regulations, as found in section 110 and part D of the CAA and 40 CFR
part 51 (Requirements for Preparation, Adoption, and Submittal of
Implementation Plans). The EPA interpretation of these requirements,
which forms the basis for today's action, appears in the various EPA
policy guidance documents listed in footnote 1. Among those provisions
is the requirement that a VOC rule must, at a minimum, provide for the
implementation of RACT for stationary sources of VOC emissions. This
requirement was carried forth from the pre-amended Act.
For the purpose of assisting state and local agencies in developing
RACT rules, EPA prepared a series of Control Technique Guideline (CTG)
documents. The CTGs are based on the underlying requirements of the Act
and specify the presumptive norms for what is RACT for specific source
categories. Under the CAA, Congress ratified EPA's use of these
documents, as well as other Agency policy, for requiring States to
``fix-up'' their RACT rules. See section 182(a)(2)(A). However, there
are source categories for which no CTG has been written. The CTGs
applicable to some of these rules are entitled, ``Control of Volatile
Organic Emissions from Existing Stationary Sources--Volume VI: Surface
Coating of Miscellaneous Metal Parts and Products'' (EPA-450/2-78-015),
``Control of Volatile Organic Emissions from Solvent Metal Cleaning''
(EPA-450/2-77-022), and ``Control of Volatile Organic Emissions From
Existing Stationary Sources--Volume VII: Factory Surface Coating of
Flat Wood Paneling'' (EPA-450/2-78-032). Further interpretations of EPA
policy are found in the Blue Book, referred to in footnote 1. In
general, these guidance documents have been set forth to ensure that
VOC rules are fully enforceable and strengthen or maintain the SIP.
SBCAPCD's submitted Rule 337--Surface Coating of Aircraft or
Aerospace Vehicle Parts and Products--includes the following major
provisions:
exempted certain coatings and operations,
the reactive organic compound (ROC) limits for different
coating categories,
the control and capture efficiency requirements for add-on
exhaust control equipment,
recordkeeping requirements.
VCAPCD's submitted Rule 74.13--Aerospace Assembly and Component
Manufacturing Operations--includes the following major provisions:
a list of ROC limits for coatings and adhesives,
the requirements for surface and general cleaning, add-on
control equipment, and recordkeeping,
an exemption for sources emitting less than 3 pounds of
ROC per day and less than 200 pounds of ROC per year,
a requirement to obtain an Authority to Construct or a
Permit to Operate application under certain circumstances.
MBUAPCD Rule 416--Organic Solvents--includes the following major
provisions:
limits for emissions due to organic solvents that are
baked, heat-cured, heat-polymerized, or exposed to flame,
limits for emissions from photochemically and non-
photochemically reactive solvents,
recordkeeping requirements.
MBUAPCD Rule 433--Organic Solvent Cleaning--includes the following
major provision:
requirements for operational, equipment, alternative
control requirements, and recordkeeping.
MBUAPCD Rule 434--Coating of Metal Parts and Products--includes the
following provision:
requirements for VOC content of coatings, add-on control
alternatives, the qualification for extreme-performance coating, and
recordkeeping.
YSAQMD Rule 2.25--Metal Parts and Products Coating Operations--
includes the following major provisions:
requirements for VOC content of coatings, application
methods, add-on control alternatives, surface preparation and clean-up
solvents,
requirements for prohibition of specification,
qualification for extreme performance coating classification, and
recordkeeping.
[[Page 5290]]
YSAQMD Rule 2.33--Adhesives Operations--includes the following
major provisions:
VOC limits for adhesives and adhesive primers,
requirement to use equipment that is airless, air assisted
airless, high volume low pressure, electrostatic spray, or disposable
aerosol containers,
requirements for using alternative emissions control
systems,
limiting the weight percent of VOCs in aerosol adhesives,
recordkeeping requirements.
PCAPCD Rule 238--Factory Coating of Flat Wood Paneling--includes
the following major provisions:
limits on the VOC content of wood flat stock coating,
adhesive, and inks,
requirements for using alternative emissions,
control systems, application equipment requirements.
EPA has evaluated the submitted rules and has determined that they
are consistent with the CAA, EPA regulations, and EPA policy.
Therefore, the following rules: SBCAPCD Rule 337--Surface Coating of
Aircraft or Aerospace Vehicle Parts and Products, VCAPCD Rule 74.13--
Aerospace Assembly and Component Manufacturing Operations, MBUAPCD Rule
416--Organic Solvents, MBUAPCD Rule 433--Organic Solvent Cleaning,
MBUAPCD Rule 434--Coating of Metal Parts and Products, YSAQMD Rule
2.25--Metal Parts and Products Coating Operations, YSAQMD Rule 2.33--
Adhesives Operations, and PCAPCD Rule 238--Factory Coating of Flat Wood
Paneling, are being approved under section 110(k)(3) of the CAA as
meeting the requirements of section 110(a) and part D. Therefore, if
this direct final action is not withdrawn, on April 12, 1996, any FIP
clock is stopped.
Nothing in this action should be construed as permitting or
allowing or establishing a precedent for any future implementation
plan. Each request for revision to the state implementation plan shall
be considered separately in light of specific technical, economic, and
environmental factors and in relation to relevant statutory and
regulatory requirements.
EPA is publishing this document without prior proposal because the
Agency views this as a noncontroversial amendment and anticipates no
adverse comments. However, in a separate document in this Federal
Register publication, the EPA is proposing to approve the SIP revision
should adverse or critical comments be filed. This action will be
effective April 12, 1996, unless, by March 13, 1996, adverse or
critical comments are received.
If the EPA receives such comments, this action will be withdrawn
before the effective date by publishing a subsequent document that will
withdraw the final action. All public comments received will then be
addressed in a subsequent final rule based on this action serving as a
proposed rule. The EPA will not institute a second comment period on
this action. Any parties interested in commenting on this action should
do so at this time. If no such comments are received, the public is
advised that this action will be effective April 12, 1996.
Regulatory Process
Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., EPA
must prepare a regulatory flexibility analysis assessing the impact of
any proposed or final rule on small entities. 5 U.S.C. Secs. 603 and
604. Alternatively, EPA may certify that the rule will not have a
significant impact on a substantial number of small entities. Small
entities include small businesses, small not-for-profit enterprises and
government entities with jurisdiction over population of less than
50,000.
SIP approvals under sections 110 and 301(a) and subchapter I, Part
D of the CAA do not create any new requirements, but simply approve
requirements that the State is already imposing. Therefore, because the
Federal SIP-approval does not impose any new requirements, I certify
that it does not have a significant impact on any small entities
affected. Moreover, due to the nature of the Federal-state relationship
under the CAA, preparation of a regulatory flexibility analysis would
constitute Federal inquiry into the economic reasonableness of state
action. The CAA forbids EPA to base its actions concerning SIPs on such
grounds. Union Electric Co. v. U.S. E.P.A., 427 U.S. 246, 256-66 (S.
Ct. 1976); 42 U.S.C. 7410 (a)(2).
Unfunded Mandates
Under Sections 202, 203, and 205 of the Unfunded Mandates Reform
Act of 1995 (``Unfunded Mandates Act''), signed into law on March 22,
1995, EPA must undertake various actions in association with proposed
or final rules that include a Federal mandate that may result in
estimated costs of $100 million or more to the private sector or to
State, local, or tribal governments in the aggregate.
Through submission of this state implementation plan or plan
revision, the State and any affected local or tribal governments have
elected to adopt the program provided for under Part D of the Clean Air
Act. These rules may bind State, local, and tribal governments to
perform certain actions and also require the private sector to perform
certain duties. The rules being approved by this action will impose no
new requirements because affected sources are already subject to these
regulations under State law. Therefore, no additional costs to State,
local, or tribal governments or to the private sector result from this
action. EPA has also determined that this direct-final action does not
include a mandate that may result in estimated costs of $100 million or
more to State, local, or tribal governments in the aggregate or to the
private sector.
This action has been classified as a Table 3 action for signature
by the Regional Administrator under the procedures pubished in the
Federal Register on January 19, 1989 (54 FR 2214-2225), as revised by a
July 10, 1995 memorandum from Mary Nichols, Assistant Administrator for
Air and Radiation. The OMB has exempted this action from review under
Executive Order 12866.
List of Subjects in 40 CFR Part 52
Environmental protection, Air pollution control, Hydrocarbons,
Incorporation by reference, Intergovernmental relations, Ozone,
Reporting and recordkeeping requirements, Volatile organic compounds.
Note: Incorporation by reference of the State Implementation
Plan for the State of California was approved by the Director of the
Federal Register on July 1, 1982.
Dated: November 8, 1995.
Felicia Marcus,
Regional Administrator.
Subpart F of part 52, chapter I, Title 40 of the Code of Federal
Regulations is amended as follows:
PART 52--[AMENDED]
1. The authority citation for part 52 continues to read as follows:
Authority: 42 U.S.C. 7401-7671q.
Subpart F--California
2. Section 52.220 is amended by adding paragraphs (c) (183)(B)(3),
(198)(F)(2), (199)(C), (207)(C)(3), (214)(C), and (225)(B) to read as
follows:
Sec. 52.220 Identification of plan.
* * * * *
(c) * * *
(183) * * *
(B) * * *
(3) Rule 74.13, adopted on January 22, 1991.
* * * * *
(198) * * *
[[Page 5291]]
(F) * * *
(2) Rule 416, adopted April 20, 1994.
* * * * *
(199) * * *
(C) Monterey Bay Unified Air Pollution Control District.
(1) Rules 433 and 434, adopted June 15, 1994.
* * * * *
(207) * * *
(C) * * *
(3) Rules 2.25 and 2.33, adopted April 27, 1994 and September 14,
1994, respectively.
* * * * *
(214) * * *
(C) Santa Barbara County Air Pollution Control District.
(1) Rule 337, adopted October 20, 1994.
* * * * *
(225) * * *
(B) Placer County Air Pollution Control District.
(1) Rule 238, adopted June 8, 1995.
* * * * *
[FR Doc. 96-2969 Filed 2-9-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-2967 Approval and Promulgation of Air Quality Implementation Plans; Pennsylvania; Approval of Source-Specific VOC and NOINFX RACT and Synthetic Minor Permit Conditions
[Federal Register Volume 61, Number 29 (Monday, February 12, 1996)]
[Rules and Regulations]
[Pages 5303-5306]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-2967]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[PA 70-1-7207a; FRL-5338-8]
Approval and Promulgation of Air Quality Implementation Plans;
Pennsylvania; Approval of Source-Specific VOC and NOX RACT and
Synthetic Minor Permit Conditions
AGENCY: Environmental Protection Agency (EPA).
ACTION: Direct final rule.
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SUMMARY: EPA is approving a State Implementation Plan (SIP) revision
submitted by the Commonwealth of Pennsylvania. This revision
establishes and requires reasonably available control technology (RACT)
on one major source and establishes permit conditions to limit eight
source's emissions to below major source threshold levels. The intended
effect of this action is to approve source-specific plan approvals and
operating permits, which establish the above-mentioned requirements in
accordance with the Clean Air Act. This action is being taken under
section 110 of the Clean Air Act.
DATES: This action is effective April 12, 1996 unless notice is
received on or before March 13, 1996 that adverse or critical comments
will be submitted. If the effective date is delayed, timely notice will
be published in the Federal Register.
ADDRESSES: Comments may be mailed to Marcia L. Spink, Associate
Director, Air Programs, Mailcode 3AT00, U.S. Environmental Protection
Agency, Region III, 841 Chestnut Building, Philadelphia, Pennsylvania
19107. Copies of the documents relevant to this action are available
for public inspection during normal business hours at the Air,
Radiation, and Toxics Division, U.S. Environmental Protection Agency,
Region III, 841 Chestnut Building, Philadelphia, Pennsylvania 19107;
the Air and Radiation Docket and Information Center, U.S. Environmental
Protection Agency, 401 M Street, SW., Washington, DC 20460; and
Pennsylvania Department of Environmental Resources, Bureau of Air
Quality Control, P.O. Box 8468, 400 Market Street, Harrisburg,
Pennsylvania 17105.
FOR FURTHER INFORMATION CONTACT: Brian K. Rehn, (215) 597-4554, at the
EPA Region III address above, or by E-mail at
Rehn.B[email protected].
SUPPLEMENTARY INFORMATION: On August 1, 1995, the Commonwealth of
Pennsylvania submitted formal revisions to its State Implementation
Plan (SIP). The SIP revision consists of a group of plan approvals and
operating permits for individual sources of volatile organic compounds
and/or nitrogen oxides located in Pennsylvania. This rulemaking
addresses those plan approvals and operating permits pertaining to the
following sources: (1) James River Corporation--Chambersburg, (2)
Appleton Papers, Inc.--Cumberland County , (3) Air Products &
Chemicals, Inc.--Trexlortown, (4) Elf Atochem North America, Inc., (5)
York City Sewer Authority--Manchester Township, (6) Glasgow, Inc.--Ivy
Rock Plants, (7) Glasgow, Inc.--Spring House Plants, (8) Glasgow,
Inc.--Catanach Plant, (9) Glasgow, Inc.--Freeborn Asphalt Plant. The
remaining plan approvals and operating permits submitted on August 1,
1995 with those being approved today will be addressed in a later
rulemaking notice.
Pursuant to section 182(b)(2) and 182(f) of the Clean Air Act
(CAA), Pennsylvania is required to implement RACT for all major VOC and
NOX sources by no later than May 31, 1995. Major source size is
determined by a source's location, the classification of the area where
the source is located, and whether it is located in an ozone transport
region (OTR)--as established by the CAA. The Pennsylvania portion of
the Philadelphia ozone nonattainment area is classified as severe, and
consists of Bucks, Chester, Delaware, Montgomery, and Philadelphia
Counties. For severe ozone nonattainment areas, the Clean Air Act
requires RACT for sources emitting 25 tons or more per year of VOCs, or
for sources emitting at least 25 tons per year of NOX.
The remaining counties in Pennsylvania are classified as either
moderate or marginal nonattainment areas, or are designated attainment
for ozone. However, under section 184 of the CAA, moderate ozone
nonattainment area requirements (including RACT as defined in section
182(b)(2) and 182(f)) apply throughout the OTR. Therefore, RACT is
applicable statewide in Pennsylvania. The Clean Air Act requires RACT
for sources emitting 50 tons per year or more of VOCs, or 100 tons per
year or more of NOX.
The August 1, 1995 Pennsylvania submittals that are the subject of
this notice, are meant to satisfy the RACT requirements for one source
in Pennsylvania and to limit the potential VOC and/or NOX
emissions at eight sources to below the major source size threshold in
order to avoid RACT requirements.
Summary of SIP Revision
The details of the RACT requirements for the source-specific plan
approvals and operating permits can be found in the docket and
accompanying technical support document and will not be reiterated in
this notice. Briefly, EPA is
[[Page 5304]]
approving one operating permit as RACT and eight operating permits as a
revision to the Pennsylvania SIP to limit those source's emissions to
below the major source threshold. Several of the operating permits
contain conditions irrelevant to the determination of VOC or NOX
RACT. Consequently, these provisions are not being included in this
approval for VOC or NOX RACT.
RACT Permit
EPA is approving the operating permit (OP 28-2006) for the James
River Corporation's facility, located in Chambersburg, Franklin County.
James River Corporation operates a lithographic printing facility which
is considered a major source of VOC emissions. The specific emission
limitations and other RACT requirements for this source is summarized
in the accompanying technical support document, which is available from
EPA's Region III office. A source-specific RACT emission limitation
that is approved into the Pennsylvania SIP is only the one which has
been officially submitted for approval on August 1, 1995, and is the
subject of a rulemaking notice. Emission limitations approved within
this notice will remain unless and until they are replaced pursuant to
40 CFR part 51 and approved by the U.S. EPA.
Synthetic Minor Source Permits (Sources Located in the OTR Portion of
Pennsylvania, but Outside of Philadelphia)
The three sources below are located outside of the Philadelphia
ozone nonattainment area, but lie within the Northeast OTR established
by the Clean Air Act. Each of these three sources would have the
potential to emit at least 50 tons per year of VOCs and/or 100 tons per
year of NOX, and without limiting permit conditions or controls,
could be defined as a major source under the Clean Air Act. However,
each of these sources has agreed to enforceable permit conditions which
limit actual emissions to below major source thresholds.
Therefore, EPA is approving the operating permit (OP 21-2004) for
Appleton Papers, Inc., located in Lower Allen Township in Cumberland
County. Appleton Papers is a surface coating installation, specializing
in the production of carbonless reproduction paper and, without
limiting permit conditions or controls, would be a major source of both
NOX and VOCs. Appleton Papers has agreed to permit conditions
limiting their NOX emissions to below the major source threshold.
Additionally, Appleton Papers is subject to VOC RACT for surface
coating operations under state regulation 25 PA Code, 129.52(b), and is
therefore not required to submit a case-by-case RACT determination for
its VOC emissions.
Air Products, Inc.'s Trexlortown facility in Lehigh County operates
numerous boilers, heaters, and support equipment, and without limiting
permit conditions or controls, would be considered a major source of
NOX. However, EPA is approving an operating permit (OP 39-0008)
for Air Products and Chemicals Trexlortown facility which caps NOX
emissions to below 100 tons per year, and qualifies the source as a
synthetic minor.
EPA is approving the operating permit (OP 67-2013) for the York
City Sewer Authority's waste water treatment plant, located in
Manchester Township in York County. Without permit limitations or
controls, this facility would be considered a major source of NOX.
However the City has agreed to permit limitations which qualify the
plant as a synthetic minor source.
The approval of the synthetic minor permit conditions for the
sources above limit the emissions at each of these facilities to less
than the major source thresholds, and allow the sources to avoid being
subject to major source RACT requirements. For details of the permit
emission limitations for each of the above sources, please refer to the
technical support document contained in the docket for this action.
Synthetic Minor Permits (Sources Within the Philadelphia Nonattainment
Area)
The five sources below are located within the five-county
Philadelphia ozone nonattainment area. Each of these sources has the
potential to emit at least 25 tons per year of VOCs and/or 25 tons per
year of NOX, and each would therefore be considered a major
source. However, these sources have agreed to enforceable permit
conditions which limit actual emissions to below major source
thresholds, and they are qualified as synthetic minor sources.
Elf Atochem is a chemical research and development facility located
in Upper Merion Township in Montgomery County. Elf Atochem would be
considered a major source of NOX (without limiting permit
conditions or controls). However, since the company's operating permit
(OP 46-0022) limits its NOX emissions to below the major source
threshold, EPA is approving the permit as a synthetic minor.
EPA is approving the operating permit (OP 46-0043) for Glasgow,
Inc.'s two Ivy Rock plants, located in Plymouth Township in Montgomery
County. Glasgow, Inc. operates asphalt batching facilities in Plymouth
Township which, without permit limitations or controls, would be
considered a major source of both VOC and NOX. Glasgow, Inc has
capped their NOX and VOC emissions from its Ivy Rock facilities
operating permit to below major source thresholds, and qualifies for
consideration as a synthetic minor source.
EPA is approving the operating permit (OP 46-0029) for Glasgow,
Inc.'s two Spring House plants, located in Montgomery County. Glasgow
operates asphalt batching plants in Montgomery Township, which would be
defined as a major source of both VOC and NOX, without permit
limitations or controls. Since the source has limited these emissions
to below major source thresholds, EPA is approving the source's permit
as a synthetic minor.
EPA is approving the operating permit (OP 15-0021) for Glasgow,
Inc.'s Catanach plant, located in East Whiteland Township in Chester
County. Without permit limits or controls, Glasgow's Catanach plant
would be considered a major source of both VOC and NOX. The source
has limited its emissions to below major source thresholds, and
qualifies as a synthetic minor.
EPA is approving the operating permit (OP 23-0026) for Glasgow,
Inc.'s Freeborn plant, located in Springfield Township in Delaware
County. Glasgow's Freeborn plant would also be considered a major
source of both VOC and NOX, without permit limitations or
controls, but the source has agreed to limit its emissions as a
synthetic minor.
The approval of the synthetic minor permit conditions for these
sources limit emissions at these facilities to less than major source
thresholds, and allow the sources to avoid being subject to major
source RACT requirements. For details of the emission limitations
contained in the permits for each of the above sources, refer to the
technical support document contained in the docket for this action.
EPA is approving this SIP revision without prior proposal because
the Agency views this as a noncontroversial amendment and anticipates
no adverse comments. However, in a separate document in this Federal
Register publication, EPA is proposing to approve the SIP revision
should adverse or critical comments be filed. This action will be
effective April 12, 1996 unless, by March 13, 1996, adverse or critical
comments are received.
If EPA receives such comments, this action will be amended before
the
[[Page 5305]]
effective date by publishing a subsequent document that will withdraw
the final action for those permits that are the subject of adverse
comments. All public comments received regarding those permits will
then be addressed in a subsequent final rule based on this action
serving as a proposed rule. EPA will not institute a second comment
period on this action. Any parties interested in commenting on this
action should do so at this time. If no such comments are received, the
public is advised that this action will be effective on April 12, 1996.
Final Action
EPA is approving one operating permit as RACT and eight operating
permits to limit emissions at those subject sources to below major
source emission levels.
Nothing in this action should be construed as permitting or
allowing or establishing a precedent for any future request for
revision to any state implementation plan. Each request for revision to
the state implementation plan shall be considered separately in light
of specific technical, economic, and environmental factors and in
relation to relevant statutory and regulatory requirements.
Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., EPA
must prepare a regulatory flexibility analysis assessing the impact of
any proposed or final rule on small entities. 5 U.S.C. 603 and 604.
Alternatively, EPA may certify that the rule will not have a
significant impact on a substantial number of small entities. Small
entities include small businesses, small not-for-profit enterprises,
and government entities with jurisdiction over populations of less than
50,000.
Under Section 202 of the Unfunded Mandates Reform Act of 1995
(``Unfunded Mandates Act''), signed into law on March 22, 1995, EPA
must prepare a budgetary impact statement to accompany any proposed or
final that includes a Federal mandate that may result in estimated
costs to State, local, or tribal governments in the aggregate; or to
the private sector, of $100 million or more. Under section 205, EPA
must select the most cost-effective and least burdensome alternative
that achieves the objectives of the rule and is consistent with
statutory requirements. Section 203 requires EPA to establish a plan
for informing and advising any small governments that may be
significantly or uniquely impacted by the rule.
EPA has determined that the approval action proposed/promulgated
does not include a Federal mandate that may result in estimated costs
of $100 million or more to either State, local, or tribal governments
in the aggregate, or to the private sector. This Federal action
approves pre-existing requirements under State or local law, and
imposes no new Federal requirements. Accordingly, no additional costs
to State, local, or tribal governments, or to the private sector,
result from this action.
This action has been classified as a Table 3 action for signature
by the Regional Administrator under the procedures published in the
Federal Register on January 19, 1989 (54 FR 2214-2225), as revised by
an October 4, 1993 memorandum from Michael H. Shapiro, Acting Assistant
Administrator for Air and Radiation. The OMB has exempted this
regulatory action from E.O. 12866 review.
Under section 307(b)(1) of the Clean Air Act, petitions for
judicial review of this action, pertaining to the VOC and NOX RACT
approval of one source and the synthetic minor permit conditions for
eight additional sources, must be filed in the United States Court of
Appeals for the appropriate circuit by April 12, 1996. Filing a
petition for reconsideration by the Administrator of this final rule
does not affect the finality of this rule for the purposes of judicial
review nor does it extend the time within which a petition for judicial
review may be filed, and shall not postpone the effectiveness of such
rule or action. This action may not be challenged later in proceedings
to enforce its requirements. (See section 307(b)(2).)
List of Subjects in 40 CFR Part 52
Environmental protection, Air pollution control, Hydrocarbons,
Incorporation by reference, Intergovernmental relations, Nitrogen
dioxide, Ozone, Reporting and recordkeeping requirements.
Dated: November 24, 1995.
W. Michael McCabe,
Regional Administrator, Region III.
40 CFR part 52, is amended as follows:
PART 52--[AMENDED]
1. The authority citation for part 52 continues to read as follows:
Authority: 42 U.S.C. 7401-7671q.
Subpart NN--Pennsylvania
2. Section 52.2020 is amended by adding paragraph (c)(104) to read
as follows:
Sec. 52.2020 Identification of plan.
* * * * *
(c) * * *
(104) Revisions to the Pennsylvania Regulations Chapter 129.91
submitted on August 1, 1995 by the Pennsylvania Department of
Environmental Protection:
(i) Incorporation by reference.
(A) Two letters, one dated August 1, 1995, from James Seif,
Secretary of the Pennsylvania Department of Environmental Protection,
transmitting source-specific VOC and/or NOX RACT determinations in
the form of operating permits for the following sources: James River
Corporation--Chambersburg (Franklin County)--printer. In addition,
operating permits for the following sources containing provisions
limiting these sources as ``synthetic minor'' sources (below RACT
threshold level for VOC and/or NOX emissions) are being approved:
Appleton Papers, Inc. (Cumberland County)--carbon paper producer; Air
Products & Chemicals, Inc.--Trexlortown (Lehigh County)--gas
production/storage facility; Elf Atochem North America, Inc.
(Montgomery County)--chemical research & development firm; York City
Sewer Authority--Manchester Township (York County)--waste water
treatment facility; Glasgow, Inc.--Ivy Rock Plants 1 & 2 (Montgomery
County)--asphalt production facility; Glasgow, Inc.--Catanach Plant
(Chester County)--asphalt production facility; Glasgow, Inc.--Freeborn
Asphalt Plant (Delaware County)--asphalt production facility.
(B) One letter, dated November 15, 1995, from James Seif, Secretary
of the Pennsylvania Department of Environmental Protection,
transmitting source-specific VOC and/or NOX RACT determinations in
the form of operating permits including the following source: Glasgow,
Inc.--Spring House Plants 1 & 2 (Montgomery County)--asphalt production
facility;
(C) Operating permits (OP):
(1) James River Corporation--OP 28-2006, effective June 14, 1995,
except the expiration date of the operating permit.
(2) Appleton Papers, Inc.--OP 21-2004, effective May 24, 1995,
except the expiration date of the operating permit.
(3) Air Products and Chemicals, Inc.--OP 39-0008, effective May 25,
1995, except the expiration date of the operating permit.
(4) Elf Atochem North America, Inc.--OP 46-0022, effective June 27,
1995, except the expiration date of the operating permit.
(5) York City Sewer Authority, Manchester Township--OP 67-2013,
effective March 1, 1995, except the expiration date of the operating
permit.
[[Page 5306]]
(6) Glasgow, Inc., Ivy Rock Asphalt Plants 1 & 2--OP 46-0043,
effective June 7, 1995, except for the expiration date of the operating
permit.
(7) Glasgow, Inc., Spring House Asphalt Plants 1 & 2--OP 46-0029,
effective June 7, 1995, except for the expiration date of the operating
permit.
(8) Glasgow, Inc., Catanach Asphalt Plant--OP 15-0021, effective
June 7, 1995, except for the expiration date of the operating permit.
(9) Glasgow, Inc., Freeborn Asphalt Plant--OP 23-0026, effective
June 7, 1995, except for the expiration date of the operating permit.
[FR Doc. 96-2967 Filed 2-9-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-2966 Approval and Promulgation of Implementation Plans; Illinois
[Federal Register Volume 61, Number 29 (Monday, February 12, 1996)]
[Rules and Regulations]
[Pages 5291-5295]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-2966]
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[IL132-2-7237; FRL-5418-6]
Approval and Promulgation of Implementation Plans; Illinois
AGENCY: Environmental Protection Agency.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The United States Environmental Protection Agency (USEPA) is
approving Illinois' request to exempt the Chicago ozone nonattainment
area from the applicable oxides of nitrogen (NOX) transportation
conformity requirements. The Chicago ozone nonattainment area is
classified as severe nonattainment for ozone. The request is based on
the urban airshed modeling (UAM) conducted by the Lake Michigan Ozone
Control Program (LMOP) which shows that additional NOX reductions
in the Chicago area will not contribute to attainment of the ozone
standard. Approval of this NOX exemption for transportation
conformity will simplify the process of demonstrating that
transportation plans and projects will not contribute to violations of
the ozone standard. Comments received on the August 16, 1995, proposal
are addressed in this rulemaking. The continued approval of this
exemption is contingent on the results of subsequent modeling including
the final ozone attainment demonstration and plan for the Chicago
nonattainment area. This plan is expected to be submitted by mid-1997
and to incorporate the results of the Ozone Transport Assessment Group
(OTAG) process. The attainment plan will supersede the initial modeling
results as the basis for the waiver which USEPA is granting in this
notice. If the attainment plan relies on NOX controls on mobile
sources in the Chicago ozone nonattainment area to demonstrate
attainment, the NOX waiver for transportation conformity will be
reconsidered. To the extent the final plans achieve attainment of the
ozone standard without additional NOX reductions from mobile
sources, the NOX exemption would continue. USEPA's rulemaking
action to reconsider the initial NOX waiver may occur
simultaneously with rulemaking action on the attainment plans. This
NOX waiver approval does not change the transportation conformity
requirement for a NOX budget test unless the attainment SIP shows
that NOX emissions could grow without limit without threatening
attainment (as described in the November 14, 1995, amendment to the
conformity rule).
EFFECTIVE DATE: This action will be effective March 13, 1996.
ADDRESSES: Copies of the documents relevant to this action are
available for inspection at the following address: U.S. Environmental
Protection Agency, Region 5, Air and Radiation Division, 77 West
Jackson Boulevard, Chicago, Illinois, 60604.
FOR FURTHER INFORMATION CONTACT: Patricia Morris, Regulation
Development Section, Regulation Development Branch (AR-18J), U.S.
Environmental Protection Agency, 77 West Jackson Boulevard, Chicago,
Illinois, 60604. (312) 353-8656.
SUPPLEMENTARY INFORMATION:
I. Background
Clean Air Act section 176(c)(3)(A)(iii) requires, in order to
demonstrate conformity with the applicable State Implementation Plan
(SIP), that transportation plans and transportation improvement
programs (TIPs) contribute to emissions reductions in ozone
nonattainment areas during the period before control strategy SIPs are
approved by USEPA. This requirement is implemented in 40 CFR 51.436
through 51.440 (and 93.122 through 93.124), which establishes the so-
called ``build/no-build test.'' This test requires a demonstration that
the ``Action'' scenario (representing the implementation of the
proposed transportation plan/TIP) will result in lower motor vehicle
emissions than the ``Baseline'' scenario (representing the
implementation of the current transportation plan/TIP). In addition,
the ``Action'' scenario must result in emissions lower than 1990
levels.
The November 24, 1993, final transportation conformity rule does
not require the build/no-build test and less-than-1990 test for
NOX as an ozone precursor in ozone nonattainment areas where the
Administrator determines that additional reductions of NOX would
not contribute to attainment of the National Ambient Air Quality
Standard (NAAQS) for ozone. Clean Air Act section 176(c)(3)(A)(iii),
which is the conformity provision requiring contributions to emission
reductions before SIPs with emissions budgets can be approved,
specifically references Clean Air Act section 182(b)(1). That section
requires submission of State plans that, among other things, provide
for specific annual reductions of volatile organic compounds (VOCs) and
NOX emissions ``as necessary'' to attain the ozone standard by the
applicable attainment date. Section 182(b)(1) further states that its
requirements do not apply in the case of NOX for those ozone
nonattainment areas for which USEPA determines that additional
reductions of NOX would not contribute to ozone attainment.
As explained below, the USEPA thru an amendment to it's
transportation conformity rule, has changed the procedural mechanism
through which a NOX exemption from transportation conformity would
be granted. Instead of a petition under 182(f), transportation
conformity NOX exemptions for ozone nonattainment areas that are
subject to section 182(b)(1) need to be submitted as a SIP revision
request. The Chicago ozone nonattainment area is classified as severe
and, thus, is subject to section 182(b)(1).
The USEPA published on August 29, 1995, an interim final rule (60
FR 44762) which amended the transportation conformity rule and changed
the statutory authority from 182(f) to 182(b)(1) of the Act for areas
that are subject to section 182(b)(1). The interim final rule was
effective immediately upon publication and provides the means for
exempting areas subject to 182(b)(1) from NOX provisions of the
transportation conformity rule. In conjunction with the interim rule,
USEPA published a proposal providing for further amendments to the
transportation conformity rule and describing how USEPA intended to
process section 182(b)(1) NOX waivers (60 FR 44790). On November
14, 1995, the USEPA published a final rule (60 FR 57179)
[[Page 5292]]
after completing notice-and-comment rulemaking, which includes the
provisions of the August 29, 1995, interim rule. The November 14, 1995,
rule also addresses the NOX budget requirement.
The June 20, 1995, SIP revision request from Illinois, has been
submitted to meet the requirements of section 182(b)(1). A public
hearing on this SIP revision request was held on July 17, 1995. The
USEPA proposed to approve the SIP revision request on August 16, 1995,
(60 FR 42491).
The Chicago severe ozone nonattainment area includes the Counties
of Cook, DuPage, Grundy (Aux Sable and Gooselake Townships), Kane,
Kendall (Oswego Township), Lake, McHenry, and Will. In evaluating the
SIP revision request, the USEPA considered whether additional NOX
reductions would contribute to attainment of the standard in the
Chicago area and also in the downwind areas of the LMOP modeling
domain.
As outlined in relevant USEPA guidance, the use of photochemical
grid modeling is the recommended approach for testing the contribution
of NOX emission reductions to attainment of the ozone standard.
A summary of the UAM modeling and USEPA's review of the modeling
and submittal are contained in the August 16, 1995, proposed rule (60
FR 42491). Review of the modeling results show a very definite
directional signal indicating that application of NOX controls in
the Chicago ozone nonattainment area would exacerbate peak ozone
concentrations not only in the Chicago area but also in the LMOP
modeling domain. The LMOP modeling domain includes northern Indiana,
western Michigan and eastern Wisconsin. The States and the Lake
Michigan Air Directors Consortium (LADCo) have completed the validation
process for the UAM modeling system to be used in the demonstration of
attainment for the LMOP modeling domain.
II. Response to Comments on the Proposal
Four sets of comments were received on the proposed approval of the
NOX waiver. The Illinois Department of Transportation commented
positively on the approval of the waiver. The comments opposed to the
approval of the waiver are summarized in this section.
Comment
The State of New York is concerned by the claim that VOC only
controls reduce both peak ozone and geographic extent of ozone
exposure. Modeling in the northeast shows a need for NOX
reductions as well as VOC to reduce regional ozone. The model
assumptions are questioned: whether the Federal motor vehicle control
program (FMVCP) is assumed in future year (1996 and 2007) emission
inventories; how the transport and boundary conditions were modeled;
and how modeling across the board reductions are adequate for a
specific source category exemption.
Response
Reductions from the FMVCP were assumed for the 1996 and 2007
emissions inventories for the UAM modeling.
Several modeling and data analyses were performed by Illinois and
the Lake Michigan Air Directors Consortium (LADCO) [the technical
representatives of the States in the LMOP] to examine the relative
benefits of VOC versus NOX emission controls. The modeling
analyses included emissions sensitivity tests for several different
basecase scenarios, including: (1) An original base period emissions
inventory; (2) increased VOC emissions in the base period inventory
(higher VOC/NOX ratios); (3) increased base period VOC/NOX
ratios through either increased VOC emissions or decreased NOX
emissions; and (4) differences in photochemistry photolysis rates as
applied in the Urban Airshed Model--Version IV (UAM-IV) (the
photochemical dispersion model generally accepted and supported by the
EPA) and in UAM-V (the photochemical dispersion model approved by the
EPA for use in the LMOP).
Despite differences in the absolute and relative amounts of VOC and
NOX emissions in the sensitivity analyses, the analyses found that
the modeled domain-wide peak ozone concentration, the coverage of
modeled ozone concentrations exceeding 120 parts per billion (ppb), and
the number of hours with modeled ozone concentrations exceeding 120
ppb, decreased in response to VOC emission reductions and increased in
response to NOX emission reductions (up to more than 60 percent
controls for some episode analysis days) for all modeled episodes.
VOC and NOX emission reductions were found to produce
different impacts spatially. In and downwind of major urban areas,
within the ozone nonattainment areas, VOC reductions were effective in
lowering peak ozone concentrations, while NOX emission reductions
resulted in increased peak ozone concentrations. Farther downwind,
within attainment areas, VOC emissions reductions became less effective
for reducing ozone concentrations, while NOX emission reductions
were effective in lowering ozone concentrations. It must be noted,
however, that the magnitude of ozone decreases farther downwind due to
NOX emission reductions was less than the magnitude of ozone
increases in the ozone nonattainment areas as a result of the same
NOX emission reductions.
Analyses of ambient data by LMOP contractors provided results which
corroborated the modeling results. These analyses identified areas of
VOC- and NOX-limited conditions (VOC-limited conditions would
imply a greater sensitivity of ozone concentrations to changes in VOC
emissions. The reverse would be true for NOX-limited conditions)
and tracked the ozone and ozone precursor concentrations in the urban
plumes as they moved downwind. The analyses indicated VOC-limited
conditions in the Chicago/Northwest Indiana and Milwaukee areas and
NOX-limited conditions further downwind. These results imply that
VOC controls in the Chicago/Northwest Indiana and Milwaukee areas would
be more effective at reducing peak ozone concentrations within the
severe ozone nonattainment areas.
The consistency between the modeling results and the ambient data
analysis results for all episodes with joint data supports the view
that the UAM-V modeling system developed in the LMOP may be used to
investigate the relative merits of VOC versus NOX emission
controls. The UAM-V results for all modeled episodes point to the
benefits of VOC controls versus NOX controls in reducing the
modeled domain peak ozone concentrations.
Comment
There have been monitored violations of the ozone standard in the
Chicago nonattainment area within the past year. Therefore, a NOX
exemption for the Chicago area would seem to conflict with the intent
of the 1990 amendments to the Act.
Response
This NOX exemption is based on the UAM submittals which
demonstrate that NOX reductions will not contribute to reaching
attainment of the ozone standard by the 2007 attainment date as
required by the Act. In such circumstances, the Act explicitly provides
that the relevant area may be granted a waiver from the requirement to
adopt and implement NOX control measures.
[[Page 5293]]
Comment
NYSDEC requested additional time to better review the technical
details of the modeling performed for the Chicago area and that all
waivers be delayed until the review is complete.
Response
The LADCo modeling has been available to any interested parties
since the modeling was initiated. Further, the docket records contain
the submittal summarizing the results of the model runs conducted to
support the NOX waiver petition. These modeling results have been
available to the public since July 13, 1994, when LADCo originally
submitted the request for the USEPA to approve the NOX waiver
under section 182(f) for RACT, NSR and conformity. On March 6, 1995,
the USEPA proposed to approve the section 182(f) NOX waiver for
the Lake Michigan area. The modeling has been available as part of the
docket file for this proposed approval. Therefore, USEPA does not
believe it is appropriate to delay action on the waiver request.
Comment
NYSDEC disagrees that the NOX waiver rule should be a Table 3
action for signature by the Regional Administrator and because of the
national implications of the NOX exemption believes it should be a
Table 1 action.
Response
The NOX waiver for transportation conformity is a SIP revision
request submitted by the State of Illinois. SIP revisions have been
delegated to the Regional Administrator for signature under the
procedures published in the Federal Register on January 19, 1989 (54 FR
2214-2225), as revised by a July 10, 1995, memorandum from Mary
Nichols, Assistant Administrator for Air and Radiation. This NOX
waiver is applicable only for the purpose of relieving the need to meet
the interim transportation conformity test for the Chicago area. In
addition, the policy related to processing the NOX waivers for
transportation conformity has been coordinated at the national level.
Comment
Both Connecticut and the NYSDEC are concerned that the waiver for
Chicago will create economic hardship and a need for increased emission
reductions in the northeast.
Response
The USEPA has taken steps to assure that downwind areas will not be
negatively impacted by NOX exemptions. The USEPA intends to use
its authority under section 110(a)(2)(D) to require a State to reduce
NOX emissions from stationary and/or mobile sources where there is
evidence, such as photochemical grid modeling, showing that the
NOX emissions could contribute significantly to nonattainment in,
or interfere with maintenance by, any other State or in another
nonattainment area within the same State. This action would be
independent of any action taken by USEPA on a NOX exemption
request under section 182(f) or 182(b)(1). That is, USEPA action to
grant or deny a NOX exemption request under section 182(f) or
182(b)(1) for any area would not shield that area from USEPA action to
require NOX emission reductions, if necessary, under section
110(a)(2)(D).
Significant new modeling analyses are being conducted by LADCO,
USEPA and other agencies as part of the Ozone Transport Assessment
Group (OTAG) process. The OTAG is a consultative process among the
eastern States and USEPA. The OTAG process, which ends at the close of
1996, assesses national and regional control strategies, using improved
modeling techniques. The goal of the OTAG process is for USEPA and the
affected States to reach consensus on the additional regional and
national emissions reductions that are needed for attainment of the
ozone standard. Based on the results of the OTAG process, States are
expected to submit by mid-1997 attainment plans which show attainment
through local, regional, and national controls.
The OTAG plans to complete additional modeling between now and
September 1996 using emissions data and strategies currently being
developed among OTAG workgroups. These new analyses will improve the
information available on NOX and VOC impacts on ozone
concentrations both in the LADCO area and over the eastern half of the
United States. These analyses will for example, provide more accurate
boundary conditions for the LADCO area analyses; this provides greater
accuracy in both the attainment plan and in the decision regarding
NOX reductions contribution to attainment.
In light of the modeling completed thus far and considering the
importance of the OTAG and attainment plan modeling efforts, USEPA
grants this waiver on a contingent basis. As the OTAG modeling results
and control recommendations are completed in 1996, this information
will be incorporated into the attainment plans being developed by the
LADCO States. When these attainment plans are submitted to USEPA in
mid-1997, these new modeling analyses will be reviewed to determine if
the NOX waiver should be continued, altered or removed.
The attainment plans will supersede the initial modeling results
which are the basis for the waiver which the USEPA grants in this
notice. To the extent the attainment plans include NOX controls on
certain major stationary sources or mobile sources in the LADCO
nonattainment areas, USEPA will remove the NOX waiver for those
sources. To the extent that plans achieve attainment without additional
NOX reductions from certain sources, the NOX reductions would
be considered excess reductions and, thus, the exemption would continue
for those sources. USEPA's rulemaking action to reconsider this initial
NOX waiver may occur simultaneously with rulemaking action on the
attainment plans.
Comment
The State of Connecticut is concerned that the LADCo modeling does
not look at the larger regional issues. The USEPA Regional Oxidant
Model showed that NOX controls were necessary for large portions
of the United States to reach attainment.
Response
Direct comparisons of ROM and UAM-V results must be conducted with
caution and may produce conflicting results even though both modeling
systems are performing adequately. The UAM-V modeling system is
theoretically more complete and incorporates improved scientific
principles and more area-specific input data. ROM, on the other hand,
is a simpler modeling system with lower spatial resolution, more
uncertain emission estimates, and no special treatment of
meteorological phenomena, such as lake-breeze effects (critical factors
in the Lake Michigan area), and individual source plumes for large
sources. These differences in model formulation and data input
resolution as well as differences in output resolution may preclude
direct comparisons of the two models.
The significant new modeling analyses being conducted by LADCO,
USEPA and other agencies as part of the OTAG process will address the
issues of regional and local transport, as stated above.
Comment
The American Lung Association (ALA) and Citizens Commission for
Clean Air in the Lake Michigan Basin (CCCALMB) comment that
transportation conformity exemptions under section 182(b)(1) waive only
the
[[Page 5294]]
section 176(c)(3)(A)(iii) requirement to contribute to specific annual
reductions of NOX. NOX emissions must still be accounted for
in the modeling and thus Illinois should submit NOX emissions
budgets along with the VOC budgets in the attainment and 15 percent
plan submittals.
Response
The USEPA published a final rule amending the transportation
conformity rule on November 14, 1995, (60 FR 57179) which addresses the
issue of conformity to NOX budgets in control strategy SIPs when a
NOX waiver for transportation conformity has been approved. The
final rule is based on the August 29, 1995, (60 FR 44790) proposed rule
and comments which were received on that proposal. The final rule
requires consistency with NOX motor vehicle emissions budgets in
control strategy SIPs regardless of whether a NOX waiver has been
granted. However, the need to comply with the NOX build/no-build
test and less than 1990 tests for NOX no longer apply to ozone
nonattainment areas receiving a NOX waiver. Furthermore, some
flexibility is possible for areas that have been issued a NOX
waiver based upon air quality modeling data. This flexibility is
described in the notice (60 FR 57183). The NOX budget provisions
will be effective 90 days from November 14, 1995. The Illinois NOX
exemption SIP revision request was submitted pursuant to section
182(b)(1) as provided for by the amended transportation conformity
rule.
As noted previously, in light of the modeling completed thus far
and considering the importance of the OTAG and attainment plan modeling
efforts, USEPA is granting this waiver on a contingent basis. As the
OTAG modeling results and control recommendations are completed in
1996, this information will be incorporated into the attainment plans
being developed by the LADCO States, including Illinois. When these
attainment plans are submitted to USEPA in mid-1997, these new modeling
analyses will be reviewed to determine if the NOX waiver should be
continued, altered or removed.
In this action, USEPA is exempting the Chicago nonattainment area
from the transportation conformity requirement to achieve further
reductions of NOX. The 15 percent plan which is the current
control strategy SIP for the area does not establish a NOX budget
for motor vehicles. Future modeling for the attainment demonstration
will set future NOX emissions budgets or demonstrate that NOX
emissions may grow without affecting attainment.
Comment
The ALA and CCCALMB notes that NOX contributes to decreased
visibility, acidic deposition, fine particulates and nitrate loading in
the Great Lakes.
Response
The focus of the NOX waiver test relied on by Illlinois is on
whether NOX reductions contribute to attainment of the ozone NAAQS
in the Chicago nonattainment area and, by its terms, does not require
consideration of overall NOX reduction benefits. Other air
pollution problems are being dealt with as part of separate regulatory
activities such as the acid rain program and FMVPC. None of the
NOX reduction programs in place or under development to address
other air quality objectives are deleted or diminished by issuance of
this waiver
Comment
The ALA and CCCALMB comment that a ``super-regional'' NOX
strategy should be adopted before USEPA permanently grants NOX
exemptions. Although the Ozone Transport Assessment Group (OTAG) is
working on a strategy, there is no guarantee that the work will be
completed.
Response
As discussed previously, in light of the modeling completed thus
far and considering the importance of the OTAG and attainment plan
modeling efforts, USEPA grants this waiver on a contingent basis. As
the OTAG modeling results and control recommendations are completed in
1996, this information will be incorporated into the attainment plans
being developed by the LADCO States. When these attainment plans are
submitted to USEPA in mid-1997, these new modeling analyses will be
reviewed to determine if the NOX waiver should be continued,
altered or removed.
The Chicago attainment plan will supersede the initial waiver which
USEPA grants in this notice. If the attainment plan relies on NOX
controls on mobile sources in the Chicago nonattainment area to
demonstrate attainment, USEPA will remove the NOX waiver for those
sources. To the extent the plans achieve attainment without additional
NOX reductions in the Chicago area, the NOX exemption would
continue for those sources. USEPA's rulemaking actions to reconsider
the initial NOX waiver may occur simultaneously with rulemaking
action on the attainment plans.
III. Final Action
The USEPA is approving a waiver under section 182(b)(1) of the
NOX transportation conformity requirements for a build/no-build
and less than-1990 interim test for the Chicago ozone nonattainment
area as requested by the State of Illinois. In light of the modeling
completed thus far and considering the importance of the OTAG process
and attainment plan modeling efforts, USEPA grants this NOX waiver
on a contingent basis. As the OTAG modeling results and control
recommendations are completed in 1996, this information will be
incorporated into attainment plans being developed by the LADCO States.
When these attainment plans are submitted to USEPA in mid-1997, these
new modeling analyses will be reviewed to determine if the NOX
waiver should be continued, altered, or removed. USEPA's rulemaking
action to reconsider the initial NOX waiver may occur
simultaneously with rulemaking action on the attainment plans.
The USEPA also reserves the right to require NOX emission
controls for transportation sources under section 110(a)(2)(D) of the
Act if future ozone modeling demonstrates that such controls are needed
to achieve the ozone standard in downwind areas.
This action will become effective on March 13, 1996.
IV. Miscellaneous
This action has been classified as a Table 3 action for signature
by the Regional Administrator under the procedures published in the
Federal Register on January 19, 1989 (54 FR 2214-2225), as revised by a
July 10, 1995, memorandum from Mary Nichols, Assistant Administrator
for Air and Radiation. The Office of Management and Budget (OMB) has
exempted this regulatory action from Executive Order 12866 review.
Nothing in this action should be construed as permitting, allowing
or establishing a precedent for any future request for revision to any
SIP. The USEPA shall consider each request for revision to the SIP in
light of specific technical, economic, and environmental factors and in
relation to relevant statutory and regulatory requirements.
Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., USEPA
must prepare a regulatory flexibility analysis assessing the impact of
any proposed or final rule on small entities. 5 U.S.C. 603 and 604.
Alternatively, USEPA may certify that the rule will not have a
significant economic impact on a substantial number of small entities.
[[Page 5295]]
Small entities include small businesses, small not-for-profit
enterprises, and government entities with jurisdiction over populations
of less than 50,000.
This approval does not create any new requirements. Therefore, I
certify that this action does not have a significant impact on any
small entities affected. Moreover, due to the nature of the Federal-
State relationship under the Act, preparation of the regulatory
flexibility analysis would constitute Federal inquiry into the economic
reasonableness of the State action. The Act forbids USEPA to base its
actions concerning SIPs on such grounds. Union Electric Co. v. USEPA,
427 U.S. 246, 256-66 (1976).
Under Section 202 of the Unfunded Mandates Reform Act of 1995
(``Unfunded Mandates Act''), signed into law on March 22, 1995, the
USEPA must prepare a budgetary impact statement to accompany any
proposed or final rule that includes a Federal mandate that may result
in estimated costs to State, local, or tribal governments in the
aggregate; or to the private sector, of $100 million or more. Under
Section 205, the USEPA must select the most cost-effective and least
burdensome alternative that achieves the objectives of the rule and is
consistent with statutory requirements. Section 203 requires the USEPA
to establish a plan for informing and advising any small governments
that may be significantly or uniquely impacted by the rule.
The USEPA has determined that the approval action promulgated today
does not include a Federal mandate that may result in estimated costs
of $100 million or more to either State, local, or tribal governments
in the aggregate, or to the private sector.
This Federal action will relieve requirements otherwise imposed
under the Act, and hence does not impose any federal intergovernmental
mandate, as defined in section 101 of the Unfunded Mandates Act.
Accordingly, no additional costs to State, local, or tribal
governments, or the private sector, result from this action.
Under section 307(b)(1) of the Act, petitions for judicial review
of this action must be filed in the United States Court of Appeals for
the appropriate circuit by April 12, 1996. Filing a petition for
reconsideration by the Administrator of this final rule does not affect
the finality of this rule for the purpose of judicial rule, nor does it
extend the time within which a petition for judicial review may be
filed and shall not postpone the effectiveness of such rule or action.
This action may not be challenged later in proceedings to enforce its
requirements (see section 307(b)(2) of the Act).
List of Subjects in 40 CFR Part 52
Environmental protection, Air pollution control, Conformity, Oxides
of nitrogen, Ozone, Transportation conformity.
Dated: January 23, 1996.
Valdas V. Adamkus,
Regional Administrator.
Part 52, chapter I, title 40 of the Code of Federal Regulations is
amended as follows:
PART 52--[AMENDED]
1. The authority citation for part 52 continues to read as follows:
Authority: 42 U.S.C. 7401-7671q.
Subpart O--Illinois
2. Section 52.726 is amended by adding paragraph (l) to read as
follows:
Sec. 52.726 Control Strategy: Ozone.
* * * * *
(l) Approval--The United States Environmental Protection Agency is
approving under section 182(b)(1) of the Clean Air Act the exemption of
the Chicago severe, ozone nonattainment area from the build/no-build
and less than-1990 interim transportation conformity oxides of nitrogen
requirements as requested by the State of Illinois in a June 20, 1995
submittal. In light of the modeling completed thus far and considering
the importance of the OTAG process and attainment plan modeling
efforts, USEPA grants this NOX waiver on a contingent basis. As
the OTAG modeling results and control recommendations are completed in
1996, this information will be incorporated into attainment plans being
developed by the LADCO States. When these attainment plans are
submitted to USEPA in mid-1997, these new modeling analyses will be
reviewed to determine if the NOX waiver should be continued,
altered, or removed. USEPA's rulemaking action to reconsider the
initial NOX waiver may occur simultaneously with rulemaking action
on the attainment plans. The USEPA also reserves the right to require
NOX emission controls for transportation sources under section
110(a)(2)(D) of the Act if future ozone modeling demonstrates that such
controls are needed to achieve the ozone standard in downwind areas.
The Chicago severe ozone nonattainment area includes the Counties of
Cook, DuPage, Grundy (Aux Sable and Gooselake Townships), Kane, Kendall
(Oswego Township), Lake, McHenry, and Will.
[FR Doc. 96-2966 Filed 2-9-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-2964 Approval and Promulgation of Implementation Plans Alabama: Revisions to the Alabama Department of Environmental Management Administrative Code for the Air Pollution Control Program
[Federal Register Volume 61, Number 29 (Monday, February 12, 1996)]
[Rules and Regulations]
[Pages 5285-5286]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-2964]
=======================================================================
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[AL-041-1-9604a; FRL-5345-5]
Approval and Promulgation of Implementation Plans Alabama:
Revisions to the Alabama Department of Environmental Management
Administrative Code for the Air Pollution Control Program
AGENCY: Environmental Protection Agency (EPA).
ACTION: Direct final rule.
-----------------------------------------------------------------------
SUMMARY: On August 14, 1995, the State of Alabama through the
Department of Environmental Management (ADEM) submitted a State
Implementation Plan (SIP) submittal to revise the ADEM Administrative
Code for the Air Pollution Control Program. These revisions involve
changes to Chapter 335-3-14--Air Permits. Chapter 335-3-14--Air Permits
was amended to incorporate federal requirements for particulate matter
10 g or smaller (PM-10).
DATES: This action is effective April 12, 1996 unless adverse or
critical comments are received by March 13, 1996. If the effective date
is delayed, timely notice will be published in the Federal Register.
ADDRESSES: Comments may be mailed to Kimberly Bingham at the EPA Region
4 address listed below. Copies of the material submitted by ADEM may be
examined during normal business hours at the following locations:
Air and Radiation Docket and Information Center (Air Docket 6102), U.S.
Environmental Protection Agency, 401 M Street, SW, Washington DC 20460.
Environmental Protection Agency, Region 4, Air Programs Branch, 345
Courtland Street, Atlanta, Georgia 30365.
Alabama Department of Environmental Management, 1751 Congressman W. L.
Dickinson Drive, Montgomery, Alabama 36109.
FOR FURTHER INFORMATION CONTACT: Kimberly Bingham, Regulatory Planning
and Development Section, Air Programs Branch, Air Pesticides and Toxics
Management Division, Region 4, Environmental Protection Agency, 345
Courtland Street, NE, Atlanta, Georgia 30365. The telephone number is
(404) 347-3555 ext. 4195.
SUPPLEMENTARY INFORMATION: On August 14, 1995, the State of Alabama
through the ADEM submitted revisions to the Alabama SIP. These
revisions were
[[Page 5286]]
made to the ADEM Administrative Code for the Air Pollution Control
Program and include regulations to be incorporated into the SIP. EPA is
approving the following revisions to the Alabama SIP. These revisions
are more fully discussed in the official SIP submittal that is
available at the Region IV office listed under the ADDRESSES section of
this document.
Chapter 335-3-14--Air Permits was amended to incorporate federal
requirements for particulate matter 10 g or smaller (PM-10).
The EPA changed the requirement for the Prevention of Significant
Deterioration (PSD) increment from Total Suspended Particulate (TSP) to
PM-10 because the Agency found that particulate matter 10 g or
smaller is able to cause adverse health effects in humans. Sections
335-3-14-.04 and 335-3-14-.05 were revised to reflect the change from
TSP to the new PM-10 PSD increment.
Final Action
The EPA is publishing this action without prior proposal because
the Agency views this as a noncontroversial amendment and anticipates
no adverse comments. However, in a separate document in this Federal
Register publication, the EPA is proposing to approve the SIP revision
should adverse or critical comments be filed. This action will be
effective April 12, 1996 unless, by March 13, 1996, adverse or critical
comments are received.
If the EPA receives such comments, this action will be withdrawn
before the effective date by publishing a subsequent document that will
withdraw the final action. All public comments received will then be
addressed in a subsequent final rule based on the proposed rule
published with this action. The EPA will not institute a second comment
period on this action. Any parties interested in commenting on this
action should do so at this time. If no such comments are received, the
public is advised that this action will be effective April 12, 1996.
Under section 307(b)(1) of the Clean Air Act (CAA), 42 U.S.C.
7607(b)(1), petitions for judicial review of this action must be filed
in the United States Court of Appeals for the appropriate circuit by
April 12, 1996. Filing a petition for reconsideration by the
Administrator of this final rule does not affect the finality of this
rule for purposes of judicial review nor does it extend the time within
which a petition for judicial review may be filed, and shall not
postpone the effectiveness of such rule or action. This action may not
be challenged later in proceedings to enforce its requirements. [See
section 307(b)(2) of the CAA, 42 U.S.C. 7607(b)(2)].
This action has been classified as a Table 3 action for signature
by the Regional Administrator under the procedures published in the
Federal Register on January 19, 1989 (54 FR 2214-2225), as revised by a
July 10, 1995 memorandum from Mary Nichols, Assistant Administrator for
Air and Radiation. The Office of Management and Budget (OMB) has
exempted this regulatory action from E.O. 12866 review.
SIP approvals under section 110 and subchapter I, part D of the CAA
do not create any new requirements, but simply approve requirements
that the State is already imposing. Therefore, because the federal SIP-
approval does not impose any new requirements, I certify that it does
not have a significant impact on any small entities affected. Moreover,
due to the nature of the federal-state relationship under the CAA,
preparation of a regulatory flexibility analysis would constitute
federal inquiry into the economic reasonableness of state action. The
CAA forbids EPA to base its actions concerning SIPs on such grounds.
Union Electric Co. v. U.S. E.P.A., 427 U.S. 246, 256-66 (S.Ct. 1976);
42 U.S.C. 7410(a)(2) and 7410(k)(3).
Nothing in this action shall be construed as permitting or allowing
or establishing a precedent for any future request for a revision to
any SIP. Each request for revision to the SIP shall be considered
separately in light of specific technical, economic, and environmental
factors and in relation to relevant statutory and regulatory
requirements.
Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., EPA
must prepare a regulatory flexibility analysis assessing the impact of
any proposed or final rule on small entities. 5 U.S.C. 603 and 604.
Alternatively, EPA may certify that the rule will not have a
significant impact on a substantial number of small entities. Small
entities include small businesses, small not for-profit enterprises,
and government entities with jurisdiction over populations of less than
50,000.
Under Sections 202, 203, and 205 of the Unfunded Mandates Reform
Act of 1995 (``Unfunded Mandates Act''), signed into law on March 22,
1995, EPA must undertake various actions in association with proposed
or final rules that include a Federal mandate that may result in
estimated costs of $100 million or more to the private sector, or to
State, local, or tribal governments in the aggregate.
Through submission of this state implementation plan or plan
revision, the State and any affected local or tribal governments have
elected to adopt the program provided for under Section 110 of the CAA.
These rules may bind State, local and tribal governments to perform
certain actions and also require the private sector to perform certain
duties. EPA has examined whether the rules being approved by this
action would impose no new requirements, since such sources are already
subject to these regulations under State law. Accordingly, no
additional costs to State, local, or tribal governments, or to the
private sector, result from this action, and therefore there will be no
significant impact on a substantial number of small entities.
List of Subjects in 40 CFR Part 52
Environmental protection, Air pollution control, Incorporation by
reference, Intergovernmental relations, Particulate matter.
Dated: December 4, 1995.
Patrick M. Tobin,
Acting Regional Administrator.
Chapter I, title 40, Code of Federal Regulations, is amended as
follows:
PART 52--[AMENDED]
1. The authority citation for part 52 continues to read as follows:
Authority: 42 U.S.C. 7401-7671q.
Subpart B--Alabama
2. Section 52.50 is amended by adding paragraph (c)(68) to read as
follows:
Sec. 52.50 Identification of plan.
* * * * *
(c) * * *
(68) The State of Alabama submitted a SIP submittal to revise the
ADEM Administrative Code for the Air Pollution Control Program on
August 14, 1995. These revisions involve changes to Chapter 335-3-14--
Air Permits.
(i) Incorporation by reference.
(1) Amendments to the following sections of the Alabama
regulations--335-3-14-.04, and 335-3-14-.05 which were adopted on March
21, 1995.
(ii) Other material. None.
[FR Doc. 96-2964 Filed 2-9-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-2962 Clean Air Act Approval and Promulgation of Revisions to the Mississippi State Implementation Plan (SIP)
[Federal Register Volume 61, Number 29 (Monday, February 12, 1996)]
[Rules and Regulations]
[Pages 5295-5297]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-2962]
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[MS15-1-6252a; MS20-2-9605a; FRL-5400-9]
Clean Air Act Approval and Promulgation of Revisions to the
Mississippi State Implementation Plan (SIP)
AGENCY: Environmental Protection Agency (EPA).
ACTION: Direct final rule.
-----------------------------------------------------------------------
SUMMARY: EPA is approving revisions to the Mississippi State
Implementation Plan (SIP) submitted on June 14, 1991, and January 26,
1994, by the State of Mississippi through the Department of
Environmental Quality (MDEQ). These SIP revisions incorporate changes
to Regulation APC-S-1 ``Air Emission Regulations for the Prevention,
Abatement, and Control of Air Contaminants''. The proposed revisions
specify prohibited open burning practices and set conditions for which
open burning practices may occur. These SIP revisions change the open
burning restriction policy to be more consistent with federal
regulations as specified in 40 CFR parts 257 and 258.
DATES: This action is effective April 12, 1996, unless notice is
received by March 13, 1996, that someone wishes to submit adverse or
critical comments. If the effective date is delayed, timely notice will
be published in the Federal Register.
ADDRESSES: Written comments should be addressed to: Scott M. Martin,
Regulatory Planning and Development Section, Air Programs Branch, Air,
Pesticides & Toxics Management Division, Region 4 Environmental
Protection Agency, 345 Courtland Street NE., Atlanta, Georgia 30365.
Copies of the documents relative to this action are available for
public inspection during normal business hours at the following
locations. The interested persons wanting to examine these documents
should make an appointment with the appropriate office at least 24
hours before the visiting day.
Air and Radiation Docket and Information Center (Air Docket 6102), U.S.
Environmental Protection Agency, 401 M Street SW., Washington DC 20460.
Environmental Protection Agency, Region 4 Air Programs Branch, 345
[[Page 5296]]
Courtland Street, Atlanta, Georgia 30365.
Mississippi Department of Environmental Quality, Bureau of Pollution
Control, Air Quality Division, P.O. Box 10385, Jackson, Mississippi
39289-0385.
FOR FURTHER INFORMATION CONTACT: Mr. Scott M. Martin, Regulatory
Planning and Development Section, Air Programs Branch, Air Pesticides
and Toxics Management Division, Region 4 Environmental Protection
Agency, 345 Courtland Street NE., Atlanta, Georgia 30365. The telephone
number is (404) 347-3555 ext. 4216.
SUPPLEMENTARY INFORMATION: On June 14, 1991, and January 26, 1994, MDEQ
submitted revisions to the Mississippi SIP incorporating changes to
Regulation APC-S-1, ``Air Emission Regulations for the Prevention,
Abatement and Control of Air Contaminants.'' The proposed revisions
specify prohibited open burning practices and set conditions for which
open burning practices may occur. These SIP revisions change the open
burning restriction policy to be consistent with federal regulations as
specified in 40 CFR 257. Public hearings for these revisions were held
on March 27, 1991, and November 24, 1993, and became state effective
May 28, 1991, and January 9, 1994, respectively. The major revisions
are described below:
Section 1. General
1. Paragraph one was revised by deleting Section 49 17 17,
Mississippi Code of 1972, recompiled, and adding Miss. Code Ann.
Sec. 49-17-17.
2. Paragraph two ``Exceptions'' was deleted and pargraph three was
renumbered as two. A new paragraph three was added. This paragraphs
states, ``In the event of a conflict between any of the requirements of
these regulations and/or applicable requirements of any other
regulation or law, the more stringent requirements shall be applied.''
Section 2. Definitions
1. The following definitions were added:
10. ``Excess (or excessive) emission''
16. ``Opacity''
24. ``Recreational area''
25. ``Residential area''
26. ``Shutdown'' relating to fuel burning equipment
29. ``Soot blowing''
31. ``Startup'' relating to fuel burning equipment
34. ``Upset''
2. The State revised the following definitions to meet EPA policy:
7. ``Air pollution''
8. ``Atmosphere''
13. ``Modification''
15. ``Open burning''
17. ``Particulate matter emissions''
19. ``PM-10 emissions''
21. ``Process weight''
23. ``Standard conditions''
3. The following definition was deleted:
22. ``Ringelmann Chart''
The section was also re-alphabetized and renumbered to simplify
finding definitions.
Section 3. Specific Criteria for Sources of Particulate Matter
1. Paragraph 1(a) was revised to give a reference paragraph for
allowed exceptions to the forty (40) percent opacity rule.
2. Paragraph 1(c) was deleted. Paragraph 1(d) was then renumbered
as 1(c), and edited to add 60 percent opacity and to delete references
to Ringelmann Smoke Chart.
3. Paragraph 4(a) was deleted and replaced by new paragraphs
4(a)(1), 4(a)(2), 4(a)(3) which detail limits to emissions from fuel
burning installations.
4. Paragraph 6(a) was replaced with a new paragraph which gives the
formula to be used when calculating the particulate emission rate from
a manufacturing process.
5. Paragraph 6(b) was revised to add an effective date of January
25, 1972.
6. Paragraph 7 was revised to state that open burning is prohibited
with exceptions for the infrequent burning of agricultural waste,
silvicultural waste, land clearing debris, emergency cleanup
operations, and ordnance.
7. Paragraphs 7(b), 7(c), 7(d), 7(e), 7(f), 7(h), 7(i), 7(j), 7(k),
and 7(l) which listed exceptions to open burning restrictions were
deleted.
Section 6. New Sources
1. Paragraph 4. Infectious Waste Incineration was added. This
paragraph details the conditions with which all infectious waste
incinerators which incinerate only wastes generated on site and are
installed after December 9, 1993, must comply.
2. Paragraph 4b Commercial Incinerators was added. This paragraph
details the requirements for infectious waste incinerators which
incinerate wastes generated off site.
Section 8. Provisions for Hazardous Air Pollutants
1. EPA is not acting on this section because these regulations are
federally enforceable through 40 CFR Part 61.
Section 9. Stack Height Considerations
1. The paragraph titled Exemptions From Rules and Regulations which
discussed emission exemptions during upsets and maintenance was
deleted. Exceptions to the rule are now detailed in Section 10.
Section 10. Provisions for Upsets, Startups, and Shutdowns
1. This section is being adopted. Paragraph 1. Upsets, states what
circumstances must be met so that an upset will constitute an
affirmative defense to an enforcement action brought for noncompliance
with emission standards or other requirements.
2. Paragraph 2. Startups and Shutdowns, states that emission
limitations applicable to normal operation apply during startups and
shutdowns and list exceptions to this rule.
3. Paragraph 3. Maintenance, lists factors that a source must
demonstrate to show that maintenance constitutes an affirmative defense
to an enforcement action brought for noncompliance with emission
standards or other requirements.
These provisions are consistent with EPA and Clean Air Act
requirements.
Final Action
EPA is approving the above referenced revisions to the Mississippi
SIP. This action is being taken without prior proposal because the EPA
views this as a noncontroversial amendment and anticipates no adverse
comments. However, in a separate document in this Federal Register
publication, the EPA is proposing to approve the SIP revision should
adverse or critical comments be filed. This action will be effective
April 12, 1996, unless, by March 13, 1996, adverse or critical comments
are received.
If the EPA receives such comments, this action will be withdrawn
before the effective date by publishing a subsequent document that will
withdraw the final action. All public comments received will then be
addressed in a subsequent final rule based on this action serving as a
proposed rule. The EPA will not institute a second comment period on
this action. Any parties interested in commenting on this action should
do so at this time. If no such comments are received, the public is
advised that this action will be effective April 12, 1996.
Under section 307(b)(1) of the Clean Air Act (CAA), 42 U.S.C.
7607(b)(1), petitions for judicial review of this action must be filed
in the United States
[[Page 5297]]
Court of Appeals for the appropriate circuit by April 12, 1996. Filing
a petition for reconsideration by the Administrator of this final rule
does not affect the finality of this rule for purposes of judicial
review nor does it extend the time within which a petition for judicial
review may be filed, and shall not postpone the effectiveness of such
rule or action. This action may not be challenged later in proceedings
to enforce its requirements. (See Section 307(b)(2) of the CAA, 42
U.S.C. 7607(b)(2)).
This action has been classified as a Table 3 action for signature
by the Regional Administrator under the procedures published in the
Federal Register on January 19, 1989 (54 FR 2214-2225), as revised by a
July 10, 1995 memorandum from Mary Nichols, Assistant Administrator for
Air and Radiation. The Office of Management and Budget (OMB) has
exempted this regulatory action from E.O. 12866 review.
Nothing in this action shall be construed as permitting or allowing
or establishing a precedent for any future request for a revision to
any state implementation plan. Each request for revision to the state
implementation plan shall be considered separately in light of specific
technical, economic, and environmental factors and in relation to
relevant statutory and regulatory requirements.
Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq, EPA must
prepare a regulatory flexibility analysis assessing the impact of any
proposed or final rule on small entities. 5 U.S.C. 603 and 604.
Alternatively, EPA may certify that the rule will not have a
significant impact on a substantial number of small entities. Small
entities include small businesses, small not-for-profit enterprises,
and government entities with jurisdiction over populations of less than
50,000.
SIP approvals under 110 and subchapter I, part D of the CAA do not
create any new requirements, but simply approve requirements that the
State is already imposing. Therefore, because the federal SIP-approval
does not impose any new requirements, I certify that it does not have a
significant impact on any small entities affected. Moreover, due to the
nature of the federal-state relationship under the CAA, preparation of
a regulatory flexibility analysis would constitute federal inquiry into
the economic reasonableness of state action. The CAA forbids EPA to
base its actions concerning SIPs on such grounds. Union Electric Co. v.
U.S. E.P.A., 427 U.S. 246, 256-66 (S.Ct. 1976); 42 U.S.C. 7410(a)(2)
and 7410(k)(3).
Unfunded Mandates
Under sections 202, 203 and 205 of the Unfunded Mandates Reform Act
of 1995 (``Unfunded Mandates Act''), signed into law on March 22, 1995,
EPA must undertake various actions in association with proposed or
final rules that include a Federal mandate that may result in estimated
costs of $100 million or more to the private sector, or to State,
local, or tribal governments in the aggregate.
Through submission of this state implementation plan or plan
revision, the State and any affected local or tribal governments have
elected to adopt the program provided for under section 110 of the CAA.
These rules may bind State, local and tribal governments to perform
certain duties. EPA has examined whether the rules being approved by
this action will impose any mandate upon the State, local or tribal
governments either as the owner or operator of a source or as a
regulator, or would impose any mandate upon the private sector. EPA's
action will impose no new requirements; such sources are already
subject to these regulations under State law. Accordingly, no
additional costs to State, local, or tribal governments, or to the
private sector, result from this action. Therefore, this final action
does not include a mandate that may result in estimated costs of $100
million or more to State, local, or tribal governments in the aggregate
or to the private sector.
List of Subjects in 40 CFR Part 52
Environmental protection, Air pollution control, Incorporation by
reference, Intergovernmental relations, Particulate matter, Reporting
and recordkeeping requirements, Sulfur oxides.
Dated: November 1, 1995.
Patrick M. Tobin,
Acting Regional Administrator.
Part 52 of chapter I, title 40, Code of Federal Regulations, is
amended as follows:
PART 52--[AMENDED]
1. The authority citation for part 52 continues to read as follows:
Authority: 42 U.S.C. 7401-7671q.
Subpart Z--Mississippi
2. Section 52.1270, is amended by adding paragraph (c)(27) to read
as follows:
Sec. 52.1270 Identification of plan.
* * * * *
(c) * * *
(27) Amendments to Regulation APC-S-1 ``Air Emission Regulations
for the Prevention, Abatement, and Control of Air Contaminants'' to be
consistent with federal regulations as specified in 40 CFR Part 257.
(i) Incorporation by reference. Regulation APC-S-1 ``Air Emission
Regulations for the Prevention, Abatement, and Control of Air
Contaminants'' effective January 9, 1994, except SECTION 8. PROVISIONS
FOR HAZARDOUS AIR POLLUTANTS.
(ii) Additional Material. None.
[FR Doc. 96-2962 Filed 2-9-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-2960 Approval and Promulgation of State Implementation Plan; Wisconsin; Autobody Refinishing SIP Revision
[Federal Register Volume 61, Number 29 (Monday, February 12, 1996)]
[Rules and Regulations]
[Pages 5306-5307]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-2960]
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[WI60-01-7136a; FRL-5324-5]
Approval and Promulgation of State Implementation Plan;
Wisconsin; Autobody Refinishing SIP Revision
AGENCY: Environmental Protection Agency (EPA).
ACTION: Direct final rule.
-----------------------------------------------------------------------
SUMMARY: The EPA approves a revision to the Wisconsin State
Implementation Plan (SIP) for ozone that was submitted on June 14,
1995. This revision requires the control of volatile organic compound
(VOC) emissions from facilities that perform autobody refinishing
operations. This regulation was submitted to generate reductions in VOC
emissions, which the State will use to fulfill the 15 percent
requirement of the amended Clean Air Act. In the proposed rules section
of this Federal Register, the EPA is proposing approval of, and
soliciting comments on, this requested SIP revision. If adverse
comments are received on this action, the EPA will withdraw this final
rule and address the comments received in response to this action in a
final rule on the related proposed rule, which is being published in
the proposed rules section of this Federal Register. A second public
comment period will not be held. Parties interested in commenting on
this action should do so at this time. This approval makes federally
enforceable the State's rule that has been incorporated by reference.
DATES: The ``direct final'' is effective on April 12, 1996, unless
USEPA receives adverse or critical comments by March 13, 1996. If the
effective date is delayed, timely notice will be published in the
Federal Register.
ADDRESSES: Written comments should be sent to: Carlton T. Nash, Chief,
Regulation Development Section, Air Toxics and Radiation Branch (AT-
18J), U.S. Environmental Protection Agency, 77 West Jackson Boulevard,
Chicago, Illinois 60604.
Copies of the proposed SIP revision and EPA's analysis are
available for inspection at the U.S. Environmental Protection Agency,
Region 5, Air and Radiation Division, 77 West Jackson Boulevard,
Chicago, Illinois 60604. (Please telephone Douglas Aburano at (312)
353-6960 before visiting the Region 5 Office.)
FOR FURTHER INFORMATION CONTACT: Douglas Aburano, Environmental
Engineer, Regulation Development Section, Air Toxics and Radiation
Branch (AT-18J), U.S. Environmental Protection Agency, Region 5,
Chicago, Illinois 60604, (312) 353-6960.
SUPPLEMENTARY INFORMATION:
I. Background
Section 182(b) of the Clean Air Act, as amended on November 15,
1990, sets forth the requirements for ozone nonattainment areas which
have been classified as moderate or above. Section 182(b)(1)(A)
requires those States with ozone nonattainment areas classified as
moderate or above to submit plans to reduce VOC emissions by at least
15 percent from the 1990 baseline emissions. The 1990 baseline, as
described by EPA's emission inventory guidance, is the amount of
anthropogenic VOC emissions emitted on a typical summer day. As a part
of its 15 percent plan, the State of Wisconsin has developed and
adopted a rule to reduce the VOC emissions from the autobody
refinishing operations in those areas of the State that are classified
as moderate or higher.
II. Evaluation of State Submittal
On June 14, 1995, Wisconsin submitted its 15 percent plan. Included
in this plan was the autobody refinishing rule. The EPA found that the
autobody refinishing portion of the 15 percent plan was complete in a
letter to Donald Theiler, Director of the Wisconsin Department of
Natural Resources' Bureau of Air Management, dated July 13, 1995. The
WDNR followed the required legal procedures for adopting this rule
which are prerequisites for EPA to consider including this rule in
Wisconsin's federally enforceable SIP. Public hearings for this rule
were held on December 20-21, 1994. This rule was submitted to the EPA
as a SIP revision under signature of the Governor's designee.
In developing the control requirements for this source category,
WDNR consulted the EPA's Alternative Control Techniques (ACT) document.
The WDNR adopted the coating limits for VOC content in Option 1 of the
control options found in the ACT. In addition to limiting the VOC
content of the coatings used at autobody refinishing facilities, WDNR
set standards for coating application equipment and equipment used for
cleanup. These standards adopted in the State's rule are also
consistent with the recommended requirements found in the ACT.
A more detailed analysis of the State's submittal is contained in a
July 31, 1995 technical support document, which is available at the
Regional Office listed above. In determining the approvability of this
VOC rule, EPA evaluated the rule for consistency with Federal
requirements, including section 110 and part D of the Clean Air Act.
III. Final Rulemaking Action
The EPA approves Wisconsin's autobody refinishing rule, thereby
making this rule federally enforceable.
Because EPA considers this action noncontroversial and routine, we
are approving it without prior proposal. This action will become
effective on April 12, 1996. However, if we receive adverse comments by
March 13, 1996, EPA will publish a document that withdraws this action.
IV. Miscellaneous
A. Applicability to Future SIP Decisions
Nothing in this action should be construed as permitting, allowing
or establishing a precedent for any future request for revision to any
SIP. The EPA shall consider each request for revision to the SIP in
light of specific technical, economic, and environmental factors and in
relation to relevant statutory and regulatory requirements.
B. Executive Order 12866
This action has been classified as a Table 2 action by the Regional
Administrator under the procedures published in the Federal Register on
January 19, 1989 (54 FR 2214-2225). The Office of Management and Budget
has exempted these actions from review under Executive Order 12866.
C. Regulatory Flexibility
Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., EPA
must prepare a regulatory flexibility analysis assessing the impact of
any proposed or final rule on small entities (5 U.S.C. 603 and 604).
Alternatively, EPA may certify that the rule will not have a
significant
[[Page 5307]]
impact on a substantial number of small entities. Small entities
include small businesses, small not-for-profit enterprises, and
government entities with jurisdiction over populations of less than
50,000.
This approval does not create any new requirements. Therefore, I
certify that this action does not have a significant impact on any
small entities affected. Moreover, due to the nature of the Federal-
State relationship under the Act, preparation of the regulatory
flexibility analysis would constitute Federal inquiry into the economic
reasonableness of the State action. The Act forbids EPA to base its
actions concerning SIPs on such grounds. Union Electric Co. v. U.S.
EPA, 427 U.S. 246, 256-66 (1976).
D. Unfunded Mandates
Under Section 202 of the Unfunded Mandates Reform Act of 1995
(``Unfunded Mandates Act''), signed into law on March 22, 1995, the EPA
must prepare a budgetary impact statement to accompany any proposed or
final rule that includes a Federal mandate that may result in estimated
costs to State, local, or tribal governments in the aggregate; or to
the private sector, of $100 million or more. Under Section 205, the EPA
must select the most cost-effective and least burdensome alternative
that achieves the objectives of the rule and is consistent with
statutory requirements. Section 203 requires the EPA to establish a
plan for informing and advising any small governments that may be
significantly or uniquely impacted by the rule.
The EPA has determined that the approval action promulgated today
does not include a Federal mandate that may result in estimated costs
of $100 million or more to either State, local, or tribal governments
in the aggregate, or to the private sector.
This Federal action approves pre-existing requirements under State
or local law, and imposes no new Federal requirements. Accordingly, no
additional costs to State, local, or tribal governments, or the private
sector, result from this action.
E. Petitions for Judicial Review
Under section 307(b)(1) of the Act, petitions for judicial review
of this action must be filed in the United States Court of Appeals for
the appropriate circuit by April 12, 1996. Filing a petition for
reconsideration by the Administrator of this final rule does not affect
the finality of this rule for the purposes of judicial review, nor does
it extend the time within which a petition for judicial review may be
filed and shall not postpone the effectiveness of such rule or action.
This action may not be challenged later in proceedings to enforce its
requirements (see section 307(b)(2)).
List of Subjects in 40 CFR Part 52
Environmental protection, Air pollution control, Hydrocarbons,
Incorporation by reference, Intergovernmental relations, Ozone,
Reporting and recordkeeping requirements.
Dated: October 10, 1995.
Valdas V. Adamkus,
Regional Administrator.
For the reasons stated in the preamble, part 52, chapter I, title
40 of the Code of Federal Regulations is amended as follows:
PART 52--[AMENDED]
1. The authority citation for part 52 continues to read as follows:
Authority: 42 U.S.C. 7401-7671q.
Subpart YY--Wisconsin
2. Section 52.2570 is amended by adding paragraph (c)(83) to read
as follows:
Sec. 52.2570 Identification of plan.
* * * * *
(c) * * *
(83) A revision to the ozone State Implementation Plan (SIP) was
submitted by the Wisconsin Department of Natural Resources on June 14,
1995. This revision is a volatile organic compound (VOC) regulation
which requires controls on facilities that perform autobody refinishing
operations.
(i) Incorporation by reference. The following sections of the
Wisconsin Administrative Code are incorporated by reference.
(A) NR 422.02(intro.) and (47), 422.03 (1) and (3) and 484.05(1) as
amended and published in the (Wisconsin) Register, August, 1995 and
effective September 1, 1995.
(B) NR 422.02 (1), (1x), (3m), (12d), (33j), (34s), (34v), (37s),
(42n), (47e) and (49m) and 422.095 as created and published in the
(Wisconsin) Register, August, 1995 and effective September 1, 1995.
(C) NR 422.02(1s) as renumbered from 422.02(1) and published in the
(Wisconsin) Register, August, 1995 and effective September 1, 1995.
[FR Doc. 96-2960 Filed 2-9-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-2959 Approval and Promulgation of Implementation Plan; Wisconsin; Correction
[Federal Register Volume 61, Number 29 (Monday, February 12, 1996)]
[Rules and Regulations]
[Pages 5307-5308]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-2959]
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[WI49-02-7293; FRL-5419-6]
Approval and Promulgation of Implementation Plan; Wisconsin;
Correction
AGENCY: United States Environmental Protection Agency (USEPA).
ACTION: Direct final rule; correction.
-----------------------------------------------------------------------
SUMMARY: This document contains corrections to a final rule which was
published Friday, July 28, 1995 (60 FR 38722). The final rule approved
a volatile organic compound (VOC) regulation which was incorporated by
reference into the Wisconsin State Implementation Plan (SIP).
EFFECTIVE DATE: This action is effective February 12, 1996.
FOR FURTHER INFORMATION CONTACT: Kathleen D'Agostino at (312) 886-1767.
SUPPLEMENTARY INFORMATION:
Background
On July 28, 1995 (60 FR 38722), the USEPA approved a revision to
the Wisconsin SIP containing a VOC regulation that establishes
reasonably available control technology (RACT) for screen printing
facilities. However, when these regulations were incorporated by
reference into the Wisconsin SIP, USEPA inadvertantly overwrote a more
current section of the rule which had previously been incorporated into
the SIP.
Need for Correction
As published, the incorrect version of part of this regulation has
been incorporated by reference into the State's SIP.
List of Subjects in 40 CFR Part 52
Environmental protection, Air pollution control, Hydrocarbons,
Incorporation by reference, Intergovernmental relations, Ozone,
Reporting and recordkeeping requirements.
Authority: 42 U.S.C. 7401-7671q.
Dated: January 24, 1996.
Valdas V. Adamkus,
Regional Administrator.
Correction of Publication
Accordingly, the direct final rule published on July 28, 1995 (60
FR 38722), is corrected as follows:
Subpart YY--Wisconsin
On page 38724, in the third column, paragraph 52.2570(c)(82)(i)(D)
is corrected to read as follows:
[[Page 5308]]
Sec. 52.2570 Identification of plan.
* * * * *
(c) * * *
(82) * * *
(i) * * *
(D) NR 439.04(4)(intro.), (5)(a)1. and (5)(a)2. as amended and
published in the (Wisconsin) Register, June, 1994, No. 462, effective
July 1, 1994.
* * * * *
[FR Doc. 96-2959 Filed 2-9-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-2951 Airworthiness Directives; de Havilland Model DHC-8-301, -311, and -315 Series Airplanes
[Federal Register Volume 61, Number 29 (Monday, February 12, 1996)]
[Rules and Regulations]
[Pages 5277-5279]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-2951]
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DEPARTMENT OF TRANSPORTATION
14 CFR Part 39
[Docket No. 95-NM-261-AD; Amendment 39-9475; AD 95-26-17]
Airworthiness Directives; de Havilland Model DHC-8-301, -311, and
-315 Series Airplanes
AGENCY: Federal Aviation Administration, DOT.
ACTION: Final rule; request for comments.
-----------------------------------------------------------------------
SUMMARY: This amendment adopts a new airworthiness directive (AD) that
is applicable to certain de Havilland Model DHC-8-301, -311, and -315
series airplanes. This action requires modification of the airspeed
limitations placard and revision of the Airplane Flight Manual to
specify operating at lower airspeeds at full flaps. This action also
provides for the termination of the requirements of this AD for certain
airplanes. This amendment is prompted by a report that incorrect rivets
were installed on the outboard flaps assemblies of these airplanes. The
actions specified in this AD are intended to prevent structural failure
of the outboard flaps of the wings due to the installation of incorrect
rivets in the flap assemblies, which could result in reduced
controllability of the airplane.
DATES: Effective February 27, 1996. -
The incorporation by reference of certain publications listed in
the regulations is approved by the Director of the Federal Register as
of February 27, 1996. -
Comments for inclusion in the Rules Docket must be received on or
before April 12, 1996.
ADDRESSES: Submit comments in triplicate to the Federal Aviation
Administration (FAA), Transport Airplane Directorate, ANM-103,
Attention: Rules Docket No. 95-NM-261-AD, 1601 Lind Avenue, SW.,
Renton, Washington 98055-4056. -
The service information referenced in this AD may be obtained from
Bombardier, Inc., Bombardier Regional Aircraft Division, Garratt
Boulevard, Downsview, Ontario, Canada M3K 1Y5. This information may be
examined at the FAA, Transport Airplane Directorate, 1601 Lind Avenue,
SW., Renton, Washington; or at the FAA, New York Aircraft Certification
Office, Engine and Propeller Directorate, 10 Fifth Street, Third Floor,
Valley Stream, New York; or at the Office of the Federal Register, 800
North Capitol Street, NW., suite 700, Washington, DC.
FOR FURTHER INFORMATION CONTACT: Franco Pieri, Aerospace Engineer,
Airframe and Propulsion Branch, ANE-171, FAA, New York Aircraft
Certification Office, Engine and Propeller Directorate, 10 Fifth
Street, Third Floor, Valley Stream, New York 11581; telephone (516)
256-7526; fax (516) 568-2716.
SUPPLEMENTARY INFORMATION: Transport Canada Aviation, which is the
airworthiness authority for Canada, recently notified the FAA that an
unsafe condition may exist on certain de Havilland Model DHC-8-301, -
311, and -315 series airplanes. Transport Canada Aviation advises that
incorrect rivets were installed during manufacture of the outboard flap
assemblies of these airplanes. Investigation revealed that AD rivets
were installed on the outboard flaps instead of DD rivets. AD rivets
are made of a material that is not as strong as that of DD rivets. This
condition, if not corrected, could result in structural failure of the
outboard flaps of the wings, and subsequent reduced controllability of
the airplane. -
The manufacturer has issued de Havilland Service Bulletin S.B. 8-
57-24, Revision `A', dated September 26, 1995, which describes
procedures for modification (8/2498) of the airspeed limitations
placard to specify a lower airspeed at 35 degrees flaps. -
The service bulletin also describes procedures for modification (8/
2066) of the outboard flaps, which entails drilling out the AD rivets
and installing new DD rivets on Model DHC-8-311 and -315 series
airplanes. Following accomplishment of this modification, the service
bulletin specifies removal of the airspeed limitations placard
(Modification 8/2498). A corrective modification has not yet been
developed for Model DHC-8-301 series airplanes. -
Transport Canada Aviation classified this service bulletin as
mandatory and issued Canadian airworthiness directive CF-95-05R1, dated
October 19, 1995, in order to assure the continued airworthiness of
these airplanes in Canada. In addition, the Canadian airworthiness
directive requires a revision to the Airplane Flight Manual (AFM),
which specifies operating at a lower airspeed at full flaps. The
Canadian airworthiness directive references DHC-8 Model 301 Flight
Manual, PSM 1-83-1A, Flight Manual Revision 57, dated September 26,
1995, for accomplishment of the AFM revision for Model DHC-8-301 series
airplanes. -
These airplane models are manufactured in Canada and are type
certificated for operation in the United States under the provisions of
section 21.29 of the Federal Aviation Regulations (14 CFR 21.29) and
the applicable bilateral airworthiness agreement. Pursuant to this
bilateral airworthiness agreement, Transport Canada Aviation has kept
the FAA informed of the situation described above. The FAA has examined
the findings of Transport Canada Aviation, reviewed all available
information, and determined that AD action is necessary for products of
this type design that are certificated for operation in the United
States. -
Since an unsafe condition has been identified that is likely to
exist or develop on other airplanes of the same type design registered
in the United States, this AD is being issued to prevent structural
failure of the outboard flaps of the wings and subsequent reduced
controllability of the airplane. This AD requires modification of the
airspeed limitations placard to indicate that the airplane must be
flown at reduced airspeed when flying at 35 degrees flaps. This action
is required to be accomplished in accordance with the service bulletin
described previously. -
Additionally, this AD requires a revision to the AFM for all
airplanes to include information relative to reducing airspeed at 35
degrees flaps. (The revision for Model DHC-8-301 series airplanes is
described in DHC-8 Model 301 Flight Manual, PSM 1-83-1A, Flight Manual
Revision 57, dated September 26, 1995.) -
For Model DHC-8-311 and -315 series airplanes, this AD also
provides for termination of the requirements of the AD by modifying the
outboard flaps (installation of Modification 8/2066). -
This is considered to be interim action. The FAA is currently
considering requiring the accomplishment of Modification 8/2066 on the
applicable airplanes, which will constitute terminating action for the
requirements of this AD action. However, the planned compliance time
for accomplishment of this modification is sufficiently long so that
prior notice and time for public comment will be practicable. -
Since a situation exists that requires the immediate adoption of
this regulation, it is found that notice and opportunity for prior
public comment hereon are impracticable, and that good cause exists for
making this amendment effective in less than 30 days.
[[Page 5278]]
Comments Invited -
Although this action is in the form of a final rule that involves
requirements affecting flight safety and, thus, was not preceded by
notice and an opportunity for public comment, comments are invited on
this rule. Interested persons are invited to comment on this rule by
submitting such written data, views, or arguments as they may desire.
Communications shall identify the Rules Docket number and be submitted
in triplicate to the address specified under the caption ADDRESSES. All
communications received on or before the closing date for comments will
be considered, and this rule may be amended in light of the comments
received. Factual information that supports the commenter's ideas and
suggestions is extremely helpful in evaluating the effectiveness of the
AD action and determining whether additional rulemaking action would be
needed. -
Comments are specifically invited on the overall regulatory,
economic, environmental, and energy aspects of the rule that might
suggest a need to modify the rule. All comments submitted will be
available, both before and after the closing date for comments, in the
Rules Docket for examination by interested persons. A report that
summarizes each FAA-public contact concerned with the substance of this
AD will be filed in the Rules Docket. -
Commenters wishing the FAA to acknowledge receipt of their comments
submitted in response to this rule must submit a self-addressed,
stamped postcard on which the following statement is made: ``Comments
to Docket Number 95-NM-261-AD.'' The postcard will be date stamped and
returned to the commenter. -
The regulations adopted herein will not have substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government. Therefore, in
accordance with Executive Order 12612, it is determined that this final
rule does not have sufficient federalism implications to warrant the
preparation of a Federalism Assessment. -
The FAA has determined that this regulation is an emergency
regulation that must be issued immediately to correct an unsafe
condition in aircraft, and that it is not a ``significant regulatory
action'' under Executive Order 12866. It has been determined further
that this action involves an emergency regulation under DOT Regulatory
Policies and Procedures (44 FR 11034, February 26, 1979). If it is
determined that this emergency regulation otherwise would be
significant under DOT Regulatory Policies and Procedures, a final
regulatory evaluation will be prepared and placed in the Rules Docket.
A copy of it, if filed, may be obtained from the Rules Docket at the
location provided under the caption ADDRESSES.
List of Subjects in 14 CFR Part 39 -
Air transportation, Aircraft, Aviation safety, Incorporation by
reference, Safety.
Adoption of the Amendment -
Accordingly, pursuant to the authority delegated to me by the
Administrator, the Federal Aviation Administration amends part 39 of
the Federal Aviation Regulations (14 CFR part 39) as follows:
PART 39--AIRWORTHINESS DIRECTIVES -
1. The authority citation for part 39 continues to read as follows:
Authority: 49 USC 106(g), 40101, 40113, 44701.
Sec. 39.13 [Amended] -
2. Section 39.13 is amended by adding the following new
airworthiness directive:
95-26-17 De Havilland, Inc.: Amendment 39-9475. Docket 95-NM-261-
AD.
-Applicability: Model DHC-8-301, -311, and -315 series
airplanes; as listed in de Havilland Service Bulletin S.B. 8-57-24,
Revision `A', dated September 26, 1995; certificated in any
category.
-Note 1: This AD applies to each airplane identified in the
preceding applicability provision, regardless of whether it has been
modified, altered, or repaired in the area subject to the
requirements of this AD. For airplanes that have been modified,
altered, or repaired so that the performance of the requirements of
this AD is affected, the owner/operator must use the authority
provided in paragraph (e) of this AD to request approval from the
FAA. This approval may address either no action, if the current
configuration eliminates the unsafe condition; or different actions
necessary to address the unsafe condition described in this AD. Such
a request should include an assessment of the effect of the changed
configuration on the unsafe condition addressed by this AD. In no
case does the presence of any modification, alteration, or repair
remove any airplane from the applicability of this AD.
-Compliance: Required as indicated, unless accomplished
previously. -
To prevent structural failure of the outboard flaps of the wings
and subsequent reduced controllability of the airplane, accomplish
the following: -
(a) Within 30 days after the effective date of this AD,
accomplish the modification of the airspeed limitation placards
(Modification 8/2498) in accordance with de Havilland Service
Bulletin S.B. 8-57-24, Revision `A', dated September 26, 1995. -
(b) Prior to further flight following accomplishment of the
modification required by paragraph (a) of this AD, revise the
Limitations Section of the FAA-approved Airplane Flight Manual (AFM)
by accomplishing either paragraph (b)(1) or (b)(2) of this AD, as
applicable; and operate the airplane in accordance with those
limitations. -
(1) For Model DHC-8-301 series airplanes: Include the
information specified in DHC-8 Model 301 Flight Manual, PSM 1-83-1A,
Flight Manual Revision 57, dated September 26, 1995, which specifies
a lower airspeed limitation at full flaps. This may be accomplished
by inserting a copy of Flight Manual Revision 57 into the AFM. -
(2) For Model DHC-8-311 and -315 series airplanes: Include the
following statement in section 2, paragraph 2.4.1.2., of the AFM.
This may be accomplished by inserting a copy of this AD in the AFM.
``Flap extended speed (VFE): Flaps 35 degrees 130 knots IAS'' -
(c) For Model DHC-8-311 and -315 series airplanes:
Accomplishment of Modification 8/2066 in accordance with de
Havilland Service Bulletin S.B. 8-57-24, Revision `A', dated
September 26, 1995, constitutes terminating action for the
requirements of this AD. Following accomplishment of Modification 8/
2066, the airspeed limitations placard (Modification 8/2498)
required by paragraph (a) of this AD and the AFM limitation required
by paragraph (b) of this AD may be removed. -
(d) As of the effective date of this AD, Modification 8/2498
must be accomplished in accordance with de Havilland Service
Bulletin S.B. 8-57-24, Revision `A', dated September 26, 1995, prior
to installation of any outboard flap assembly having a part number
and serial number that is listed in de Havilland Service Bulletin
S.B. 8-57-24, Revision `A', dated September 26, 1995.
-Note 2: For Model DHC-8-311 and -315 series airplanes:
Accomplishment of Modification 8/2066 in accordance with de
Havilland Service Bulletin S.B. 8-57-24, Revision `A', dated
September 26, 1995, is considered acceptable for compliance with the
requirements of paragraph (d) of this AD.
-(e) An alternative method of compliance or adjustment of the
compliance time that provides an acceptable level of safety may be
used if approved by the Manager, New York Aircraft Certification
Office (ACO), FAA, Engine and Propeller Directorate. Operators shall
submit their requests through an appropriate FAA Principal
Maintenance Inspector, who may add comments and then send it to the
Manager, New York ACO.
-Note: 3: Information concerning the existence of approved
alternative methods of compliance with this AD, if any, may be
obtained from the New York ACO. -
(f) Special flight permits may be issued in accordance with
sections 21.197 and 21.199 of the Federal Aviation Regulations (14
CFR 21.197 and 21.199) to operate the airplane to
[[Page 5279]]
a location where the requirements of this AD can be accomplished. -
(g) The modifications shall be done in accordance with de
Havilland Service Bulletin S.B. 8-57-24, Revision `A', dated
September 26, 1995. The AFM revision may be done in accordance with
DHC-8 Model 301 Flight Manual, PSM 1-83-1A, Flight Manual Revision
57, dated September 26, 1995, for Model DHC-8-301 series airplanes.
The incorporation by reference of these documents was approved by
the Director of the Federal Register in accordance with 5 U.S.C.
552(a) and 1 CFR part 51. Copies may be obtained from Bombardier,
Inc., Bombardier Regional Aircraft Division, Garratt Boulevard,
Downsview, Ontario, Canada M3K 1Y5. Copies may be inspected at the
FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton,
Washington; or at the FAA, New York Aircraft Certification Office,
Engine and Propeller Directorate, 10 Fifth Street, Third Floor,
Valley Stream, New York; or at the Office of the Federal Register,
800 North Capitol Street, NW., suite 700, Washington, DC. -
(h) This amendment becomes effective on February 27, 1996.
Issued in Renton, Washington, on December 22, 1995.
Darrell M. Pederson,
Acting Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. 96-2951 Filed 2-9-96; 8:45 am]
BILLING CODE 4910-13-U
Complete official Federal Register PDF
FR Doc. 96-2946 Service Contract Filing RequirementsMiscellaneous Revisions
[Federal Register Volume 61, Number 29 (Monday, February 12, 1996)]
[Rules and Regulations]
[Pages 5308-5312]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-2946]
=======================================================================
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FEDERAL MARITIME COMMISSION
46 CFR Part 514
[Docket No. 95-08]
Service Contract Filing Requirements--Miscellaneous Revisions
AGENCY: Federal Maritime Commission.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Federal Maritime Commission is amending its rules to
provide for an optional, abbreviated service contract format; and to
require service contracts to include the legal names and business
addresses of the signatories and either list affiliates' business
addresses or certify that affiliates' business addresses will be
provided to the Commission within 10 business days of such request. The
final rule in this matter should reduce duplication and Commission and
carrier costs, as well as facilitate automation of the Commission's
service contract records.
EFFECTIVE DATE: March 13, 1996.
FOR FURTHER INFORMATION CONTACT:
Bryant L. VanBrakle, Director, Bureau of Tariffs, Certification and
Licensing, Federal Maritime Commission, 800 North Capitol Street NW.,
Washington, DC 20573, (202) 523-5796.
SUPPLEMENTARY INFORMATION:
I. Background
The Federal Maritime Commission (``Commission'') initiated this
proceeding with a Notice of Proposed Rulemaking (``NPR'' or ``Proposed
Rule'') published in the May 23, 1995 Federal Register.\1\ The NPR
solicited comments on a proposal to amend the Commission's rules to
provide for an optional, abbreviated service contract format, on
condition that such filings: (1) Incorporate by reference the
corresponding electronic essential terms (``ET'') filed in the
Commission's Automated Tariff Filing and Information System (``ATFI'');
and (2) certify that, other than for those provisions set forth in the
filed service contract, said ET sets forth the parties' true and
complete contract. The NPR also proposed requiring contracts to set
forth the true and complete names and addresses of contract parties,
including affiliates, and the typewritten names, titles and addresses
of the representatives signing contracts for the contract parties. The
Proposed Rule's purposes are to reduce duplication and Commission and
carrier costs, facilitate automation of the Commission's service
contract records and facilitate the identification of shipper parties,
including named affiliates to certain service contracts.
\1\ 60 FR 27248.
---------------------------------------------------------------------------
II. Comments
The NPR elicited three comments: (1) Joint comments of the Asia-
North America Eastbound Rate Agreement, the Transpacific Westbound Rate
Agreement, and the South Europe/American Conference (``ANERA, et
al.''); (2) joint comments of the Trans-Pacific Conference of Japan and
the Japan-Atlantic and Gulf Freight Conference and their member lines
(``Japan Conferences''); and (3) the Trans-Atlantic Conference
Agreement (``TACA''). The comments generally support the Proposed Rule,
but suggest some modifications concerning the Proposed Rule's
requirement for ``true and complete names, * * * and addresses'' of
contract parties and information requirements for service contracts
involving a significant number of shipper affiliates.
A. Abbreviated Service Contract Format
ANERA, et al., and TACA support the proposed optional abbreviated
service contract format, stating that it would reduce costs to them as
well as the Commission.
The Japan Conferences do not oppose the abbreviated format, but
advise that it might not enjoy widespread usage in their trades. They
note that traditional Japanese contracting practices would result in
Japanese shippers and most other commercial interests continuing to
insist upon single, full-text format contracts instead of
``bifurcated'' versions that include the associated ET publications.
They also advise that Japanese shippers, as well as most other
commercial interests, have not yet adopted the practice of contracting
via Electronic Data Interchange. They therefore urge that this format
be ``optional'', as currently proposed.
The Japan Conferences also advise that problems could be associated
with requiring contract signatories to certify that the terms set forth
in the abbreviated format service contract and ATFI ETs are the true
and complete terms covering all aspects of the parties' contract. They
believe problems could occur when making certifications about
frequently changing terms and conditions in instances where an
inadvertent disparity arises between the true contract and the
abbreviated version. They contend that the latter would be controlling
under the rule but would not reflect the parties' true understanding.
B. Addresses of Contract Signatories
ANERA, et al., support the NPR's proposal to require service
contracts to state the contract parties' addresses. TACA opposes the
Proposed Rule's use of the term ``true and complete'' with regard to
contract parties' names and addresses,\2\ because the term might have
several meanings. TACA offers several examples in this regard: the name
shown on a person's birth certificate; the name that a person commonly
uses; the official legal name of a company or corporation shown on its
certificate of incorporation; or a commonly used acronym, such as
``AT&T'', rather than ``American Telephone and Telegraph Company''.
Further, it contends that a ``true and complete'' address could be the
postal address of a person or company rather than the business address.
TACA therefore believes that this aspect of the Proposed Rule invites
uncertainty and confusion. Moreover, it contends that ocean common
carrier service contract filers should be allowed to ``reasonably rely
on the form, style, and completeness of the names of those persons
executing such contracts on behalf of shipper parties as are provided
them.'' As an alternative, TACA suggests that requiring a contract to
state the ``names and postal addresses of contract parties and
signers'' would be sufficient.\3\ To this end, it offers the following
revision to the first sentence of 46 CFR 514.7(h)(1)(v):
\2\ The NPR proposed requiring service contracts to include
``the true and complete names and addresses of the contract parties
and the typewritten names, titles, and addresses of the
representatives signing the contract for the parties.''
\3\ TACA also believes that it is redundant to state the address
of a ``contract signer'' when its address, in most cases, is the
same as that of the contract party it represents. They believe that
the revision which they suggest will also remedy this aspect of the
Proposed Rule.
---------------------------------------------------------------------------
The names and postal addresses of the contract parties and the
typewritten names and titles of the representatives signing the
contract for the parties along with their postal address if
different than that of the Contract party represented.
[[Page 5309]]
C. Addresses of Contract Parties' Affiliates
ANERA, et al., support a requirement that a contract state the
addresses of affiliates named in the contract, stating that this would
make it easier for ANERA, et al., and the Commission to enforce the
terms of service contracts. However, they suggest that the requirements
applying to shippers' association members and affiliates be modified to
allow contract parties the following options: (1) Listing the addresses
in the contract; or (2) certifying that the addresses have been
provided to the carrier or conference to retain and to be made
available upon request by the Commission. They believe that this would
also achieve the NPR's goals, while allowing the industry flexibility
to comply in the most efficient manner.
TACA opposes a requirement that service contracts include shippers'
affiliates' addresses. It states that this requirement is ``contrary to
the paramount purpose of this rulemaking proceeding * * * to reduce the
`sheer physical bulk' of confidential service contract material.'' As
an alternative, TACA suggests that ``to meet the purpose regarding
difficulty in identifying affiliates to certain contracts which have,
in some cases, hampered the Commission's investigative efforts,'' the
Proposed Rule be revised to provide that contract filers obtain and
confidentially provide shipper party affiliate address information when
requested by the Commission in its investigative efforts. TACA believes
that such a modification would serve the Proposed Rule's purpose and
``eliminate its undesirable features''. It also states that ``to
include relevant affiliate address information in * * * contracts will
increase costs, delay the filing process and otherwise impede it.''
III. Discussion
The Commission has considered the comments in this matter and has
decided to adopt a Final Rule that modifies the proposal to adopt the
suggestion that the Final Rule require ``legal names and business
addresses'', rather than ``true and complete names and addresses''. The
Final Rule also moves the change proposed for section 514.7(h)(1)(vi)
into section 514.7(h)(1)(v) and clarifies the Rule's application to
previously-filed contracts amended after the Final Rule's effective
date.
The Commission is adopting, without change, the Proposed Rule's
amendment of 46 CFR 514.7(h)(2)(i)(A) to afford service contract
parties the option of filing service contracts in abbreviated format,
on condition that such filings incorporate by reference the
corresponding ATFI ETs; and declare that, other than for those
provisions set forth in the field service contract, said ET sets forth
the parties' true and complete contract. The Final Rule also requires
service contracts to set forth the contract parties' names and
addresses. Carriers and conferences, like the Japan Conferences, which
do not elect to file service contracts in abbreviated form may continue
to file service contracts in full-text format, as at present.
TACA has raised questions regarding the ``true and complete''
aspect of a name or address, and occasional redundancy when the
addresses of service contract parties and representatives signing the
contract are the same, and has offered a modification to the rule to
clarify it in this regard. The Final Rule modifies proposed 46 CFR
514.7(h)(1)(v) by deleting the term ``true and complete'' and
substituting the requirement that the ``legal names and business
addresses'' be set forth in the contract.\4\
\4\ A business address need not be repeated in instances where
the business address of the person signing the contract is the same
as the business address of a contract party.
---------------------------------------------------------------------------
While TACA is concerned that a requirement that names and addresses
be ``true and complete'' would invite uncertainty and confusion
regarding the term's meaning, the Commission believes that TACA's
suggested revision to require the ``names and postal addresses'' of
contract parties is not acceptable. However, to partially address
TACA's concerns, the Final Rule herein clarifies that a contract is
required to set forth the parties' ``legal names and business
addresses'', as well as the legal names of affiliates of service
contract parties entitled to access the contract.
The Commission has considered the comments by ANERA, et al.,
regarding the NPR's proposal to amend 46 CFR 514.7(h)(1)(vi) with
regard to names and addresses of service contract parties' affiliates,
and TACA's observation concerning address information for service
contracts involving significant numbers of affiliates. The Commission
has determined to provide carriers/conferences the option of either (1)
listing affiliates' business addresses in the service contract; or (2)
certifying in the contract that this information will be provided to
the Commission upon request within 10 business days of such request.
The collection of information requirements contained in this final
rule were previously approved by the Office of Management and Budget
under the provisions of the Paperwork Reduction Act of 1980 (Pub. L.
96-511), as amended. (OMB Control No. 3072-0055, expires May 31, 1998.)
Public reporting burden for this collection of information will
decrease to an average of one manhour per response, including the time
for reviewing instructions, searching existing data sources, gathering
and maintaining the data needed, and completing and reviewing the
collection of information.
The Chairman of the Commission certifies, pursuant to section
605(b) of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., that
this final rule will not have a significant economic impact on a
substantial number of small entities, including small businesses, small
organizational units, and small governmental jurisdictions.
List of Subjects in 46 CFR Part 514
Administrative practice and procedure, Antitrust, Automatic data
processing, Cargo vessels, Confidential business information,
Contracts, Exports, Freight, Freight forwarders, Imports, Maritime
carriers, Penalties, Rates and fares, Reporting and recordkeeping
requirements.
Therefore, pursuant to 5 U.S.C. 553 and sections 3, 8, and 17 of
the Shipping Act of 1984 (46 U.S.C. app. 1702, 1707 and 1716), the
Federal Maritime Commission amends Part 514 of Title 46 of the Code of
Federal Regulations as follows:
PART 514--[AMENDED]
1. The authority citation for Part 514 continues to read:
Authority: 5 U.S.C. 552 and 553; 31 U.S.C. 9701; 46 U.S.C. app.
804, 812, 814-817(a), 820, 833a, 841a, 843, 844, 845, 845a, 845b,
847, 1702-1712, 1714-1716, 1718, 1721, and 1722; and sec. 2(b) of
Pub. L. 101-92, 103 Stat. 601.
2. Section 514.7 is amended by revising paragraph (h)(1)(v) and
adding paragraph (h)(2)(i)(C) to read as follows:
Sec. 514.7 Service contracts in foreign commerce.
* * * * *
(h) * * *
(1) * * *
(v) The typewritten legal names and business addresses of the
contract parties; the typewritten legal names of affiliates entitled to
access the contract; and the typewritten names, titles and addresses of
the representatives signing the contract for the parties. Carriers and/
or conferences which enter into contracts which include affiliates must
in each instance either:
[[Page 5310]]
(A) list the affiliates' business addresses; or
(B) certify that this information will be provided to the
Commission upon request within 10 business days of such request (These
requirements will apply to previously-filed contracts amended after
March 13, 1996). However, the requirements of this section do not apply
to amendments to contracts that have been filed in accordance with the
requirements of this section unless the amendment adds new parties or
affiliates. subsequent references in the contract to the contract
parties shall be consistent with the first reference (e.g., (exact
name), ``carriers,'' ``shipper,'' or ``association,'' etc.); and
* * * * *
(2) * * *
(i) * * *
(C) Section 514.7(h)(2)(i)(A) does not apply to a service contract
that incorporates by reference all of the associated essential terms
filing as published in ATFI, provided that the parties certify that,
other than for those provisions set forth in the filed service
contract, such essential terms filing sets forth the true and complete
contract.\1\
\1\ See Exhibit II of this part for an example of an abbreviated
format service contract.
---------------------------------------------------------------------------
3. Exhibit II is added to Part 514, reading as follows:
BILLING CODE 6730-01-M
[[Page 5311]]
[GRAPHIC] [TIFF OMMITTED] TR12FE96.000
[[Page 5312]]
By the Commission.
Joseph C. Polking,
Secretary.
[FR Doc. 96-2946 Filed 2-9-96; 8:45 am]
BILLING CODE 6730-01-C
Complete official Federal Register PDF
FR Doc. 96-2641 Revision of Valuation Regulations Governing Oil and Gas Transportation and Processing Allowances, and Coal Washing and Transportation Allowances
[Federal Register Volume 61, Number 29 (Monday, February 12, 1996)]
[Rules and Regulations]
[Pages 5448-5490]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-2641]
[[Page 5447]]
_______________________________________________________________________
Part II
Department of the Interior
_______________________________________________________________________
Minerals Management Service
_______________________________________________________________________
30 CFR Parts 202 and 206
Revision of Valuation Regulations Governing Oil and Gas Transportation
and Processing Allowances, and Coal Washing and Transportation
Allowances; Final Rule
Federal Register / Vol. 61, No. 29 / Monday, February 12, 1996 /
Rules and Regulations
[[Page 5448]]
DEPARTMENT OF THE INTERIOR
Minerals Management Service
30 CFR Parts 202 and 206
RIN 1010-AC00
Revision of Valuation Regulations Governing Oil and Gas
Transportation and Processing Allowances, and Coal Washing and
Transportation Allowances
AGENCY: Minerals Management Service, Interior.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Royalty Management Program (RMP) of the Minerals
Management Service (MMS) is amending its valuation regulations for oil
and gas transportation and processing allowances for production from
Federal leases. It also is amending the regulations for coal washing
and transportation allowances for production from Federal leases. The
principal change is to eliminate allowance forms filing for Federal
mineral leases. These changes will affect Federal oil and gas and coal
leases only. The rule will not change the existing regulations
applicable to Indian leases at this time.
EFFECTIVE DATE: March 1, 1996.
FOR FURTHER INFORMATION CONTACT: David S. Guzy, Chief, Rules and
Procedures Staff, at (303) 231-3432.
SUPPLEMENTARY INFORMATION: The principal authors of this final rule are
Thomas K. Brozovich, Financial Compliance Branch, Compliance
Verification Division, and Harold E. Corley, Solid Minerals Valuation
Branch, Valuation and Standards Division, RMP, MMS, Lakewood, Colorado.
This rule is effective March 1, 1996, because mineral royalties are
reported monthly, and a reporting change in the middle of the month
would complicate reporting for both industry and MMS. The earlier
effective date of March 1 is also preferable because the rule reduces
the administrative reporting for the minerals industry for production
from Federal mineral leases.
I. Background
This final rule consolidates two proposed rules. In the Notices of
Proposed Rulemaking, MMS explained the process by which it administers
the allowance form filing requirements and asked for input on several
related issues (60 FR 40120, August 7, 1995, and 60 FR 40127, August 7,
1995). The current valuation regulations for oil, gas, and coal require
that certain forms be filed as a prerequisite to the deduction of
allowances on Form MMS-2014, Report of Sales and Royalty Remittance for
transportation, processing, and washing costs. Failure to timely file
required forms can result in significant consequences, including loss
of the allowance. An Allowance Study Group examined this issue at
length in 1993 and made certain recommendations to improve allowance
administration. Proposed rules incorporating the Allowance Study
Group's recommendations were published in the Federal Register on
August 7, 1995.
The purpose of these final regulations is to revise the oil and gas
allowance regulations for production from Federal leases which became
effective March 1, 1988, and the coal allowance regulations for
production from Federal leases which became effective March 1, 1989.
As explained further below, MMS is not making any changes at this
time to the regulations applicable for Indian leases. Instead, we will
keep the rulemaking regarding Indian leases open and will issue amended
regulations in the near future.
II. Comments on Proposed Rules
The proposed rulemakings provided for a 60-day public comment
period, which ended October 6, 1995, and, was extended to October 20,
1995, by a subsequent notice (60 FR 51963, October 4, 1995).
The Allowance Study Group and others within MMS identified issues
for which opinions were sought from interested parties during the
comment period. Specifically, the issues addressed:
a. The need for and usefulness of the current regulatory
requirement for allowance forms submission, including the information
on each form.
b. The need for and equity of allowance payback and late payment
interest charges for failure to file forms.
c. The need for regulatory approval thresholds or limits on the
amount of allowances which could be claimed without gaining permission.
d. The need to establish an assessment when payors improperly net
their allowances when reporting on Form MMS-2014.
e. The need to eliminate the current treatment of transportation
factors in arm's-length contracts as reductions in value.
f. The need to assess payors for exceeding allowance limits in
certain circumstances prior to receiving MMS approval.
g. The need to assess payors for erroneously reporting information
on allowance forms.
Twenty commenters submitted timely comments during the comment
period. Two additional commenters submitted late comments that were
received on October 24, 1995. Twenty of the comments were from industry
while two were from representatives of Indian lessors.
Comments from industry overwhelmingly suggested that we cease using
allowance forms as a means to track allowances while comments from the
Indian community supported the need to be able to track and verify
allowances.
When the original allowance regulations were implemented in 1988,
MMS was not contemporaneous with its audit efforts and forms were
needed to properly track allowances. However, we are now keeping
contemporaneous with our audits and have a reduced need for such forms.
Also, the Federal Gas Valuation Negotiated Rulemaking Committee
recommended, among other things, in its March 1995 report, that MMS
discontinue requiring transportation and processing allowance form
filings for gas production. The Indian Gas Valuation Negotiated
Rulemaking Committee is still discussing options. Accordingly, MMS has
decided to adopt this final rule to change allowance regulations for
Federal leases only at this time and to leave the rulemaking open for
allowance regulations for Indian leases. The existing regulations are
redesignated for Indian leases and are changed to remove references to
Federal leases.
Having different allowance rules for Federal leases than for Indian
leases requires completely separate valuation regulations. Therefore,
the current subparts are redesignated as Subpart C--Federal Oil,
Subpart D--Federal Gas, and Subpart F--Federal Coal, and references to
Indian leases are removed. The new designation for Indian valuation
regulations which will be unchanged from the existing regulations, will
be Part 206-Product Valuation, Subpart B--Indian Oil, Subpart E--Indian
Gas, and Subpart J--Indian Coal.
General Comments
Most of the commenters stated that we should not implement the
proposed rule, but that we should improve it and, in fact, go several
steps beyond the proposal.
Response. MMS has determined, except for requirements on Indian
leases, that the commenters pose strong arguments for further
streamlining the
[[Page 5449]]
regulations for allowance form filing requirements. Accordingly, we
have changed the regulations for Federal leases to implement many of
the suggestions. However, the current regulations remain intact for
Indian leases, pending further evaluation and decisions.
Specific Comments
(a) Almost every industry commenter suggested that MMS adopt the
recommendation of The Federal Gas Negotiated Rulemaking Committee to
cease requiring allowance form filings for natural gas. The commenters
also suggested we cease requiring such forms for oil and coal as well
as gas.
Response. MMS agrees with the industry commenters on this issue and
has incorporated their suggestions for Federal leases.
(b) Many of the industry commenters correctly stated that
discontinuing the forms filing requirement will make the issue of
payback bills and late payment interest moot.
Response. MMS agrees with this conclusion and has deleted such
consequences for violations on Federal leases.
(c) No comments were received on the issue of requiring approval to
exceed established oil and gas allowance limits.
Response. MMS believes that allowances should have established
limits which cannot be unilaterally exceeded. However, we also
understand that, occasionally, circumstances are such that the cost of
transporting or processing may exceed the allowable percentage limits.
Therefore, we are keeping the established limits which have been
effective since March 1, 1988.
(d) Most commenters said that an assessment for improperly netting
allowances on the Form MMS-2014 was not necessary because payors do not
purposely report in that manner. Further, they stated that such
exceptions should be addressed on a case-by-case basis.
Response. MMS believes it is necessary to have a deterrent for
improper reporting, especially netting allowances. We recognize that
some reporting may be inadvertent, and therefore, have implemented an
assessment provision which allows us to bill up to 10 percent of the
allowance reported as a netted amount but not to exceed $250 per lease
selling arrangement per sales period. This provision gives us the
flexibility to work with the payor who has infrequently or never netted
its allowances while being able to more aggressively address the
situation with the payor who chronically nets allowances.
(e) Many commenters recommended that MMS retain the oil and gas
transportation factors in arm's-length contracts to ease the buying,
selling, and reporting burden.
Response. MMS agrees that transportation factors should remain as a
viable industry mechanism for buying and selling even though some
problems differentiating factors from allowances existed in the past.
Therefore we have retained transportation factors for arm's-length
contracts.
(f) Few commenters responded on the need to assess payors for
exceeding oil and gas allowance limits prior to receiving MMS approval.
Response. MMS believes that exceeding established allowance limits
without prior MMS approval unjustly benefits industry and penalizes the
Federal Government. Accordingly, we have adopted an assessment, based
on an interest calculation methodology, presented in 30 CFR 218.54 to
bill companies which exceed established allowance limits without prior
MMS approval.
(g) Few commenters responded to the proposal to assess payors for
erroneous reporting and other violations. Those who did held the
general opinion that MMS has enough assessments to encourage correct
reporting and such violations should be handled on a case-by-case
basis.
Response. MMS agrees with the commenters. We have enough
assessments in many areas to encourage correct reporting the first
time. Therefore, only the additional limited assessments for netting
and exceeding allowance limits heretofore discussed will be implemented
in this rulemaking.
For the reasons discussed above, MMS is amending its valuation
regulations to have new allowance requirements for oil, gas, and coal
production from Federal lands. Allowance form filing requirements for
production from Indian lands are not being changed pending further
evaluation and discussions.
Allowance requirements for production from Federal lands are being
changed to eliminate unnecessary regulatory burdens on industry.
However, Federal allowance requirements will also reflect an assessment
for ``improper netting'' because this concealment of information has
adverse effects on MMS' efforts to monitor the accuracy of royalty
payments.
III. Section by Section Analysis
a. Federal Oil.
1. The only change to several sections within Subpart C--Federal
Oil involves the removal of Indian references. Therefore, the changes
to these sections will not be separately discussed for the purposes of
this rulemaking. The sections which are deleted entirely or partially
revised to eliminate the reference to Indian leases are:
Sec. 206.100 Purpose and scope.
Sec. 206.101 Definitions.
The following terms are changed or removed: Audit, BIA, Gross
proceeds, Indian allottee, Indian Tribe, Lease products, Lessee, and
Net profit share.
Sec. 206.102 Valuation standards.
Section 206.102(a)(2)(i) and (ii); (d), (i), (k) and (l) are
revised or removed to eliminate the reference to Indian leases.
Sec. 206.105 Determination of transportation allowances.
Section 206.105(b)(5) and (e)(2) are revised to eliminate the
reference to Indian leases.
2. We are also amending several sections of Subpart C--Federal Oil
to reflect comments from industry for elimination of allowance forms.
Further, based on recommendations of our Allowance Study Group, we are
revising the current assessment structure to focus our efforts on
administration of allowance information provided on Form MMS-2014 by
the payor, rather than generating a revenue stream from sanctions for
the untimely submission of allowance forms.
Accordingly, we are revising the following sections:
Sec. 206.101 Definitions.
Allowance We changed the definition to remove any implication of a
forms filing requirement, or of having to seek MMS approval prior to
claiming an allowance on Form MMS-2014.
Netting We added this definition to clarify the reporting situation
which will result in an assessment for not reporting allowances as a
separate line item on Form MMS-2014.
Sec. 206.104 Transportation allowances--general.
Section 206.104(b)(2) is amended to specify that Form MMS-4393 is
the application form used to request an exception to exceed the
regulatory allowance limitation of 50 percent for oil transportation.
Section 206.104(d) is amended to add the caveat about netting to
further clarify improper reporting of allowances on Form MMS-2014.
Sec. 206.105 Determination of transportation allowances.
Section 206.105(a)(1)(i) is amended to remove the requirement to
file Form
[[Page 5450]]
MMS-4110 (and the related 3-month retroactivity period) and specify
that the lessee/payor can use a self-implementing approach to claim an
allowance under an arm's-length contract by reporting an allowance as a
separate line entry on the Form MMS-2014.
Section 206.105(a)(3) is revised to reflect a change in the cost
allocation approval process. The lessee is still required to request
and receive approval for a cost allocation method for transportation of
both gaseous and liquid products through the same delivery system.
However, that approval process will no longer be tied to allowance form
filing. Instead, the lessee must submit the proposal within 3 months of
claiming the deduction on the Form MMS-2014.
Section 206.105(b)(1) is amended to remove the requirement to file
Form MMS-4110 (and the related 3-month retroactivity period) and
specify that the lessee/payor may use a self-implementing approach to
claim an allowance under a non-arm's-length or no contract by reporting
an allowance as a separate line entry on Form MMS-2014.
Section 206.105(b)(2)(v) is amended to specify that the reporting
period will be based on a calendar year as opposed to a forms filing
reporting period. We retained the use of the Standard and Poor's BBB
rating.
Section 206.105(b)(4) is amended to reflect a change in the cost
allocation approval process. The lessee is still required to request
and receive approval for a cost allocation method for transportation of
both gaseous and liquid products through the same delivery system.
However, that approval process will no longer be tied to allowance form
filing; instead, the lessee must submit the proposal within 3 months of
claiming the deduction on Form MMS-2014. Section 206.105(c)(1)(i) is
amended for sales under arm's-length contracts to specify that the
lessee must take the transportation allowance by reporting a separate
line item on the Form MMS-2014. Submitting the Form MMS-4110 is no
longer applicable.
Sections 206.105(c)(1) (ii) and (iii) these paragraphs are removed
because of the elimination of allowance forms.
Section 206.105(c)(1)(iv) is redesignated as Section
206.105(c)(1)(ii) because of paragraph renumbering. We will still
require the lessee to document its transportation costs and to make
that data available upon MMS request. Sections 206.105(c)(1)(v) and
(vi) are removed because of the elimination of allowance forms.
Section 206.105(c)(2)(i) is amended for sales under non-arm's-
length or no contracts to specify that the lessee takes the
transportation allowance by reporting a separate line item on the Form
MMS-2014. Submitting the Form MMS-4110 is no longer applicable.
Sections 206.105(c)(2) (ii) and (iii) are removed because of the
elimination of allowance forms.
Section 206.105(c)(2)(iv) is redesignated Sec. 206.105(c)(2)(ii)
because of paragraph renumbering. We are removing reference to Form
MMS-4110 and are retaining the lessee's use of cost estimates for the
current calendar year until such time as actual cost data becomes
available. Section 206.105(c)(2)(v) is removed because of the
elimination of allowance forms.
Section 206.105(c)(2)(vi) is redesigned as Sec. 206.105(c)(2)(iii)
to conform with the change in paragraph numbering. We will still
require the lessee to document its transportation costs and to make
that data available upon MMS request. We are removing reference to Form
MMS-4110.
Section 206.105(c)(2)(vii) is removed because of the elimination of
allowance forms.
Section 206.105(c)(2)(viii) is redesignated as
Sec. 206.105(c)(2)(iv) to conform with paragraph renumbering. The
lessee may use a FERC-approved or State regulatory agency-approved
tariff as its transportation cost. Section 206.105(c)(3) is removed
because of the elimination of allowance forms.
Section 206.105(c)(4) is removed because it duplicates the
requirement to report a separate line entry on the Form MMS-2014 when
claiming an allowance.
Section 206.105(d)(1)-(2) is amended to remove the sanction
language associated with untimely filing of allowance forms, and
replaces it with an assessment for improper netting. We have imposed
this new assessment, described under Section 206.105(d)(1), because of
the impact concealing allowance information on the Form MMS-2014 has on
MMS' ability to verify the allowance taken. The new assessment
provision allows us to bill up to 10 percent of the allowance reported
as a netted amount but not to exceed $250 per lease selling arrangement
per sales period. This provision gives us the flexibility to work with
the payor who has infrequently or never netted its allowances, while
being able to more aggressively address the situation with the payor
who chronically nets its allowances (i.e., a repeat offender). Use of
this new assessment is consistent with the conclusions and
recommendations of the multiconstituent Allowance Study Group.
We also have included under new Section 206.105(d)(2) the current
policy of assessing interest on the amount of an allowance taken in
excess of the threshold (50 percent of the value of the oil
transported) from the date the excess allowance is taken to the date
the lessee files an exception request (Form MMS-4393) with MMS.
Section 206.105(d)(2) is redesignated as Sec. 206.105(d)(3) to
conform with paragraph renumbering.
Section 206.105(d)(3) is redesignated as Sec. 206.105(d)(4) due to
paragraph renumbering.
Section 206.105(e)(1) is amended to remove reference to the
allowance form filing period. This paragraph still authorizes the
lessee to make adjustments to estimated allowances based on actual cost
data for the allowance reporting period. However, it clarifies that
when such adjustments result in an underpayment of royalty, the
interest for such underpayment is computed from the date the lessee
took the deduction to the date the lessee repays the difference to MMS.
b. Federal Gas
(1) The only change to several sections within Subpart D--Federal
Gas involves the removal of references to Indian leases or lessors. The
sections which are deleted entirely or partially revised to eliminate
the reference to Indian leases or lessors are:
Sec. 206.150 Purpose and scope.
Sec. 206.151 Definitions.
The following terms are changed or removed: Audit, BIA, Gross
proceeds, Indian allottee, Indian Tribe, Lease products, Lessee, and
Net profit share
Sec. 206.152 Valuation standards--unprocessed gas.
Section 206.152 (a)(3) (i) and (ii); (e)(2), (i), (k) and (l) are
revised or removed to eliminate the reference to Indian leases or
lessors.
Sec. 206.153 Valuation standards--processed gas.
Section 206.153 (a)(3) (i) and (ii); (e)(2), (i), (k) and (l) are
revised to eliminate the reference to Indian leases or lessors.
Sec. 206.154 Determination of quantities and qualities for computing
royalties.
Section 206.154(c)(4) is revised to eliminate the reference to
Indian leases or lessors.
[[Page 5451]]
Sec. 206.155 Accounting for comparison.
Section 206.155(b) is revised to eliminate the reference to Indian
leases or lessors.
Sec. 206.157 Determination of transportation allowances.
Section 206.157(e)(2) is revised to eliminate the reference to
Indian leases or lessors.
Sec. 206.159 Determination of processing allowances.
Section 206.159(c)(2)(v) is revised to eliminate the reference to
Indian leases or lessors.
(2) We are also amending several sections of Subpart D--Federal Gas
to update the current regulations (e.g., removal of Notice to Lessees
and Operators of Federal Onshore Oil and Gas Leases (NTL)) and to
reflect comments from industry for elimination of allowance forms.
Further, based on recommendations of our Allowance Study Group, we are
revising the current assessment structure to focus our efforts on
verifying allowance information provided on Form MMS-2014 by the payor,
rather than generating a revenue stream from sanctions on the filing
and timely submission of allowance forms.
Accordingly, we are revising the following sections:
Sec. 206.150 Purpose and scope.
Section 206.150(e) is eliminated in its entirety because NTL's were
terminated by the Federal Register Notice published on January 15,
1988, (53 FR 1230).
Sec. 206.151 Definitions.
Allowance We changed the definition to remove any implication of a
forms filing requirement, or of having to seek MMS approval prior to
claiming an allowance on Form MMS-2014.
Netting We added this definition to clarify the reporting situation
which will result in an assessment for not reporting allowances as a
separate line item on Form MMS-2014.
Sec. 206.156 Transportation allowances--general.
Section 206.156(c)(3) is amended to specify that Form MMS-4393 is
the application form used to request an exception to exceed the
regulatory allowance limitation of 50 percent for gas transportation.
Section 206.156(d) is amended to add the caveat about netting to
further clarify improper reporting of allowances on Form MMS-2014.
Sec. 206.157 Determination of transportation allowances.
Section 206.157(a)(1)(i) is amended to remove the requirement to
file Form MMS-4295, Gas Transportation Allowance Report (and the
related 3-month retroactivity period) and specify that the lessee/payor
may use a self-implementing approach to claim an allowance under an
arm's-length contract by reporting a separate line entry on Form MMS-
2014.
Section 206.157(a)(3) is amended to clarify that the lessee is
still required to request and receive approval for a cost allocation
method for transportation of both gaseous and liquid products through
the same delivery system. It also will clarify that the approval
process will no longer be tied to allowance form filing; instead, the
lessee must submit the proposal within 3 months of claiming the
deduction on Form MMS-2014.
Section 206.157(b)(1) is revised to remove the requirement to file
Form MMS-4295 (and the related 3-month retroactivity period) and
specify that the lessee/payor may use a self-implementing approach to
claim an allowance under a non-arm's-length or no contract by reporting
a separate line entry on Form MMS-2014.
Section 206.157(b)(2)(v) is amended to specify that the reporting
period will be based on a calendar year basis as opposed to a forms
filing reporting period. We retained the use of the Standard and Poor's
BBB rating.
Section 206.157(b)(4) is amended to clarify the approval for cost
allocation methods. The lessee is still required to request and receive
approval for a cost allocation method for transportation of both
gaseous and liquid products through the same delivery system. The
approval process will no longer be tied to allowance form filing;
instead, the lessee must submit the proposal within 3 months of
claiming the deduction on Form MMS-2014.
Section 206.157(c)(1)(i) is amended for sales under arm's-length
contracts to specify that the lessee takes the transportation allowance
by reporting a separate line item on Form MMS-2014. Submitting Form
MMS-4295 is no longer applicable.
Sections 206.157(c)(1) (ii) and (iii) are removed because of the
elimination of allowance forms.
Section 206.157(c)(1)(iv) is redesignated as Sec. 206.157(c)(1)(ii)
due to paragraph renumbering. We will still require the lessee to
document its transportation costs and to make all documentation
available upon MMS request.
Sections 206.157(c)(1) (v) and (vi) are removed because of the
elimination of allowance forms.
Section 206.157(c)(2)(i) is amended for sales under a non-arm's-
length or no contract to specify that the lessee takes the
transportation allowance by reporting a separate line item on MMS-2014.
Submitting Form MMS-4295 is no longer applicable.
Sections 206.157(c)(2) (ii) and (iii) are removed because of the
elimination of allowance forms.
Section 206.157(c)(2)(iv) is redesignated as Sec. 206.157(c)(2)(ii)
because of paragraph renumbering. We are removing reference to Form
MMS-4295 and are retaining the lessee's use of cost estimates for the
current calendar year until such time as actual cost data become
available.
Section 206.157(c)(2)(v) is removed because of the elimination of
allowance forms.
Section 206.157(c)(2)(vi) is redesignated as
Sec. 206.157(c)(2)(iii) because of paragraph renumbering. We will still
require the lessee to document its transportation costs and to make
that data available upon MMS request. We are removing reference to Form
MMS-4295.
Section 206.157(c)(2)(vii) is removed because of the elimination of
allowance forms.
Section 206.157(c)(2)(viii) is redesignated as
Sec. 206.157(c)(2)(iv) because of paragraph renumbering. The lessee may
use a FERC-approved or State regulatory agency-approved tariff as its
transportation cost.
Section 206.157(c)(3) is removed because of the elimination of
allowance forms.
Section 206.157(c)(4) is removed because it duplicates the
requirement to report a separate line entry on Form MMS-2014 when
claiming an allowance.
Sections 206.157(d) (1)-(2) are amended to remove the sanction
language associated with timely filing of allowance forms, and replace
it with an assessment for improper netting. We have imposed this new
assessment, described under Sec. 206.157(d)(1), because of the impact
concealing allowance information on Form MMS-2014 has on MMS' ability
to verify the allowance taken. The new assessment provision allows us
to bill up to 10 percent of the allowance reported as a netted amount
but not to exceed $250 per lease selling arrangement per sales period.
This provision gives us the flexibility to work with the payor which
has infrequently or never netted its allowances while being able to
more aggressively address the situation with
[[Page 5452]]
the payor who chronically nets its allowances (i.e., a repeat
offender). Use of this new sanction is consistent with the conclusions
and recommendations of the multiconstituent Allowance Study Group.
We also have included under new Sec. 206.157(d)(2) the current
policy of assessing interest on the amount of an allowance taken in
excess of the threshold (50 percent of the value of the gas
transported) from the date the excess allowance is taken to the date
the lessee files an exception request Form MMS-4393, Request to Exceed
Regulatory Allowance Limitation with MMS.
Section 206.157(d)(2) is redesignated as Sec. 206.157(d)(3) because
of paragraph renumbering.
Section 206.157(d)(3) is redesignated as Sec. 206.157(d)(4) because
of paragraph renumbering.
Section 206.157(e)(1) is amended to remove reference to the
allowance form filing period. This paragraph still authorizes the
lessee to make adjustments to estimated allowances based on actual cost
data for the allowance reporting period. However, it clarifies that
when such adjustments result in an underpayment of royalty, the
interest for such underpayment is computed from allowance reporting
period when the lessee took the deduction to the date the lessee repays
the difference to MMS.
Sec. 206.158 Processing allowances--general.
Section 206.158(c)(3) is amended to specify that Form MMS-4393 is
the application form used to request an exception to exceed the
regulatory allowance limitation of 66\2/3\ percent for gas processing.
Section 206.158(e) is amended to add the caveat about netting to
further clarify improper reporting of allowances on Form MMS-2014.
Sec. 206.159 Determination of processing allowances.
Section 206.159(a)(1)(i) is amended to remove the requirement to
file Form MMS-4109, Gas Processing Allowance Summary Report (and the
related 3-month retroactivity period) and specify that the lessee/payor
can use a self-implementing approach to claim an allowance under an
arm's-length contract by reporting a separate line entry on Form MMS-
2014. This change implements industry's comments requesting elimination
of allowance forms.
Section 206.159(a)(3) is amended to clarify that the lessee is
still required to request and receive approval for a cost allocation
method for transportation of both gaseous and liquid products through
the same delivery system. However, that approval process will no longer
be tied to allowance form filing; instead, the lessee must submit the
proposal within 3 months of claiming the deduction on Form MMS-2014.
Section 206.159(b)(1) is revised to remove the requirement to file
Form MMS-4109 (and the related 3-month retroactivity period) and
specify that the lessee/payor can use a self-implementing approach to
claim an allowance under a non-arm's-length or no contract by reporting
a separate line entry on Form MMS-2014. This change implements
industry's comments requesting elimination of allowance forms.
Section 206.159(b)(2)(v) is amended to specify that the reporting
period will be based on a calendar year basis as opposed to a forms
filing reporting period. We retained the use of the Standard and Poor's
BBB rating.
Section 206.159(c)(1)(i) is revised for sales under arm's-length
contracts, to specify that the lessee takes the gas processing
allowance by reporting a separate line item on Form MMS-2014.
Submitting Form MMS-4109 is no longer required.
Section 206.159(c)(1) (ii)-(iii) are removed because of the
elimination of allowance forms.
Section 206.159(c)(1)(iv) is redesignated as Sec. 206.159(c)(1)(ii)
because of paragraph renumbering. We still require the lessee to
document their processing costs and to make that data available upon
MMS request.
Sections 206.159(c)(1) (v) and (vi) are removed because of the
elimination of allowance forms.
Section 206.159(c)(2)(i) is revised for sales under a non-arm's-
length or no contract to specify that the lessee takes the gas
processing allowance by reporting a separate line item on Form MMS-
2014. Submitting Form MMS-4109 is no longer required.
Sections 206.159(c)(2)(ii) and (iii) are removed because of the
elimination of allowance forms.
Section 206.159(c)(2)(iv) is redesignated as Sec. 206.159(c)(2)(ii)
because of paragraph renumbering. We are removing reference to form
MMS-4109 and are retaining the lessee's use of cost estimates for the
current calendar year until such time as actual cost data becomes
available.
Section 206.159(c)(2)(v) is removed because of the elimination of
allowance forms.
Section 206.159(c)(2)(vi) is redesignated as
Sec. 206.159(c)(2)(iii) because of paragraph renumbering. We will still
require the lessee to document its processing costs and to make that
data available upon MMS request. We are removing reference to Form MMS-
4109.
Section 206.159(c)(2)(vii) is removed because of the elimination of
allowance forms.
Section 206.159(c)(2)(viii) is redesignated as
Sec. 206.159(c)(2)(iv) due to paragraph renumbering.
Section 206.159(c)(3) is removed because of the elimination of
allowance forms.
Section 206.159(c)(4) is removed because it duplicates the
requirement to report a separate line entry on Form MMS-2014 when
claiming an allowance.
Sections 206.159(d) (1) and (2) are revised to remove the
consequences associated with untimely filing of allowance forms, and
replacing them with an assessment for improper netting. We have imposed
this new assessment language, described under Sec. 206.159(d)(1), based
on the severity of concealing allowance information on Form MMS-2014.
The new assessment provision allows us to bill up to 10 percent of the
allowance reported as a netted amount but not to exceed $250 per lease
selling arrangement per sales period. This provision gives us the
flexibility to work with the payor who has infrequently or never netted
its allowances while being able to more aggressively address the
situation with the payor who chronically nets its allowances (i.e., a
repeat offender). Use of this new assessment is consistent with the
conclusions and recommendations of the multiconstituent Allowance Study
Group.
We also have included under new Sec. 206.159(d)(2) the current
policy of assessing interest on the amount of an allowance taken in
excess of the threshold (66 \2/3\ percent of the value of the gas
processed) from the date the excess allowance is taken to the date the
lessee files an exception request (Form MMS-4393) with MMS.
Section 206.159(d)(2) is redesignated as Sec. 206.159(d)(3) because
of paragraph renumbering.
Section 206.159(d)(3) is redesignated as Sec. 206.159(d)(4) because
of paragraph renumbering.
Section 206.159(e)(1) is amended to remove reference to the
allowance form filing period. This paragraph still authorizes the
lessee to make adjustments to estimated allowances based on actual cost
data for the allowance reporting period. However, it clarifies that
when such adjustments result in an underpayment of royalty, the
interest for such underpayment is
[[Page 5453]]
computed from the allowance reporting period when the lessee took the
deduction to the date the lessee repays the difference to MMS.
c. Federal Coal
(1) The only change to several sections within Subpart F--Federal
Coal involves the removal of references to Indian leases or lessors.
The sections which are deleted entirely or partially revised, to
eliminate the reference to Indian leases or lessors are:
Sec. 206.250 Purpose and scope.
Sec. 206.251 Definitions.
The following terms are changed or removed: Audit, BIA, Gross
proceeds, Indian allottee, Indian Tribe, Lease, and Lessee.
Sec. 206.253 Coal subject to royalties--general provisions.
Section 206.253 (a) and (c) are revised to eliminate the reference
to Indian leases or lessors.
Sec. 206.255 Point of royalty determination.
Section 206.255(a) and (b) are revised to eliminate the reference
to Indian leases or lessors.
Sec. 206.256 Valuation standards for cents-per-ton leases.
Section 206.256(a) is revised to eliminate the reference to Indian
leases or lessors.
Sec. 206.257 Valuation standards for ad valorem leases.
Section 206.257 (a), (d)(2), (h), (j), and (k) are revised to
eliminate the reference to Indian leases or lessors.
Sec. 206.258 Washing allowances--general.
Section 206.258(c) is revised to eliminate the reference to Indian
leases or lessors.
Sec. 206.261 Transportation allowances--general.
Section 206.261(a)(1), (a)(2), and (e) are revised to eliminate the
reference to Indian leases or lessors.
Sec. 206.262 Determination of transportation allowances.
Section 206.262(b)(3) is revised to eliminate the reference to
Indian leases or lessors.
(2) We are revising several sections of Subpart F--Federal Coal to
reflect comments from industry for elimination of allowance forms.
Further, based on recommendations of our Allowance Study Group, we are
revising the current assessment structure to focus our efforts on
verifying allowance information provided on Form MMS-2014, by the
payor, rather than generating a revenue stream from sanctions on the
filing and timely submission of allowance forms.
Accordingly, we are revising the following sections:
Sec. 206.251 Definitions.
Allowance We changed the definition to remove any implication of a
forms filing requirement, or of having to seek MMS approval prior to
claiming an allowance on the Form MMS-2014.
Netting We added this definition to clarify the reporting situation
which will result in an assessment for not reporting allowances as a
separate line item on Form MMS-2014.
Sec. 206.259 Determination of washing allowances.
Section 206.259(a)(1) is amended to remove the requirement to file
Form MMS-4292, Coal Washing Allowance Report (and the related 3-month
retroactivity period) and specifying that the lessee/payor can use a
self-implementing approach to claim an allowance under an arm's-length
contract by reporting a separate line entry on Form MMS-2014. This
change implements industry's comments requesting elimination of
allowance forms.
Section 206.259(b)(1) is amended to remove the requirement to file
Form MMS-4292 (and the related 3-month retroactivity period) and
specify that the lessee/payor may use a self-implementing approach to
claim an allowance under a non-arm's-length or no contract by reporting
a separate line entry on the Form MMS-2014.
Section 206.259(b)(2)(v) is amended to specify that the reporting
period will be based on a calendar year basis as opposed to a forms
filing reporting period. We retained the use of the Standard and Poor's
BBB rating.
Section 206.259(c)(1)(i) is amended for sales under arm's-length
contracts to specify that the lessee takes the coal washing allowance
by reporting a separate line item on Form MMS-2014. Submitting the Form
MMS-4292 is no longer required.
Sections 206.259(c)(1) (ii) and (iii) these paragraphs are removed
because of the elimination of allowance forms. Section
206.259(c)(1)(iv) is redesignated as Sec. 206.259(c)(1)(ii). We will
still require the lessee to document its washing costs and to make all
documentation available upon request by MMS.
Section 206.259(c)(1)(v) is removed because of the elimination of
allowance forms.
Section 206.259(c)(1)(vi) is removed because of the elimination of
allowance forms.
Section 206.259(c)(2)(i) is revised for sales under a non-arm's-
length or no contract to specify that the lessee takes the coal washing
allowance by reporting a separate line item on Form MMS-2014.
Submitting Form MMS-4292 is no longer required.
Sections 206.259(c)(2) (ii)-(iii) are removed because of the
elimination of allowance forms.
Section 206.259(c)(2)(iv) is redesignated as Sec. 206.259(c)(2)(ii)
due to paragraph renumbering. We are removing reference to Form MMS-
4292 and are retaining the lessee's use of cost estimates for the
current calendar year until such time as actual cost data become
available.
Section 206.259(c)(2)(v) is removed because of the elimination of
allowance forms.
Section 206.259(c)(2)(vi) is redesignated as
Sec. 206.259(c)(2)(iii) because of paragraph renumbering. We will still
require the lessee to document its washing costs and to make that data
available upon MMS request. We are removing reference to Form MMS-4292.
Section 206.259(c)(2)(vii) is removed because of the elimination of
allowance forms.
Section 206.259(c)(3) is removed because of the elimination of
allowance forms.
Section 206.259(c)(4) is removed because it duplicates the
requirement to report a separate line entry on Form MMS-2014 when
claiming an allowance.
Section 206.259(d)(1) is amended to remove the language associated
with timely filing of allowance forms, and replaces it with an
assessment for improper netting. We have imposed this new assessment,
described under Sec. 206.259 (d)(1), because of the impact concealing
allowance information on Form MMS-2014 has on MMS' ability to verify
allowances taken. The new assessment provision allows us to bill up to
10 percent of the allowance reported as a netted amount but not to
exceed $250 per lease selling arrangement per sales period. This
provision gives us the flexibility to work with the payor which has
infrequently or never netted its allowances while being able to more
aggressively address the situation with the payor which chronically
nets its allowances (i.e., a repeat offender). Use of this new
assessment is consistent with the conclusions and recommendations of
the multiconstituent Allowance Study Group.
Section 206.259(e)(1) is amended to remove reference to the
allowance form filing period. This paragraph still authorizes the
lessee to make
[[Page 5454]]
adjustments to estimated allowances based on actual cost data for the
allowance reporting period. However, it clarifies that when such
adjustments result in an underpayment of royalty, the interest for such
underpayment is computed from the allowance reporting period when the
lessee took the deduction to the date the lessee repays the difference
to MMS.
Sec. 206.262 Determination of transportation allowances.
Section 206.262(a)(1) is amended to remove the requirement to file
Form MMS-4293, Coal Transportation Allowance Report (and the related 3-
month retroactivity period) and specify that the lessee/payor may use a
self-implementing approach to claim an allowance under an arm's-length
contract by reporting a separate line entry on Form MMS-2014.
Section 206.262(b)(1) is amended to remove the requirement to file
Form MMS-4293 (and the related 3-month retroactivity period) and
specify that the lessee/payor may use a self-implementing approach to
claim an allowance under a non-arm's-length or no contract by reporting
a separate line entry on Form MMS-2014.
Section 206.262(b)(2)(v) is amended to specify that the reporting
period will be based on a calendar year basis as opposed to a forms
filing reporting period. We retained the use of the Standard and Poor's
BBB rating.
Section 206.262(c)(1)(i) is revised for sales under arm's-length
contracts to specify that the lessee takes the coal transportation
allowance by reporting a separate line item on Form MMS-2014.
Submitting Form MMS-4293 is no longer applicable.
Section 206.262(c)(1) (ii)-(iii) are removed because of the
elimination of allowance forms.
Section 206.262(c)(1)(iv) is redesignated as Sec. 206.262(c)(1)(ii)
because of paragraph renumbering. We will still require the lessee to
document its transportation costs and to make that data available upon
request by MMS.
Section 206.262(c)(1) (v)-(vi) are removed because of the
elimination of allowance forms.
Section 206.262(c)(2)(i) is amended for sales under a non-arm's-
length or no contract to specify that the lessee takes the coal
transportation allowance by reporting a separate line item on Form MMS-
2014. Submitting Form MMS-4293 is no longer applicable.
Sections 206.262(c)(2) (ii) and (iii) are removed because of the
elimination of allowance forms.
Section 206.262(c)(2)(iv) is redesignated as Sec. 206.262(c)(2)(ii)
due to paragraph renumbering. We are removing reference to Form MMS-
4293 and are retaining the lessee's use of cost estimates for the
current calendar year until such time as actual cost data become
available. Section 206.262(c)(2)(v) is removed because of the
elimination of allowance forms.
Section 206.262(c)(2)(vi) is redesignated as
Sec. 206.262(c)(2)(iii) because of paragraph renumbering. We will still
require the lessee to document its transportation costs and to make
that data available upon MMS request. We are removing reference to Form
MMS-4293.
Section 206.262(c)(2)(vii) is removed because of the elimination of
allowance forms.
Section 206.262(c)(2)(viii) is redesignated as
Sec. 206.262(c)(2)(iv) because of paragraph renumbering. The lessee may
use a FERC-approved or State regulatory agency-approved tariff as its
transportation cost.
Section 206.262(c)(3) is removed because of the elimination of
allowance forms.
Section 206.262(c)(4) is removed since it duplicates the
requirement to report a separate line entry on Form MMS-2014 when
claiming an allowance.
Section 206.262(d)(1) is amended to remove the language associated
with timely filing of allowance forms, and replaces it with an
assessment for improper netting. We have imposed this new assessment,
described under Sec. 206.259(d)(1), because of the impact of concealing
allowance information on Form MMS-2014 has on MMS' ability to verify
allowances taken. The new assessment provision allows us to bill up to
10 percent of the allowance reported as a netted amount but not to
exceed $250 per lease selling arrangement per sales period. This
provision gives us the flexibility to work with the payor which has
infrequently or never netted its allowances while being able to more
aggressively address the situation with the payor which chronically
nets its allowances (i.e., a repeat offender). Use of this new
assessment is consistent with the conclusions and recommendations of
the multiconstituent Allowance Study Group.
Section 206.262(e)(1) is amended to remove reference to the
allowance form filing period. This paragraph still authorizes the
lessee to make adjustments to estimated allowances based on actual cost
data for the allowance reporting period. However, it clarifies that
when such adjustments result in an underpayment of royalty, the
interest for such underpayment is computed from the allowance reporting
period when the lessee took the deduction to date the lessee repays the
difference to MMS.
d. Indian Oil
(1) As stated earlier, since there will be different reporting
requirements for claiming allowance deductions for Indian and Federal
lands, we have established a new valuation subpart, designated Subpart
B--Indian Oil. This new subpart mirrors what was the old combined
Subpart C--Federal and Indian Oil.
The following changes in paragraphs involve removal of Federal
references for new Subpart B--Indian Oil, and therefore will not be
separately discussed:
Sec. 206.50 Purpose and scope.
Section 206.50 (a)-(c).
Sec. 206.51 Definitions.
Audit, Field, Gathering, Gross proceeds, Lease products, Lessee,
Net profit share, Outer Continental Shelf, Posted price, and Section 6
lease.
Sec. 206.52 Valuation standards.
Section 206.52 (d), (i), and (k).
Sec. 206.53 Point of royalty settlement.
Section 206.53 (a) (1)-(2) and (b).
Sec. 206.54 Transportation allowances-general.
Section 206.54 (a) (1)-(2).
Sec. 206.55 Determination of transportation allowances.
Section 206.55 (b)(5), (c)(2)(viii), and (e)(2)-(3).
(2) To specify the form used to request a waiver to allowance
limitations, we made the following change:
Sec. 206.54 Transportation allowances-general.
Section 206.54(b)(2).
This further clarifies that the lessee must use Form MMS-4393 as
the application form to request an exception to exceed the regulatory
allowance limitation of 50 percent for oil transportation.
e. Indian Gas.
(1) Changes to the following paragraphs involve partial or total
removal of Federal references for new Subpart E--Indian Gas, and
therefore will not be separately discussed:
Sec. 206.170 Purpose and scope.
Section 206.170 (a)-(c), (e).
Sec. 206.171 Definitions.
Audit, Field, Gathering, Gross proceeds, Lease products, Lessee,
Net
[[Page 5455]]
profit share, Outer Continental Shelf, and Section 6 lease.
Sec. 206.172 Valuation standards-unprocessed gas.
Section 206.172 (e)(2), (i), and (k).
Sec. 206.173 Valuation standards-processed gas.
Section 206.173(e)(2), (i), and (k).
Sec. 206.174 Determination of quantities and qualities for computing
royalties.
Section 206.174 (a)(1)-(2), (c)(4), and (d)(1).
Sec. 206.177 Determination of transportation allowances.
Section 206.177 (b)(5), (c)(2)(viii), and (e)(2)-(3).
Sec. 206.179 Determination of processing allowances.
Section 206.179 (c)(2)(v), (e)(2)-(3).
(2) To specify the form used to request a waiver to allowance
limitations, we made the following change:
Sec. 206.176 Transportation allowances-general.
Section 206.176(c)(3).
This further clarifies that the lessee must use Form MMS-4393 as
the application form to request an exception to exceed the regulatory
allowance limitation of 50 percent for gas transportation.
Sec. 206.178 Processing allowances-general.
Section 206.178(c)(3).
This further clarifies that the lessee must use Form MMS-4393 as
the application form to request an exception to exceed the regulatory
allowance limitation of 66\2/3\ percent for gas processing.
f. Indian Coal
Changes to the following paragraphs involve removal of Federal
references for new Subpart J--Indian Coal, and therefore will not be
separately discussed:
Sec. 206.450 Purpose and scope.
Section 206.450 (a)-(b).
Sec. 206.451 Definitions.
Audit, Gross proceeds, Lease, and Lessee.
Sec. 206.453 Coal subject to royalties-general provisions.
Section 206.453(a), (c).
Sec. 206.455 Point of royalty determination.
Section 206.455 (a)-(b).
Sec. 206.456 Valuation standards for cents-per-ton leases.
Section 206.456(a).
Sec. 206.457 Valuation standards for ad valorem leases.
Section 206.457 (a), (d)(2), (h), and (j).
Sec. 206.458 Washing allowances-general.
Section 206.458(c).
Sec. 206.461 Transportation allowances-general.
Section 206.461 (a)(1)-(2), and (e).
Sec. 206.462 Determination of transportation allowances.
Section 206.462 (b)(3) and (c)(2)(viii).
g. Part 202--Royalties
Subpart D--Federal and Indian Gas
Section 202.151(a) is amended to revise the last sentence of this
paragraph to refer to the separate subparts governing allowances for
Federal and Indian gas.
IV. Procedural Matters
The Regulatory Flexibility Act
The Department has determined that this rulemaking will not have a
significant economic effect on a substantial number of small entities
under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). The rule
will streamline and improve existing regulatory reporting requirements
related to allowances that are used to calculate royalty payments on
oil and gas produced from Federal and Indian lands.
Executive Order 12630
The Department certifies that the rule does not represent a
governmental action capable of interference with constitutionally
protected property rights. Thus, a Takings Implication Assessment need
not be prepared under Executive Order 12630, ``Government Action and
Interference with Constitutionally Protected Property Rights.''
Executive Order 12778
The Department has certified to the Office of Management and Budget
that these final regulations meet the applicable standards provided in
Sections 2(a) and 2(b)(2) of Executive Order 12778.
Executive Order 12866
This document has been reviewed under Executive Order 12866 and is
not a significant regulatory action.
Paperwork Reduction Act
The information collection requirements contained in this rule have
been approved by the Office of Management and Budget under 44 U.S.C.
3501 et seq., and assigned Clearance Numbers 1010-0022, 1010-0061, and
1010-0075.
National Environmental Policy Act of 1969
We have determined that this rulemaking is not a major Federal
action significantly affecting the quality of the human environment,
and a detailed statement under section 102(2)(C) of the National
Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)) is not
required.
List of Subjects 30 CFR Parts 206 and 202
Coal, Continental shelf, Geothermal energy, Government contracts,
Indian lands, Mineral royalties, Natural gas, Petroleum, Public lands--
mineral resources, Reporting and recordkeeping requirements.
Dated: January 26, 1996.
Bob Armstrong,
Assistant Secretary--Land and Minerals Management.
For the reasons set out in the preamble, 30 CFR part 206 is amended
as set forth below:
PART 206--PRODUCT VALUATION
1. The authority citation for Part 206 is revised to read as
follows:
Authority: 5 U.S.C. 301 et seq.; 25 U.S.C. 396 et seq., 396a et
seq., 2101 et seq.; 30 U.S.C. 181 et seq., 351 et seq., 1001 et
seq., 1701 et seq.; 31 U.S.C. 9701.; 43 U.S.C. 1301 et seq., 1331 et
seq., and 1801 et seq.
2. The heading for Subpart B--Oil, Gas, and OCS Sulfur, General--
[Reserved] is removed and a new Subpart B--Indian Oil is added to read
as follows:
Subpart B--Indian Oil
Sec.
206.50 Purpose and scope.
206.51 Definitions.
206.52 Valuation standards.
206.53 Point of royalty settlement.
206.54 Transportation allowances--general.
206.55 Determination of transportation allowances.
Subpart B--Indian Oil
Sec. 206.50 Purpose and scope.
(a) This subpart is applicable to all oil production from Indian
(Tribal and allotted) oil and gas leases (except leases on the Osage
Indian Reservation, Osage County, Oklahoma). The purpose of this
subpart is to establish the value of production, for royalty purposes,
consistent with the mineral leasing laws, other applicable laws, and
lease terms.
(b) If the specific provisions of any Federal statute, treaty,
settlement
[[Page 5456]]
agreement between the Indian lessor and a lessee resulting from
administrative or judicial litigation, or oil and gas lease subject to
the requirements of this subpart are inconsistent with any regulation
in this subpart, then the statute, treaty, lease provision or
settlement agreement shall govern to the extent of that inconsistency.
(c) All royalty payments made to MMS or Indian Tribes are subject
to audit and adjustment.
(d) The regulations in this subpart are intended to ensure that the
trust responsibilities of the United States with respect to the
administration of Indian oil and gas leases are discharged in
accordance with the requirements of the governing mineral leasing laws,
treaties, and lease terms.
Sec. 206.51 Definitions.
For the purposes of this subpart:
Allowance means an approved or an MMS-initially accepted deduction
in determining value for royalty purposes. Transportation allowance
means an allowance for the reasonable, actual costs incurred by the
lessee for moving oil to a point of sale or point of delivery off the
lease, unit area, or communitized area, excluding gathering, or an
approved or MMS-initially accepted deduction for costs of such
transportation, determined by this subpart.
Area means a geographic region at least as large as the defined
limits of an oil and/or gas field in which oil and/or gas lease
products have similar quality, economic, and legal characteristics.
Arm's-length contract means a contract or agreement that has been
arrived at in the market place between independent, nonaffiliated
persons with opposing economic interests regarding that contract. For
purposes of this subpart, two persons are affiliated if one person
controls, is controlled by, or is under common control with another
person. For purposes of this subpart, based on the instruments of
ownership of the voting securities of an entity, or based on other
forms of ownership: ownership in excess of 50 percent constitutes
control; ownership of 10 through 50 percent creates a presumption of
control; and ownership of less than 10 percent creates a presumption of
noncontrol which MMS may rebut if it demonstrates actual or legal
control, including the existence of interlocking directorates.
Notwithstanding any other provisions of this subpart, contracts between
relatives, either by blood or by marriage, are not arm's-length
contracts. MMS may require the lessee to certify ownership control. To
be considered arm's-length for any production month, a contract must
meet the requirements of this definition for that production month, as
well as when the contract was executed.
Audit means a review, conducted in accordance with generally
accepted accounting and auditing standards, of royalty payment
compliance activities of lessees or other interest holders who pay
royalties, rents, or bonuses on Indian leases.
BIA means the Bureau of Indian Affairs of the Department of the
Interior.
BLM means the Bureau of Land Management of the Department of the
Interior.
Condensate means liquid hydrocarbons (normally exceeding 40 degrees
of API gravity) recovered at the surface without resorting to
processing. Condensate is the mixture of liquid hydrocarbons that
results from condensation of petroleum hydrocarbons existing initially
in a gaseous phase in an underground reservoir.
Contract means any oral or written agreement, including amendments
or revisions thereto, between two or more persons and enforceable by
law that with due consideration creates an obligation.
Field means a geographic region situated over one or more
subsurface oil and gas reservoirs encompassing at least the outermost
boundaries of all oil and gas accumulations known to be within those
reservoirs vertically projected to the land surface. Onshore fields are
usually given names and their official boundaries are often designated
by oil and gas regulatory agencies in the respective States in which
the fields are located.
Gathering means the movement of lease production to a central
accumulation or treatment point on the lease, unit, or communitized
area, or to a central accumulation or treatment point off the lease,
unit, or communitized area as approved by BLM operations personnel for
onshore leases.
Gross proceeds (for royalty payment purposes) means the total
monies and other consideration accruing to an oil and gas lessee for
the disposition of the oil produced. Gross proceeds includes, but is
not limited to, payments to the lessee for certain services such as
dehydration, measurement, and/or gathering to the extent that the
lessee is obligated to perform them at no cost to the Indian lessor.
Gross proceeds, as applied to oil, also includes, but is not limited
to, reimbursements for harboring or terminating fees. Tax
reimbursements are part of the gross proceeds accruing to a lessee even
though the Indian royalty interest may be exempt from taxation. Monies
and other consideration, including the forms of consideration
identified in this paragraph, to which a lessee is contractually or
legally entitled but which it does not seek to collect through
reasonable efforts are also part of gross proceeds.
Indian allottee means any Indian for whom land or an interest in
land is held in trust by the United States or who holds title subject
to Federal restriction against alienation.
Indian Tribe means any Indian Tribe, band, nation, pueblo,
community, rancheria, colony, or other group of Indians for which any
land or interest in land is held in trust by the United States or which
is subject to Federal restriction against alienation.
Lease means any contract, profit-share arrangement, joint venture,
or other agreement issued or approved by the United States under a
mineral leasing law that authorizes exploration for, development or
extraction of, or removal of lease products--or the land area covered
by that authorization, whichever is required by the context.
Lease products means any leased minerals attributable to,
originating from, or allocated to Indian leases.
Lessee means any person to whom an Indian Tribe, or an Indian
allottee issues a lease, and any person who has been assigned an
obligation to make royalty or other payments required by the lease.
This includes any person who has an interest in a lease as well as an
operator or payor who has no interest in the lease but who has assumed
the royalty payment responsibility.
Like-quality lease products means lease products which have similar
chemical, physical, and legal characteristics.
Load oil means any oil which has been used with respect to the
operation of oil or gas wells for wellbore stimulation, workover,
chemical treatment, or production purposes. It does not include oil
used at the surface to place lease production in marketable condition.
Marketable condition means lease products which are sufficiently
free from impurities and otherwise in a condition that they will be
accepted by a purchaser under a sales contract typical for the field or
area.
Marketing affiliate means an affiliate of the lessee whose function
is to acquire only the lessee's production and to market that
production.
Minimum royalty means that minimum amount of annual royalty that
the lessee must pay as specified in the
[[Page 5457]]
lease or in applicable leasing regulations.
MMS means the Minerals Management Service of the Department of the
Interior.
Net-back method (or workback method) means a method for calculating
market value of oil at the lease. Under this method, costs of
transportation, processing, or manufacturing are deducted from the
proceeds received for the oil and any extracted, processed, or
manufactured products, or from the value of the oil or any extracted,
processed, or manufactured products at the first point at which
reasonable values for any such products may be determined by a sale
under an arm's-length contract or comparison to other sales of such
products, to ascertain value at the lease.
Net profit share (for applicable Indian lessees) means the
specified share of the net profit from production of oil and gas as
provided in the agreement.
Oil means a mixture of hydrocarbons that existed in the liquid
phase in natural underground reservoirs and remains liquid at
atmospheric pressure after passing through surface separating
facilities and is marketed or used as such. Condensate recovered in
lease separators or field facilities is considered to be oil. For
purposes of royalty valuation, the term tar sands is defined separately
from oil.
Oil shale means a kerogen-bearing rock (i.e., fossilized,
insoluble, organic material). Separation of kerogen from oil shale may
take place in situ or in surface retorts by various processes. The
kerogen, upon distillation, will yield liquid and gaseous hydrocarbons.
Person means any individual, firm, corporation, association,
partnership, consortium, or joint venture (when established as a
separate entity).
Posted price means the price specified in publicly available posted
price bulletins, onshore terminal postings, or other price notices net
of all adjustments for quality (e.g., API gravity, sulfur content,
etc.) and location for oil in marketable condition.
Processing means any process designed to remove elements or
compounds (hydrocarbon and nonhydrocarbon) from gas, including
absorption, adsorption, or refrigeration. Field processes which
normally take place on or near the lease, such as natural pressure
reduction, mechanical separation, heating, cooling, dehydration, and
compression are not considered processing. The changing of pressures
and/or temperatures in a reservoir is not considered processing.
Selling arrangement means the individual contractual arrangements
under which sales or dispositions of oil are made. Selling arrangements
are described by illustration in MMS Royalty Management Program Oil and
Gas Payor Handbook.
Spot sales agreement means a contract wherein a seller agrees to
sell to a buyer a specified amount of oil at a specified price over a
fixed period, usually of short duration, which does not normally
require a cancellation notice to terminate, and which does not contain
an obligation, nor imply an intent, to continue in subsequent periods.
Tar sands means any consolidated or unconsolidated rock (other
than coal, oil shale, or gilsonite) that either contains a
hydrocarbonaceous material with a gas-free viscosity greater than
10,000 centipoise at original reservoir temperature, or contains
quarrying.
Sec. 206.52 Valuation standards.
(a)(1) The value of production, for royalty purposes, of oil from
leases subject to this subpart shall be the value determined under this
section less applicable allowances determined under this subpart.
(2) (i) For any Indian leases which provide that the Secretary may
consider the highest price paid or offered for a major portion of
production (major portion) in determining value for royalty purposes,
if data are available to compute a major portion, MMS will, where
practicable, compare the value determined in accordance with this
section with the major portion. The value to be used in determining the
value of production, for royalty purposes, shall be the higher of those
two values.
(ii) For purposes of this paragraph, major portion means the
highest price paid or offered at the time of production for the major
portion of oil production from the same field. The major portion will
be calculated using like-quality oil sold under arm's-length contracts
from the same field (or, if necessary to obtain a reasonable sample,
from the same area) for each month. All such oil production will be
arrayed from highest price to lowest price (at the bottom).
The major portion is that price at which 50 percent (by volume)
plus 1 barrel of the oil (starting from the bottom) is sold.
(b)(1) (i) The value of oil which is sold under an arm's-length
contract shall be the gross proceeds accruing to the lessee, except as
provided in paragraphs (b)(1)(ii) and (b)(1)(iii) of this section. The
lessee shall have the burden of demonstrating that its contract is
arm's-length. The value which the lessee reports, for royalty purposes,
is subject to monitoring, review, and audit. For purposes of this
section, oil which is sold or otherwise transferred to the lessee's
marketing affiliate and then sold by the marketing affiliate under an
arm's-length contract shall be valued in accordance with this paragraph
based upon the sale by the marketing affiliate.
(ii) In conducting reviews and audits, MMS will examine whether the
contract reflects the total consideration actually transferred either
directly or indirectly from the buyer to the seller for the oil. If the
contract does not reflect the total consideration, then MMS may require
that the oil sold under that contract be valued in accordance with
paragraph (c) of this section. Value may not be less than the gross
proceeds accruing to the lessee, including the additional
consideration.
(iii) If MMS determines that the gross proceeds accruing to the
lessee under an arm's-length contract do not reflect the reasonable
value of the production because of misconduct by or between two
contracting parties, or because the lessee otherwise has breached its
duty to the lessor to market the production for the mutual benefit of
the lessee and the lessor, then MMS shall require that the oil
production be valued under the first applicable of paragraph (c)(2),
(c)(3), (c)(4), or (c)(5) of this section. When MMS determines that the
value may be unreasonable, MMS will notify the lessee and give the
lessee an opportunity to provide written information justifying the
lessee's value. If the oil production is then valued under paragraph
(c)(4) or (c)(5) of this section, the notification requirements of
paragraph (e) of this section shall apply.
(2) MMS may require a lessee to certify that its arm's-length
contract provisions include all of the consideration to be paid by the
buyer, either directly or indirectly, for the oil.
(c) The value of oil production from leases subject to this section
which is not sold under an arm's-length contract shall be the
reasonable value determined in accordance with the first applicable of
the following paragraphs:
(1) The lessee's contemporaneous posted prices or oil sales
contract prices used in arm's-length transactions for purchases or
sales of significant quantities of like-quality oil in the same field
(or, if necessary to obtain a reasonable sample, from the same area);
provided, however, that those posted prices or oil sales contract
prices are comparable to other contemporaneous posted prices or oil
sales contract prices used in arm's-length transactions for purchases
or sales of significant quantities of like-quality oil in the same
field (or, if necessary to obtain a
[[Page 5458]]
reasonable sample, from the same area). In evaluating the comparability
of posted prices or oil sales contract prices, the following factors
shall be considered: Price, duration, market or markets served, terms,
quality of oil, volume, and other factors as may be appropriate to
reflect the value of the oil. If the lessee makes arm's-length
purchases or sales at different postings or prices, then the volume-
weighted average price for the purchases or sales for the production
month will be used;
(2) The arithmetic average of contemporaneous posted prices used in
arm's-length transactions by persons other than the lessee for
purchases or sales of significant quantities of like-quality oil in the
same field (or, if necessary to obtain a reasonable sample, from the
same area);
(3) The arithmetic average of other contemporaneous arm's-length
contract prices for purchases or sales of significant quantities of
like-quality oil in the same area or nearby areas;
(4) Prices received for arm's-length spot sales of significant
quantities of like-quality oil from the same field (or, if necessary to
obtain a reasonable sample, from the same area), and other relevant
matters, including information submitted by the lessee concerning
circumstances unique to a particular lease operation or the salability
of certain types of oil;
(5) A net-back method or any other reasonable method to determine
value;
(6) For purposes of this paragraph, the term lessee includes the
lessee's designated purchasing agent, and the term contemporaneous
means postings or contract prices in effect at the time the royalty
obligation is incurred.
(d) Any Indian lessee will make available, upon request to the
authorized MMS or Indian representatives, to the Office of the
Inspector General of the Department of the Interior, or other persons
authorized to receive such information, arm's-length sales and volume
data for like-quality production sold, purchased, or otherwise obtained
by the lessee from the field or area or from nearby fields or areas.
(e) (1) Where the value is determined under paragraph (c) of this
section, the lessee shall retain all data relevant to the determination
of royalty value. Such data shall be subject to review and audit, and
MMS will direct a lessee to use a different value if it determines that
the reported value is inconsistent with the requirements of these
regulations.
(2) A lessee shall notify MMS if it has determined value under
paragraph (c)(4) or (c)(5) of this section. The notification shall be
by letter to MMS Associate Director for Royalty Management or his/her
designee. The letter shall identify the valuation method to be used and
contain a brief description of the procedure to be followed. The
notification required by this paragraph is a one-time notification due
no later than the end of the month following the month the lessee first
reports royalties on a Form MMS-2014 using a valuation method
authorized by paragraph (c)(4) or (c)(5) of this section and each time
there is a change from one to the other of these two methods.
(f) If MMS determines that a lessee has not properly determined
value, the lessee shall pay the difference, if any, between royalty
payments made based upon the value it has used and the royalty payments
that are due based upon the value established by MMS. The lessee shall
also pay interest on the difference computed under 30 CFR 218.54. If
the lessee is entitled to a credit, MMS will provide instructions for
the taking of that credit.
(g) The lessee may request a value determination from MMS. In that
event, the lessee shall propose to MMS a value determination method and
may use that value for royalty payment purposes until MMS issues a
value determination. The lessee shall submit all available data
relevant to its proposal. MMS shall expeditiously determine the value
based upon the lessee's proposal and any additional information MMS
deems necessary. In making a value determination, MMS may use any of
the valuation criteria authorized by this subpart. That determination
shall remain effective for the period stated therein. After MMS issues
its determination, the lessee shall make the adjustments in accordance
with paragraph (f) of this section.
(h) Notwithstanding any other provision of this
FR Doc. 96-2641 Revision of Valuation Regulations Governing Oil and Gas Transportation and Processing Allowances, and Coal Washing and Transportation Allowances
section, under no
circumstances shall the value of production, for royalty purposes, be
less than the gross proceeds accruing to the lessee for lease
production, less applicable allowances determined under this subpart.
(i) The lessee is required to place oil in marketable condition at
no cost to the Indian lessor unless otherwise provided in the lease
agreement or this section. Where the value established under this
section is determined by a lessee's gross proceeds, that value shall be
increased to the extent that the gross proceeds have been reduced
because the purchaser, or any other person, is providing certain
services the cost of which ordinarily is the responsibility of the
lessee to place the oil in marketable condition.
(j) Value shall be based on the highest price a prudent lessee can
receive through legally enforceable claims under its contract. Absent
contract revision or amendment, if the lessee fails to take proper or
timely action to receive prices or benefits to which it is entitled, it
must pay royalty at a value based upon that obtainable price or
benefit. Contract revisions or amendments shall be in writing and
signed by all parties to an arm's-length contract. If the lessee makes
timely application for a price increase or benefit allowed under its
contract but the purchaser refuses, and the lessee takes reasonable
measures, which are documented, to force purchaser compliance, the
lessee will owe no additional royalties unless or until monies or
consideration resulting from the price increase or additional benefits
are received. This paragraph shall not be construed to permit a lessee
to avoid its royalty payment obligation in situations where a purchaser
fails to pay, in whole or in part or timely, for a quantity of oil.
(k) Notwithstanding any provision in these regulations to the
contrary, no review, reconciliation, monitoring, or other like process
that results in a redetermination by MMS of value under this section
shall be considered final or binding as against the Indian Tribes or
allottees until the audit period is formally closed.
(l) Certain information submitted to MMS to support valuation
proposals, including transportation allowances or extraordinary cost
allowances, is exempted from disclosure by the Freedom of Information
Act, 5 U.S.C. Sec. 552, or other Federal law. Any data specified by law
to be privileged, confidential, or otherwise exempt, will be maintained
in a confidential manner in accordance with applicable laws and
regulations. All requests for information about determinations made
under this part are to be submitted in accordance with the Freedom of
Information Act regulation of the Department of the Interior, 43 CFR
Part 2. Nothing in this section is intended to limit or diminish in any
manner whatsoever the right of an Indian lessor to obtain any and all
information to which such lessor may be lawfully entitled from MMS or
such lessor's lessee directly under the terms of the lease, 30 U.S.C.
1733, or other applicable law.
Sec. 206.53 Point of royalty settlement.
(a) (1) Royalties shall be computed on the quantity and quality of
oil as measured at the point of settlement approved by BLM for onshore
leases.
(2) If the value of oil determined under Sec. 206.52 of this
subpart is based
[[Page 5459]]
upon a quantity and/or quality different from the quantity and/or
quality at the point of royalty settlement approved by the BLM for
onshore leases, the value shall be adjusted for those differences in
quantity and/or quality.
(b) No deductions may be made from the royalty volume or royalty
value for actual or theoretical losses. Any actual loss that may be
sustained prior to the royalty settlement metering or measurement point
will not be subject to royalty provided that such actual loss is
determined to have been unavoidable by BLM.
(c) Except as provided in paragraph (b) of this section, royalties
are due on 100 percent of the volume measured at the approved point of
royalty settlement. There can be no reduction in that measured volume
for actual losses beyond the approved point of royalty settlement or
for theoretical losses that are claimed to have taken place either
prior to or beyond the proved point of royalty settlement. Royalties
are due on 100 percent of the value of the oil as provided in this
subpart. There can be no deduction from the value of the oil for
royalty purposes to compensate for actual losses beyond the approved
point of royalty settlement or for theoretical losses that are claimed
to have taken place either prior to or beyond the approved point of
royalty settlement.
Sec. 206.54 Transportation allowances--general.
(a) Where the value of oil has been determined under Section 206.52
of this subpart at a point (e.g., sales point or point of value
determination) off the lease, MMS shall allow a deduction for the
reasonable, actual costs incurred by the lessee to transport oil to a
point off the lease; provided, however, that no transportation
allowance will be granted for transporting oil taken as Royalty-In-Kind
(RIK); or
(b) (1) Except as provided in paragraph (b)(2) of this section, the
transportation allowance deduction on the basis of a selling
arrangement shall not exceed 50 percent of the value of the oil at the
point of sale as determined under Sec. 206.52 of this subpart.
Transportation costs cannot be transferred between selling arrangements
or to other products.
(2) Upon request of a lessee, MMS may approve a transportation
allowance deduction in excess of the limitation prescribed by paragraph
(b)(1) of this section. The lessee must demonstrate that the
transportation costs incurred in excess of the limitation prescribed in
paragraph (b)(1) of this section were reasonable, actual, and
necessary. An application for exception (using Form MMS-4393, Request
to Exceed Regulatory Allowance Limitation) shall contain all relevant
and supporting documentation necessary for MMS to make a determination.
Under no circumstances shall the value, for royalty purposes, under any
selling arrangement, be reduced to zero.
(c) Transportation costs must be allocated among all products
produced and transported as provided in Sec. 206.55. Transportation
allowances for oil shall be expressed as dollars per barrel.
(d) If, after a review and/or audit, MMS determines that a lessee
has improperly determined a transportation allowance authorized by this
subpart, then the lessee shall pay any additional royalties, plus
interest determined in accordance with 30 CFR 218.54, or shall be
entitled to a credit, without interest.
Sec. 206.55 Determination of transportation allowances.
(a) Arm's-length transportation contracts.
(1)(i) For transportation costs incurred by a lessee under an
arm's-length contract, the transportation allowance shall be the
reasonable, actual costs incurred by the lessee for transporting oil
under that contract, except as provided in paragraphs (a)(1)(ii) and
(a)(1)(iii) of this section, subject to monitoring, review, audit, and
adjustment. The lessee shall have the burden of demonstrating that its
contract is arm's-length. Such allowances shall be subject to the
provisions of paragraph (f) of this section. Before any deduction may
be taken, the lessee must submit a completed page one of Form MMS-4110
(and Schedule 1), Oil Transportation Allowance Report, in accordance
with paragraph (c)(1) of this section. 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 MMS,
unless MMS approves a longer period upon a showing of good cause by the
lessee.
(ii) In conducting reviews and audits, MMS will examine whether the
contract reflects more than the consideration actually transferred
either directly or indirectly from the lessee to the transporter for
the transportation. If the contract reflects more than the total
consideration, then MMS may require that the transportation allowance
be determined in accordance with paragraph (b) of this section.
(iii) If MMS determines that the consideration paid under an arm's-
length transportation contract does not reflect the reasonable value of
the transportation because of misconduct by or between the contracting
parties, or because the lessee otherwise has breached its duty to the
lessor to market the production for the mutual benefit of the lessee
and the lessor, then MMS shall require that the transportation
allowance be determined in accordance with paragraph (b) of this
section. When MMS determines that the value of the transportation may
be unreasonable, MMS will notify the lessee and give the lessee an
opportunity to provide written information justifying the lessee's
transportation costs.
(2)(i) If an arm's-length transportation contract includes more
than one liquid product, and the transportation costs attributable to
each product cannot be determined from the contract, then the total
transportation costs shall be allocated in a consistent and equitable
manner to each of the liquid products transported in the same
proportion as the ratio of the volume of each product (excluding waste
products which have no value) to the volume of all liquid products
(excluding waste products which have no value). Except as provided in
this paragraph, no allowance may be taken for the costs of transporting
lease production which is not royalty-bearing without MMS approval.
(ii) Notwithstanding the requirements of paragraph (i), the lessee
may propose to MMS a cost allocation method on the basis of the values
of the products transported. MMS shall approve the method unless it
determines that it is not consistent with the purposes of the
regulations in this part.
(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 MMS. The lessee may use the
oil transportation allowance determined in accordance with its proposed
allocation procedure until MMS issues its determination on the
acceptability of the cost allocation. The lessee shall submit all
available data to support its proposal. The initial proposal must be
submitted by June 30, 1988 or within 3 months after the last day of the
month for which the lessee requests a transportation allowance,
whichever is later (unless MMS approves a longer period). MMS shall
then determine the oil transportation allowance based upon the lessee's
proposal and any additional information MMS deems necessary.
(4) Where the lessee's payments for transportation under an arm's-
length contract are not on a dollar-per-unit basis, the lessee shall
convert whatever
[[Page 5460]]
consideration is paid to a dollar value equivalent for the purposes of
this section.
(5) Where an arm's-length sales contract price, or a posted price,
includes a provision whereby the listed price is reduced by a
transportation factor, MMS will not consider the transportation factor
to be a transportation allowance. The transportation factor may be used
in determining the lessee's gross proceeds for the sale of the product.
The transportation factor may not exceed 50 percent of the base price
of the product without MMS approval.
(b) Non-arm's-length or no contract.
(1) If a lessee has a non-arm's-length transportation contract or
has no contract, including those situations where the lessee performs
transportation services for itself, the transportation allowance will
be based upon the lessee's reasonable, actual costs as provided in this
paragraph. All transportation allowances deducted under a non-arms-
length or no-contract situation are subject to monitoring, review,
audit, and adjustment. Before any estimated or actual deduction may be
taken, the lessee must submit a completed Form MMS-4110 in its entirety
in accordance with paragraph (c)(2) of this section. 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 MMS, unless MMS approves a longer period upon a showing of good
cause by the lessee. MMS will monitor the allowance deductions to
determine whether lessees are taking deductions that are reasonable and
allowable. When necessary or appropriate, MMS may direct a lessee to
modify its actual transportation allowance deduction.
(2) The transportation allowance for non-arms-length or no-contract
situations shall be based upon the lessee's actual costs for
transportation during the reporting period, including operating and
maintenance expenses, overhead, and either depreciation and a return on
undepreciated capital investment in accordance with paragraph
(b)(2)(iv)(A) of this section, or a cost equal to the initial capital
investment in the transportation system multiplied by a rate of return
in accordance with paragraph (b)(2)(iv)(B) of this section. Allowable
capital costs are generally those for depreciable fixed assets
(including costs of delivery and installation of capital equipment)
which are an integral part of the transportation system.
(i) Allowable operating expenses include: Operations supervision
and engineering; operations labor; fuel; utilities; materials; ad
valorem property taxes; rent; supplies; and any other directly
allocable and attributable operating expense which the lessee can
document.
(ii) Allowable maintenance expenses include: Maintenance of the
transportation system; maintenance of equipment; maintenance labor; and
other directly allocable and attributable maintenance expenses which
the lessee can document.
(iii) Overhead directly attributable and allocable to the operation
and maintenance of the transportation system is an allowable expense.
State and Federal income taxes and severance taxes and other fees,
including royalties, are not allowable expenses.
(iv) A lessee may use either depreciation or a return on
depreciable capital investment. 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 MMS.
(A) To compute depreciation, the lessee may elect to use either a
straight-line depreciation method based on the life of equipment or on
the life of the reserves which the transportation system services or on
a unit-of-production method. After an election is made, the lessee may
not change methods without MMS approval. A change in ownership of a
transportation system shall not alter the depreciation schedule
established by the original transporter/lessee for purposes of the
allowance calculation. With or without a change in ownership, a
transportation system shall be depreciated only once. Equipment shall
not be depreciated below a reasonable salvage value.
(B) MMS shall allow as a cost an amount equal to the initial
capital investment in the transportation system multiplied by the rate
of return determined under paragraph (b)(2)(v) of this section. No
allowance shall be provided for depreciation. This alternative shall
apply only to transportation facilities first placed in service after
March 1, 1988.
(v) The rate of return shall be the industrial rate associated with
Standard and Poor's BBB rating. The rate of return shall be the monthly
average rate as published in Standard and Poor's Bond Guide for the
first month of the reporting period for which the allowance is
applicable and shall be effective during the reporting period. The rate
shall be redetermined at the beginning of each subsequent
transportation allowance reporting period (which is determined under
paragraph (c) of this section).
(3)(i) The deduction for transportation costs shall be determined
on the basis of the lessee's cost of transporting each product through
each individual transportation system. Where more than one liquid
product is transported, allocation of costs to each of the liquid
products transported shall be in the same proportion as the ratio of
the volume of each liquid product (excluding waste products which have
no value) to the volume of all liquid products (excluding waste
products which have no value) and such allocation shall be made in a
consistent and equitable manner. Except as provided in this paragraph,
the lessee may not take an allowance for transporting lease production
which is not royalty-bearing without MMS approval.
(ii) Notwithstanding the requirements of paragraph (i), the lessee
may propose to MMS a cost allocation method on the basis of the values
of the products transported. MMS shall approve the method unless it
determines that it is not consistent with the purposes of the
regulations in this part.
(4) Where both gaseous and liquid products are transported through
the same transportation system, the lessee shall propose a cost
allocation procedure to MMS. The lessee may use the oil transportation
allowance determined in accordance with its proposed allocation
procedure until MMS issues its determination on the acceptability of
the cost allocation. The lessee shall submit all available data to
support its proposal. The initial proposal must be submitted by June
30, 1988 or within 3 months after the last day of the month for which
the lessee requests a transportation allowance, whichever is later
(unless MMS approves a longer period). MMS shall then determine the oil
transportation allowance on the basis of the lessee's proposal and any
additional information MMS deems necessary.
(5) A lessee may apply to MMS for an exception from the requirement
that it compute actual costs in accordance with paragraphs (b)(1)
through (b)(4) of this section. MMS will grant the exception only if
the lessee has a tariff for the transportation system approved by the
Federal Energy Regulatory Commission (FERC) for Indian leases. MMS
shall deny the exception request if it determines that the tariff is
excessive as compared to arm's-length transportation charges by
pipelines, owned by the lessee or others, providing similar
transportation services in that area. If there are no arm's-length
transportation charges, MMS shall deny the exception request if:
[[Page 5461]]
(i) No FERC cost analysis exists and the FERC has declined to
investigate under MMS timely objections upon filing; and
(ii) the tariff significantly exceeds the lessee's actual costs for
transportation as determined under 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's-length contract, is
reported on Form MMS-2014, Report of Sales and Royalty Remittance. A
Form MMS-4110 received by the end of the month that the Form MMS-2014
is due shall be considered to be timely received.
(ii) The initial Form MMS-4110 shall be effective for a reporting
period beginning the month that the lessee is first authorized to
deduct a transportation allowance and shall continue until the end of
the calendar year, or until the applicable contract or rate terminates
or is modified or amended, whichever is earlier.
(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 MMS approves a longer period
(during which period the lessee shall continue to use the allowance
from the previous reporting period).
(iv) MMS 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 MMS.
(v) Transportation allowances which are based on arm's-length
contracts and which are in effect at the time these regulations become
effective will be allowed to continue until such allowances terminate.
For the purposes of this section, only those allowances that have been
approved by MMS in writing shall qualify as being in effect at the time
these regulations become effective.
(vi) MMS may establish, in appropriate circumstances, reporting
requirements which are different from the requirements of this section.
(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's-length contract or no-contract situation is reported on Form MMS-
2014. A Form MMS-4110 received by the end of the month that the Form
MMS-2014 is due shall be considered to be timely received. The initial
report may be based upon estimated costs.
(ii) The initial Form MMS-4110 shall be effective for a reporting
period beginning the month that the lessee first is authorized to
deduct a transportation allowance and shall continue until the end of
the calendar year, or until transportation under the non-arm's-length
contract or the no-contract situation terminates, whichever is earlier.
(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. The estimated oil
transportation allowance shall be based on the actual costs for the
previous reporting period plus or minus any adjustments which are based
on the lessee's knowledge of decreases or increases that will affect
the allowance. MMS must receive the Form MMS-4110 within 3 months after
the end of the previous reporting period, unless MMS approves a longer
period (during which period the lessee shall continue to use the
allowance from the previous reporting period).
(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. Cost estimates
shall be based upon the most recently available operations data for the
transportation system or, if such data are not available, the lessee
shall use estimates based upon industry data for similar transportation
systems.
(v) Non-arm's-length contract or no-contract transportation
allowances which are in effect at the time these regulations become
effective will be allowed to continue until such allowances terminate.
For the purposes of this section, only those allowances that have been
approved by MMS in writing shall qualify as being in effect at the time
these regulations become effective.
(vi) Upon request by MMS, 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 MMS.
(vii) MMS may establish, in appropriate circumstances, reporting
requirements which are different from the requirements of this section.
(viii) If the lessee is authorized to use its FERC-approved tariff
as its transportation cost in accordance with paragraph (b)(5) of this
section, it shall follow the reporting requirements of paragraph (c)(1)
of this section.
(3) MMS may establish reporting dates for individual lessees
different from those specified in this subpart in order to provide more
effective administration. Lessees will be notified of any change in
their reporting period.
(4) Transportation allowances must be reported as a separate line
item on Form MMS-2014, unless MMS approves a different reporting
procedure.
(d) Interest assessments for incorrect or late reports and for
failure to report. (1) If a lessee deducts a transportation allowance
on its Form MMS-2014 without complying with the requirements of this
section, the lessee shall pay interest only on the amount of such
deduction until the requirements of this section are complied with. The
lessee also shall repay the amount of any allowance which is disallowed
by this section.
(2) If a lessee erroneously reports a transportation allowance
which results in an underpayment of royalties, interest shall be paid
on the amount of that underpayment.
(3) Interest required to be paid by this section shall be
determined in accordance with 30 CFR 218.54.
(e) Adjustments.
(1) If the actual transportation allowance is less than the amount
the lessee has taken on Form MMS-2014 for each month during the
allowance form reporting period, the lessee shall be required to pay
additional royalties due plus interest computed under 30 CFR 218.54,
retroactive to the first day of the first month the lessee is
authorized to deduct a transportation allowance. If the actual
transportation allowance is greater than the amount the lessee has
taken on Form MMS-2014 for each month during the allowance form
reporting period, the lessee shall be entitled to a credit without
interest.
(2) For lessees transporting production from Indian leases, the
lessee must submit a corrected Form MMS-2014 to reflect actual costs,
together with any payment, in
[[Page 5462]]
accordance with instructions provided by MMS.
(f) Actual or theoretical losses. Notwithstanding any other
provisions of this subpart, for other than arm's-length contracts, no
cost shall be allowed for oil transportation which results from
payments (either volumetric or for value) for actual or theoretical
losses. This section does not apply when the transportation allowance
is based upon a FERC or State regulatory agency approved tariff.
(g) Other transportation cost determinations. The provisions of
this section shall apply to determine transportation costs when
establishing value using a netback valuation procedure or any other
procedure that requires deduction of transportation costs.
3. Subpart C--Federal and Indian Oil is amended by revising the
heading to read as follows:
Subpart C--Federal Oil
4. Section 206.100 is amended by revising paragraphs (a), (b), and
(c) to read as follows:
Sec. 206.100 Purpose and scope.
(a) This subpart is applicable to all oil production from Federal
oil and gas leases. The purpose of this subpart is to establish the
value of production, for royalty purposes, consistent with the mineral
leasing laws, other applicable laws, and lease terms.
(b) If the specific provisions of any Federal statute, settlement
agreement between the United States and a lessee resulting from
administrative or judicial litigation, or oil and gas lease subject to
the requirements of this subpart are inconsistent with any regulation
in this subpart, then the statute, lease provision or settlement
agreement shall govern to the extent of that inconsistency.
(c) All royalty payments made to MMS are subject to audit and
adjustment.
* * * * *
5. Section 206.101 is amended by adding in alphabetical order the
definition for Netting, revising the definitions for Allowance, Audit,
Gross proceeds, Lease products, Lessee, Net Profit share, and deleting
the definitions BIA, Indian allottee, Indian Tribe to read as follows:
Sec. 206.101 Definitions.
For the purposes of this subpart:
Allowance means a deduction in determining value for royalty
purposes. Transportation allowance means an allowance for the
reasonable, actual costs incurred by the lessee for moving oil to a
point of sale or point of delivery off the lease, unit area, or
communitized area, excluding gathering.
* * * * *
Audit means a review, conducted in accordance with generally
accepted accounting and auditing standards, of royalty payment
compliance activities of lessees or other interest holders who pay
royalties, rents, or bonuses on Federal leases.
* * * * *
Gross proceeds (for royalty payment purposes) means the total
moneys and other consideration accruing to an oil and gas lessee for
the disposition of the oil produced. Gross proceeds includes, but is
not limited to, payments to the lessee for certain services such as
dehydration, measurement, and/or gathering to the extent that the
lessee is obligated to perform them at no cost to the Federal
Government. Gross proceeds, as applied to oil, also includes, but is
not limited to, reimbursements for harboring or terminaling fees. Tax
reimbursements are part of the gross proceeds accruing to a lessee even
though the Federal royalty interest may be exempt from taxation. Moneys
and other consideration, including the forms of consideration
identified in this paragraph, to which a lessee is contractually or
legally entitled but which it does not seek to collect through
reasonable efforts are also part of gross proceeds.
* * * * *
Lease products means any leased minerals attributable to,
originating from, or allocated to Outer Continental Shelf or onshore
Federal leases.
Lessee means any person to whom the United States issues a lease,
and any person who has been assigned an obligation to make royalty or
other payments required by the lease. This includes any person who has
an interest in a lease as well as an operator or payor who has no
interest in the lease but who has assumed the royalty payment
responsibility.
* * * * *
Net profit share (for applicable Federal leases) means the
specified share of the net profit from production of oil and gas as
provided in the agreement.
Netting is the deduction of an allowance from the sales value by
reporting a one line net sales value, instead of correctly reporting
the deduction as a separate line item on the Form MMS-2014.
* * * * *
6. Section 206.102 is amended by redesignating paragraph (a)(1) as
paragraph (a), removing paragraph (a)(2), and revising paragraphs (d),
(i), (k), and (l) to read as follows:
Sec. 206.102 Valuation standards.
(a) * * *
* * * * *
(d) Any Federal lessee will make available, upon request to the
authorized MMS or State representatives, to the Office of the Inspector
General of the Department of the Interior, or other persons authorized
to receive such information, arm's-length sales and volume data for
like-quality production sold, purchased, or otherwise obtained by the
lessee from the field or area or from nearby fields or areas.
* * * * *
(i) The lessee is required to place oil in marketable condition at
no cost to the Federal Government unless otherwise provided in the
lease agreement or this section. Where the value established under this
section is determined by a lessee's gross proceeds, that value shall be
increased to the extent that the gross proceeds have been reduced
because the purchaser, or any other person, is providing certain
services the cost of which ordinarily is the responsibility of the
lessee to place the oil in marketable condition.
* * * * *
(k) Notwithstanding any provision in these regulations to the
contrary, no review, reconciliation, monitoring, or other like process
that results in a redetermination by MMS of value under this section
shall be considered final or binding as against the Federal Government
or its beneficiaries until the audit period is formally closed.
(l) Certain information submitted to MMS to support valuation
proposals, including transportation allowances or extraordinary cost
allowances, is exempted from disclosure by the Freedom of Information
Act, 5 U.S.C. 552, or other Federal law. Any data specified by law to
be privileged, confidential, or otherwise exempt, will be maintained in
a confidential manner in accordance with applicable laws and
regulations. All requests for information about determinations made
under this part are to be submitted in accordance with the Freedom of
Information Act regulation of the Department of the Interior, 43 CFR
Part 2.
7. Section 206.104 is amended by revising paragraphs (b)(2), and
(d) to read as follows:
Sec. 206.104 Transportation allowances-general.
* * * * *
(b) * * *
[[Page 5463]]
(2) Upon request of a lessee, MMS may approve a transportation
allowance deduction in excess of the limitation prescribed by paragraph
(b)(1) of this section. The lessee must demonstrate that the
transportation costs incurred in excess of the limitation prescribed in
paragraph (b)(1) of this section were reasonable, actual, and
necessary. An application for exception (using Form MMS-4393, Request
to Exceed Regulatory Allowance Limitation) shall contain all relevant
and supporting documentation necessary for MMS to make a determination.
Under no circumstances shall the value, for royalty purposes, under any
selling arrangement, be reduced to zero.
* * * * *
(d) If, after a review and/or audit, MMS determines that a lessee
has improperly determined a transportation allowance authorized by this
subpart, then the lessee shall pay any additional royalties, plus
interest determined in accordance with 30 CFR 218.54, or shall be
entitled to a credit, without interest. If the lessee takes a deduction
for transportation on the Form MMS-2014 by improperly netting the
allowance against the sales value of the oil instead of reporting the
allowance as a separate line item, the lessee may be assessed an amount
under Sec. 206.105(d).
8. In Sec. 206.105, paragraphs (c)(1)(ii), (c)(1)(iii), (c)(1)(v),
(c)(1)(vi), (c)(2)(ii), (c)(2)(iii), (c)(2)(v), (c)(2)(vii), (c)(3),
and (c)(4) are removed; paragraphs (c)(1)(iv), (c)(2)(iv), (c)(2)(vi),
and (c)(2)(viii) are redesignated as paragraphs (c)(1)(ii), (c)(2)(ii),
and (c)(2)(iii), and (c)(2)(iv) respectively; and revising paragraphs
(a)(1)(i), (a)(3), (b)(1), (b)(2)(v), (b)(4), (c)(1)(i), (c)(2)(i),
newly designated (c)(2)(ii), newly designated (c)(2)(iii), (d), and (e)
to read as follows:
Sec. 206.105 Determination of transportation allowances.
(a) Arm's-length transportation contracts.
(1)(i) For transportation costs incurred by a lessee under an
arm's-length contract, the transportation allowance shall be the
reasonable, actual costs incurred by the lessee for transporting oil
under that contract, except as provided in paragraphs (a)(1)(ii) and
(a)(1)(iii) of this section, subject to monitoring, review, audit, and
adjustment. The lessee shall have the burden of demonstrating that its
contract is arm's-length. MMS' prior approval is not required before a
lessee may deduct costs incurred under an arm's-length contract. Such
allowances shall be subject to the provisions of paragraph (f) of this
section. The lessee must claim a transportation allowance by reporting
it as a separate line entry on the Form MMS-2014.
* * * * *
(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 MMS. The lessee may use the
oil transportation allowance determined in accordance with its proposed
allocation procedure until MMS issues its determination on the
acceptability of the cost allocation. The lessee shall submit all
available data to support its proposal. The initial proposal must be
submitted within 3 months after the last day of the month for which the
lessee requests a transportation allowance. MMS shall then determine
the oil transportation allowance based upon the lessee's proposal and
any additional information MMS deems necessary.
* * * * *
(b) Non-arm's-length or no contract.
(1) If a lessee has a non-arm's-length transportation contract or
has no contract, including those situations where the lessee performs
transportation services for itself, the transportation allowance will
be based upon the lessee's reasonable, actual costs as provided in this
paragraph. All transportation allowances deducted under a non-arms-
length or no-contract situation are subject to monitoring, review,
audit, and adjustment to ensure that they are reasonable and allowable.
The lessee must claim a transportation allowance by reporting it as a
separate line entry on the Form MMS-2014. When necessary or
appropriate, MMS may direct a lessee to modify its estimated or actual
transportation allowance deduction.
(2) * * *
(i) * * *
(v) The rate of return must be the industrial rate associated with
Standard and Poor's BBB rating. The rate of return must be the monthly
average rate as published in Standard and Poor's Bond Guide for the
first month for which the allowance is applicable. The rate must be
redetermined at the beginning of each subsequent calendar year.
* * * * *
(4) Where both gaseous and liquid products are transported through
the same transportation system, the lessee shall propose a cost
allocation procedure to MMS. The lessee may use the oil transportation
allowance determined in accordance with its proposed allocation
procedure until MMS issues its determination on the acceptability of
the cost allocation. The lessee shall submit all available data to
support its proposal. MMS shall then determine the oil transportation
allowance on the basis of the lessee's proposal and any additional
information MMS deems necessary. The lessee must submit the allocation
proposal within 3 months of claiming the allocated deduction on the
Form MMS-2014.
* * * * *
(c) Reporting requirements.
(1) Arm's-length contracts.
(i) The lessee must notify MMS of an allowance based on incurred
costs by using a separate line entry on the Form MMS-2014.
(ii) * * *
(2) Non-arm's-length or no contract.
(i) The lessee must notify MMS of an allowance based on the
incurred costs by using a separate line entry on the Form MMS-2014.
(ii) For new transportation facilities or arrangements, the
lessee's initial deduction shall include estimates of the allowable oil
transportation costs for the applicable period. Cost estimates shall be
based upon the most recently available operations data for the
transportation system or, if such data are not available, the lessee
shall use estimates based upon industry data for similar transportation
systems.
(iii) Upon request by MMS, the lessee shall submit all data used to
prepare the allowance deduction. The data shall be provided within a
reasonable period of time, as determined by MMS.
(iv) * * *
(d) Interest and assessments.
(1) If a lessee nets a transportation allowance against the royalty
value on the Form MMS-2014, the lessee shall be assessed an amount of
up to 10 percent of the allowance netted not to exceed $250 per lease
selling arrangement per sales period.
(2) If a lessee deducts a transportation allowance on its Form MMS-
2014 that exceeds 50 percent of the value of the oil transported
without obtaining prior approval of MMS under 206.104 of this subpart,
the lessee shall pay interest on the excess allowance amount taken from
the date such amount is taken to the date the lessee files an exception
request with MMS.
(3) If a lessee erroneously reports a transportation allowance
which results in an underpayment of royalties, interest shall be paid
on the amount of that underpayment.
(4) Interest required to be paid by this section shall be
determined in accordance with 30 CFR 218.54.
(e) Adjustments. (1) If the actual transportation allowance is less
than the
[[Page 5464]]
amount the lessee has taken on Form MMS-2014 for each month during the
allowance reporting period, the lessee shall pay additional royalties
due plus interest computed under 30 CFR 218.54 from the allowance
reporting period when the lessee took the deduction to the date the
lessee repays the difference to MMS. If the actual transportation
allowance is greater than the amount the lessee has taken on Form MMS-
2014 for each month during the allowance reporting period, the lessee
shall be entitled to a credit without interest.
(2) For lessees transporting production from onshore Federal
leases, the lessee must submit a corrected Form MMS-2014 to reflect
actual costs, together with any payment, in accordance with
instructions provided by MMS.
* * * * *
9. Subpart D is amended by revising the heading to read as follows:
Subpart D--Federal Gas
10. Section 206.150 is revised to read as follows:
Sec. 206.150 Purpose and scope.
(a) This subpart is applicable to all gas production from Federal
oil and gas leases. The purpose of this subpart is to establish the
value of production for royalty purposes consistent with the mineral
leasing laws, other applicable laws and lease terms.
(b) If the specific provisions of any statute or settlement
agreement between the United States and a lessee resulting from
administrative or judicial litigation, or oil and gas lease subject to
the requirements of this subpart are inconsistent with any regulation
in this subpart, then the lease, statute, or settlement agreement shall
govern to the extent of that inconsistency.
(c) All royalty payments made to MMS are subject to audit and
adjustment.
(d) The regulations in this subpart are intended to ensure that the
administration of oil and gas leases is discharged in accordance with
the requirements of the governing mineral leasing laws and lease terms.
11. Section 206.151 is amended by adding in alphabetical order the
definition for Netting, revising the definitions Allowance, Audit,
Gross proceeds, Lease products, Lessee, Net Profit share, and removing
the definitions BIA, Indian allottee, and Indian Tribe to read as
follows:
Sec. 206.151 Definitions.
* * * * *
Allowance means a deduction in determining value for royalty
purposes. Processing allowance means an allowance for the reasonable
costs for processing gas determined under this subpart. Transportation
allowance means an allowance for the cost of moving royalty bearing
substances (identifiable, measurable oil and gas, including gas that is
not in need of initial separation) from the point at which it is first
identifiable and measurable to the sales point or other point where
value is established under this subpart.
* * * * *
Audit means a review, conducted in accordance with generally
accepted accounting and auditing standards, of royalty payment
compliance activities of lessees or other interest holders who pay
royalties, rents, or bonuses on Federal leases.
* * * * *
Gross proceeds (for royalty payment purposes) means the total
monies and other consideration accruing to an oil and gas lessee for
the disposition of the oil produced. Gross proceeds includes, but is
not limited to, payments to the lessee for certain services such as
dehydration, measurement, and/or gathering to the extent that the
lessee is obligated to perform them at no cost to the Federal
Government. Gross proceeds, as applied to oil, also includes, but is
not limited to, reimbursements for harboring or terminaling fees. Tax
reimbursements are part of the gross proceeds accruing to a lessee even
though the Federal royalty interest may be exempt from taxation. Monies
and other consideration, including the forms of consideration
identified in this paragraph, to which a lessee is contractually or
legally entitled but which it does not seek to collect through
reasonable efforts are also part of gross proceeds.
* * * * *
Lease products means any leased minerals attributable to,
originating from, or allocated to Outer Continental Shelf or onshore
Federal leases.
Lessee means any person to whom the United States issues a lease,
and any person who has been assigned an obligation to make royalty or
other payments required by the lease. This includes any person who has
an interest in a lease as well as an operator or payor who has no
interest in the lease but who has assumed the royalty payment
responsibility.
* * * * *
Net profit share (for applicable Federal leases) means the
specified share of the net profit from production of oil and gas as
provided in the agreement.
Netting is the deduction of an allowance from the sales value by
reporting a one line net sales value, instead of correctly reporting
the deduction as a separate line item on the Form MMS-2014.
* * * * *
12. Section 206.152 is amended by revising paragraph (a)(2),
removing paragraph (a)(3), and revising paragraphs (e)(2), (h), (i),
(k) and (l) to read as follows:
Sec. 206.152 Valuation standards--unprocessed gas.
(a) * * *
(2) The value of production, for royalty purposes, of gas subject
to this subpart shall be the value of gas determined under this section
less applicable allowances.
* * * * *
(e) * * *
(2) Any Federal lessee will make available upon request to the
authorized MMS or State representatives, to the Office of the Inspector
General of the Department of the Interior, or other person authorized
to receive such information, arm's-length sales and volume data for
like-quality production sold, purchased or otherwise obtained by the
lessee from the field or area or from nearby fields or areas.
* * * * *
(h) Notwithstanding any other provision of this section, under no
circumstances shall the value of production for royalty purposes be
less than the gross proceeds accruing to the lessee for lease
production, less applicable allowances.
(i) The lessee is required to place gas in marketable condition at
no cost to the Federal Government unless otherwise provided in the
lease agreement. Where the value established under this section is
determined by a lessee's gross proceeds, that value shall be increased
to the extent that the gross proceeds have been reduced because the
purchaser, or any other person, is providing certain services the cost
of which ordinarily is the responsibility of the lessee to place the
gas in marketable condition.
* * * * *
(k) Notwithstanding any provision in these regulations to the
contrary, no review, reconciliation, monitoring, or other like process
that results in a redetermination by MMS of value under this section
shall be considered final or binding as against the Federal Government
or its beneficiaries until the audit period is formally closed.
[[Page 5465]]
(l) Certain information submitted to MMS to support valuation
proposals, including transportation or extraordinary cost allowances,
is exempted from disclosure by the Freedom of Information Act, 5 U.S.C.
Sec. 552, or other Federal Law. Any data specified by law to be
privileged, confidential, or otherwise exempt will be maintained in a
confidential manner in accordance with applicable law and regulations.
All requests for information about determinations made under this
subpart are to be submitted in accordance with the Freedom of
Information Act regulation of the Department of the Interior, 43 CFR
Part 2.
13. Section 206.153 is amended by removing paragraph (a)(3), and
revising paragraphs (e)(2), (i), (k), and (l) to read as follows:
Sec. 206.153 Valuation standards--processed gas.
* * * * *
(e) * * *
(2) Any Federal lessee will make available upon request to the
authorized MMS or State representatives, to the Office of the Inspector
General of the Department of the Interior, or other persons authorized
to receive such information, arm's-length sales and volume data for
like-quality residue gas and gas plant products sold, purchased or
otherwise obtained by the lessee from the same processing plant or from
nearby processing plants.
* * * * *
(i) The lessee is required to place residue gas and gas plant
products in marketable condition at no cost to the Federal Government
unless otherwise provided in the lease agreement. Where the value
established under this section is determined by a lessee's gross
proceeds, that value shall be increased to the extent that the gross
proceeds have been reduced because the purchaser, or any other person,
is providing certain services the cost of which ordinarily is the
responsibility of the lessee to place the residue gas or gas plant
products in marketable condition.
* * * * *
(k) Notwithstanding any provision in these regulations to the
contrary, no review, reconciliation, monitoring, or other like process
that results in a redetermination by MMS of value under this section
shall be considered final or binding against the Federal Government or
its beneficiaries until the audit period is formally closed.
(l) Certain information submitted to MMS to support valuation
proposals, including transportation allowances, processing allowances
or extraordinary cost allowances, is exempted from disclosure by the
Freedom of Information Act, 5 U.S.C. 552, or other Federal law. Any
data specified by law to be privileged, confidential, or otherwise
exempt, will be maintained in a confidential manner in accordance with
applicable law and regulations. All requests for information about
determinations made under this Part are to be submitted in accordance
with the Freedom of Information Act regulation of the Department of the
Interior, 43 CFR Part 2.
14. Section 206.154 is amended by revising paragraph (c)(4) to read
as follows:
Sec. 206.154 Determination of quantities and qualities for computing
royalties.
* * * * *
(c) * * *
(4) A lessee may request MMS approval of other methods for
determining the quantity of residue gas and gas plant products
allocable to each lease. If approved, such method will be applicable to
all gas production from Federal leases that is processed in the same
plant.
* * * * *
15. Section 206.155 is amended by revising paragraph (b) to read as
follows:
Sec. 206.155 Accounting for comparison.
* * * * *
(b) The requirement for accounting for comparison contained in the
terms of leases will govern as provided in Section 206.150(b) of this
subpart. When accounting for comparison is required by the lease terms,
such accounting for comparison shall be determined in accordance with
paragraph (a) of this section.
16. Section 206.156 is amended by revising paragraphs (c)(3), and
(d) to read as follows:
Sec. 206.156 Transportation allowances--general.
* * * * *
(c)* * *
(3) Upon request of a lessee, MMS may approve a transportation
allowance deduction in excess of the limitations prescribed by
paragraphs (c)(1) and (c)(2) of this section. The lessee must
demonstrate that the transportation costs incurred in excess of the
limitations prescribed in paragraphs (c)(1) and (c)(2) of this section
were reasonable, actual, and necessary. An application for exception
(using Form MMS-4393, Request to Exceed Regulatory Allowance
Limitation) shall contain all relevant and supporting documentation
necessary for MMS to make a determination. Under no circumstances shall
the value for royalty purposes under any selling arrangement be reduced
to zero.
(d) If, after a review and/or audit, MMS determines that a lessee
has improperly determined a transportation allowance authorized by this
subpart, then the lessee shall pay any additional royalties, plus
interest, determined in accordance with 30 CFR 218.54, or shall be
entitled to a credit, without interest. If the lessee takes a deduction
for transportation on the Form MMS-2014 by improperly netting the
allowance against the sales value of the oil instead of reporting the
allowance as a separate line item, he may be assessed an additional
amount under 206.157(d).
17. In Sec. 206.157, paragraphs (c)(1)(ii), (c)(1)(iii), (c)(1)(v),
(c)(1)(vi), (c)(2)(ii), (c)(2)(iii), (c)(2)(v), (c)(2)(vii), (c)(3)
and, (c)(4) are removed; paragraphs (c)(1)(iv), (c)(2)(iv), (c)(2)(vi),
and (c)(2)(viii) are redesignated as paragraphs (c)(1)(ii), (c)(2)(ii),
(c)(2)(iii), and (c)(2)(iv) respectively; and revising paragraphs
(a)(1)(i), (a)(3), (b)(1), (b)(2)(v), (b)(4), (c)(1)(i), (c)(2)(i),
newly designated (c)(2)(ii), newly designated (c)(2)(iii), (d), (e)(1)
and (e)(2) to read as follows:
Sec. 206.157 Determination of transportation allowances.
(a) Arm's-length transportation contracts. (1)(i) For
transportation costs incurred by a lessee under an arm's-length
contract, the transportation allowance shall be the reasonable, actual
costs incurred by the lessee for transporting the unprocessed gas,
residue gas and/or gas plant products under that contract, except as
provided in paragraphs (a)(1)(ii) and (a)(1)(iii) of this section,
subject to monitoring, review, audit, and adjustment. The lessee shall
have the burden of demonstrating that its contract is arm's-length.
MMS' prior approval is not required before a lessee may deduct costs
incurred under an arm's-length contract. Such allowances shall be
subject to the provisions of paragraph (f) of this section. The lessee
must claim a transportation allowance by reporting it as a separate
line entry on the Form MMS-2014.
* * * * *
(3) If an arm's-length transportation contract includes both
gaseous and liquid products and the transportation costs attributable
to each cannot be determined from the contract, the lessee shall
propose an allocation procedure to MMS. The lessee may use the
transportation allowance determined in accordance with its proposed
allocation procedure until MMS issues its determination on the
acceptability of the cost allocation. The lessee shall
[[Page 5466]]
submit all relevant data to support its proposal. MMS shall then
determine the gas transportation allowance based upon the lessee's
proposal and any additional information MMS deems necessary. The lessee
must submit the allocation proposal within 3 months of claiming the
allocated deduction on the Form MMS-2014.
* * * * *
(b) Non-arm's-length or no contract.
(1) If a lessee has a non-arm's-length transportation contract or
has no contract, including those situations where the lessee performs
transportation services for itself, the transportation allowance will
be based upon the lessee's reasonable actual costs as provided in this
paragraph. All transportation allowances deducted under a non-arm's-
length or no contract situation are subject to monitoring, review,
audit, and adjustment. The lessee must claim a transportation allowance
by reporting it as a separate line entry on the Form MMS-2014. When
necessary or appropriate, MMS may direct a lessee to modify its
estimated or actual transportation allowance deduction.
(2)* * *
(v) The rate of return must be the industrial rate associated with
Standard and Poor's BBB rating. The rate of return must be the monthly
average rate as published in Standard and Poor's Bond Guide for the
first month for which the allowance is applicable. The rate must be
redetermined at the beginning of each subsequent calendar year.
* * * * *
(4) Where both gaseous and liquid products are transported through
the same transportation system, the lessee shall propose a cost
allocation procedure to MMS. The lessee may use the transportation
allowance determined in accordance with its proposed allocation
procedure until MMS issues its determination on the acceptability of
the cost allocation. The lessee shall submit all relevant data to
support its proposal. MMS shall then determine the transportation
allowance based upon the lessee's proposal and any additional
information MMS deems necessary. The lessee must submit the allocation
proposal within 3 months of claiming the allocated deduction on the
Form MMS-2014.
* * * * *
(c) Reporting requirements.
(1) Arm's-length contracts. (i) The lessee must notify MMS of an
allowance based on incurred costs by using a separate line entry on the
Form MMS-2014.
* * * * *
(2) Non-arm's-length or no contract. (i) The lessee must notify MMS
of an allowance based on the incurred costs by using a separate line
entry on the Form MMS-2014.
(ii) For new transportation facilities or arrangements, the
lessee's initial deduction shall include estimates of the allowable gas
transportation costs for the applicable period. Cost estimates shall be
based upon the most recently available operations data for the
transportation system or, if such data are not available, the lessee
shall use estimates based upon industry data for similar transportation
systems.
(iii) Upon request by MMS, the lessee shall submit all data used to
prepare the allowance deduction. The data shall be provided within a
reasonable period of time, as determined by MMS.
* * * * *
(d) Interest and assessments. (1) If a lessee nets a transportation
allowance against the royalty value on the Form MMS-2014, the lessee
shall be assessed an amount of up to 10 percent of the allowance netted
not to exceed $250 per lease selling arrangement per sales period.
(2) If a lessee deducts a transportation allowance on its Form MMS-
2014 that exceeds 50 percent of the value of the gas transported
without obtaining prior approval of MMS under section 206.156, the
lessee shall pay interest on the excess allowance amount taken from the
date such amount is taken to the date the lessee files an exception
request with MMS.
(3) If a lessee erroneously reports a transportation allowance
which results in an underpayment of royalties, interest shall be paid
on the amount of that underpayment.
(4) Interest required to be paid by this section shall be
determined in accordance with 30 CFR 218.54.
(e) Adjustments. (1) If the actual transportation allowance is less
than the amount the lessee has taken on Form MMS-2014 for each month
during the allowance reporting period, the lessee shall be required to
pay additional royalties due plus interest computed under 30 CFR 218.54
from the allowance reporting period when the lessee took the deduction
to the date the lessee repays the difference to MMS. If the actual
transportation allowance is greater than the amount the lessee has
taken on Form MMS-2014 for each month during the allowance reporting
period, the lessee shall be entitled to a credit without interest.
(2) For lessees transporting production from onshore Federal
leases, the lessee must submit a corrected Form MMS-2014 to reflect
actual costs, together with any payment, in accordance with
instructions provided by MMS.
* * * * *
18. Section 206.158 is amended by revising paragraphs (c)(3) and
(e) to read as follows:
Sec. 206.158 Processing allowances--general.
* * * * *
(c)* * *
(3) Upon request of a lessee, MMS may approve a processing
allowance in excess of the limitation prescribed by paragraph (c)(2) of
this section. The lessee must demonstrate that the processing costs
incurred in excess of the limitation prescribed in paragraph (c)(2) of
this section were reasonable, actual, and necessary. An application for
exception (using Form MMS-4393, Request to Exceed Regulatory Allowance
Limitation) shall contain all relevant and supporting documentation for
MMS to make a determination. Under no circumstances shall the value for
royalty purposes of any gas plant product be reduced to zero.
* * * * *
(e) If MMS determines that a lessee has improperly determined a
processing allowance authorized by this subpart, then the lessee shall
pay any additional royalties, plus interest determined in accordance
with 30 CFR 218.54, or shall be entitled to a credit, without interest.
If the lessee takes a deduction for transportation on the Form MMS-2014
by improperly netting the allowance against the sales value of the oil
instead of reporting the allowance as a separate line item, he may be
assessed an additional amount under 206.159(d).
19. In Sec. 206.159, paragraphs (c)(1)(ii), (c)(1)(iii), (c)(1)(v),
(c)(1)(vi), (c)(2)(ii), (c)(2)(iii), (c)(2)(v), (c)(2)(vii), (c)(3),
and (c)(4) are removed; paragraphs (c)(1)(iv), (c)(2)(iv), (c)(2)(vi),
and (c)(2)(viii) are redesignated as paragraphs (c)(1)(ii), (c)(2)(ii),
(c)(2)(iii) and (c)(2)(iv) respectively; and revising paragraphs
(a)(1)(i), (a)(3), (b)(1), (b)(2)(v), (c)(1)(i), (c)(2)(i) newly
designated (c)(2)(ii), newly designated (c)(2)(iii), (d), (e)(1) and
(e)(2) to read as follows:
Sec. 206.159 Determination of processing allowances.
(a) Arm's-length processing contracts.
(1)(i) For processing costs incurred by a lessee under an arm's-
length contract, the processing allowance shall be the reasonable
actual costs incurred by the lessee for processing the gas under that
contract, except as provided in paragraphs (a)(1)(ii) and (a)(1)(iii)
of this section, subject to monitoring, review,
[[Page 5467]]
audit, and adjustment. The lessee shall have the burden of
demonstrating that its contract is arm's-length. MMS' prior approval is
not required before a lessee may deduct costs incurred under an arm's-
length contract. The lessee must claim a transportation allowance by
reporting it as a separate line entry on the Form MMS-2014.
* * * * *
(3) If an 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, the lessee shall propose an
allocation procedure to MMS. The lessee may use its proposed allocation
procedure until MMS issues its determination. The lessee shall submit
all relevant data to support its proposal. MMS shall then determine the
processing allowance based upon the lessee's proposal and any
additional information MMS deems necessary. No processing allowance
will be granted for the costs of processing lease production which is
not royalty bearing. The lessee must submit the allocation proposal
within 3 months of claiming the allocated deduction on Form MMS-2014.
* * * * *
(b) Non-arm's-length or no contract. (1) If a lessee has a non-
arm's-length processing contract or has no contract, including those
situations where the lessee performs processing for itself, the
processing allowance will be based upon the lessee's reasonable actual
costs as provided in this paragraph. All processing allowances deducted
under a non-arm's-length or no-contract situation are subject to
monitoring, review, audit, and adjustment. The lessee must claim a
processing allowance by reflecting it as a separate line entry on the
Form MMS-2014. When necessary or appropriate, MMS may direct a lessee
to modify its estimated or actual processing allowance.
(2)* * *
(v) The rate of return must be the industrial rate associated with
Standard and Poor's BBB rating. The rate of return must be the monthly
average rate as published in Standard and Poor's Bond Guide for the
first month for which the allowance is applicable. The rate must be
redetermined at the beginning of each subsequent calendar year.
* * * * *
(c) Reporting requirements (1) Arm's-length contracts. (i) The
lessee must notify MMS of an allowance based on incurred costs by using
a separate line entry on the Form MMS-2014.
* * * * *
(2) Non-arm's-length or no contract.
(i) The lessee must notify MMS of an allowance based on the
incurred costs by using a separate line entry on the Form MMS-2014.
(ii) For new processing plants, the lessee's initial deduction
shall include estimates of the allowable gas processing costs for the
applicable period. Cost estimates shall be based upon the most recently
available operations data for the plant or, if such data are not
available, the lessee shall use estimates based upon industry data for
similar gas processing plants.
(iii) Upon request by MMS, the lessee shall submit all data used to
prepare the allowance deduction. The data shall be provided within a
reasonable period of time, as determined by MMS.
(d) Interest and assessments.
(1) If a lessee nets a processing allowance against the royalty
value on the Form MMS-2014, the lessee shall be assessed an amount of
up to 10 percent of the allowance netted not to exceed $250 per lease
selling arrangement per sales period.
(2) If a lessee deducts a processing allowance on its Form MMS-2014
that exceeds 66\2/3\ percent of the value of the gas processed without
obtaining prior approval of MMS under Section 206.158, the lessee shall
pay interest on the excess allowance amount taken from the date such
amount is taken to the date the lessee files an exception request with
MMS.
(3) If a lessee erroneously reports a processing allowance which
results in an underpayment of royalties, interest shall be paid on the
amount of that underpayment.
(4) Interest required to be paid by this section shall be
determined in accordance with 30 CFR 218.54.
(e) Adjustments.
(1) If the actual processing allowance is less than the amount the
lessee has taken on Form MMS-2014 for each month during the allowance
reporting period, the lessee shall pay additional royalties due plus
interest computed under 30 CFR 218.54 from the allowance reporting
period when the lessee took the deduction to the date the lessee repays
the difference to MMS. If the actual processing allowance is greater
than the amount the lessee has taken on Form MMS-2014 for each month
during the allowance reporting period, the lessee shall be entitled to
a credit without interest.
(2) For lessees transporting production from onshore Federal
leases, the lessee must submit a corrected Form MMS-2014 to reflect
actual costs, together with any payment, in accordance with
instructions provided by MMS.
* * * * *
20. The subpart heading Subpart E--Solid Minerals, General
[Reserved] is removed and a new Subpart E--Indian Gas is added to read
as follows:
Subpart E--Indian Gas
Sec.
206.170 Purpose and scope.
206.171 Definitions.
206.172 Valuation standards--unprocessed gas.
206.173 Valuation standards--processed gas.
206.174 Determination of quantities and qualities for computing
royalties.
206.175 Accounting for comparison.
206.176 Transportation allowances--general.
206.177 Determination of transportation allowances.
206.178 Processing allowances--general.
206.179 Determination of processing allowances.
Subpart E--Indian Gas
Sec. 206.170 Purpose and scope.
(a) This subpart is applicable to all gas production from Indian
(Tribal and allotted) oil and gas leases (except leases on the Osage
Indian Reservation, Osage County, Oklahoma). The purpose of this
subpart is to establish the value of production for royalty purposes
consistent with the mineral leasing laws, other applicable laws, and
lease terms.
(b) If the specific provisions of any statute, treaty, or
settlement agreement between the Indian lessor and a lessee resulting
from administrative or judicial litigation, or oil and gas lease
subject to the requirements of this subpart are inconsistent with any
regulation in this subpart, then the lease, statute, treaty provision
or settlement agreement shall govern to the extent of that
inconsistency.
(c) All royalty payments made to any Tribe or allottee are subject
to audit and adjustment.
(d) The regulations in this subpart are intended to ensure that the
trust responsibilities of the United States with respect to the
administration of Indian oil and gas leases are discharged in
accordance with the requirements of the governing mineral leasing laws,
treaties, and lease terms.
Sec. 206.171 Definitions.
For purposes of this subpart:
Allowance means an approved or an (MMS)-initially accepted
deduction in determining value for royalty purposes. Processing
allowance means an allowance for the reasonable, actual costs incurred
by the lessee for
[[Page 5468]]
processing gas, or an approved or MMS-initially accepted deduction for
costs of such processing, determined pursuant to this subpart.
Transportation allowance means an allowance for the reasonable, actual
costs incurred by the lessee for moving unprocessed gas, residue gas,
or gas plant products to a point of sale or point of delivery off the
lease, unit area, communitized area, or away from a processing plant,
excluding gathering, or an approved or MMS-initially accepted deduction
for costs of such transportation, determined pursuant to this subpart.
Area means a geographic region at least as large as the defined
limits of an oil and/or gas field, in which oil and/or gas lease
products have similar quality, economic, and legal characteristics.
Arm's-length contract means a contract or agreement that has been
arrived at in the marketplace between independent, nonaffiliated
persons with opposing economic interests regarding that contract. For
purposes of this subpart, two persons are affiliated if one person
controls, is controlled by, or is pursuant to common control with
another person. For purposes of this subpart, based on the instruments
of ownership of the voting securities of an entity, or based on other
forms of ownership: ownership in excess of 50 percent constitutes
control; ownership of 10 through 50 percent creates a presumption of
control; and ownership of less than 10 percent creates a presumption of
noncontrol which MMS may rebut if it demonstrates actual or legal
control, including the existence of interlocking directorates.
Notwithstanding any other provisions of this subpart, contracts between
relatives, either by blood or by marriage, are not arm's-length
contracts. MMS may require the lessee to certify ownership control. To
be considered arm's-length for any production month, a contract must
meet the requirements of this definition for that production month, as
well as when the contract was executed.
Audit means a review, conducted in accordance with generally
accepted accounting and auditing standards, of royalty payment
compliance activities of lessees or other interest holders who pay
royalties, rents, or bonuses on Indian leases.
BIA means the Bureau of Indian Affairs of the Department of the
Interior.
BLM means the Bureau of Land Management of the Department of the
Interior.
Compression means the process of raising the pressure of gas.
Condensate means liquid hydrocarbons (normally exceeding 40 degrees
of API gravity) recovered at the surface without resorting to
processing. Condensate is the mixture of liquid hydrocarbons that
results from condensation of petroleum hydrocarbons existing initially
in a gaseous phase in an underground reservoir.
Contract means any oral or written agreement, including amendments
or revisions thereto, between two or more persons and enforceable by
law that with due consideration creates an obligation.
Field means a geographic region situated over one or more
subsurface oil and gas reservoirs encompassing at least the outermost
boundaries of all oil and gas accumulations known to be within those
reservoirs vertically projected to the land surface. Onshore fields are
usually given names and their official boundaries are often designated
by oil and gas regulatory agencies in the respective States in which
the fields are located.
Gas means any fluid, either combustible or noncombustible,
hydrocarbon or nonhydrocarbon, which is extracted from a reservoir and
which has neither independent shape nor volume, but tends to expand
indefinitely. It is a substance that exists in a gaseous or rarefied
state pursuant to standard temperature and pressure conditions.
Gas plant products means separate marketable elements, compounds,
or mixtures, whether in liquid, gaseous, or solid form, resulting from
processing gas, excluding residue gas.
Gathering means the movement of lease production to a central
accumulation and/or treatment point on the lease, unit or communitized
area, or to a central accumulation or treatment point off the lease,
unit or communitized area as approved by BLM operations personnel for
onshore leases.
Gross proceeds (for royalty payment purposes) means the total
monies and other consideration accruing to an oil and gas lessee for
the disposition of unprocessed gas, residue gas, or gas plant products
produced. Gross proceeds includes, but is not limited to, payments to
the lessee for certain services such as compression, dehydration,
measurement, and/or field gathering to the extent that the lessee is
obligated to perform them at no cost to the Indian lessor, and payments
for gas processing rights. Gross proceeds, as applied to gas, also
includes but is not limited to reimbursements for severance taxes and
other reimbursements. Tax reimbursements are part of the gross proceeds
accruing to a lessee even though the Indian royalty interest may be
exempt from taxation. Monies and other consideration, including the
forms of consideration identified in this paragraph, to which a lessee
is contractually or legally entitled but which it does not seek to
collect through reasonable efforts are also part of gross proceeds.
Indian allottee means any Indian for whom land or an interest in
land is held in trust by the United States or who holds title subject
to Federal restriction against alienation.
Indian Tribe means any Indian Tribe, band, nation, pueblo,
community, rancheria, colony, or other group of Indians for which any
land or interest in land is held in trust by the United States or which
is subject to Federal restriction against alienation.
Lease means any contract, profit-share arrangement, joint venture,
or other agreement issued or approved by the United States pursuant to
a mineral leasing law that authorizes exploration for, development or
extraction of, or removal of lease products--or the land area covered
by that authorization, whichever is required by the context.
Lease products means any leased minerals attributable to,
originating from, or allocated to Indian leases.
Lessee means any person to whom an Indian Tribe, or an Indian
allottee issues a lease, and any p
FR Doc. 96-2641 Revision of Valuation Regulations Governing Oil and Gas Transportation and Processing Allowances, and Coal Washing and Transportation Allowances
erson who has been assigned an
obligation to make royalty or other payments required by the lease.
This includes any person who has an interest in a lease as well as an
operator or payor who has no interest in the lease but who has assumed
the royalty payment responsibility.
Like-quality lease products means lease products which have similar
chemical, physical, and legal characteristics.
Marketable condition means lease products which are sufficiently
free from impurities and otherwise in a condition that they will be
accepted by a purchaser pursuant to a sales contract typical for the
field or area.
Marketing affiliate means an affiliate of the lessee whose function
is to acquire only the lessee's production and to market that
production.
Minimum royalty means that minimum amount of annual royalty that
the lessee must pay as specified in the lease or in applicable leasing
regulations.
MMS means the Minerals Management Service of the Department of the
Interior.
Net-back method (or work-back method) means a method for
calculating market value of gas at the lease.
[[Page 5469]]
Pursuant to this method, costs of transportation, processing, or
manufacturing are deducted from the proceeds received for the gas,
residue gas or gas plant products, and any extracted, processed, or
manufactured products, or from the value of the gas, residue gas or gas
plant products, and any extracted, processed, or manufactured products,
at the first point at which reasonable values for any such products may
be determined by a sale pursuant to an arm's-length contract or
comparison to other sales of such products, to ascertain value at the
lease.
Net output means the quantity of residue gas and each gas plant
product that a processing plant produces.
Net profit share (for applicable Indian leases) means the specified
share of the net profit from production of oil and gas as provided in
the agreement.
Person means any individual, firm, corporation, association,
partnership, consortium, or joint venture (when established as a
separate entity).
Posted price means the price, net of all adjustments for quality
and location, specified in publicly available price bulletins or other
price notices available as part of normal business operations for
quantities of unprocessed gas, residue gas, or gas plant products in
marketable condition.
Processing means any process designed to remove elements or
compounds (hydrocarbon and nonhydrocarbon) from gas, including
absorption, adsorption, or refrigeration. Field processes which
normally take place on or near the lease, such as natural pressure
reduction, mechanical separation, heating, cooling, dehydration, and
compression, are not considered processing. The changing of pressures
and/or temperatures in a reservoir is not considered processing.
Residue gas means that hydrocarbon gas consisting principally of
methane resulting from processing gas.
Selling arrangement means the individual contractual arrangements
pursuant to which sales or dispositions of gas, residue gas and gas
plant products are made. Selling arrangements are described by
illustration in the MMS Royalty Management Program Oil and Gas Payor
Handbook.
Spot sales agreement means a contract wherein a seller agrees to
sell to a buyer a specified amount of unprocessed gas, residue gas, or
gas plant products at a specified price over a fixed period, usually of
short duration, which does not normally require a cancellation notice
to terminate, and which does not contain an obligation, nor imply an
intent, to continue in subsequent periods.
Warranty contract means a long-term contract entered into prior to
1970, including any amendments thereto, for the sale of gas wherein the
producer agrees to sell a specific amount of gas and the gas delivered
in satisfaction of this obligation may come from fields or sources
outside of the designated fields.
Sec. 206.172 Valuation standards--unprocessed gas.
(a) (1) This section applies to the valuation of all gas that is
not processed and all gas that is processed but is sold or otherwise
disposed of by the lessee pursuant to an arm's-length contract prior to
processing (including all gas where the lessee's arm's-length contract
for the sale of that gas prior to processing provides for the value to
be determined on the basis of a percentage of the purchaser's proceeds
resulting from processing the gas). This section also applies to
processed gas that must be valued prior to processing in accordance
with Sec. 206.175 of this subpart. Where the lessee's contract includes
a reservation of the right to process the gas and the lessee exercises
that right, Sec. 206.173 of this subpart shall apply instead of this
section.
(2) The value of production, for royalty purposes, of gas subject
to this subpart shall be the value of gas determined pursuant to this
section less applicable allowances determined pursuant to this subpart.
(3) (i) For any Indian leases which provide that the Secretary may
consider the highest price paid or offered for a major portion of
production (major portion) in determining value of production for
royalty purposes, if data are available to compute a major portion MMS
will, where practicable, compare the value determined in accordance
with this section with the major portion. The value to be used in
determining the value of production for royalty purposes shall be the
higher of those two values.
(ii) For purposes of this paragraph, major portion means the
highest price paid or offered at the time of production for the major
portion of gas production from the same field. The major portion will
be calculated using like-quality gas sold pursuant to arm's-length
contracts from the same field (or, if necessary to obtain a reasonable
sample, from the same area) for each month. All such sales will be
arrayed from highest price to lowest price (at the bottom). The major
portion is that price at which 50 percent (by volume) plus 1 mcf of the
gas (starting from the bottom) is sold.
(b)(1) (i) The value of gas which is sold pursuant to an arm's-
length contract shall be the gross proceeds accruing to the lessee,
except as provided in paragraphs (b)(1)(ii) and (b)(1)(iii) of this
section. The lessee shall have the burden of demonstrating that its
contract is arm's-length. The value which the lessee reports, for
royalty purposes, is subject to monitoring, review, and audit. For
purposes of this section, gas which is sold or otherwise transferred to
the lessee's marketing affiliate and then sold by the marketing
affiliate pursuant to an arm's-length contract shall be valued in
accordance with this paragraph based upon the sale by the marketing
affiliate. Also, where the lessee's arm's-length contract for the sale
of gas prior to processing provides for the value to be determined
based upon a percentage of the purchaser's proceeds resulting from
processing the gas, the value of production, for royalty purposes,
shall never be less than a value equivalent to 100 percent of the value
of the residue gas attributable to the processing of the lessee's gas.
(ii) In conducting reviews and audits, MMS will examine whether the
contract reflects the total consideration actually transferred either
directly or indirectly from the buyer to the seller for the gas. If the
contract does not reflect the total consideration, then MMS may require
that the gas sold pursuant to that contract be valued in accordance
with paragraph (c) of this section. Value may not be less than the
gross proceeds accruing to the lessee, including the additional
consideration.
(iii) If MMS determines that the gross proceeds accruing to the
lessee pursuant to an arm's-length contract do not reflect the
reasonable value of the production because of misconduct by or between
the contracting parties, or because the lessee otherwise has breached
its duty to the lessor to market the production for the mutual benefit
of the lessee and the lessor, then MMS shall require that the gas
production be valued pursuant to paragraphs (c)(2) or (c)(3) of this
section, and in accordance with the notification requirements of
paragraph (e) of this section. When MMS determines that the value may
be unreasonable, MMS will notify the lessee and give the lessee an
opportunity to provide written information justifying the lessee's
value.
(2) Notwithstanding the provisions of paragraph (b)(1) of this
section, the value of gas sold pursuant to a warranty contract shall be
determined by MMS, and due consideration will be given to all valuation
criteria specified in this section. The lessee must request a value
determination in accordance with paragraph (g) of this section for gas
sold pursuant to a warranty contract;
[[Page 5470]]
provided, however, that any value determination for a warranty contract
in effect on the effective date of these regulations shall remain in
effect until modified by MMS.
(3) MMS may require a lessee to certify that its arm's-length
contract provisions include all of the consideration to be paid by the
buyer, either directly or indirectly, for the gas.
(c) The value of gas subject to this section which is not sold
pursuant to an arm's-length contract shall be the reasonable value
determined in accordance with the first applicable of the following
methods:
(1) The gross proceeds accruing to the lessee pursuant to a sale
pursuant to its non-arm's-length contract (or other disposition other
than by an arm's-length contract), provided that those gross proceeds
are equivalent to the gross proceeds derived from, or paid pursuant to,
comparable arm's-length contracts for purchases, sales, or other
dispositions of like-quality gas in the same field (or, if necessary to
obtain a reasonable sample, from the same area). In evaluating the
comparability of arm's-length contracts for the purposes of these
regulations, the following factors shall be considered: price, time of
execution, duration, market or markets served, terms, quality of gas,
volume, and such other factors as may be appropriate to reflect the
value of the gas;
(2) A value determined by consideration of other information
relevant in valuing like-quality gas, including gross proceeds pursuant
to arm's-length contracts for like-quality gas in the same field or
nearby fields or areas, posted prices for gas, prices received in
arm's-length spot sales of gas, other reliable public sources of price
or market information, and other information as to the particular lease
operation or the salability of the gas; or
(3) A net-back method or any other reasonable method to determine
value.
(d) (1) Notwithstanding any other provisions of this section,
except paragraph (h) of this section, if the maximum price permitted by
Federal law at which gas may be sold is less than the value determined
pursuant to this section, then MMS shall accept such maximum price as
the value. For purposes of this section, price limitations set by any
State or local government shall not be considered as a maximum price
permitted by Federal law.
(2) The limitation prescribed in paragraph (d)(1) of this section
shall not apply to gas sold pursuant to a warranty contract and valued
pursuant to paragraph (b)(2) of this section.
(e) (1) Where the value is determined pursuant to paragraph (c) of
this section, the lessee shall retain all data relevant to the
determination of royalty value. Such data shall be subject to review
and audit, and MMS will direct a lessee to use a different value if it
determines that the reported value is inconsistent with the
requirements of these regulations.
(2) Any Indian lessee will make available upon request to the
authorized MMS or Indian representatives, to the Office of the
Inspector General of the Department of the Interior, or other person
authorized to receive such information, arm's-length sales and volume
data for like-quality production sold, purchased or otherwise obtained
by the lessee from the field or area or from nearby fields or areas.
(3) A lessee shall notify MMS if it has determined value pursuant
to paragraph (c)(2) or (c)(3) of this section. The notification shall
be by letter to MMS Associate Director for Royalty Management or his/
her designee. The letter shall identify the valuation method to be used
and contain a brief description of the procedure to be followed. The
notification required by this paragraph is a one-time notification due
no later than the end of the month following the month the lessee first
reports royalties on a Form MMS-2014 using a valuation method
authorized by paragraph (c)(2) or (c)(3) of this section, and each time
there is a change in a method pursuant to paragraph (c)(2) or (c)(3) of
this section.
(f) If MMS determines that a lessee has not properly determined
value, the lessee shall pay the difference, if any, between royalty
payments made based upon the value it has used and the royalty payments
that are due based upon the value established by MMS. The lessee shall
also pay interest on that difference computed pursuant to 30 CFR
218.54. If the lessee is entitled to a credit, MMS will provide
instructions for the taking of that credit.
(g) The lessee may request a value determination from MMS. In that
event, the lessee shall propose to MMS a value determination method,
and may use that method in determining value for royalty purposes until
MMS issues its decision. The lessee shall submit all available data
relevant to its proposal. MMS shall expeditiously determine the value
based upon the lessee's proposal and any additional information MMS
deems necessary. In making a value determination MMS may use any of the
valuation criteria authorized by this subpart. That determination shall
remain effective for the period stated therein. After MMS issues its
determination, the lessee shall make the adjustments in accordance with
paragraph (f) of this section.
(h) Notwithstanding any other provision of this section, pursuant
to no circumstances shall the value of production for royalty purposes
be less than the gross proceeds accruing to the lessee for lease
production, less applicable allowances determined pursuant to this
subpart.
(i) The lessee is required to place gas in marketable condition at
no cost to the Indian lessor unless otherwise provided in the lease
agreement. Where the value established pursuant to this section is
determined by a lessee's gross proceeds, that value shall be increased
to the extent that the gross proceeds have been reduced because the
purchaser, or any other person, is providing certain services the cost
of which ordinarily is the responsibility of the lessee to place the
gas in marketable condition.
(j) Value shall be based on the highest price a prudent lessee can
receive through legally enforceable claims pursuant to its contract. If
there is no contract revision or amendment, and the lessee fails to
take proper or timely action to receive prices or benefits to which it
is entitled, it must pay royalty at a value based upon that obtainable
price or benefit. Contract revisions or amendments shall be in writing
and signed by all parties to an arm's-length contract. If the lessee
makes timely application for a price increase or benefit allowed
pursuant to its contract but the purchaser refuses, and the lessee
takes reasonable measures, which are documented, to force purchaser
compliance, the lessee will owe no additional royalties unless or until
monies or consideration resulting from the price increase or additional
benefits are received. This paragraph shall not be construed to permit
a lessee to avoid its royalty payment obligation in situations where a
purchaser fails to pay, in whole or in part or timely, for a quantity
of gas.
(k) Notwithstanding any provision in these regulations to the
contrary, no review, reconciliation, monitoring, or other like process
that results in a redetermination by MMS of value pursuant to this
section shall be considered final or binding as against the Indian
Tribes or allottees until the audit period is formally closed.
(l) Certain information submitted to MMS to support valuation
proposals, including transportation, processing, or extraordinary cost
allowances, is exempted from disclosure by the Freedom of Information
Act, 5 U.S.C. 552, or other Federal Law. Any data specified by law to
be privileged, confidential, or otherwise exempt will be maintained in
a confidential manner
[[Page 5471]]
in accordance with applicable law and regulations. All requests for
information about determinations made pursuant to this subpart are to
be submitted in accordance with the Freedom of Information Act
regulation of the Department of the Interior, 43 CFR Part 2. Nothing in
this section is intended to limit or diminish in any manner whatsoever
the right of an Indian lessor to obtain any and all information as such
lessor may be lawfully entitled from MMS or such lessor's lessee
directly pursuant to the terms of the lease, 30 U.S.C. 1733, or other
applicable law.
Sec. 206.173 Valuation standards--processed gas.
(a) (1) This section applies to the valuation of all gas that is
processed by the lessee and any other gas production to which this
subpart applies and that is not subject to the valuation provisions of
Sec. 206.172 of this part. This section applies where the lessee's
contract includes a reservation of the right to process the gas and the
lessee exercises that right.
(2) The value of production, for royalty purposes, of gas subject
to this section shall be the combined value of the residue gas and all
gas plant products determined pursuant to this section, plus the value
of any condensate recovered downstream of the point of royalty
settlement without resorting to processing determined pursuant to
section of this part, less applicable transportation allowances and
processing allowances determined pursuant to this subpart.
(3) (i) For any Indian leases which provide that the Secretary may
consider the highest price paid or offered for a major portion of
production (major portion) in determining value for royalty purposes,
if data are available to compute a major portion MMS will, where
practicable, compare the values determined in accordance with this
section for any lease product with the major portion determined for
that lease product. The value to be used in determining the value of
production for royalty purposes shall be the higher of those two
values.
(ii) For purposes of this paragraph, major portion means the
highest price paid or offered at the time of production for the major
portion of gas production from the same field, or for residue gas or
gas plant products from the same processing plant, as applicable. The
major portion will be calculated using like-quality lease products sold
pursuant to arm's-length contracts from the same field or processing
plant (or, if necessary to obtain a reasonable sample, from the same
area or nearby processing plants) for each month. All such sales will
be arrayed from highest price to lowest price (at the bottom). The
major portion is that price at which 50 percent (by volume) plus 1 mcf
of the gas (starting from the bottom) is sold, or for gas plant
products, 50 percent (by volume) plus 1 unit.
(b)(1) (i) The value of the residue gas or any gas plant product
which is sold pursuant to an arm's-length contract shall be the gross
proceeds accruing to the lessee, except as provided in paragraphs
(b)(1)(ii) and (b)(1)(iii) of this section. The lessee shall have the
burden of demonstrating that its contract is arm's-length. The value
that the lessee reports for royalty purposes is subject to monitoring,
review, and audit. For purposes of this section, residue gas or any gas
plant product which is sold or otherwise transferred to the lessee's
marketing affiliate and then sold by the marketing affiliate pursuant
to an arm's-length contract shall be valued in accordance with this
paragraph based upon the sale by the marketing affiliate.
(ii) In conducting these reviews and audits, MMS will examine
whether or not the contract reflects the total consideration actually
transferred either directly or indirectly from the buyer to the seller
for the residue gas or gas plant product. If the contract does not
reflect the total consideration, then MMS may require that the residue
gas or gas plant product sold pursuant to that contract be valued in
accordance with paragraph (c) of this section. Value may not be less
than the gross proceeds accruing to the lessee, including the
additional consideration.
(iii) If MMS determines that the gross proceeds accruing to the
lessee pursuant to an arm's-length contract do not reflect the
reasonable value of the residue gas or gas plant product because of
misconduct by or between the contracting parties, or because the lessee
otherwise has breached its duty to the lessor to market the production
for the mutual benefit of the lessee and the lessor, then MMS shall
require that the residue gas or gas plant product be valued pursuant to
paragraphs (c)(2) or (c)(3) of this section, and in accordance with the
notification requirements of paragraph (e) of this section. When MMS
determines that the value may be unreasonable, MMS will notify the
lessee and give the lessee an opportunity to provide written
information justifying the lessee's value.
(2) Notwithstanding the provisions of paragraph (b)(1) of this
section, the value of residue gas sold pursuant to a warranty contract
shall be determined by MMS, and due consideration will be given to all
valuation criteria specified in this section. The lessee must request a
value determination in accordance with paragraph (g) of this section
for gas sold pursuant to a warranty contract; provided, however, that
any value determination for a warranty contract in effect on the
effective date of these regulations shall remain in effect until
modified by MMS.
(3) MMS may require a lessee to certify that its arm's-length
contract provisions include all of the consideration to be paid by the
buyer, either directly or indirectly, for the residue gas or gas plant
product.
(c) The value of residue gas or any gas plant product which is not
sold pursuant to an arm's-length contract shall be the reasonable value
determined in accordance with the first applicable of the following
methods:
(1) The gross proceeds accruing to the lessee pursuant to a sale
pursuant to its non-arm's-length contract (or other disposition other
than by an arm's-length contract), provided that those gross proceeds
are equivalent to the gross proceeds derived from, or paid pursuant to,
comparable arm's-length contracts for purchases, sales, or other
dispositions of like quality residue gas or gas plant products from the
same processing plant (or, if necessary to obtain a reasonable sample,
from nearby plants). In evaluating the comparability of arm's-length
contracts for the purposes of these regulations, the following factors
shall be considered: price, time of execution, duration, market or
markets served, terms, quality of residue gas or gas plant products,
volume, and such other factors as may be appropriate to reflect the
value of the residue gas or gas plant products;
(2) A value determined by consideration of other information
relevant in valuing like-quality residue gas or gas plant products,
including gross proceeds pursuant to arm's-length contracts for like-
quality residue gas or gas plant products from the same gas plant or
other nearby processing plants, posted prices for residue gas or gas
plant products, prices received in spot sales of residue gas or gas
plant products, other reliable public sources of price or market
information, and other information as to the particular lease operation
or the salability of such residue gas or gas plant products; or
(3) A net-back method or any other reasonable method to determine
value.
(d) (1) Notwithstanding any other provisions of this section,
except paragraph (h) of this section, if the maximum price permitted by
Federal law at which any residue gas or gas plant products may be sold
is less than
[[Page 5472]]
the value determined pursuant to this section, then MMS shall accept
such maximum price as the value. For the purposes of this section,
price limitations set by any State or local government shall not be
considered as a maximum price permitted by Federal law.
(2) The limitation prescribed by paragraph (d)(1) of this section
shall not apply to residue gas sold pursuant to a warranty contract and
valued pursuant to paragraph (b)(2) of this section.
(e) (1) Where the value is determined pursuant to paragraph (c) of
this section, the lessee shall retain all data relevant to the
determination of royalty value. Such data shall be subject to review
and audit, and MMS will direct a lessee to use a different value if it
determines upon review or audit that the reported value is inconsistent
with the requirements of these regulations.
(2) The Indian lessee will make available upon request to the
authorized MMS, or Indian representatives, to the Office of the
Inspector General of the Department of the Interior, or other persons
authorized to receive such information, arm's-length sales and volume
data for like-quality residue gas and gas plant products sold,
purchased or otherwise obtained by the lessee from the same processing
plant or from nearby processing plants.
(3) A lessee shall notify MMS if it has determined any value
pursuant to paragraph (c)(2) or (c)(3) of this section. The
notification shall be by letter to MMS Associate Director for Royalty
Management or his/her designee. The letter shall identify the valuation
method to be used and contain a brief description of the procedure to
be followed. The notification required by this paragraph is a one-time
notification due no later than the end of the month following the month
the lessee first reports royalties on a Form MMS-2014 using a valuation
method authorized by paragraph (c)(2) or (c)(3) of this section, and
each time there is a change in a method pursuant to paragraph (c)(2) or
(c)(3) of this section.
(f) If MMS determines that a lessee has not properly determined
value, the lessee shall pay the difference, if any, between royalty
payments made based upon the value it has used and the royalty payments
that are due based upon the value established by MMS. The lessee shall
also pay interest computed on that difference pursuant to 30 CFR
218.54. If the lessee is entitled to a credit, MMS will provide
instructions for the taking of that credit.
(g) The lessee may request a value determination from MMS. In that
event, the lessee shall propose to MMS a value determination method,
and may use that method in determining value for royalty purposes until
MMS issues its decision. The lessee shall submit all available data
relevant to its proposal. MMS shall expeditiously determine the value
based upon the lessee's proposal and any additional information MMS
deems necessary. In making a value determination, MMS may use any of
the valuation criteria authorized by this subpart. That determination
shall remain effective for the period stated therein. After MMS issues
its determination, the lessee shall make the adjustments in accordance
with paragraph (f) of this section.
(h) Notwithstanding any other provision of this section, pursuant
to no circumstances shall the value of production for royalty purposes
be less than the gross proceeds accruing to the lessee for residue gas
and/or any gas plant products, less applicable transportation
allowances and processing allowances determined pursuant to this
subpart.
(i) The lessee is required to place residue gas and gas plant
products in marketable condition at no cost to the Indian lessor unless
otherwise provided in the lease agreement. Where the value established
pursuant to this section is determined by a lessee's gross proceeds,
that value shall be increased to the extent that the gross proceeds
have been reduced because the purchaser, or any other person, is
providing certain services the cost of which ordinarily is the
responsibility of the lessee to place the residue gas or gas plant
products in marketable condition.
(j) Value shall be based on the highest price a prudent lessee can
receive through legally enforceable claims pursuant to its contract.
Absent contract revision or amendment, if the lessee fails to take
proper or timely action to receive prices or benefits to which it is
entitled it must pay royalty at a value based upon that obtainable
price or benefit. Contract revisions or amendments shall be in writing
and signed by all parties to an arm's-length contract. If the lessee
makes timely application for a price increase or benefit allowed
pursuant to its contract but the purchaser refuses, and the lessee
takes reasonable measures, which are documented, to force purchaser
compliance, the lessee will owe no additional royalties unless or until
monies or consideration resulting from the price increase or additional
benefits are received. This paragraph shall not be construed to permit
a lessee to avoid its royalty payment obligation in situations where a
purchaser fails to pay, in whole or in part, or timely, for a quantity
of residue gas or gas plant product.
(k) Notwithstanding any provision in these regulations to the
contrary, no review, reconciliation, monitoring, or other like process
that results in a redetermination by MMS of value pursuant to this
section shall be considered final or binding against the Indian Tribes
or allottees until the audit period is formally closed.
(l) Certain information submitted to MMS to support valuation
proposals, including transportation allowances, processing allowances
or extraordinary cost allowances, is exempted from disclosure by the
Freedom of Information Act, 5 U.S.C. 552, or other Federal law. Any
data specified by law to be privileged, confidential, or otherwise
exempt, will be maintained in a confidential manner in accordance with
applicable law and regulations. All requests for information about
determinations made pursuant to this Part are to be submitted in
accordance with the Freedom of Information Act regulation of the
Department of the Interior, 43 CFR Part 2. Nothing in this section is
intended to limit or diminish in any manner whatsoever the right of an
Indian lessor to obtain any and all information as such lessor may be
lawfully entitled from MMS or such lessor's lessee directly pursuant to
the terms of the lease, 30 U.S.C. 1733, or other applicable law.
Sec. 206.174 Determination of quantities and qualities for computing
royalties.
(a) (1) Royalties shall be computed on the basis of the quantity
and quality of unprocessed gas at the point of royalty settlement
approved by BLM for onshore leases.
(2) If the value of gas determined pursuant to Sec. 206.172 of this
subpart is based upon a quantity and/or quality that is different from
the quantity and/or quality at the point of royalty settlement, as
approved by BLM or MMS, that value shall be adjusted for the
differences in quantity and/or quality.
(b) (1) For residue gas and gas plant products, the quantity basis
for computing royalties due is the monthly net output of the plant even
though residue gas and/or gas plant products may be in temporary
storage.
(2) If the value of residue gas and/or gas plant products
determined pursuant to Sec. 206.173 of this subpart is based upon a
quantity and/or quality of residue gas and/or gas plant products that
is different from that which is attributable to a lease, determined in
accordance with paragraph (c) of this section, that value shall be
adjusted for
[[Page 5473]]
the differences in quantity and/or quality.
(c) The quantity of the residue gas and gas plant products
attributable to a lease shall be determined according to the following
procedure:
(1) When the net output of the processing plant is derived from gas
obtained from only one lease, the quantity of the residue gas and gas
plant products on which computations of royalty are based is the net
output of the plant.
(2) When the net output of a processing plant is derived from gas
obtained from more than one lease producing gas of uniform content, the
quantity of the residue gas and gas plant products allocable to each
lease shall be in the same proportions as the ratios obtained by
dividing the amount of gas delivered to the plant from each lease by
the total amount of gas delivered from all leases.
(3) When the net output of a processing plant is derived from gas
obtained from more than one lease producing gas of nonuniform content,
the quantity of the residue gas allocable to each lease will be
determined by multiplying the amount of gas delivered to the plant from
the lease by the residue gas content of the gas, and dividing the
arithmetical product thus obtained by the sum of the similar
arithmetical products separately obtained for all leases from which gas
is delivered to the plant, and then multiplying the net output of the
residue gas by the arithmetic quotient obtained. The net output of gas
plant products allocable to each lease will be determined by
multiplying the amount of gas delivered to the plant from the lease by
the gas plant product content of the gas, and dividing the arithmetical
product thus obtained by the sum of the similar arithmetical products
separately obtained for all leases from which gas is delivered to the
plant, and then multiplying the net output of each gas plant product by
the arithmetic quotient obtained.
(4) A lessee may request MMS approval of other methods for
determining the quantity of residue gas and gas plant products
allocable to each lease. If approved, such method will be applicable to
all gas production from Indian leases that is processed in the same
plant.
(d) (1) No deductions may be made from the royalty volume or
royalty value for actual or theoretical losses. Any actual loss of
unprocessed gas that may be sustained prior to the royalty settlement
metering or measurement point will not be subject to royalty provided
that such loss is determined to have been unavoidable by BLM .
(2) Except as provided in paragraph (d)(1) of this section and 30
CFR 202.171(c), royalties are due on 100 percent of the volume
determined in accordance with paragraphs (a) through (c) of this
section. There can be no reduction in that determined volume for actual
losses after the quantity basis has been determined or for theoretical
losses that are claimed to have taken place. Royalties are due on 100
percent of the value of the unprocessed gas, residue gas, and/or gas
plant products as provided in this subpart, less applicable allowances.
There can be no deduction from the value of the unprocessed gas,
residue gas, and/or gas plant products to compensate for actual losses
after the quantity basis has been determined, or for theoretical losses
that are claimed to have taken place.
Sec. 206.175 Accounting for comparison.
(a) Except as provided in paragraph (b) of this section, where the
lessee (or a person to whom the lessee has transferred gas pursuant to
a non-arm's-length contract or without a contract) processes the
lessee's gas and after processing the gas the residue gas is not sold
pursuant to an arm's-length contract, the value, for royalty purposes,
shall be the greater of (1) the combined value, for royalty purposes,
of the residue gas and gas plant products resulting from processing the
gas determined pursuant to Sec. 206.173 of this subpart, plus the
value, for royalty purposes, of any condensate recovered downstream of
the point of royalty settlement without resorting to processing
determined pursuant to Sec. 206.52 of this subpart; or (2) the value,
for royalty purposes, of the gas prior to processing determined in
accordance with Sec. 206.172 of this subpart.
(b) The requirement for accounting for comparison contained in the
terms of leases, particularly Indian leases, will govern as provided in
Sec. 206.170(b) of this subpart. When accounting for comparison is
required by the lease terms, such accounting for comparison shall be
determined in accordance with paragraph (a) of this section.
Sec. 206.176 Transportation allowances--general.
(a) Where the value of gas has been determined pursuant to
Sec. 206.172 or Sec. 206.173 of this subpart at a point (e.g., sales
point or point of value determination) off the lease, MMS shall allow a
deduction for the reasonable actual costs incurred by the lessee to
transport unprocessed gas, residue gas, and gas plant products from a
lease to a point off the lease including, if appropriate,
transportation from the lease to a gas processing plant off the lease
and from the plant to a point away from the plant.
(b) Transportation costs must be allocated among all products
produced and transported as provided in Sec. 206.177.
(c) (1) Except as provided in paragraph (c)(3) of this section, for
unprocessed gas valued in accordance with Sec. 206.172 of this subpart,
the transportation allowance deduction on the basis of a selling
arrangement shall not exceed 50 percent of the value of the unprocessed
gas determined in accordance with Sec. 206.172 of this subpart.
(2) Except as provided in paragraph (c)(3) of this section, for gas
production valued in accordance with Sec. 206.173 of this subpart the
transportation allowance deduction on the basis of a selling
arrangement shall not exceed 50 percent of the value of the residue gas
or gas plant product determined in accordance with Sec. 206.173 of this
subpart. For purposes of this section, natural gas liquids shall be
considered one product.
(3) Upon request of a lessee, MMS may approve a transportation
allowance deduction in excess of the limitations prescribed by
paragraphs (c)(1) and (c)(2) of this section. The lessee must
demonstrate that the transportation costs incurred in excess of the
limitations prescribed in paragraphs (c)(1) and (c)(2) of this section
were reasonable, actual, and necessary. An application for exception
(using Form MMS-4393, Request to Exceed Regulatory Allowance
Limitation) shall contain all relevant and supporting documentation
necessary for MMS to make a determination. Pursuant to no circumstances
shall the value for royalty purposes pursuant to any selling
arrangement be reduced to zero.
(d) If, after a review and/or audit, MMS determines that a lessee
has improperly determined a transportation allowance authorized by this
subpart, then the lessee shall pay any additional royalties, plus
interest, determined in accordance with 30 CFR 218.54, or shall be
entitled to a credit, without interest.
Sec. 206.177 Determination of transportation allowances.
(a) Arm's-length transportation contracts.
(1) (i) For transportation costs incurred by a lessee pursuant to
an arm's-length contract, the transportation allowance shall be the
reasonable, actual costs incurred by the lessee for transporting the
unprocessed gas,
[[Page 5474]]
residue gas and/or gas plant products pursuant to that contract, except
as provided in paragraphs (a)(1)(ii) and (a)(1)(iii) of this section,
subject to monitoring, review, audit, and adjustment. The lessee shall
have the burden of demonstrating that its contract is arm's-length.
Such allowances shall be subject to the provisions of paragraph (f) of
this section. Before any deduction may be taken, the lessee must submit
a completed page one of Form MMS-4295 (and Schedule 1), Gas
Transportation Allowance Report, in accordance with paragraph (c)(1) of
this section. 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-4295 is filed with MMS, unless MMS approves a
longer period upon a showing of good cause by the lessee.
(ii) In conducting reviews and audits, MMS will examine whether or
not the contract reflects more than the consideration actually
transferred either directly or indirectly from the lessee to the
transporter for the transportation. If the contract reflects more than
the total consideration, then MMS may require that the transportation
allowance be determined in accordance with paragraph (b) of this
section.
(iii) If MMS determines that the consideration paid pursuant to an
arm's-length transportation contract does not reflect the reasonable
value of the transportation because of misconduct by or between the
contracting parties, or because the lessee otherwise has breached its
duty to the lessor to market the production for the mutual benefit of
the lessee and the lessor, then MMS shall require that the
transportation allowance be determined in accordance with paragraph (b)
of this section. When MMS determines that the value of the
transportation may be unreasonable, MMS will notify the lessee and give
the lessee an opportunity to provide written information justifying the
lessee's transportation costs.
(2) (i) If an arm's-length transportation contract includes more
than one product in a gaseous phase and the transportation costs
attributable to each product cannot be determined from the contract,
the total transportation costs shall be allocated in a consistent and
equitable manner to each of the products transported in the same
proportion as the ratio of the volume of each product (excluding waste
products which have no value) to the volume of all products in the
gaseous phase (excluding waste products which have no value). Except as
provided in this paragraph, no allowance may be taken for the costs of
transporting lease production which is not royalty bearing without MMS
approval.
(ii) Notwithstanding the requirements of paragraph (i), the lessee
may propose to MMS a cost allocation method on the basis of the values
of the products transported. MMS shall approve the method unless it
determines that it is not consistent with the purposes of the
regulations in this subpart.
(3) If an arm's-length transportation contract includes both
gaseous and liquid products and the transportation costs attributable
to each cannot be determined from the contract, the lessee shall
propose an allocation procedure to MMS. The lessee may use the
transportation allowance determined in accordance with its proposed
allocation procedure until MMS issues its determination on the
acceptability of the cost allocation. The lessee shall submit all
relevant data to support its proposal. The initial proposal must be
submitted by June 30, 1988, or within 3 months after the last day of
the month for which the lessee requests a transportation allowance,
whichever is later (unless MMS approves a longer period). MMS shall
then determine the gas transportation allowance based upon the lessee's
proposal and any additional information MMS deems necessary.
(4) Where the lessee's payments for transportation pursuant to an
arm's-length contract are not based on a dollar per unit, the lessee
shall convert whatever consideration is paid to a dollar value
equivalent for the purposes of this section.
(5) Where an arm's-length sales contract price or a posted price
includes a provision whereby the listed price is reduced by a
transportation factor, MMS will not consider the transportation factor
to be a transportation allowance. The transportation factor may be used
in determining the lessee's gross proceeds for the sale of the product.
The transportation factor may not exceed 50 percent of the base price
of the product without MMS approval.
(b) Non-arm's-length or no contract. (1) If a lessee has a non-
arm's-length transportation contract or has no contract, including
those situations where the lessee performs transportation services for
itself, the transportation allowance will be based upon the lessee's
reasonable actual costs as provided in this paragraph. All
transportation allowances deducted pursuant to a non-arm's-length or no
contract situation are subject to monitoring, review, audit, and
adjustment. Before any estimated or actual deduction may be taken, the
lessee must submit a completed Form MMS-4295 in accordance with
paragraph (c)(2) of this section. 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-4295 is filed with MMS, unless
MMS approves a longer period upon a showing of good cause by the
lessee. MMS will monitor the allowance deductions to ensure that
deductions are reasonable and allowable. When necessary or appropriate,
MMS may direct a lessee to modify its actual transportation allowance
deduction.
(2) The transportation allowance for non-arm's-length or no-
contract situations shall be based upon the lessee's actual costs for
transportation during the reporting period, including operating and
maintenance expenses, overhead, and either depreciation and a return on
undepreciated capital investment in accordance with paragraph
(b)(2)(iv)(A) of this section, or a cost equal to the initial
depreciable investment in the transportation system multiplied by a
rate of return in accordance with paragraph (b)(2)(iv)(B) of this
section. Allowable capital costs are generally those costs for
depreciable fixed assets (including costs of delivery and installation
of capital equipment) which are an integral part of the transportation
system.
(i) Allowable operating expenses include: Operations supervision
and engineering; operations labor; fuel; utilities; materials; ad
valorem property taxes; rent; supplies; and any other directly
allocable and attributable operating expense which the lessee can
document.
(ii) Allowable maintenance expenses include: Maintenance of the
transportation system; maintenance of equipment; maintenance labor; and
other directly allocable and attributable maintenance expenses which
the lessee can document.
(iii) Overhead directly attributable and allocable to the operation
and maintenance of the transportation system is an allowable expense.
State and Federal income taxes and severance taxes and other fees,
including royalties, are not allowable expenses.
(iv) A lessee may use either depreciation or a return on
depreciable capital investment. 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 MMS.
(A) To compute depreciation, the lessee may elect to use either a
straight-line depreciation method based on the life of equipment or on
the life of the
[[Page 5475]]
reserves which the transportation system services, or a unit of
production method. After an election is made, the lessee may not change
methods without MMS approval. A change in ownership of a transportation
system shall not alter the depreciation schedule established by the
original transporter/lessee for purposes of the allowance calculation.
With or without a change in ownership, a transportation system shall be
depreciated only once. Equipment shall not be depreciated below a
reasonable salvage value.
(B) MMS shall allow as a cost an amount equal to the allowable
initial capital investment in the transportation system multiplied by
the rate of return determined pursuant to paragraph (b)(2)(v) of this
section. No allowance shall be provided for depreciation. This
alternative shall apply only to transportation facilities first placed
in service after March 1, 1988.
(v) The rate of return shall be the industrial rate associated with
Standard and Poor's BBB rating. The rate of return shall be the monthly
average rate as published in Standard and Poor's Bond Guide for the
first month of the reporting period for which the allowance is
applicable and shall be effective during the reporting period. The rate
shall be redetermined at the beginning of each subsequent
transportation allowance reporting period (which is determined pursuant
to paragraph (c) of this section).
(3) (i) The deduction for transportation costs shall be determined
on the basis of the lessee's cost of transporting each product through
each individual transportation system. Where more than one product in a
gaseous phase is transported, the allocation of costs to each of the
products transported shall be made in a consistent and equitable manner
in the same proportion as the ratio of the volume of each product
(excluding waste products which have no value) to the volume of all
products in the gaseous phase (excluding waste products which have no
value). Except as provided in this paragraph, the lessee may not take
an allowance for transporting a product which is not royalty bearing
without MMS approval.
(ii) Notwithstanding the requirements of paragraph (i), the lessee
may propose to MMS a cost allocation method on the basis of the values
of the products transported. MMS shall approve the method unless it
determines that it is not consistent with the purposes of the
regulations in this part.
(4) Where both gaseous and liquid products are transported through
the same transportation system, the lessee shall propose a cost
allocation procedure to MMS. The lessee may use the transportation
allowance determined in accordance with its proposed allocation
procedure until MMS issues its determination on the acceptability of
the cost allocation. The lessee shall submit all relevant data to
support its proposal. The initial proposal must be submitted by June
30, 1988 or within 3 months after the last day of the month for which
the lessee begins the transportation, whichever is later, unless MMS
approves a longer period. MMS shall then determine the transportation
allowance based upon the lessee's proposal and any additional
information MMS deems necessary.
(5) A lessee may apply to MMS for an exception from the requirement
that it compute actual costs in accordance with paragraphs (b)(1)
through (b)(4) of this section. MMS will grant the exception only if
the lessee has a tariff for the transportation system approved by the
Federal Energy Regulatory Commission (FERC) for Indian leases. MMS
shall deny the exception request if it determines that the tariff is
excessive as compared to arm's-length transportation charges by
pipelines, owned by the lessee or others, providing similar
transportation services in that area. If there are no arm's-length
transportation charges, MMS shall deny the exception request if: (i) No
FERC cost analysis exists and the FERC has declined to investigate
pursuant to MMS timely objections upon filing; and (ii) the tariff
significantly exceeds the lessee's actual costs for transportation as
determined pursuant to 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-4295 (and Schedule 1) prior to, or at the same time
as, the transportation allowance determined pursuant to an arm's-length
contract is reported on Form MMS-2014, Report of Sales and Royalty
Remittance. A Form MMS-4295 received by the end of the month that the
Form MMS-2014 is due shall be considered to be timely received.
(ii) The initial Form MMS-4295 shall be effective for a reporting
period beginning the month that the lessee is first authorized to
deduct a transportation allowance and shall continue until the end of
the calendar year, or until the applicable contract or rate terminates
or is modified or amended, whichever is earlier.
(iii) After the initial reporting period and for succeeding
reporting periods, lessees must submit page one of Form MMS-4295 (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 MMS approves a longer period
(during which period the lessee shall continue to use the allowance
from the previous reporting period).
(iv) MMS 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 MMS.
(v) Transportation allowances which are based on arm's-length
contracts and which are in effect at the time these regulations become
effective will be allowed to continue until such allowances terminate.
For the purposes of this section, only those allowances that have been
approved by MMS in writing shall qualify as being in effect at the time
these regulations become effective.
(vi) MMS may establish, in appropriate circumstances, reporting
requirements which are different from the requirements of this section.
(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-4295 prior to, or at the
same time as, the transportation allowance determined pursuant to a
non-arm's-length contract or no contract situation is reported on Form
MMS-2014, Report of Sales and Royalty Remittance. A Form MMS-4295
received by the end of the month that the Form MMS-2014 is due shall be
considered to be timely received. The initial report may be based upon
estimated costs.
(ii) The initial Form MMS-4295 shall be effective for a reporting
period beginning the month that the lessee first is authorized to
deduct a transportation allowance and shall continue until the end of
the calendar year, or until the transportation pursuant to the non-
arm's-length contract or the no contract situation terminates,
whichever is earlier.
(iii) For calendar-year reporting periods succeeding the initial
reporting period, the lessee shall submit a completed Form MMS-4295
containing the actual costs for the previous reporting period. If the
transportation is continuing, the lessee shall include on Form MMS-4295
its estimated costs for the next calendar year. The estimated
transportation allowance shall be based
[[Page 5476]]
on the actual costs for the previous reporting period plus or minus any
adjustments which are based on the lessee's knowledge of decreases or
increases which will affect the allowance. Form MMS-4295 must be
received by MMS within 3 months after the end of the previous reporting
period, unless MMS approves a longer period (during which period the
lessee shall continue to use the allowance from the previous reporting
period).
(iv) For new transportation facilities or arrangements, the
lessee's initial Form MMS-4295 shall include estimates of the allowable
transportation costs for the applicable period. Cost estimates shall be
based upon the most recently available operations data for the
transportation system, or if such data are not available, the lessee
shall use estimates based upon industry data for similar transportation
systems.
(v) Non-arm's-length contract or no contract based transportation
allowances which are in effect at the time these regulations become
effective will be allowed to continue until such allowances terminate.
For the purposes of this section, only those allowances that have been
approved by MMS in writing shall qualify as being in effect at the time
these regulations become effective.
(vi) Upon request by MMS, the lessee shall submit all data used to
prepare its Form MMS-4295. The data shall be provided within a
reasonable period of time, as determined by MMS.
(vii) MMS may establish in appropriate circumstances, reporting
requirements which are different from the requirements of this section.
(viii) If the lessee is authorized to use its FERC-approved tariff
as its transportation cost in accordance with paragraph (b)(5) of this
section, it shall follow the reporting requirements of paragraph (c)(1)
of this section.
(3) MMS may establish reporting dates for individual lessees
different than those specified in this subpart in order to provide more
effective administration. Lessees will be notified of any change in
their reporting period.
(4) Transportation allowances must be reported as a separate line
item on Form MMS-2014, unless MMS approves a different reporting
procedure.
(d) Interest assessments for incorrect or late reports and failure
to report.
(1) If a lessee deducts a processing allowance on its Form MMS-2014
without complying with the requirements of this section, the lessee
shall pay interest only on the amount of such deduction until the
requirements of this section are complied with. The lessee also shall
repay the amount of any allowance which is disallowed by this section.
(2) If a lessee erroneously reports a transportation allowance
which results in an underpayment of royalties, interest shall be paid
on the amount of that underpayment.
(3) Interest required to be paid by this section shall be
determined in accordance with 30 CFR 218.54.
(e) Adjustments. (1) If the actual transportation allowance is less
than the amount the lessee has taken on Form MMS-2014 for each month
during the allowance form reporting period, the lessee shall be
required to pay additional royalties due plus interest computed
pursuant to 30 CFR 218.54, retroactive to the first day of the first
month the lessee is authorized to deduct a transportation allowance. If
the actual transportation allowance is greater than the amount the
lessee has taken on Form MMS-2014 for each month during the allowance
form reporting period, the lessee shall be entitled to a credit,
without interest.
(2) For lessees transporting production from onshore Indian leases,
the lessee must submit a corrected Form MMS-2014 to reflect actual
costs, together with any payment, in accordance with instructions
provided by MMS.
(f) Actual or theoretical losses. Notwithstanding any other
provisions of this subpart, for other than arm's-length contracts no
cost shall be allowed for transportation which results from payments
(either volumetric or for value) for actual or theoretical losses. This
section does not apply when the transportation allowance is based upon
a FERC or state regulatory agency approved tariff.
(g) Other transportation cost determinations. The provisions of
this section shall apply to determine transportation costs when
establishing value using a net-back valuation procedure or any other
procedure that requires deduction of transportation costs.
Sec. 206.178 Processing allowances--general.
(a) Where the value of gas is determined pursuant to Sec. 206.173
of this subpart, a deduction shall be allowed for the reasonable actual
costs of processing.
(b) Processing costs must be allocated among the gas plant
products. A separate processing allowance must be determined for each
gas plant product and processing plant relationship. Natural gas
liquids (NGL's) shall be considered as one product.
(c) (1) Except as provided in paragraph (d)(2) of this section, the
processing allowance shall not be applied against the value of the
residue gas. Where there is no residue gas MMS may designate an
appropriate gas plant product against which no allowance may be
applied.
(2) Except as provided in paragraph (c)(3) of this section, the
processing allowance deduction on the basis of an individual product
shall not exceed 66\2/3\ percent of the value of each gas plant product
determined in accordance with Sec. 206.173 of this subpart (such value
to be reduced first for any transportation allowances related to
postprocessing transportation authorized by Sec. 206.176 of this
subpart).
(3) Upon request of a lessee, MMS may approve a processing
allowance in excess of the limitation prescribed by paragraph (c)(2) of
this section. The lessee must demonstrate that the processing costs
incurred in excess of the limitation prescribed in paragraph (c)(2) of
this section were reasonable, actual, and necessary. An application for
exception (using Form MMS-4393, Request to Exceed Regulatory Allowance
Limitation) shall contain all relevant and supporting documentation for
MMS to make a determination. Under no circumstances shall the value for
royalty purposes of any gas plant product be reduced to zero.
(d)(1) Except as provided in paragraph (d)(2) of this section, no
processing cost deduction shall be allowed for the costs of placing
lease products in marketable condition, including dehydration,
separation, compression, or storage, even if those functions are
performed off the lease or at a processing plant. Where gas is
processed for the removal of acid gases, commonly referred to as
``sweetening,'' no processing cost deduction shall be allowed for such
costs unless the acid gases removed are further processed into a gas
plant product. In such event, the lessee shall be eligible for a
processing allowance as determined in accordance with this subpart.
However, MMS will not grant any processing allowance for processing
lease production which is not royalty bearing.
(2) (i) If the lessee incurs extraordinary costs for processing gas
production from a gas production operation, it may apply to MMS for an
allowance for those costs which shall be in addition to any other
processing allowance to which the lessee is entitled pursuant to this
section. Such an allowance may be granted only if the lessee can
demonstrate that the costs are, by reference to standard industry
[[Page 5477]]
conditions and practice, extraordinary, unusual, or unconventional.
(ii) Prior MMS approval to continue an extraordinary processing
cost allowance is not required. However, to retain the authority to
deduct the allowance the lessee must report the deduction to MMS in a
form and manner prescribed by MMS.
(e) If MMS determines that a lessee has improperly determined a
processing allowance authorized by this subpart, then the lessee shall
pay any additional royalties, plus interest determined in accordance
with 30 CFR 218.54, or shall be entitled to a credit, without interest.
Sec. 206.179 Determination of processing allowances.
(a) Arm's-length processing contracts.
(1) (i) For processing costs incurred by a lessee pursuant to an
arm's-length contract, the processing allowance shall be the reasonable
actual costs incurred by the lessee for processing the gas pursuant to
that contract, except as provided in paragraphs (a)(1)(ii) and
(a)(1)(iii) of this section, subject to monitoring, review, audit, and
adjustment. The lessee shall have the burden of demonstrating that its
contract is arm's-length. Before any deduction may be taken, the lessee
must submit a completed page one of Form MMS-4109, Gas Processing
Allowance Summary Report, in accordance with paragraph (c)(1) of this
section. A processing 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-4109 is filed with MMS, unless MMS approves a longer
period upon a showing of good cause by the lessee.
(ii) In conducting reviews and audits, MMS will examine whether the
contract reflects more than the consideration actually transferred
either directly or indirectly from the lessee to the processor for the
processing. If the contract reflects more than the total consideration,
then MMS may require that the processing allowance be determined in
accordance with paragraph (b) of this section.
(iii) If MMS determines that the consideration paid pursuant to an
arm's-length processing contract does not reflect the reasonable value
of the processing because of misconduct by or between the contracting
parties, or because the lessee otherwise has breached its duty to the
lessor to market the production for the mutual benefit of the lessee
and lessor, then MMS shall require that the processing allowance be
determined in accordance with paragraph (b) of this section. When MMS
determines that the value of the processing may be unreasonable, MMS
will notify the lessee and give the lessee an opportunity to provide
written information justifying the lessee's processing costs.
(2) If an arm's-length processing contract includes more than one
gas plant product and the processing costs attributable to each product
can be determined from the contract, then the processing costs for each
gas plant product shall be determined in accordance with the contract.
No allowance may be taken for the costs of processing lease production
which is not royalty-bearing.
(3) If an 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, the lessee shall propose an
allocation procedure to MMS. The lessee may use its proposed allocation
procedure until MMS issues its determination. The lessee shall submit
all relevant data to support its proposal. The initial proposal must be
submitted by June 30, 1988 or within 3 months after the last day of the
month for which the lessee requests a processing allowance, whichever
is later (unless MMS approves a longer period). MMS shall then
determine the processing allowance based upon the lessee's proposal and
any additional information MMS deems necessary. No processing allowance
will be granted for the costs of processing lease production which is
not royalty bearing.
(4) Where the lessee's payments for processing pursuant to an
arm's-length contract are not based on a dollar per unit basis, the
lessee shall convert whatever consideration is paid to a dollar value
equivalent for the purposes of this section.
(b) Non-arm's-length or no contract.
(1) If a lessee has a non-arm's-length processing contract or has
no contract, including those situations where the lessee performs
processing for itself, the processing allowance will be based upon the
lessee's reasonable actual costs as provided in this paragraph. All
processing allowances deducted pursuant to a non-arm's-length or no
contract situation are subject to monitoring, review, audit, and
adjustment. Before any estimated or actual deduction may be taken, the
lessee must submit a completed Form MMS-4109 in accordance with
paragraph (c)(2) of this section. A processing 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-4109 is filed with MMS, unless MMS
approves a longer period upon a showing of good cause by the lessee.
MMS will monitor the allowance deduction to ensure that deductions are
reasonable and allowable. When necessary or appropriate, MMS may direct
a lessee to modify its actual processing allowance.
(2) The processing allowance for non-arm's-length or no contract
situations shall be based upon the lessee's actual costs for processing
during the reporting period, including operating and maintenance
expenses, overhead, and either depreciation and a return on
undepreciated capital investment in accordance with paragraph
(b)(2)(iv)(A) of this section, or a cost equal to the initial
depreciable investment in the processing plant multiplied by a rate of
return in accordance with paragraph (b)(2)(iv)(B) of this section.
Allowable capital costs are generally those costs for depreciable fixed
assets (including costs of delivery and installation of capital
equipment) which are an integral part of the processing plant.
(i) Allowable operating expenses include: Operations supervision
and engineering; operations labor; fuel; utilities; materials; ad
valorem property taxes; rent; supplies; and any other directly
allocable and attributable operating expense which the lessee can
document.
(ii) Allowable maintenance expenses include: maintenance of the
processing plant; maintenance of equipment; maintenance labor; and
other directly allocable and attributable maintenance expenses which
the lessee can document.
(iii) Overhead directly attributable and allocable to the operation
and maintenance of the processing plant is an allowable expense. State
and Federal income taxes and severance taxes, including royalties, are
not allowable expenses.
(iv) A lessee may use either depreciation or a return on
depreciable capital investment. When a lessee has elected to use either
method for a processing plant, the lessee may not later elect to change
to the other alternative without approval of MMS.
(A) To compute depreciation, the lessee may elect to use either a
straight-line depreciation method based on the life of equipment or on
the life of the reserves which the processing plant services, or a
unit-of-production method. After an election is made, the lessee may
not change methods without MMS approval. A change in ownership of a
processing plant shall not alter the depreciation schedule established
by the original processor/lessee for purposes of the allowance
calculation. With or without a change in ownership, a processing plant
shall be depreciated
[[Page 5478]]
only once. Equipment shall not be depreciated below a reasonable
salvage value.
(B) MMS shall allow as a cost an amount equal to the allowable
initial capital investment in the processing plant multiplied by the
rate of return determined pursuant to paragraph (b)(2)(v) of this
section. No allowance shall be provided for depreciation. This
alternative shall apply only to plants first placed in service after
March 1, 1988.
(v) The rate of return shall be the industrial rate associated with
Standard and Poor's BBB rating. The rate of return shall be the monthly
average rate as published in Standard and Poor's Bond Guide for the
first month of the reporting period for which the allowance is
applicable and shall be effective during the reporting period. The rate
shall be redetermined at the beginning of each subsequent processing
allowance reporting period (which is determined pursuant to paragraph
(c)(2) of this section).
(3) The processing allowance for each gas plant product shall be
determined based on the lessee's reasonable and actual cost of
processing the gas. Allocation of costs to each gas plant product shall
be based upon generally accepted accounting principles. The lessee may
not take an allowance for the costs of processing lease production
which is not royalty bearing.
(4) A lessee may apply to MMS for an exception from the requirement
that it compute actual costs in accordance with paragraphs (b)(1)
through (b)(3) of this section. MMS may grant the exception only if:
(i) The lessee has arm's-length contracts for processing other gas
production at the same processing plant; and (ii) at least 50 percent
of the gas processed annually at the plant is processed pursuant to
arm's-length processing contracts; if MMS grants the exception, the
lessee shall use as its processing allowance the volume weighted
average prices charged other persons pursuant to arm's-length contracts
for processing at the same plant.
(c) Reporting requirements.
(1) Arm's-length contracts.
(i) With the exception of those processing 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-4109 (and Schedule 1) prior to
the time, or at the same time as, the processing allowance determined
pursuant to an arm's-length contract is reported on Form MMS-2014,
Report of Sales and Royalty Remittance. A Form MMS-4109 received by the
end of the month that the Form MMS-2014 is due shall be considered to
be timely received.
(ii) The initial Form MMS-4109 shall be effective for a reporting
period beginning the month that the lessee is first authorized to
deduct a processing allowance and shall continue until the end of the
calendar year, or until the applicable contract or rate terminates or
is modified or amended, whichever is earlier.
(iii) After the initial reporting period and for succeeding
reporting periods, lessees must submit page 1 of Form MMS-4109 (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 MMS approves a longer period
(during which period the lessee shall continue to use the allowance
from the previous reporting period).
(iv) MMS may require that a lessee submit arm's-length processing
contracts and related documents. Documents shall be submitted within a
reasonable time, as determined by MMS.
(v) Processing allowances which are based on arm's-length contracts
and which are in effect at the time these regulations become effective
will be allowed to continue until such allowances terminate. For the
purpose of this section, only those allowances that have been approved
by MMS in writing shall qualify as being in effect at the time these
regulations became effective.
(vi) MMS may establish, in appropriate circumstances, reporting
requirements which are different from the requirements of this section.
(2) Non-arm's-length or no contract.
(i) With the exception of those processing 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-4109 prior to, or at the same
time as, the processing allowance determined pursuant to a non-arm's-
length contract or no contract situation is reported on Form MMS-2014,
Report of Sales and Royalty Remittance. A Form MMS-4109 received by the
end of the month that the Form MMS-2014 is due shall be considered to
be timely received. The initial report may be based upon estimated
costs.
(ii) The initial Form MMS-4109 sha
FR Doc. 96-2641 Revision of Valuation Regulations Governing Oil and Gas Transportation and Processing Allowances, and Coal Washing and Transportation Allowances
ll be effective for a reporting
period beginning the month that the lessee first is authorized to
deduct a processing allowance and shall continue until the end of the
calendar year, or until the processing pursuant to the non-arm's-length
contract or the no contract situation terminates, whichever is earlier.
(iii) For calendar-year reporting periods succeeding the initial
reporting period, the lessee shall submit a completed Form MMS-4109
containing the actual costs for the previous reporting period. If gas
processing is continuing, the lessee shall include on Form MMS-4109 its
estimated costs for the next calendar year. The estimated gas
processing allowance shall be based on the actual costs for the
previous period plus or minus any adjustments which are based on the
lessee's knowledge of decreases or increases which will affect the
allowance. Form MMS-4109 must be received by MMS within 3 months after
the end of the previous reporting period, unless MMS approves a longer
period (during which period the lessee shall continue to use the
allowance from the previous reporting period).
(iv) For new processing plants, the lessee's initial Form MMS-4109
shall include estimates of the allowable gas processing costs for the
applicable period. Cost estimates shall be based upon the most recently
available operations data for the plant, or if such data are not
available, the lessee shall use estimates based upon industry data for
similar gas processing plants.
(v) Processing allowances based on non-arm's-length or no contract
situations which are in effect at the time these regulations become
effective will be allowed to continue until such allowances terminate
for gas production from Indian leases. For the purposes of this
section, only those allowances that have been approved by MMS in
writing shall qualify as being in effect at the time these regulations
become effective.
(vi) Upon request by MMS, the lessee shall submit all data used by
the lessee to prepare its Form MMS-4109. The data shall be provided
within a reasonable period of time, as determined by MMS.
(vii) MMS may establish, in appropriate circumstances, reporting
requirements which are different from the requirements of this section.
(viii) If the lessee is authorized to use the volume weighted
average prices charged other persons as its processing allowance in
accordance with paragraph (b)(4) of this section, it shall follow the
reporting requirements of paragraph (c)(1) of this section.
(3) MMS may establish reporting dates for individual leases
different from those specified in this subpart in order to provide more
effective administration. Lessees will be notified of any change in
their reporting period.
[[Page 5479]]
(4) Processing allowances must be reported as a separate line on
the Form MMS-2014, unless MMS approves a different reporting procedure.
(d) Interest assessments for incorrect or late reports and failure
to report.
(1) If a lessee deducts a processing allowance on its Form MMS-2014
without complying with the requirements of this section, the lessee
shall pay interest only on the amount of such deduction until the
requirements of this section are complied with. The lessee also shall
repay the amount of any allowance which is disallowed by this section.
(2) If a lessee erroneously reports a processing allowance which
results in an underpayment of royalties, interest shall be paid on the
amount of that underpayment.
(3) Interest required to be paid by this section shall be
determined in accordance with 30 CFR 218.54.
(e) Adjustments.
(1) If the actual gas processing allowance is less than the amount
the lessee has taken on Form MMS-2014 for each month during the
allowance form reporting period, the lessee shall be required to pay
additional royalties due plus interest computed pursuant to 30 CFR
218.54, retroactive to the first day of the first month the lessee is
authorized to deduct a processing allowance. If the actual processing
allowance is greater than the amount the lessee has taken on Form MMS-
2014 for each month during the allowance period, the lessee shall be
entitled to a credit, without interest.
(2) For lessees processing production from onshore Indian leases,
the lessee must submit a corrected Form MMS-2014 to reflect actual
costs, together with any payment, in accordance with instructions
provided by MMS.
(f) Other processing cost determinations. The provisions of this
section shall apply to determine processing costs when establishing
value using a net back valuation procedure or any other procedure that
requires deduction of processing costs.
21. Subpart F--Coal is amended by revising the heading to read as
follows:
Subpart F--Federal Coal
22. Section 206.250 is amended by removing paragraph (d) and
revising paragraphs (a) and (b) to read as follows:
Sec. 206.250 Purpose and scope.
(a) This subpart is applicable to all coal produced from Federal
coal leases. The purpose of this subpart is to establish the value of
coal produced for royalty purposes, of all coal from Federal leases
consistent with the mineral leasing laws, other applicable laws and
lease terms.
(b) If the specific provisions of any statute or settlement
agreement between the United States and a lessee resulting from
administrative or judicial litigation, or any coal lease subject to the
requirements of this subpart, are inconsistent with any regulation in
this subpart then the statute, lease provision, or settlement shall
govern to the extent of that inconsistency.
* * * * *
23. Section 206.251 is amended by adding in alphabetical order a
definition for Netting, revising the definitions Allowance, Audit,
Gross proceeds; Lease, Lessee, and removing the definitions BIA, Indian
allottee, and Indian Tribe to read as follows:
Sec. 206.251 Definitions.
* * * * *
Allowance means a deduction used in determining value for royalty
purposes. Coal washing allowance means an allowance for the reasonable,
actual costs incurred by the lessee for coal washing. Transportation
allowance means an allowance for the reasonable, actual costs incurred
by the lessee for moving coal to a point of sale or point of delivery
remote from both the lease and mine or wash plant.
* * * * *
Audit means a review, conducted in accordance with generally
accepted accounting and auditing standards, of royalty payment
compliance activities of lessees or other interest holders who pay
royalties, rents, or bonuses on Federal leases.
* * * * *
Gross proceeds (for royalty payment purposes) means the total
monies and other consideration accruing to a coal lessee for the
production and disposition of the coal produced. Gross proceeds
includes, but is not limited to, payments to the lessee for certain
services such as crushing, sizing, screening, storing, mixing, loading,
treatment with substances including chemicals or oils, and other
preparation of the coal to the extent that the lessee is obligated to
perform them at no cost to the Federal Government. Gross proceeds, as
applied to coal, also includes but is not limited to reimbursements for
royalties, taxes or fees, and other reimbursements. Tax reimbursements
are part of the gross proceeds accruing to a lessee even though the
Federal royalty interest may be exempt from taxation. Monies and other
consideration, including the forms of consideration identified in this
paragraph, to which a lessee is contractually or legally entitled but
which it does not seek to collect through reasonable efforts are also
part of gross proceeds.
Lease means any contract, profit-share arrangement, joint venture,
or other agreement issued or approved by the United States for a
Federal coal resource under a mineral leasing law that authorizes
exploration for, development or extraction of, or removal of coal--or
the land covered by that authorization, whichever is required by the
context.
Lessee means any person to whom the United States issues a lease,
and any person who has been assigned an obligation to make royalty or
other payments required by the lease. This includes any person who has
an interest in a lease as well as an operator or payor who has no
interest in the lease but who has assumed the royalty payment
responsibility.
* * * * *
Netting is the deduction of an allowance from the sales value by
reporting a one line net sales value, instead of correctly reporting
the deduction as a separate line item on the Form MMS-2014.
* * * * *
24. Section 206.253 is amended by revising paragraphs (a) and (c)
to read as follows:
Sec. 206.253 Coal subject to royalties--general provisions.
(a) All coal (except coal unavoidably lost as determined by BLM
under 43 CFR part 3400) from a Federal lease subject to this part is
subject to royalty. This includes coal used, sold, or otherwise
disposed of by the lessee on or off the lease.
* * * * *
(c) If waste piles or slurry ponds are reworked to recover coal,
the lessee shall pay royalty at the rate specified in the lease at the
time the recovered coal is used, sold, or otherwise finally disposed
of. The royalty rate shall be that rate applicable to the production
method used to initially mine coal in the waste pile or slurry pond;
i.e., underground mining method or surface mining method. Coal in waste
pits or slurry ponds initially mined from Federal leases shall be
allocated to such leases regardless of whether it is stored on Federal
lands. The lessee shall maintain accurate records to determine to which
individual Federal lease coal in the waste pit or slurry pond should be
allocated. However, nothing in this section requires payment of a
royalty on
[[Page 5480]]
coal for which a royalty has already been paid.
* * * * *
25. Section 206.255 is amended by revising paragraphs (a) and (b)
to read as follows:
Sec. 206.255 Point of royalty determination.
(a) For all leases subject to this subpart, royalty shall be
computed on the basis of the quantity and quality of Federal coal in
marketable condition measured at the point of royalty measurement as
determined jointly by BLM and MMS.
(b) Coal produced and added to stockpiles or inventory does not
require payment of royalty until such coal is later used, sold, or
otherwise finally disposed of. MMS may ask BLM to increase the lease
bond to protect the lessor's interest when BLM determines that
stockpiles or inventory become excessive so as to increase the risk of
degradation of the resource.
* * * * *
26. Section 206.256 is amended by revising paragraph (a) to read as
follows:
Sec. 206.256 Valuation standards for cents-per-ton leases.
(a) This section is applicable to coal leases on Federal lands
which provide for the determination of royalty on a cents-per-ton (or
other quantity) basis.
* * * * *
27. Section 206.257 is amended by revising paragraphs (a), (d)(2),
(h), (j), and (k) to read as follows:
Sec. 206.257 Valuation standards for ad valorem leases.
(a) This section is applicable to coal leases on Federal lands
which provide for the determination of royalty as a percentage of the
amount of value of coal (ad valorem). The value for royalty purposes of
coal from such leases shall be the value of coal determined under this
section, less applicable coal washing allowances and transportation
allowances determined under Secs. 206.258 through 206.262 of this
subpart, or any allowance authorized by Sec. 206.265 of this subpart.
The royalty due shall be equal to the value for royalty purposes
multiplied by the royalty rate in the lease.
* * * * *
(d) * * *
(2) Any Federal lessee will make available upon request to the
authorized MMS or State representatives, to the Inspector General of
the Department of the Interior or other persons authorized to receive
such information, arm's-length sales value and sales quantity data for
like-quality coal sold, purchased, or otherwise obtained by the lessee
from the area.
* * * * *
(h) The lessee is required to place coal in marketable condition at
no cost to the Federal Government. Where the value established under
this section is determined by a lessee's gross proceeds, that value
shall be increased to the extent that the gross proceeds has been
reduced because the purchaser, or any other person, is providing
certain services, the cost of which ordinarily is the responsibility of
the lessee to place the coal in marketable condition.
* * * * *
(j) Notwithstanding any provision in these regulations to the
contrary, no review, reconciliation, monitoring, or other like process
that results in a redetermination by MMS of value under this section
shall be considered final or binding as against the Federal Government
or its beneficiaries until the audit period is formally closed.
(k) Certain information submitted to MMS to support valuation
proposals, including transportation, coal washing, or other allowances
under Sec. 206.265 of this subpart, is exempted from disclosure by the
Freedom of Information Act, 5 U.S.C. 522. Any data specified by the Act
to be privileged, confidential, or otherwise exempt shall be maintained
in a confidential manner in accordance with applicable law and
regulations. All requests for information about determinations made
under this Part are to be submitted in accordance with the Freedom of
Information Act regulation of the Department of the Interior, 43 CFR
Part 2.
28. Section 206.258 is amended by revising paragraph (c) to read as
follows:
Sec. 206.258 Washing allowances--general.
* * * * *
(c) Lessees shall not disproportionately allocate washing costs to
Federal leases.
* * * * *
29. Section 206.259 is amended by removing paragraphs (c)(1)(ii),
(c)(1)(iii), (c)(1)(v), (c)(1)(vi), (c)(2)(ii), (c)(2)(iii), (c)(2)(v),
(c)(2)(vii), (c)(3), and (c)(4); redesignating paragraphs (c)(1)(iv),
(c)(2)(iv), and (c)(2)(vi) as (c)(1)(ii), (c)(2)(ii), and (c)(2)(iii)
respectively; and by revising paragraphs (a)(1), (b)(1), (b)(2)(v),
(c)(1)(i), (c)(2)(i), newly designated (c)(2)(ii), newly designated
(c)(2)(iii), (d), and (e)(1) to read as follows:
Sec. 206.259 Determination of washing allowances.
(a) Arm's-length contracts.
(1) For washing costs incurred by a lessee under an arm's-length
contract, the washing allowance shall be the reasonable actual costs
incurred by the lessee for washing the coal under that contract,
subject to monitoring, review, audit, and possible future adjustment.
The lessee shall have the burden of demonstrating that its contract is
arm's-length. MMS' prior approval is not required before a lessee may
deduct costs incurred under an arm's-length contract. The lessee must
claim a washing allowance by reporting it as a separate line entry on
the Form MMS-2014.
* * * * *
(b) Non-arm's-length or no contract.
(1) If a lessee has a non-arm's-length contract or has no contract,
including those situations where the lessee performs washing for
itself, the washing allowance will be based upon the lessee's
reasonable actual costs. All washing allowances deducted under a non-
arm's-length or no contract situation are subject to monitoring,
review, audit, and possible future adjustment. The lessee must claim a
washing allowance by reporting it as a separate line entry on the Form
MMS-2014. When necessary or appropriate, MMS may direct a lessee to
modify its estimated or actual washing allowance.
(2) * * *
(v) The rate of return must be the industrial rate associated with
Standard and Poor's BBB rating. The rate of return must be the monthly
average rate as published in Standard and Poor's Bond Guide for the
first month for which the allowance is applicable. The rate must be
redetermined at the beginning of each subsequent calendar year.
* * * * *
(c) Reporting requirements.
(1) Arm's-length contracts.
(i) The lessee must notify MMS of an allowance based on incurred
costs by using a separate line entry on the Form MMS-2014.
(ii) * * *
(2) Non-arm's-length or no contract.
(i) The lessee must notify MMS of an allowance based on the
incurred costs by using a separate line entry on the Form MMS-2014.
(ii) For new washing facilities or arrangements, the lessee's
initial washing deduction shall include estimates of the allowable coal
washing costs for the applicable period. Cost estimates shall be based
upon the most recently available operations data for the processing
system or, if such data are not available, the lessee shall use
estimates based upon industry data for similar washing systems.
(iii) Upon request by MMS, the lessee shall submit all data used to
prepare the
[[Page 5481]]
allowance deduction. The data shall be provided within a reasonable
period of time, as determined by MMS.
(d) Interest and assessments.
(1) If a lessee nets a washing allowance on the Form MMS-2014, then
the lessee shall be assessed an amount up to 10 percent of the
allowance netted not to exceed $250 per lease selling arrangement per
sales period.
(2) If a lessee erroneously reports a washing allowance which
results in an underpayment of royalties, interest shall be paid on the
amount of that underpayment.
(3) Interest required to be paid by this section shall be
determined in accordance with 30 CFR 218.202.
(e) Adjustments. (1) If the actual coal washing allowance is less
than the amount the lessee has taken on Form MMS-2014 for each month
during the allowance reporting period, the lessee shall pay additional
royalties due plus interest computed under 30 CFR 218.202 from the date
when the lessee took the deduction to the date the lessee repays the
difference to MMS. If the actual washing allowance is greater than the
amount the lessee has taken on Form MMS-2014 for each month during the
allowance reporting period, the lessee shall be entitled to a credit
without interest.
* * * * *
30. Section 206.261 is amended by revising paragraphs (a)(1),
(a)(2), and (e) to read as follows:
Sec. 206.261 Transportation allowances--general.
(a) * * *
(1) Transport the coal from a Federal lease to a sales point which
is remote from both the lease and mine; or
(2) Transport the coal from a Federal lease to a wash plant when
that plant is remote from both the lease and mine and, if applicable,
from the wash plant to a remote sales point. In-mine transportation
costs shall not be included in the transportation allowance.
* * * * *
(e) Lessees shall not disproportionately allocate transportation
costs to Federal leases.
31. Section 206.262 is amended by removing paragraphs (c)(1)(ii),
(c)(1)(iii), (c)(1)(v), (c)(1)(vi), (c)(2)(ii), (c)(2)(iii), (c)(2)(v),
(c)(2)(vii), (c)(3) and (c)(4); redesignating paragraphs (c)(1)(iv),
(c)(2)(iv), (c)(2)(vi), and (c)(2)(viii) as paragraphs (c)(1)(ii),
(c)(2)(ii), (c)(2)(iii), and (c)(2)(v) respectively; and revising
paragraphs (a)(1), (b)(1), (b)(2)(v), (b)(3), (c)(1)(i), (c)(2)(i),
newly designated (c)(2)(ii), newly designated (c)(2)(iii), (d) and (e)
to read as follows:
Sec. 206.262 Determination of transportation allowances.
(a) Arm's-length contracts.
(1) For transportation costs incurred by a lessee pursuant to an
arm's-length contract, the transportation allowance shall be the
reasonable, actual costs incurred by the lessee for transporting the
coal under that contract, subject to monitoring, review, audit, and
possible future adjustment. The lessee shall have the burden of
demonstrating that its contract is arm's-length. The lessee must claim
a transportation allowance by reporting it as a separate line entry on
the Form MMS-2014.
* * * * *
(b) Non-arm's-length or no contract.
(1) If a lessee has a non-arm's-length contract or has no contract,
including those situations where the lessee performs transportation
services for itself, the transportation allowance will be based upon
the lessee's reasonable actual costs. All transportation allowances
deducted under a non-arm's-length or no contract situation are subject
to monitoring, review, audit, and possible future adjustment. The
lessee must claim a transportation allowance by reporting it as a
separate line entry on the Form MMS-2014. When necessary or
appropriate, MMS may direct a lessee to modify its estimated or actual
transportation allowance deduction.
(2) * * *
(v) The rate of return must be the industrial rate associated with
Standard and Poor's BBB rating. The rate of return must be the monthly
average rate as published in Standard and Poor's Bond Guide for the
first month for which the allowance is applicable. The rate must be
redetermined at the beginning of each subsequent calendar year.
(3) A lessee may apply to MMS for exception from the requirement
that it compute actual costs in accordance with paragraphs (b)(1) and
(b)(2) of this section. MMS will grant the exception only if the lessee
has a rate for the transportation approved by a Federal agency or by a
State regulatory agency (for Federal leases). MMS shall deny the
exception request if it determines that the rate is excessive as
compared to arm's-length transportation charges by systems, owned by
the lessee or others, providing similar transportation services in that
area. If there are no arm's-length transportation charges, MMS shall
deny the exception request if:
(i) No Federal or State regulatory agency costs analysis exists and
the Federal or State regulatory agency, as applicable, has declined to
investigate under MMS timely objections upon filing; and
(ii) The rate significantly exceeds the lessee's actual costs for
transportation as determined under this section.
(c) Reporting requirements.
(1) Arm's-length contracts.
(i) The lessee must notify MMS of an allowance based on incurred
costs by using a separate line entry on the Form MMS-2014.
(ii) * * *
(2) Non-arm's-length or no contract.
(i) The lessee must notify MMS of an allowance based on the
incurred costs by using a separate line entry on Form MMS-2014.
(ii) For new transportation facilities or arrangements, the
lessee's initial deduction shall include estimates of the allowable
coal transportation costs for the applicable period. Cost estimates
shall be based upon the most recently available operations data for the
transportation system or, if such data are not available, the lessee
shall use estimates based upon industry data for similar transportation
systems.
(iii) Upon request by MMS, the lessee shall submit all data used to
prepare the allowance deduction. The data shall be provided within a
reasonable period of time, as determined by MMS.
(iv) * * *
(d) Interest and assessments.
(1) If a lessee nets a transportation allowance on Form MMS-2014,
the lessee shall be assessed an amount of up to 10 percent of the
allowance netted not to exceed $250 per lease selling arrangement per
sales period.
(2) * * *
(3) * * *
(e) Adjustments.
(1) If the actual coal transportation allowance is less than the
amount the lessee has taken on Form MMS-2014 for each month during the
allowance reporting period, the lessee shall pay additional royalties
due plus interest computed under 30 CFR 218.202 from the date when the
lessee took the deduction to the date the lessee repays the difference
to MMS. If the actual transportation allowance is greater than amount
the lessee has taken on Form MMS-2014 for each month during the
allowance reporting period, the lessee shall be entitled to a credit
without interest.
* * * * *
32. A new Subpart J is added to read as follows:
Subpart J--Indian Coal
Sec.
206.450 Purpose and scope.
206.451 Definitions.
[[Page 5482]]
206.452 Coal subject to royalties--general provisions.
206.453 Quality and quantity measurement standards for reporting
and paying royalties.
206.454 Point of royalty determination.
206.455 Valuation standards for cents-per-ton leases.
206.456 Valuation standards for ad valorem leases.
206.457 Washing allowances--general.
206.458 Determination of washing allowances.
206.459 Allocation of washed coal.
206.460 Transportation allowances--general.
206.461 Determination of transportation allowances.
206.462 Contract submission.
206.463 In-situ and surface gasification and liquefaction
operations.
206.464 Value enhancement of marketable coal.
Subpart J--Indian Coal
Sec. 206.450 Purpose and scope.
(a) This subpart prescribes the procedures to establish the value,
for royalty purposes, of all coal from Indian Tribal and allotted
leases (except leases on the Osage Indian Reservation, Osage County,
Oklahoma).
(b) If the specific provisions of any statute, treaty, or
settlement agreement between the Indian lessor and a lessee resulting
from administrative or judicial litigation, or any coal lease subject
to the requirements of this subpart, are inconsistent with any
regulation in this subpart, then the statute, treaty, lease provision,
or settlement shall govern to the extent of that inconsistency.
(c) All royalty payments are subject to later audit and adjustment.
(d) The regulations in this subpart are intended to ensure that the
trust responsibilities of the United States with respect to the
administration of Indian coal leases are discharged in accordance with
the requirements of the governing mineral leasing laws, treaties, and
lease terms.
Sec. 206.451 Definitions.
Ad valorem lease means a lease where the royalty due to the lessor
is based upon a percentage of the amount or value of the coal.
Allowance means an approved, or an MMS-initially accepted deduction
in determining value for royalty purposes. Coal washing allowance means
an allowance for the reasonable, actual costs incurred by the lessee
for coal washing, or an approved or MMS-initially accepted deduction
for the costs of washing coal, determined pursuant to this subpart.
Transportation allowance means an allowance for the reasonable, actual
costs incurred by the lessee for moving coal to a point of sale or
point of delivery remote from both the lease and mine or wash plant, or
an approved MMS-initially accepted deduction for costs of such
transportation, determined pursuant to this subpart.
Area means a geographic region in which coal has similar quality
and economic characteristics. Area boundaries are not officially
designated and the areas are not necessarily named.
Arm's-length contract means a contract or agreement that has been
arrived at in the marketplace between independent, nonaffiliated
persons with opposing economic interests regarding that contract. For
purposes of this subpart, two persons are affiliated if one person
controls, is controlled by, or is under common control with another
person. For purposes of this subpart, based on the instruments of
ownership of the voting securities of an entity, or based on other
forms of ownership: ownership in excess of 50 percent constitutes
control; ownership of 10 through 50 percent creates a presumption of
control; and ownership of less than 10 percent creates a presumption of
noncontrol which MMS may rebut if it demonstrates actual or legal
control, including the existence of interlocking directorates.
Notwithstanding any other provisions of this subpart, contracts between
relatives, either by blood or by marriage, are not arm's-length
contracts. MMS may require the lessee to certify ownership control. To
be considered arm's-length for any production month, a contract must
meet the requirements of this definition for that production month, as
well as when the contract was executed.
Audit means a review, conducted in accordance with generally
accepted accounting and auditing standards, of royalty payment
compliance activities of lessees or other interest holders who pay
royalties, rents, or bonuses on Indian leases.
BIA means the Bureau of Indian Affairs of the Department of the
Interior.
BLM means the Bureau of Land Management of the Department of the
Interior.
Coal means coal of all ranks from lignite through anthracite.
Coal washing means any treatment to remove impurities from coal.
Coal washing may include, but is not limited to, operations such as
flotation, air, water, or heavy media separation; drying; and related
handling (or combination thereof).
Contract means any oral or written agreement, including amendments
or revisions thereto, between two or more persons and enforceable by
law that with due consideration creates an obligation.
Gross proceeds (for royalty payment purposes) means the total
monies and other consideration accruing to a coal lessee for the
production and disposition of the coal produced. Gross proceeds
includes, but is not limited to, payments to the lessee for certain
services such as crushing, sizing, screening, storing, mixing, loading,
treatment with substances including chemicals or oils, and other
preparation of the coal to the extent that the lessee is obligated to
perform them at no cost to the Indian lessor. Gross proceeds, as
applied to coal, also includes but is not limited to reimbursements for
royalties, taxes or fees, and other reimbursements. Tax reimbursements
are part of the gross proceeds accruing to a lessee even though the
Indian royalty interest may be exempt from taxation. Monies and other
consideration, including the forms of consideration identified in this
paragraph, to which a lessee is contractually or legally entitled but
which it does not seek to collect through reasonable efforts are also
part of gross proceeds.
Indian allottee means any Indian for whom land or an interest in
land is held in trust by the United States or who holds title subject
to Federal restriction against alienation.
Indian Tribe means any Indian Tribe, band, nation, pueblo,
community, rancheria, colony, or other group of Indians for which any
land or interest in land is held in trust by the United States or which
is subject to Federal restriction against alienation.
Lease means any contract, profit-share arrangement, joint venture,
or other agreement issued or approved by the United States for an
Indian coal resource under a mineral leasing law that authorizes
exploration for, development or extraction of, or removal of coal--or
the land covered by that authorization, whichever is required by the
context.
Lessee means any person to whom the Indian Tribe or an Indian
allottee issues a lease, and any person who has been assigned an
obligation to make royalty or other payments required by the lease.
This includes any person who has an interest in a lease as well as an
operator or payor who has no interest in the lease but who has assumed
the royalty payment responsibility.
Like-quality coal means coal has similar chemical and physical
characteristics.
Marketable condition means coal that is sufficiently free from
impurities and otherwise in a condition that it will be
[[Page 5483]]
accepted by a purchaser under a sales contract typical for that area.
Mine means an underground or surface excavation or series of
excavations and the surface or underground support facilities that
contribute directly or indirectly to mining, production, preparation,
and handling of lease products.
MMS means the Minerals Management Service of the Department of the
Interior.
Net-back method means a method for calculating market value of coal
at the lease or mine. Under this method, costs of transportation,
washing, handling, etc., are deducted from the ultimate proceeds
received for the coal at the first point at which reasonable values for
the coal may be determined by a sale pursuant to an arm's-length
contract or by comparison to other sales of coal, to ascertain value at
the mine.
Net output means the quantity of washed coal that a washing plant
produces.
Person means by individual, firm, corporation, association,
partnership, consortium, or joint venture.
Selling arrangement means the individual contractual arrangements
under which sales or dispositions of coal are made to a purchaser.
Spot market price means the price received under any sales
transaction when planned or actual deliveries span a short period of
time, usually not exceeding one year.
Sec. 206.452 Coal subject to royalties--general provisions.
(a) All coal (except coal unavoidably lost as determined by BLM
pursuant to 43 CFR Group 3400) from an Indian lease subject to this
part is subject to royalty. This includes coal used, sold, or otherwise
disposed of by the lessee on or off the lease.
(b) If a lessee receives compensation for unavoidably lost coal
through insurance coverage or other arrangements, royalties at the rate
specified in the lease are to be paid on the amount of compensation
received for the coal. No royalty is due on insurance compensation
received by the lessee for other losses.
(c) If waste piles or slurry ponds are reworked to recover coal,
the lessee shall pay royalty at the rate specified in the lease at the
time the recovered coal is used, sold, or otherwise finally disposed
of. The royalty rate shall be that rate applicable to the production
method used to initially mine coal in the waste pile or slurry pond;
i.e., underground mining method or surface mining method. Coal in waste
pits or slurry ponds initially mined from Indian leases shall be
allocated to such leases regardless of whether it is stored on Indian
lands. The lessee shall maintain accurate records to determine to which
individual Indian lease coal in the waste pit or slurry pond should be
allocated. However, nothing in this section requires payment of a
royalty on coal for which a royalty has already been paid.
Sec. 206.453 Quality and quantity measurement standards for reporting
and paying royalties.
(a) For leases subject to Sec. 206.456 of this subpart, the quality
of coal on which royalty is due shall be reported on the basis of
percent sulfur, percent ash, and number of British thermal units (Btu)
per pound of coal. Coal quality determinations shall be made at
intervals prescribed in the lessee's sales contract. If there is no
contract, or if the contract does not specify the intervals of coal
quality determination, the lessee shall propose a quality test schedule
to MMS. In no case, however, shall quality tests be performed less than
quarterly using standard industry-recognized testing methods. Coal
quality information shall be reported on the appropriate forms required
under 30 CFR Part 216.
(b) For all leases subject to this subpart, the quantity of coal on
which royalty is due shall be measured in short tons (of 2,000 pounds
each) by methods prescribed by the BLM. Coal quantity information shall
be reported on appropriate forms required under 30 CFR Part 216 and on
the Report of Sales and Royalty Remittance, Form MMS-2014, as required
under 30 CFR Part 210.
Sec. 206.454 Point of royalty determination.
(a) For all leases subject to this subpart, royalty shall be
computed on the basis of the quantity and quality of Indian coal in
marketable condition measured at the point of royalty measurement as
determined jointly by BLM and MMS.
(b) Coal produced and added to stockpiles or inventory does not
require payment of royalty until such coal is later used, sold, or
otherwise finally disposed of. MMS may ask BLM or BIA to increase the
lease bond to protect the lessor's interest when BLM determines that
stockpiles or inventory become excessive so as to increase the risk of
degradation of the resource.
(c) The lessee shall pay royalty at a rate specified in the lease
at the time the coal is used, sold, or otherwise finally disposed of,
unless otherwise provided for at Sec. 206.455(d) of this subpart.
Sec. 206.455 Valuation standards for cents-per-ton leases.
(a) This section is applicable to coal leases on Indian Tribal and
allotted Indian lands (except leases on the Osage Indian Reservation,
Osage County, Oklahoma) which provide for the determination of royalty
on a cents-per-ton (or other quantity) basis.
(b) The royalty for coal from leases subject to this section shall
be based on the dollar rate per ton prescribed in the lease. That
dollar rate shall be applicable to the actual quantity of coal used,
sold, or otherwise finally disposed of, including coal which is
avoidably lost as determined by BLM pursuant to 43 CFR Part 3400.
(c) For leases subject to this section, there shall be no
allowances for transportation, removal of impurities, coal washing, or
any other processing or preparation of the coal.
(d) When a coal lease is readjusted pursuant to 43 CFR Part 3400
and the royalty valuation method changes from a cents-per-ton basis to
an ad valorem basis, coal which is produced prior to the effective date
of readjustment and sold or used within 30 days of the effective date
of readjustment shall be valued pursuant to this section. All coal that
is not used, sold, or otherwise finally disposed of within 30 days
after the effective date of readjustment shall be valued pursuant to
the provisions of Sec. 206.456 of this subpart, and royalties shall be
paid at the royalty rate specified in the readjusted lease.
Sec. 206.456 Valuation standards for ad valorem leases.
(a) This section is applicable to coal leases on Indian Tribal and
allotted Indian lands (except leases on the Osage Indian Reservation,
Osage County, Oklahoma) which provide for the determination of royalty
as a percentage of the amount of value of coal (ad valorem). The value
for royalty purposes of coal from such leases shall be the value of
coal determined pursuant to this section, less applicable coal washing
allowances and transportation allowances determined pursuant to
Sec. 206.457 through Sec. 206.461 of this subpart, or any allowance
authorized by Sec. 206.464 of this subpart. The royalty due shall be
equal to the value for royalty purposes multiplied by the royalty rate
in the lease.
(b) (1) The value of coal that is sold pursuant to an arm's-length
contract shall be the gross proceeds accruing to the lessee, except as
provided in paragraphs (b)(2), (b)(3), and (b)(5) of this section. The
lessee shall have the burden of demonstrating that its contract is
arm's-length. The value
[[Page 5484]]
which the lessee reports, for royalty purposes, is subject to
monitoring, review, and audit.
(2) In conducting reviews and audits, MMS will examine whether the
contract reflects the total consideration actually transferred either
directly or indirectly from the buyer to the seller for the coal
produced. If the contract does not reflect the total consideration,
then MMS may require that the coal sold pursuant to that contract be
valued in accordance with paragraph (c) of this section. Value may not
be based on less than the gross proceeds accruing to the lessee for the
coal production, including the additional consideration.
(3) If MMS determines that the gross proceeds accruing to the
lessee pursuant to an arm's-length contract do not reflect the
reasonable value of the production because of misconduct by or between
the contracting parties, or because the lessee otherwise has breached
its duty to the lessor to market the production for the mutual benefit
of the lessee and the lessor, then MMS shall require that the coal
production be valued pursuant to paragraphs (c)(2)(ii), (c)(2)(iii),
(c)(2)(iv), or (c)(2)(v) of this section, and in accordance with the
notification requirements of paragraph (d)(3) of this section. When MMS
determines that the value may be unreasonable, MMS will notify the
lessee and give the lessee an opportunity to provide written
information justifying the lessee's reported coal value.
(4) MMS may require a lessee to certify that its arm's-length
contract provisions include all of the consideration to be paid by the
buyer, either directly or indirectly, for the coal production.
(5) The value of production for royalty purposes shall not include
payments received by the lessee pursuant to a contract which the lessee
demonstrates, to MMS' satisfaction, were not part of the total
consideration paid for the purchase of coal production.
(c) (1) The value of coal from leases subject to this section and
which is not sold pursuant to an arm's-length contract shall be
determined in accordance with this section.
(2) If the value of the coal cannot be determined pursuant to
paragraph (b) of this section, then the value shall be determined
through application of other valuation criteria. The criteria shall be
considered in the following order, and the value shall be based upon
the first applicable criterion:
(i) The gross proceeds accruing to the lessee pursuant to a sale
under its non-arm's-length contract (or other disposition of produced
coal by other than an arm's-length contract), provided that those gross
proceeds are within the range of the gross proceeds derived from, or
paid under, comparable arm's-length contracts between buyers and
sellers neither of whom is affiliated with the lessee for sales,
purchases, or other dispositions of like-quality coal produced in the
area. In evaluating the comparability of arm's-length contracts for the
purposes of these regulations, the following factors shall be
considered: price, time of execution, duration, market or markets
served, terms, quality of coal, quantity, and such other factors as may
be appropriate to reflect the value of the coal;
(ii) Prices reported for that coal to a public utility commission;
(iii) Prices reported for that coal to the Energy Information
Administration of the Department of Energy;
(iv) Other relevant matters including, but not limited to,
published or publicly available spot market prices, or information
submitted by the lessee concerning circumstances unique to a particular
lease operation or the salability of certain types of coal;
(v) If a reasonable value cannot be determined using paragraphs
(c)(2)(i), (c)(2)(ii), (c)(2)(iii), or (c)(2)(iv) of this section, then
a net-back method or any other reasonable method shall be used to
determine value.
(3) When the value of coal is determined pursuant to paragraph
(c)(2) of this section, that value determination shall be consistent
with the provisions contained in paragraph (b)(5) of this section.
(d) (1) Where the value is determined pursuant to paragraph (c) of
this section, that value does not require MMS' prior approval. However,
the lessee shall retain all data relevant to the determination of
royalty value. Such data shall be subject to review and audit, and MMS
will direct a lessee to use a different value if it determines that the
reported value is inconsistent with the requirements of these
regulations.
(2) An Indian lessee will make available upon request to the
authorized MMS or Indian representatives, or to the Inspector General
of the Department of the Interior or other persons authorized to
receive such information, arm's-length sales and sales quantity data
for like-quality coal sold, purchased, or otherwise obtained by the
lessee from the area.
(3) A lessee shall notify MMS if it has determined value pursuant
to paragraphs (c)(2)(ii), (c)(2)(iii), (c)(2)(iv), or (c)(2)(v) of this
section. The notification shall be by letter to the Associate Director
for Royalty Management or his/her designee. The letter shall identify
the valuation method to be used and contain a brief description of the
procedure to be followed. The notification required by this section is
a one-time notification due no later than the month the lessee first
reports royalties on the Form MMS-2014 using a valuation method
authorized by paragraphs (c)(2)(ii), (c)(2)(iii), (c)(2)(iv), or
(c)(2)(v) of this section, and each time there is a change in a method
under paragraphs (c)(2)(iv) or (c)(2)(v) of this section.
(e) If MMS determines that a lessee has not properly determined
value, the lessee shall be liable for the difference, if any, between
royalty payments made based upon the value it has used and the royalty
payments that are due based upon the value established by MMS. The
lessee shall also be liable for interest computed pursuant to 30 CFR
218.202. If the lessee is entitled to a credit, MMS will provide
instructions for the taking of that credit.
(f) The lessee may request a value determination from MMS. In that
event, the lessee shall propose to MMS a value determination method,
and may use that method in determining value for royalty purposes until
MMS issues its decision. The lessee shall submit all available data
relevant to its proposal. MMS shall expeditiously determine the value
based upon the lessee's proposal and any additional information MMS
deems necessary. That determination shall remain effective for the
period stated therein. After MMS issues its determination, the lessee
shall make the adjustments in accordance with paragraph (e) of this
section.
(g) Notwithstanding any other provisions of this section, under no
circumstances shall the value for royalty purposes be less than the
gross proceeds accruing to the lessee for the disposition of produced
coal less applicable provisions of paragraph (b)(5) of this section and
less applicable allowances determined pursuant to Sec. 206.457 through
Sec. 206.461 and Sec. 206.464 of this subpart.
(h) The lessee is required to place coal in marketable condition at
no cost to the Indian lessor. Where the value established pursuant to
this section is determined by a lessee's gross proceeds, that value
shall be increased to the extent that the gross proceeds has been
reduced because the purchaser, or any other person, is providing
certain services, the cost of which ordinarily is the responsibility of
the lessee to place the coal in marketable condition.
(i) Value shall be based on the highest price a prudent lessee can
receive through legally enforceable claims under its contract. Absent
contract revision or amendment, if the lessee
[[Page 5485]]
fails to take proper or timely action to receive prices or benefits to
which it is entitled, it must pay royalty at a value based upon that
obtainable price or benefit. Contract revisions or amendments shall be
in writing and signed by all parties to an arm's-length contract, and
may be retroactively applied to value for royalty purposes for a period
not to exceed two years, unless MMS approves a longer period. If the
lessee makes timely application for a price increase allowed under its
contract but the purchaser refuses, and the lessee takes reasonable
measures, which are documented, to force purchaser compliance, the
lessee will owe no additional royalties unless or until monies or
consideration resulting from the price increase are received. This
paragraph shall not be construed to permit a lessee to avoid its
royalty payment obligation in situations where a purchaser fails to
pay, in whole or in part or timely, for a quantity of coal.
(j) Notwithstanding any provision in these regulations to the
contrary, no review, reconciliation, monitoring, or other like process
that results in a redetermination by MMS of value under this section
shall be considered final or binding as against the Indian Tribes or
allottees until the audit period is formally closed.
(k) Certain information submitted to MMS to support valuation
proposals, including transportation, coal washing, or other allowances
pursuant to Sec. 206.457 through 206.461 and Sec. 206.464 of this
subpart, is exempted from disclosure by the Freedom of Information Act,
5 U.S.C. 522. Any data specified by the Act to be privileged,
confidential, or otherwise exempt shall be maintained in a confidential
manner in accordance with applicable law and regulations. All requests
for information about determinations made under this Part are to be
submitted in accordance with the Freedom of Information Act regulation
of the Department of the Interior, 43 CFR Part 2. Nothing in this
section is intended to limit or diminish in any manner whatsoever the
right of an Indian lessor to obtain any and all information as such
lessor may be lawfully entitled from MMS or such lessor's lessee
directly under the terms of the lease or applicable law.
Sec. 206.457 Washing allowances--general.
(a) For ad valorem leases subject to Sec. 206.456 of this subpart,
MMS shall, as authorized by this section, allow a deduction in
determining value for royalty purposes for the reasonable, actual costs
incurred to wash coal, unless the value determined pursuant to
Sec. 206.456 of this subpart was based upon like-quality unwashed coal.
Under no circumstances shall the washing allowance and the
transportation allowance authorized by Sec. 206.461 of this subpart
reduce the value for royalty purposes to zero.
(b) If MMS determines that a lessee has improperly determined a
washing allowance authorized by this section, then the lessee shall be
liable for any additional royalties, plus interest determined in
accordance with 30 CFR 218.202, or shall be entitled to a credit,
without interest.
(c) Lessees shall not disproportionately allocate washing costs to
Indian leases.
(d) No cost normally associated with mining operations and which
are necessary for placing coal in marketable condition shall be allowed
as a cost of washing.
(e) Coal washing costs shall only be recognized as allowances when
the washed coal is sold and royalties are reported and paid.
Sec. 206.458 Determination of washing allowances.
(a) Arm's-length contracts.
(1) For washing costs incurred by a lessee pursuant to an arm's-
length contract, the washing allowance shall be the reasonable actual
costs incurred by the lessee for washing the coal under that contract,
subject to monitoring, review, audit, and possible future adjustment.
MMS' prior approval is not required before a lessee may deduct costs
incurred under an arm's-length contract. However, before any deduction
may be taken, the lessee must submit a completed page one of Form MMS-
4292, Coal Washing Allowance Report, in accordance with paragraph
(c)(1) of this section. A washing 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-4292 is filed with MMS, unless MMS
approves a longer period upon a showing of good cause by the lessee.
(2) In conducting reviews and audits, MMS will examine whether the
contract reflects more than the consideration actually transferred
either directly or indirectly from the lessee to the washer for the
washing. If the contract reflects more than the total consideration
paid, then MMS may require that the washing allowance be determined in
accordance with paragraph (b) of this section.
(3) If MMS determines that the consideration paid pursuant to an
arm's-length washing contract does not reflect the reasonable value of
the washing because of misconduct by or between the contracting
parties, or because the lessee otherwise has breached its duty to the
lessor to market the production for the mutual benefit of the lessee
and the lessor, then MMS shall require that the washing allowance be
determined in accordance with paragraph (b) of this section. When MMS
determines that the value of the washing may be unreasonable, MMS will
notify the lessee and give the lessee an opportunity to provide written
information justifying the lessee's washing costs.
(4) Where the lessee's payments for washing under an arm's-length
contract are not based on a dollar-per-unit basis, the lessee shall
convert whatever consideration is paid to a dollar value equivalent.
Washing allowances shall be expressed as a cost per ton of coal washed.
(b) Non-arm's-length or no contract.
(1) If a lessee has a non-arm's-length contract or has no contract,
including those situations where the lessee performs washing for
itself, the washing allowance will be based upon the lessee's
reasonable actual costs. All washing allowances deducted under a non-
arm's-length or no contract situation are subject to monitoring,
review, audit, and possible future adjustment. Prior MMS approval of
washing allowances is not required for non-arm's-length or no contract
situations. However, before any estimated or actual deduction may be
taken, the lessee must submit a completed Form MMS-4292 in accordance
with paragraph (c)(2) of this section. A washing 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-4292 is filed with MMS, unless
MMS approves a longer period upon a showing of good cause by the
lessee. MMS will monitor the allowance deduction to ensure that
deductions are reasonable and allowable. When necessary or appropriate,
MMS may direct a lessee to modify its actual washing allowance.
(2) The washing allowance for non-arm's-length or no contract
situations shall be based upon the lessee's actual costs for washing
during the reported period, including operating and maintenance
expenses, overhead, and either depreciation and a return on
undepreciated capital investment in accordance with paragraph
(b)(2)(iv)(A) of this section, or a cost equal to the depreciable
investment in the wash plant multiplied by the rate of return in
accordance with paragraph (b)(2)(iv)(B) of this section. Allowable
capital costs are generally those for depreciable fixed assets
(including costs of delivery and
[[Page 5486]]
installation of capital equipment) which are an integral part of the
wash plant.
(i) Allowable operating expenses include: Operations supervision
and engineering; operations labor; fuel; utilities; materials; ad
valorem property taxes; rent; supplies; and any other directly
allocable and attributable operating expense which the lessee can
document.
(ii) Allowable maintenance expenses include: Maintenance of the
wash plant; maintenance of equipment; maintenance labor; and other
directly allocable and attributable maintenance expenses which the
lessee can document.
(iii) Overhead attributable and allocable to the operation and
maintenance of the wash plant is an allowable expense. State and
Federal income taxes and severance taxes, including royalties, are not
allowable expenses.
(iv) A lessee may use either paragraph (b)(2)(iv)(A) or (b)(2)(iv)
(B) of this section. After a lessee has elected to use either method
for a wash plant, the lessee may not later elect to change to the other
alternative without approval of MMS.
(A) To compute depreciation, the lessee may elect to use either a
straight-line depreciation method based on the life of equipment or on
the life of the reserves which the wash plant services, whichever is
appropriate, or a unit of production method. After an election is made,
the lessee may not change methods without MMS approval. A change in
ownership of a wash plant shall not alter the depreciation schedule
established by the original operator/lessee for purposes of the
allowance calculation. With or without a change in ownership, a wash
plant shall be depreciated only once. Equipment shall not be
depreciated below a reasonable salvage value.
(B) MMS shall allow as a cost an amount equal to the allowable
capital investment in the wash plant multiplied by the rate of return
determined pursuant to paragraph (b)(2)(v) of this section. No
allowance shall be provided for depreciation. This alternative shall
apply only to plants first placed in service or acquired after March 1,
1989.
(v) The rate of return shall be the industrial rate associated with
Standard and Poor's BBB rating. The rate of return shall be the monthly
average rate as published in Standard and Poor's Bond Guide for the
first month of the reporting period for which the allowance is
applicable and shall be effective during the reporting period. The rate
shall be redetermined at the beginning of each subsequent washing
allowance reporting period (which is determined pursuant to paragraph
(c)(2) of this section).
(3) The washing allowance for coal shall be determined based on the
lessee's reasonable and actual cost of washing the coal. The lessee may
not take an allowance for the costs of washing lease production that is
not royalty bearing.
(c) Reporting requirements.
(1) Arm's-length contracts.
(i) With the exception of those washing 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-4292 prior to, or at the same
time, as the washing allowance determined pursuant to an arm's-length
contract is reported on Form MMS-2014, Report of Sales and Royalty
Remittance. A Form MMS-4292 received by the end of the month that the
Form MMS-2014 is due shall be considered to be received timely.
(ii) The initial Form MMS-4292 shall be effective for a reporting
period beginning the month that the lessee is first authorized to
deduct a washing allowance and shall continue until the end of the
calendar year, or until the applicable contract or rate terminates or
is modified or amended, whichever is earlier.
(iii) After the initial reporting period and for succeeding
reporting periods, lessees must submit page one of Form MMS-4292 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 MMS approves a longer period (during which period the
lessee shall continue to use the allowance from the previous reporting
period).
(iv) MMS may require that a lessee submit arm's-length washing
contracts and related documents. Documents shall be submitted within a
reasonable time, as determined by MMS.
(v) Washing allowances which are based on arm's-length contracts
and which are in effect at the time these regulations become effective
will be allowed to continue until such allowances terminate. For the
purposes of this section, only those allowances that have been approved
by MMS in writing shall qualify as being in effect at the time these
regulations become effective.
(vi) MMS may establish, in appropriate circumstances, reporting
requirements that are different from the requirements of this section.
(2) Non-arm's-length or no contract.
(i) With the exception of those washing allowances specified in
paragraphs (c)(2)(v) and (c)(2)(vii) of this section, the lessee shall
submit an initial Form MMS-4292 prior to, or at the same time as, the
washing allowance determined pursuant to a non-arm's-length contract or
no contract situation is reported on Form MMS-2014, Report of Sales and
Royalty Remittance. A Form MMS-4292 received by the end of the month
that the Form MMS-2014 is due shall be considered to be timely
received. The initial reporting may be based on estimated costs.
(ii) The initial Form MMS-4292 shall be effective for a reporting
period beginning the month that the lessee first is authorized to
deduct a washing allowance and shall continue until the end of the
calendar year, or until the washing under the non-arm's-length contract
or the no contract situation terminates, whichever is earlier.
(iii) For calendar-year reporting periods succeeding the initial
reporting period, the lessee shall submit a completed Form MMS-4292
containing the actual costs for the previous reporting period. If coal
washing is continuing, the lessee shall include on Form MMS-4292 its
estimated costs for the next calendar year. The estimated coal washing
allowance shall be based on the actual costs for the previous period
plus or minus any adjustments which are based on the lessee's knowledge
of decreases or increases which will affect the allowance. Form MMS-
4292 must be received by MMS within 3 months after the end of the
previous reporting period, unless MMS approves a longer period (during
which period the lessee shall continue to use the allowance from the
previous reporting period).
(iv) For new wash plants, the lessee's initial Form MMS-4292 shall
include estimates of the allowable coal washing costs for the
applicable period. Cost estimates shall be based upon the most recently
available operations data for the plant, or if such data are not
available, the lessee shall use estimates based upon industry data for
similar coal wash plants.
(v) Washing allowances based on non-arm's-length or no contract
situations which are in effect at the time these regulations become
effective will be allowed to continue until such allowances terminate.
For the purposes of this section, only those allowances that have been
approved by MMS in writing shall qualify as being in effect at the time
these regulations become effective.
(vi) Upon request by MMS, the lessee shall submit all data used by
the lessee to prepare its Forms MMS-4292. The data shall be provided
within a
[[Page 5487]]
reasonable period of time, as determined by MMS.
(vii) MMS may establish, in appropriate circumstances, reporting
requirements which are different from the requirements of this section.
(3) MMS may establish coal washing allowance reporting dates for
individual leases different from those specified in this subpart in
order to provide more effective administration. Lessees will be
notified of any change in their reporting period.
(4) Washing allowances must be reported as a separate line on the
Form MMS-2014, unless MMS approves a different reporting procedure.
(d) Interest assessments for incorrect or late reports and failure
to report.
(1) If a lessee deducts a washing allowance on its Form MMS-2014
without complying with the requirements of this section, the lessee
shall be liable for interest on the amount of such deduction until the
requirements of this section are complied with. The lessee also shall
repay the amount of any allowance which is disallowed by this section.
(2) If a lessee erroneously reports a washing allowance which
results in an underpayment of royalties, interest shall be paid on the
amount of that underpayment.
(3) Interest required to be paid by this section shall be
determined in accordance with 30 CFR 218.202.
(e) Adjustments.
(1) If the actual coal washing allowance is less than the amount
the lessee has taken on Form MMS-2014 for each month during the
allowance form reporting period, the lessee shall be required to pay
additional royalties due plus interest computed pursuant to 30 CFR
218.202, retroactive to the first month the lessee is authorized to
deduct a washing allowance. If the actual washing allowance is greater
than the amount the lessee has estimated and taken during the reporting
period, the lessee shall be entitled to a credit, without interest.
(2) The lessee must submit a corrected Form MMS-2014 to reflect
actual costs, together with any payment, in accordance with
instructions provided by MMS.
(f) Other washing cost determinations. The provisions of this
section shall apply to determine washing costs when establishing value
using a net-back valuation procedure or any other procedure that
requires deduction of washing costs.
Sec. 206.459 Allocation of washed coal.
(a) When coal is subjected to washing, the washed coal must be
allocated to the leases from which it was extracted.
(b) When the net output of coal from a washing plant is derived
from coal obtained from only one lease, the quantity of washed coal
allocable to the lease will be based on the net output of the washing
plant.
(c) When the net output of coal from a washing plant is derived
from coal obtained from more than one lease, unless determined
otherwise by BLM, the quantity of net output of washed coal allocable
to each lease will be based on the ratio of measured quantities of coal
delivered to the washing plant and washed from each lease compared to
the total measured quantities of coal delivered to the washing plant
and washed.
Sec. 206.460 Transportation allowances--general.
(a) For ad valorem leases subject to Sec. 206.456 of this subpart,
where the value for royalty purposes has been determined at a point
remote from the lease or mine, MMS shall, as authorized by this
section, allow a deduction in determining value for royalty purposes
for the reasonable, actual costs incurred to:
(1) Transport the coal from an Indian lease to a sales point which
is remote from both the lease and mine; or
(2) Transport the coal from an Indian lease to a wash plant when
that plant is remote from both the lease and mine and, if applicable,
from the wash plant to a remote sales point. In-mine transportation
costs shall not be included in the transportation allowance.
(b) Under no circumstances shall the washing allowance and the
transportation allowance authorized by Sec. 206.456 of this subpart
reduce the value of coal under any selling arrangement to zero.
(c) (1) When coal transported from a mine to a wash plant is
eligible for a transportation allowance in accordance with this
section, the lessee is not required to allocate transportation costs
between the quantity of clean coal output and the rejected waste
material. The transportation allowance shall be authorized for the
total production which is transported. Transportation allowances shall
be expressed as a cost per ton of cleaned coal transported.
(2) For coal that is not washed at a wash plant, the transportation
allowance shall be authorized for the total production which is
transported. Transportation allowances shall be expressed as a cost per
ton of coal transported.
(3) Transportation costs shall only be recognized as allowances
when the transported coal is sold and royalties are reported and paid.
(d) If, after a review and/or audit, MMS determines that a lessee
has improperly determined a transportation allowance authorized by this
section, then the lessee shall pay any additional royalties, plus
interest, determined in accordance with 30 CFR 218.202, or shall be
entitled to a credit, without interest.
(e) Lessees shall not disproportionately allocate transportation
costs to Indian leases.
Sec. 206.461 Determination of transportation allowances.
(a) Arm's-length contracts.
(1) For transportation costs incurred by a lessee pursuant to an
arm's-length contract, the transportation allowance shall be the
reasonable, actual costs incurred by the lessee for transporting the
coal under that contract, subject to monitoring, review, audit, and
possible future adjustment. MMS' prior approval is not required before
a lessee may deduct costs incurred under an arm's-length contract.
However, before any deduction may be taken, the lessee must submit a
completed page one of Form MMS-4293, Coal Transportation Allowance
Report, in accordance with paragraph (c)(1) of this section. 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-4293 is filed with MMS, unless MMS approves a longer period upon a
showing of good cause by the lessee.
(2) In conducting reviews and audits, MMS will examine whether the
contract reflects more than the consideration actually transferred
either directly or indirectly from the lessee to the transporter for
the transportation. If the contract reflects more than the total
consideration paid, then MMS may require that the transportation
allowance be determined in accordance with paragraph (b) of this
section.
(3) If MMS determines that the consideration paid pursuant to an
arm's-length transportation contract does not reflect the reasonable
value of the transportation because of misconduct by or between the
contracting parties, or because the lessee otherwise has breached its
duty to the lessor to market the production for the mutual benefit of
the lessee and the lessor, then MMS shall require that the
transportation allowance be determined in accordance with paragraph (b)
of this section. When
[[Page 5488]]
MMS determines that the value of the transportation may be
unreasonable, MMS will notify the lessee and give the lessee an
opportunity to provide written information justifying the lessee's
transportation costs.
(4) Where the lessee's payments for transportation under an arm's-
length contract are not based on a dollar-per-unit basis, the lessee
shall convert whatever consideration is paid to a dollar value
equivalent for the purposes of this section.
(b) Non-arm's-length or no contract.
(1) If a lessee has a non-arm's-length contract or has no contract,
including those situations where the lessee performs transportation
services for itself, the transportation allowance will be based upon
the lessee's reasonable actual costs. All transportation allowances
deducted under a non-arm's-length or no contract situation are subject
to monitoring, review, audit, and possible future adjustment. Prior MMS
approval of transportation allowances is not required for non-arm's-
length or no contract situations. However, before any estimated or
actual deduction may be taken, the lessee must submit a completed Form
MMS-4293 in accordance with paragraph (c)(2) of this section. 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-4293 is filed with MMS, unless MMS approves a longer period upon a
showing of good cause by the lessee. MMS will monitor the allowance
deductions to ensure that deductions are reasonable and allowable. When
necessary or appropriate, MMS may direct a lessee to modify its
estimated or actual transportation allowance deduction.
(2) The transportation allowance for non-arm's-length or no
contract situations shall be based upon the lessee's actual costs for
transportation during the reporting period, including operating and
maintenance expenses, overhead, and either depreciation and a return on
undepreciated capital investment in accordance with paragraph
(b)(2)(iv)(A) of this section, or a cost equal to the depreciable
investment in the transportation system multiplied by the rate of
return in accordance with paragraph (b)(2)(iv)(B) of this section.
Allowable capital costs are generally those for depreciable fixed
assets (including costs of delivery and installation of capital
equipment) which are an integral part of the transportation system.
(i) Allowable operating expenses include: Operations supervision
and engineering; operations labor; fuel; utilities; materials; ad
valorem property taxes; rent; supplies; and any other directly
allocable and attributable operating expense which the lessee can
document.
(ii) Allowable maintenance expenses include: Maintenance of the
transportation system; maintenance of equipment; maintenance labor; and
other directly allocable and attributable maintenance expenses which
the lessee can document.
(iii) Overhead attributable and allocable to the operation and
maintenance of the transportation system is an allowable expense. State
and Federal income taxes and severance taxes and other fees, including
royalties, are not allowable expenses.
(iv) A lessee may use either paragraph (b)(2)(iv)(A) or paragraph
(b)(2)(iv)(B) of this section. 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 MMS.
(A) To compute depreciation, the lessee may elect to use either a
straight-line depreciation method based on the life of equipment or on
the life of the reserves which the transportation system services,
whichever is appropriate, or a unit of production method. After an
election is made, the lessee may not change methods without MMS
approval. A change in ownership of a transportation system shall not
alter the depreciation schedule established by the original
transporter/lessee for purposes of the allowance calculation. With or
without a change in ownership, a transportation system shall be
depreciated only once. Equipment shall not be depreciated below a
reasonable salvage value.
(B) MMS shall allow as a cost an amount equal to the allowable
capital investment in the transportation system multiplied by the rate
of return determined pursuant to paragraph (b)(2)(B)(v) of this
section. No allowance shall be provided for depreciation. This
alternative shall apply only to transportation facilities first placed
in service or acquired after March 1, 1989.
(v) The rate of return shall be the industrial rate associated with
Standard and Poor's BBB rating. The rate of return shall be the monthly
average as published in Standard and Poor's Bond Guide for the first
month of the reporting period of which the allowance is applicable and
shall be effective during the reporting period. The rate shall be
redetermined at the beginning of each subsequent transportation
allowance reporting period (which is determined pursuant to paragraph
(c)(2) of this section).
(3) A lessee may apply to MMS for exception from the requirement
that it compute actual costs in accordance with paragraphs (b)(1) and
(b)(2) of this section. MMS will grant the exception only if the lessee
has a rate for the transportation approved by a Federal agency for
Indian leases. MMS shall deny the exception request if it determines
that the rate is excessive as compared to arm's-length transportation
charges by systems, owned by the lessee or others, providing similar
transportation services in that area. If there are no arm's-length
transportation charges, MMS shall deny the exception request if:
(i) No Federal regulatory agency cost analysis exists and the
Federal regulatory agency has declined to investigate pursuant to MMS
timely objections upon filing; and
(ii) The rate significantly exceeds the lessee's actual costs for
transportation as determined under 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-4293 prior to, or at the
same time as, the transportation allowance determined pursuant to an
arm's-length contract is reported on Form MMS-2014, Reports of Sales
and Royalty Remittance.
(ii) The initial Form MMS-4293 shall be effective for a reporting
period beginning the month that the lessee is first authorized to
deduct a transportation allowance and shall continue until the end of
the calendar year, or until the applicable contract or rate terminates
or is modified or amended, whichever is earlier.
(iii) After the initial reporting period and for succeeding
reporting periods, lessees must submit page one of Form MMS-4293 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 MMS approves a longer period (during which period the
lessee shall continue to use the allowance from the previous reporting
period). Lessees may request special reporting procedures in unique
allowance reporting situations, such as those related to spot sales.
(iv) MMS 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 MMS.
[[Page 5489]]
(v) Transportation allowances that are based on arm's-length
contracts and which are in effect at the time these regulations become
effective will be allowed to continue until such allowances terminate.
For the purposes of this section, only those allowances that have been
approved by MMS in writing shall qualify as being in effect at the time
these regulations become effective.
(vi) MMS may establish, in appropriate circumstances, reporting
requirements that are different from the requirements of this section.
(2) Non-arm's-length or no contract.
(i) With the exception of those transportation allowances specified
in paragraphs (c)(2)(v) and (c)(2)(vii) of this section, the lessee
shall submit an initial Form MMS-4293 prior to, or at the same time as,
the transportation allowance determined pursuant to a non-arm's-length
contract or no contract situation is reported on Form MMS-2014, Report
of Sales and Royalty Remittance. The initial report may be based on
estimated costs.
(ii) The initial Form MMS-4293 shall be effective for a reporting
period beginning the month that the lessee first is authorized to
deduct a transportation allowance and shall continue until the end of
the calendar year, or until the transportation under the non-arm's-
length contract or the no contract situation terminates, whichever is
earlier.
(iii) For calendar-year reporting periods succeeding the initial
reporting period, the lessee shall submit a completed Form MMS-4293
containing the actual costs for the previous reporting period. If the
transportation is continuing, the lessee shall include on Form MMS-4293
its estimated costs for the next calendar year. The estimated
transportation allowance shall be based on the actual costs for the
previous reporting period plus or minus any adjustments that are based
on the lessee's knowledge of decreases or increases that will affect
the allowance. Form MMS-4293 must be received by MMS within 3 months
after the end of the previous reporting period, unless MMS approves a
longer period (during which period the lessee shall continue to use the
allowance from the previous reporting period).
(iv) For new transportation facilities or arrangements, the
lessee's initial Form MMS-4293 shall include estimates of the allowable
transportation costs for the applicable period. Cost estimates shall be
based upon the most recently available operations data for the
transportation system, or, if such data are not available, the lessee
shall use estimates based upon industry data for similar transportation
systems.
(v) Non-arm's-length contract or no contract-based transportation
allowances that are in effect at the time these regulations become
effective will be allowed to continue until such allowances terminate.
For purposes of this section, only those allowances that have been
approved by MMS in writing shall qualify as being in effect at the time
these regulations become effective.
(vi) Upon request by MMS, the lessee shall submit all data used to
prepare its Form MMS-4293. The data shall be provided within a
reasonable period of time, as determined by MMS.
(vii) MMS may establish, in appropriate circumstances, reporting
requirements that are different from the requirements of this section.
(viii) If the lessee is authorized to use its Federal-agency-
approved rate as its transportation cost in accordance with paragraph
(b)(3) of this section, it shall follow the reporting requirements of
paragraph (c)(1) of this section.
(3) MMS may establish reporting dates for individual lessees
different than those specified in this paragraph in order to provide
more effective administration. Lessees will be notified as to any
change in their reporting period.
(4) Transportation allowances must be reported as a separate line
item on Form MMS-2014, unless MMS approves a different reporting
procedure.
(d) Interest assessments for incorrect or late reports and failure
to report.
(1) If a lessee deducts a transportation allowance on its Form MMS-
2014 without complying with the requirements of this section, the
lessee shall be liable for interest on the amount of such deduction
until the requirements of this section are complied with. The lessee
also shall repay the amount of any allowance which is disallowed by
this section.
(2) If a lessee erroneously reports a transportation allowance
which results in an underpayment of royalties, interest shall be paid
on the amount of that underpayment.
(3) Interest required to be paid by this section shall be
determined in accordance with 30 CFR 218.202.
(e) Adjustments.
(1) If the actual transportation allowance is less than the amount
the lessee has taken on Form MMS-2014 for each month during the
allowance form reporting period, the lessee shall be required to pay
additional royalties due plus interest, computed pursuant to 30 CFR
218.202, retroactive to the first month the lessee is authorized to
deduct a transportation allowance. If the actual transportation
allowance is greater than the amount the lessee has estimated and taken
during the reporting period, the lessee shall be to a credit, without
interest.
(2) The lessee must submit a corrected Form MMS-2014 to reflect
actual costs, together with any payment, in accordance with
instructions provided by MMS.
(f) Other transportation cost determinations. The provisions of
this section shall apply to determine transportation costs when
establishing value using a net-back valuation procedure or any other
procedure that requires deduction of transportation costs.
Sec. 206.462 Contract submission.
(a) The lessee and other payors shall submit to MMS, upon request,
contracts for the sale of coal from ad valorem leases subject to this
subpart. MMS must receive the contracts within a reasonable period of
time, as specified by MMS. Lessees shall include as part of the
submittal requirements any contracts, agreements, contract amendments,
or other documents that affect the gross proceeds received for the sale
of coal, as well as any other information regarding any consideration
received for the sale or disposition of coal that is not included in
such contracts. At the time of its contract submittals, MMS may require
the lessee to certify in writing that it has provided all documents and
information that reflect the total consideration provided by purchasers
of coal from ad valorem leases subject to this subpart. Information
requested under this section may include contracts for both ad valorem
and cents-per-ton leases and shall be available in the lessee's offices
during normal business hours or provided to MMS at such time and in
such manner as may be requested by authorized Department of the
Interior personnel. Any oral sales arrangement negotiated by the lessee
must be placed in a written form and be retained by the lessee. Nothing
in this section shall be construed to limit the authority of MMS to
obtain or have access to information pursuant to 30 CFR Part 212.
(b) Lessees and other payors shall designate, for each contract
submitted pursuant to this section, whether the contract in arm's-
length or non-arm's-length.
(c) A lessee's or other payor's determination that its contract is
arm's-length is subject to future audit to verify that the contract
meets the criteria of the arm's-length contract definition in
Sec. 206.251 of this subpart.
[[Page 5490]]
(d) Information required to be submitted under this section that
constitutes trade secrets and commercial and financial information that
is identified as privileged or confidential shall not be available for
public inspection or made public or disclosed without the consent of
the lessee or other payor, except as otherwise provided by law or
regulation.
Sec. 206.463 In-situ and surface gasification and liquefaction
operations.
In an ad valorem Federal coal lease is developed by in-situ or
surface gasification or liquefaction technology, the lessee shall
propose the value of coal for royalty purposes to MMS. MMS will review
the lessee's proposal and issue a value determination. The lessee may
use its proposed value until MMS issues a value determination.
Sec. 206.464 Value enhancement of marketable coal.
If, prior to use, sale, or other disposition, the lessee enhances
the value of coal after the coal has been placed in marketable
condition in accordance with Sec. 206.456(h) of this subpart, the
lessee shall notify MMS that such processing is occurring or will
occur. The value of that production shall be determined as follows:
(a) A value established for the feedstock coal in marketable
condition by application of the provisions of Sec. 206.465(c)(2)(i)
through (iv) of this subpart; or,
(b) In the event that a value cannot be established in accordance
with paragraph (a) of this section, then the value of production will
be determined in accordance with Sec. 206.456(c)(2)(v) of this subpart
and the value shall be the lessee's gross proceeds accruing from the
disposition of the enhanced product, reduced by MMS-approved processing
costs and procedures including a rate of return on investment equal to
two times the Standard and Poor's BBB bond rate applicable under
Sec. 206.458(b)(2)(v) of this subpart.
PART 202--ROYALTIES
1. The authority citation for part 202 is revised to read as
follows:
Authority: 5 U.S.C. 301 et seq.; 25 U.S.C. 396 et seq., 396a et
seq., 2101 et seq.; 30 U.S.C. 181 et seq., 351 et seq., 1001 et
seq.; 1701 et seq.; 31 U.S.C. 9701; 43 U.S.C. 1301 et seq.; 1331 et
seq., 1801 et seq.
Subpart D--Federal and Indian Gas
2. Section 202.151 is amended by revising paragraph (a) to read as
follows:
Sec. 202.151 Royalty on processed gas.
(a)(1) A royalty, as provided in the lease, shall be paid on the
value of:
(i) any condensate recovered downstream of the point of royalty
settlement without resorting to processing; and
(ii) residue gas and all gas plant products resulting from
processing the gas produced from a lease subject to this subpart.
(2) MMS shall authorize a processing allowance for the reasonable,
actual costs of processing the gas produced from Federal and Indian
leases. Processing allowances shall be determined in accordance with 30
CFR part 206 subpart D for gas production from Federal leases and 30
CFR part 206 subpart E for gas production from Indian leases.
* * * * *
[FR Doc. 96-2641 Filed 2-9-96; 8:45 am]
BILLING CODE 4310-MR-P
Complete official Federal Register PDF
FR Doc. 96-2581 Approval and Promulgation of Implementation Plans; Carbon Monoxide State Implementation Plan Revision State of New Jersey
[Federal Register Volume 61, Number 29 (Monday, February 12, 1996)]
[Rules and Regulations]
[Pages 5299-5303]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-2581]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[Region II Docket No. 148, NJ25-1-7282; FRL-5409-4]
Approval and Promulgation of Implementation Plans; Carbon
Monoxide State Implementation Plan Revision State of New Jersey
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.
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SUMMARY: EPA is giving a limited approval to part of a request from New
Jersey to revise its State Implementation Plan (SIP) for the control of
carbon monoxide (CO) to incorporate New Jersey's oxygenated gasoline
program. New Jersey submitted these revisions in response to
requirements established under the Clean Air Act, as amended in 1990.
EPA is approving New Jersey's oxygenated gasoline program for the
Northern New Jersey portion of the New York-Northern New Jersey-Long
Island consolidated metropolitan statistical area (CMSA) as the program
applies for the four months from November 1 through the last day of
February. In previous proposals for the States of New York and
Connecticut, EPA has proposed to determine that those four months are
the entire period when the New York-Northern New Jersey-Long Island
CMSA is prone to high ambient concentrations of CO. In a separate
document published in today's Federal Register, EPA is soliciting
comment on this determination for the limited purpose of inviting
comment on additional information concerning emission modeling related
to New Jersey's portion of the multi-state CMSA.
EFFECTIVE DATE: This final rule is effective on March 13, 1996.
ADDRESSES: Copies of the State submittal are available at the following
addresses for inspection during normal business hours:
Environmental Protection Agency, Region II Office, Library, 290
Broadway, 16th Floor, New York, New York 10007-1866
New Jersey Department of Environmental Protection, Office of Energy,
Bureau of Air Quality Planning, 401 East State Street, CN027, Trenton,
New Jersey 08625
FOR FURTHER INFORMATION CONTACT: William S. Baker, Chief, Air Programs
Branch, Environmental Protection Agency, Region II Office, 290
Broadway, 20th Floor, New York, New York 10007-1866 (212) 637-4249.
SUPPLEMENTARY INFORMATION:
Background
Motor vehicles are significant contributors of CO emissions, which
are harmful to human health. An important measure toward reducing these
emissions is the use of cleaner-burning oxygenated gasoline. Extra
oxygen in the fuel enhances fuel combustion and helps to offset fuel-
rich operating conditions, particularly during vehicle starting in cold
weather.
The Clean Air Act (Act) sets forth a number of requirements for
states with areas designated as nonattainment for the National Ambient
Air Quality Standards (NAAQS) set for CO to submit revisions to their
State Implementation Plans (SIPs). Among these is a requirement under
section 211(m) that states with CO nonattainment areas at or above a
9.5 parts per million (ppm) design value implement 2.7 percent
oxygenated gasoline programs by November 1, 1992 and submit these
programs as SIP revisions. This requirement applies to New Jersey
because the State contains a portion of the New York-Northern New
Jersey-Long Island nonattainment area, which has a design value for CO
above 9.5 ppm. The requirement had also originally applied to Southern
New Jersey as well; however, that area, which is part of the
Philadelphia CO nonattainment area, is currently in attainment for CO
and, as such, is no longer required to implement an oxygenated gasoline
program. 60 FR 62741, December 7, 1995. The New York-Northern New
Jersey-Long Island CO nonattainment area is part of the New York-
Northern New Jersey-Long Island Consolidated Metropolitan Statistical
Area (CMSA) and includes the New Jersey Counties of Bergen, Essex,
Hudson, Union, and parts of Passaic. The nonattainment area in Passaic
County includes the Cities of Clifton, Paterson, and Passaic. New
Jersey's portion of the larger CMSA, within which oxygenated fuel sale
is required, consists of the following counties: Bergen, Essex, Hudson,
Hunterdon, Middlesex, Ocean, Passaic, Somerset, Sussex, Union and
Warren.
On November 15, 1992, New Jersey submitted to EPA its oxygenated
fuels program contained in New Jersey Administrative Code Title 7,
Chapter 27, Subchapter 25, ``Control and Prohibition of Air Pollution
by Vehicular Fuels'' (adopted September 1, 1992, and operative November
1, 1992). The program required oxygenated fuel to be supplied during a
CO control period of seven months each year, extending from October 1
through April 30. EPA proposed to approve this submission, along with a
number of other revisions to New Jersey's CO SIP, on November 10, 1994
(59 FR 56019). On February 7, 1995, New Jersey modified its oxygenated
fuels regulations to shorten the length of the control period to four
months each year, from November 1 through the last day of February. 27
N.J.R. 787(a), February 21, 1995. This modification has not been
submitted to EPA as a SIP revision. Subsequently, on September 15,
1995, in the course of actions on the New York and Connecticut CO SIPs,
EPA proposed to find that the appropriate length of the control period
for the entire New York-
[[Page 5300]]
Northern New Jersey-Long Island CMSA is four months. 60 FR 47911 and 60
FR 47907. EPA also proposed to approve New York's oxygenated fuels
program and, in a separate notice, Connecticut's oxygenated fuels
program, both for a four-month control period. 60 FR 47907, September
15, 1995; 60 FR 47911, September 15, 1995. On September 28, 1995, EPA
received a request from New Jersey to waive the oxygenated fuel
requirement for the New Jersey portion of the New York-Northern New
Jersey-Long Island CMSA under section 211(m)(3)(A). This request is
still pending.\1\ Finally, on December 7, 1995, EPA published a direct-
final rule (with an accompanying proposal) to redesignate the Southern
New Jersey Camden County CO nonattainment area to attainment. 60 FR
62741.
\1\ EPA has decided to act on New Jersey's oxygenated gasoline
program at this time, even though the Agency has not completed
review of the waiver request. EPA will revisit this SIP approval if
future action on the waiver request makes that necessary.
---------------------------------------------------------------------------
In today's action, EPA is approving New Jersey's oxygenated fuels
program for Northern New Jersey for a four-month control period; this
control period length corresponds to the regulation that is currently
in effect in New Jersey and to the minimum length of control period
specified in section 211(m) of the Act. This approval finalizes the
proposed approval of New Jersey's oxygenated gasoline program for four
of the seven months proposed.
Oxygenated Fuels Requirements
The section 211(m) oxygenated fuels requirement applies to all
states with CO nonattainment areas with design values of 9.5 ppm or
greater based on data for the years 1988 and 1989. Each state's
oxygenated gasoline program must require gasoline sold or dispensed in
the larger of the CMSA or the metropolitan statistical area in which
the nonattainment area is located to contain not less than 2.7 percent
oxygen by weight during the control period. The control period is that
portion of the year in which the area is prone to high ambient
concentrations of CO, as determined by the EPA Administrator. The
length of the control period shall not be less than four months unless
a state can demonstrate that, because of meteorological conditions, a
reduced control period will assure that there will be no carbon
monoxide exceedances outside of such reduced period. (Clean Air Act
section 211(m)(2).) EPA announced guidance on the establishment of
control periods by area in the Federal Register on October 20, 1992.\2\
However, in subsequently proposing to approve the New York CO SIP
revision, EPA proposed to determine that the appropriate length of the
control period for the New York-Northern New Jersey-Long Island CMSA is
four months. 60 FR 47911, September 15, 1995. In a separate related
notice published in today's Federal Register, EPA is soliciting comment
on this determination for the limited purpose of inviting comment on
additional information concerning emission modelling related to New
Jersey's portion of the multi-state CMSA.
\2\ See, ``Guidelines for Oxygenated Gasoline Credit Programs
and Guidelines on Establishment of Control Periods under Section
211(m) of the Clean Air Act as Amended--Notice of Availability,'' 57
FR 47849 (October 20, 1992).
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State Submittal
Section 110, part D of Title I, and section 211(m) of the Act
required New Jersey to submit by November 15, 1992, revisions to the
State's CO SIP, including an oxygenated gasoline program for the New
Jersey portions of the New York-Northern New Jersey-Long Island CMSA.
As part of its November 15, 1992 submittal, the New Jersey Department
of Environmental Protection (NJDEP) submitted a revised rule--
Subchapter 25, ``Control and Prohibition of Air Pollution by Vehicular
Fuels,'' of Chapter 27, Title 7 of the New Jersey Administrative Code.
Subchapter 25 contains the requirements for New Jersey's oxygenated
gasoline program, which was adopted by New Jersey on September 1, 1992.
Summary of EPA Approval
In this action, EPA is approving New Jersey's oxygenated gasoline
program for Northern New Jersey as a revision to the New Jersey CO SIP,
but is confining this action to approval of a program with a four month
control period. For two reasons, it is appropriate at this time for EPA
to take final action to approve New Jersey's oxygenated gasoline
program for four months of the seven proposed.
First, at a minimum, any approved program would have to include a
control period of at least four months to meet the statutory
requirements in section 211(m) of the Act. However, EPA has not yet
made a final determination that the period prone to high ambient
concentrations of CO in the New York-Northern New Jersey-Long Island
CMSA is limited to four months, and EPA did not propose such a
determination in the proposed approval of the New Jersey submission.
EPA will make the final determination of control period length for the
entire CMSA in a final action on the New York and/or Connecticut
proposals, as supplemented by the additional data in today's companion
notice.3 60 FR 47911, September 15, 1995; 60 FR 47907, September
15, 1995. However, EPA is certain now that, given the statutory four-
month minimum, the four-month period covered by today's final action
will be an essential element of any fully approvable New Jersey
oxygenated gasoline SIP submission. Thus, there is no reason for EPA to
await the outcome of the separate notice-and-comment process on the
determination of the appropriate control period before approving New
Jersey's SIP submission for four months.
\3\ The reader is referred to these notices for further
information on EPA's proposed determination.
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Second, New Jersey currently has an oxygenated gasoline program
with a control period consistent with this determination. As explained
further below, EPA cannot approve the New Jersey submission for the
remaining three months so long as the State's laws do not currently
authorize a program for that additional period.
In addition, in this rulemaking EPA is finalizing its approval of
the other elements of New Jersey's oxygenated gasoline program. Since
most of the elements of New Jersey's oxygenated gasoline program remain
unchanged from those proposed for approval, EPA here incorporates by
reference the earlier proposal for all details of the oxygenated
gasoline program apart from the length of the control period and
references to the Camden nonattainment area.4 In a subsequent
final rule EPA will address the other revisions to the New Jersey CO
SIP, not related to the oxygenated gasoline program, that were proposed
to be approved in the November 10, 1994 notice.
\4\ As the Camden nonattainment area is in the process of being
redesignated to attainment without approval and retention of an
oxygenated fuels program, the references to the Camden area and the
``Southern Control Area'' are no longer applicable.
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In this action, EPA is also making the determination that, if and
when EPA takes final action determining that the control period for
this area is the four-month period from November through February, then
New Jersey's oxygenated gasoline SIP submission shall be deemed to meet
fully the requirements of section 211(m) of the Act, and this limited
approval of the four-month part of the New Jersey submission shall be
deemed converted to a full approval of that part.
[[Page 5301]]
Discussion
Approval of the SIP Submission for a Four-Month Control Period
In this action EPA is approving New Jersey's oxygenated gasoline
program only as it applies from November 1 through the last day of
February each year. This limited approval is appropriate given its
consistency with the minimum length of control period required by
statute and New Jersey's current regulatory authority, which is
confined to that four-month period.
Section 211(m)(2) of the Act requires oxygenated gasoline to be
sold during a control period established by the EPA Administrator based
on air quality monitoring data. This period must be no less than four
months, unless the state demonstrates that, because of meteorological
conditions, a reduced period would assure that there would be no
exceedances of the CO NAAQS outside of that period. Barring such a
demonstration, which none of the three affected States has attempted to
make, this provision requires EPA to approve an oxygenated fuels
program with at least a four-month control period. Thus, EPA must
approve at least four months of the seven months of the oxygenated
gasoline program proposed for approval in November 1994. The issue of
whether any additional months should be approved will be automatically
addressed when EPA takes final action on its proposal to modify the
length of the control period, as discussed further below.
EPA's limited approval of the New Jersey oxygenated gasoline
regulation for a four-month control period also ensures that the
approval complies with the Act's requirement that states have authority
to implement SIP provisions. Section 110(a)(2)(E)(i) sets as one
condition for SIP approval that the SIP must provide ``necessary
assurances that the State * * * will have adequate * * * authority
under State * * * law to carry out such [SIP].'' Because New Jersey's
current regulations provide for a four-month control period, EPA's
approval of the SIP revision for the identical control period tailors
the approval to New Jersey's current regulation and ensures that the
revision is approvable under section 110(a)(2)(E).
Finally, while EPA has proposed to determine that the control
period for the area be limited to four months, that determination need
not be finalized in order to approve a four month control period at
this time. EPA believes it is appropriate to approve New Jersey's
oxygenated fuel requirement for four months because this approval would
not increase the stringency of the State submission, a four-month
control period is a necessary element of the statutorily required
program, and the period conforms with the State's current regulation.
In addition, this partial approval ensures that New Jersey's four-month
control period will be consistent with the proposed approval of four-
month control periods in the respective portions of the New York-
Northern New Jersey-Long Island CMSA for Connecticut and New York.
Consequences of Final Determination of Four-Month Control Period
There are several consequences that would flow from a final
determination by EPA that four months is the correct control period for
this area. First, EPA is determining through this final action that, if
and when EPA takes final action determining that the control period for
the area is the four-month period from November through February, then
the corresponding four-month part of the New Jersey SIP submission
shall be deemed to meet fully the requirements of section 2ll(m) of the
Clean Air Act, and this limited approval of the four-month part of the
New Jersey submission shall be deemed converted to a full approval of
that part. There are no sanctions implications from this limited
approval.5
\5\ This action is a limited approval because, until EPA makes a
final determination on the length of the control period for this
area, EPA cannot finally determine whether New Jersey's SIP
submission meets fully the requirements of section 211(m) of the
Act. This action is also a partial approval because EPA is approving
only four months of the seven-month oxygenated gasoline program
submitted by New Jersey.
---------------------------------------------------------------------------
Second, if and when EPA takes final action determining that the
control period for the area is the four-month period from November
through February, that action shall be deemed to withdraw EPA's
proposed November 10, 1994 approval of the remaining three months of
the period covered in New Jersey's seven-month SIP submission. Such a
determination would preempt New Jersey from establishing a longer
control period due to the prohibition of certain state fuel controls in
section 211(c)(4)(A) and associated regulation promulgated by EPA on
December 15, 1993. (59 FR 7716, February 16, 1994).
Section 211 of the Clean Air Act authorizes EPA to regulate fuels
and fuel additives. Under section 211(c)(1), the Administrator has the
authority to control or prohibit the manufacture and sale of fuels and
fuel additives for motor vehicles on the grounds of danger to public
health or impairment of emissions control devices. Section 211(c)(4)(A)
provides that where the Administrator has set such a control or
prohibition under section 211(c)(1) applicable to a characteristic or
component of a fuel or fuel additive, no state may set a control or
prohibition respecting that characteristic or component, unless the
state control or prohibition is identical to the federal control or
prohibition. This provision preempts state fuel controls that are
nonidentical to federal section 211(c)(1) controls on the same
characteristic or component.
EPA promulgated the RFG program under the authority of sections
211(k) and 211(c)(1) (59 FR 7716, February 16, 1994). RFG must contain
2.0% oxygen content by weight, and it is required year-round in the New
York-Northern New Jersey-Long Island CMSA. 40 CFR section 80 subpart D.
In the absence of section 211(m), section 211(c)(4)(A) would preempt
New Jersey from establishing its own minimum oxygen content
requirements different from the RFG requirements in RFG areas. Because
section 211(m) is a specific, more stringent requirement, it overrides
the general preemption provision as to the specific control period
applicable in each area, and states are not preempted from complying
with section 211(m) in RFG areas during that control period. However,
states are still preempted from setting nonidentical controls or
prohibitions on oxygen content in RFG areas to the extent that such
controls or prohibitions are not mandated by section 211(m). This
prohibition on state fuel controls may be waived if a state shows that
a nonidentical fuel control is necessary to achieve a NAAQS. (CAA
section 211(c)(4)(C)).
EPA has proposed to determine that the New York-Northern New
Jersey-Long Island CMSA is prone to high ambient concentrations of CO
during the four-month period of November through February. Section
211(m) requires states to adopt 2.7% oxygenated gasoline requirements
only for the period prone to high ambient concentrations of CO, as
determined by the Administrator. Thus, upon finalization of EPA's
proposed determination, section 211(m) would require New Jersey to
adopt a 2.7% minimum oxygen content standard for only the four months
of November through February. The RFG oxygen content requirement
preempts any state from prescribing or enforcing oxygen content
requirements in this RFG area that go beyond what is mandated by
section 211(m). Thus, New Jersey would be preempted from enforcing an
oxygenated gasoline program for the additional months of October, March
and April.
[[Page 5302]]
Section 110(a)(2)(A) requires SIPs to include ``enforceable * * *
control measures.'' EPA only has authority to approve the enforceable
portion of the State submission, which, upon EPA's determination, would
correspond to a four-month control period. Thus, EPA would be
authorized to approve New Jersey's oxygenated fuel requirements only
for the months of November through February. As a consequence, a final
determination of a four-month control period will be deemed to withdraw
EPA's November 10, 1994 proposed approval of the remaining three months
of the period covered in New Jersey's seven-month SIP submission.
Finally, approving New Jersey's oxygenated gasoline program only
for a four-month control period would be consistent with the proposed
approval of four-month control periods in the respective portions of
the New York-Northern New Jersey-Long Island CMSA for Connecticut and
New York.
Final Action
EPA is approving New Jersey's Subchapter 25 oxygenated fuels
program for the Northern New Jersey portion of the New York-Northern
New Jersey-Long Island CMSA as it applies for a control period of
November 1 through the last day of February. In addition, as described
above, EPA is determining through this final action that, if and when
EPA takes final action determining that the control period for the area
is the four-month period from November through February, then the
corresponding four-month part of the New Jersey SIP submission shall be
deemed to meet fully the requirements of section 2ll(m) of the Clean
Air Act, and this limited approval of the four-month part of the New
Jersey submission shall be deemed converted to a full approval of that
part.
Nothing in this rule should be construed as permitting or allowing
or establishing a precedent for any future request for revision to any
SIP. Each request for revision to any SIP shall be considered
separately in light of specific technical, economic, and environmental
factors and in relation to relevant statutory and regulatory
requirements.
Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., EPA
must prepare a regulatory flexibility analysis assessing the impact of
any proposed or final rule on small entities. 5 U.S.C. 603 and 604.
Alternatively, EPA may certify that the rule will not have a
significant impact on a substantial number of small entities. Small
entities include small businesses, small not-for-profit enterprises,
and government entities with jurisdiction over populations of less than
50,000.
SIP approvals under section 110 and Subchapter I, Part D of the CAA
do not create any new requirements, but simply approve requirements
that the State is already imposing. Therefore, because the federal SIP-
approval does not impose any new requirements, I certify that it does
not have a significant impact on any small entities affected. Moreover,
due to the nature of the federal-state relationship under the CAA,
preparation of a regulatory flexibility analysis would constitute
federal inquiry into the economic reasonableness of state action. The
Clean Air Act forbids EPA to base its actions concerning SIPs on such
grounds. Union Electric Co. v US EPA, 427 US 246, 256-66 (S.Ct. 1976);
42 U.S.C. 7410(a)(2).
Under sections 202, 203, and 205 of the Unfunded Mandates Reform
Act of 1995 (``Unfunded Mandates Act''), signed into law on March 22,
1995, EPA must undertake various actions in association with proposed
or final rules that include a federal mandate that may result in
estimated annual costs of $100 million or more to the private sector,
or to state, local, or tribal governments in the aggregate.
Through submission of this SIP or SIP revision, the state and any
affected local or tribal governments have elected to adopt the program
provided for under sections 110 and 182 of the Clean Air Act. These
rules may bind state, local and tribal governments to perform certain
actions and also require the private sector to perform certain duties.
To the extent that the rules being approved by this action would impose
any mandate upon the state, local or tribal governments either as the
owner or operator of a source or as a regulator, or would impose any
mandate upon the private sector, EPA's action will impose no new
requirements; such sources are already subject to these regulations
under state law. Accordingly, no additional costs to state, local, or
tribal governments, or to the private sector, result from this action.
EPA has also determined that, in any event, this final action does not
include a mandate that may result in estimated annual costs of $100
million or more to state, local, or tribal governments in the aggregate
or to the private sector.
This action has been classified as a Table 2 action for signature
by the Regional Administrator under the procedures published in the
Federal Register on January 19, 1989 (54 FR 2214-2225), as revised by a
July 10, 1995 memorandum from Mary Nichols, Assistant Administrator for
Air and Radiation. The Office of Management and Budget (OMB) has
exempted this regulatory action from E.O. 12866 review.
Under section 307(b)(l) of the CAA, petitions for judicial review
of this rule must be filed in the United States Court of Appeals for
the appropriate circuit within 60 days from date of publication. Filing
a petition for reconsideration by the Administrator of this final rule
does not affect the finality of this rule for the purposes of judicial
review nor does it extend the time within which a petition for judicial
review may be filed and shall not postpone the effectiveness of such
rule or action. This rule may not be challenged later in proceedings to
enforce its requirements. (See 307(b)(2)).
List of Subjects in 40 CFR Part 52
Environmental protection, Air pollution control, Carbon monoxide,
Incorporation by reference, Intergovernmental relations, Reporting and
recordkeeping requirements.
Dated: January 18, 1996.
William J. Muszynski,
Acting Regional Administrator.
Part 52, chapter I, title 40 of the Code of Federal Regulations is
amended as follows:
PART 52--[AMENDED]
1. The authority citation for part 52 continues to read as follows:
Authority: 42.U.S.C. 7401-7671q.
Subpart FF--New Jersey
2. Section 52.1570 is amended by adding paragraph (c)(58) to read
as follows:
Sec. 52.1570 Identification of plan.
* * * * *
(c) * * *
* * * * *
(58) Revisions to the New Jersey State Implementation Plan (SIP)
for carbon monoxide concerning the oxygen content of motor vehicle
gasoline, dated November 15, 1992 submitted by the New Jersey State
Department of Environmental Protection (NJDEP).
(i) Incorporation by reference.
(A) Amendments to Chapter 27, Title 7 of the New Jersey
Administrative Code Chapter 27, Subchapter 25, ``Control and
Prohibition of Air Pollution by Vehicular Fuels,'' effective October 5,
1992 (as limited in Sec. 52.1605).
3. Section 52.1605 is amended under Title 7, Chapter 27, by
removing the two existing entries for subchapter 25 and adding a new
entry for subchapter 25 in numerical order to read as follows:
Sec. 52.1605 EPA Approved New Jersey regulations.
[[Page 5303]]
--------------------------------------------------------------------------------------------------------------------------------------------------------
State regulation State effective date EPA approved date Comments
--------------------------------------------------------------------------------------------------------------------------------------------------------
* * * * * * *
Title 7, Chapter 27
* * * * * * *
Subchapter 25, ``Control and Oct. 5, 1992..................... [Insert date of publication and Approves 1992 revision of Subchapter 25 except
Prohibition of Air, Pollution by FR page citation]. that (1) oxygenated gasoline provisions are
Vehicular Fuels;''. approved only as they apply to the four month
control period from November 1 through the
last day in February, consistent with the
February 21, 1995 NJDEP modification of
N.J.A.C. 7:27-25; and (2) oxygenated gasoline
provisions are approved only as they apply to
the Northern New Jersey portion of the New
York-Northern New Jersey-Long Island
consolidated metropolitan statistical area.
* * * * * * *
--------------------------------------------------------------------------------------------------------------------------------------------------------
[FR Doc. 96-2581 Filed 2-9-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-2177 Waiver Authority Under the State Processing Program
[Federal Register Volume 61, Number 29 (Monday, February 12, 1996)]
[Rules and Regulations]
[Pages 5271-5275]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-2177]
========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
Prices of new books are listed in the first FEDERAL REGISTER issue of each
week.
========================================================================
Federal Register / Vol. 61, No. 29 / Monday, February 12, 1996 /
Rules and Regulations
[[Page 5271]]
DEPARTMENT OF AGRICULTURE
Food And Consumer Service
7 CFR PART 250
RIN 0584-AB99
Waiver Authority Under the State Processing Program
AGENCY: Food and Consumer Service, USDA.
ACTION: Final rule and waiver.
-----------------------------------------------------------------------
SUMMARY: This final rule amends the Food Distribution Program
regulations by giving the Food and Consumer Service authority to waive
provisions contained in the Food Distribution Program regulations for
the purpose of conducting demonstration projects to test program
changes designed to improve the State processing of donated foods. FCS
is, at this time, invoking its authority under Sec. 250.30(t) to waive
certain provisions of Sec. 250.30(f)(1)(i) in order to conduct a
demonstration project.
EFFECTIVE DATE: This final rule is effective February 12, 1996.
FOR FURTHER INFORMATION CONTACT: Ursula Key, Schools/Institutions
Branch, Food Distribution Division, Food and Consumer Service, U.S.
Department of Agriculture, 3101 Park Center Drive, Room 501,
Alexandria, Virginia 22302; or telephone (703) 305-2644.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This final rule has been determined to be significant and was
reviewed by the Office of Management and Budget under Executive Order
12866.
Paperwork Reduction Act
This final rule reflects no new information collection requirements
under the Paperwork Reduction Act of 1980 (44 U.S.C. 3501-3502). The
OMB control number assigned to the existing recordkeeping and reporting
requirements was approved by OMB for Part 250 under control number
0584-0007. The current burden hours will not change as a result of this
final rule.
Executive Order 12372
This program is listed in the Catalog of Federal Domestic
Assistance under 10.550 and is subject to the provisions of Executive
Order 12372 which requires intergovernmental consultation with State
and local officials (7 CFR Part 3015, Subpart V and final rule-related
notices published at 48 FR 29114, June 24, 1983 and 49 FR 22676, May
31, 1984).
Executive Order 12778
This final rule has been reviewed under Executive Order 12778,
Civil Justice Reform. This final rule is intended to have preemptive
effect with respect to any State or local laws, regulations or policies
which conflict with its provisions or which would otherwise impede its
full implementation. This final rule is not intended to have
retroactive effect unless so specified in the ``Effective Date''
section of this preamble. Prior to any judicial challenge to the
provisions of this rule or the application of its provisions, all
applicable administrative procedures must be exhausted. This includes
any administrative procedures provided by State or local governments.
For disputes involving procurement by distributing and recipient
agencies, this includes any administrative appeal procedures to the
extent required by 7 CFR Parts 3015 or 3016.
Regulatory Flexibility Act
This final rule has been reviewed with regard to the requirements
of the Regulatory Flexibility Act (5 U.S.C. 601-612). The Administrator
of the Food and Consumer Service (FCS) has certified that this final
rule will not have a significant economic impact on a substantial
number of small entities. The cost of compliance to State processors of
donated foods is expected to be reduced by the changes proposed in this
rule.
Background
Section 250.30 of the current Food Distribution Program regulations
sets forth the terms and conditions under which distributing agencies,
subdistributing agencies, and recipient agencies may enter into
contracts with commercial firms for processing donated foods and
prescribes the minimum requirements to be included in such contracts.
On April 13, 1995, the Department published a proposed rule in the
Federal Register at 60 FR 18781 which would permit FCS to waive any of
the requirements of the Food Distribution Program regulations at Part
250 for the purpose of conducting demonstration projects to test
program changes designed to improve the State processing of donated
foods. The proposed rule provided a 30-day comment period. This final
rule incorporates the proposed waiver provision in the State processing
regulations at 7 CFR 250.30(t).
Analysis of Comments
The Department received a total of 9 comment letters from two
distributing agencies, a local school food authority, and six
commercial food processors. All commenters were in favor of the
proposed rule.
Four commenters responded favorably to the rule as it was proposed.
They stated that by allowing FCS to waive certain provisions, more
processors would be attracted to the program, and the cost of processed
end products should be reduced. They further stated that some of the
provisions contained in the State processing regulations are overly
restrictive and have resulted in processors dropping out of the State
processing program. These commenters believed that over-regulation
results in increased costs which are passed on to recipient agencies.
They supported FCS's proposal to allow pilot projects which could
provide guideposts for simplification of the regulations. One commenter
believed that demonstration projects will fully support modifications
to the current program to generate more competition and improved
efficiency.
Five commenters who also supported the proposed rule cited specific
provisions they would like to see waived as soon as possible. Three
commenters supported the removal of the Agricultural Marketing Service
acceptance service grading requirement for processing meat and poultry,
complaining of excessive costs for obtaining the services of AMS
graders. However, one commenter favored
[[Page 5272]]
retaining the requirement. Four commenters supported removing the
requirement for processors to submit annual certified public accountant
audit reports, also due to the costs involved. The commenters claimed
that the requirement has forced some processors out of the program.
They stated that those companies complying with the audit provision are
passing on audit costs in prices of end products to schools. FCS
appreciates these comments and will take them into consideration when
determining which requirements will be waived during the demonstration
projects.
Waiver of Requirements
FCS is invoking its authority under 7 CFR 250.30(t) to waive the
current prohibition in 7 CFR 250.30(f)(1)(i) of the substitution of
poultry. In a notice published elsewhere in this issue, FCS is
announcing a demonstration project under which it will permit selected
poultry processors to substitute commercial chicken for donated chicken
in the State processing of donated chicken.
Summary
Based on the comments received, this final rule adopts
Sec. 250.30(t) of the proposed rule without change.
List of Subjects in 7 CFR Part 250
Agricultural commodities, Food assistance programs, Food
processing.
For reasons set forth in the preamble, 7 CFR Part 250 is amended as
follows:
PART 250--DONATION OF FOODS FOR USE IN THE UNITED STATES, ITS
TERRITORIES AND POSSESSIONS AND AREAS UNDER ITS JURISDICTION
1. The authority citation for Part 250 continues to read as
follows:
Authority: 5 U.S.C. 301; 7 U.S.C. 612c, 612c note, 1431, 1431b,
1431e, 1431 note, 1446a-1, 1859; 15 U.S.C. 713c; 22 U.S.C. 1922; 42
U.S.C. 1751, 1755, 1758, 1760, 1761, 1762a, 1766, 3030a, 5179, 5180.
2. In Section 250.30, a new paragraph (t) is added to read as
follows:
Sec. 250.30 State processing of donated foods.
* * * * *
(t) Waiver authority. The Food and Consumer Service may waive any
of the requirements contained in this part for the purpose of
conducting demonstration projects to test program changes designed to
improve the State processing of donated foods.
Dated: January 18, 1996.
Ellen Haas,
Under Secretary for Food, Nutrition, and Consumer Services.
Appendix to Preamble of Final Rule--Regulatory Impact Analysis
Date: June 1995
Agency: USDA, FCS
Contact: Ursula Key
Phone: (703) 305-2644
1. Title: Food Distribution Program--Waiver Authority Under the
State Processing Program.
2. Action:
a. Nature: Final Rule.
b. Need and Purpose: This action is discretionary and is taken
to support the goal of regulatory relief, increased State
flexibility, increased program efficiency, and paperwork reduction.
This authority will be used to conduct demonstration projects to
test program alternatives to determine whether changes or greater
flexibility will improve the efficiency of the State processing
program. Of particular interest are changes that would increase
competition among processors, which should result in lower costs to
recipient agencies.
This action amends the Food Distribution Program regulations by
giving the Food and Consumer Service authority to waive provisions
pertaining to State processing of donated commodities in the Food
Distribution Program regulations at 7 CFR Part 250.30 only for the
purpose of allowing demonstration projects. Current State processing
regulations may be overly restrictive, thus increasing processor
costs and discouraging the participation of processors.
3. Background: Section 250.30 of the current Food Distribution
Program regulations sets forth the terms and conditions under which
distributing agencies, subdistributing agencies, and recipient
agencies may enter into contracts with commercial firms for
processing donated foods and prescribes the minimum requirements to
be included in such contracts. This activity is typically referred
to as State processing.
State processing is an activity principally of the Child
Nutrition Programs by which State or substate agencies arrange to
have USDA donated commodities further processed into end products
more readily usable by schools. For example, fresh bulk pack chicken
might be processed into chicken nuggets, coarse ground beef into
hamburger patties, whole turkeys into fully cooked breast meat and
turkey ham, etc. About a third to half of all USDA donated meat and
poultry is further processed under State processing contracts. For
State processing, USDA either sends the commodities directly to a
processor contracted by the State, or sends them to a State
distributing agency, which in turn arranges to have the product
backhauled to a processor. In either case, under State processing,
State or recipient agencies pay the cost of any additional
processing directly to the processor.
The total value of USDA commodities donated to the Child
Nutrition Programs was $667 million in FY 1994. A little under half
of this, of which a third, or $100 million worth, was further
processed under State processing arrangements. This figure has been
constant for the last several years. While the degree of State
processing varies by the specific type of product donated by USDA,
typically about two thirds of beef is processed under State
contracts, while less than a third of the pork, chicken and turkey
are processed. Under current FCS regulations, processors may
substitute like kind commercial commodities for USDA commodities for
their convenience in manufacturing, except the rules specifically
prohibit the substitution of meat and poultry.
On April 13, 1995, the Department published a proposed rule in
the Federal Register at 60 FR 18781 which would permit FCS to waive
provisions relative to the State processing of donated commodities
that are contained in the Food Distribution Program regulations at
Part 250 for the purpose of conducting demonstration projects to
test program changes designed to improve the State processing of
donated foods. The proposed rule provided a 30-day comment period.
This final rule incorporates the proposed waiver provision in the
State processing regulations at 7 CFR 250.30(t).
The Department received a total of 9 comment letters, all of
which were in favor of the proposed rule.
Commenters stated that by allowing FCS to waive certain
provisions of the State processing regulations, more processors
would be attracted to the program, and the cost of processed end
products should be reduced. They further stated that some of the
provisions contained in the State processing regulations are overly
restrictive and have resulted in processors dropping out of the
State processing program. These commenters believed that over-
regulation results in increased costs which are passed on to
recipient agencies. They supported FCS's proposal to conduct
demonstration projects which could provide guideposts for
simplification of the regulations. One commenter believed that
demonstration projects will fully support modifications to the
current program requirements to generate more competition and
improve efficiency.
One of the first demonstrations being considered is the
substitution of commercially acquired chicken for USDA donated
chicken. Currently, only four poultry processors are participating
in the State processing of donated foods. Processors have stated
that the current policy which prohibits the substitution of
commercially acquired chicken for donated chicken reduces the
quantity of donated chicken they are able to accept and process
during a given period. The prohibition against the substitution came
about as a result of program abuses by processors in the past (e.g.,
substituting lesser grade commercial chicken for donated chicken,
substituting mechanically boned chicken meat for high quality breast
meat, etc). In FY 1994, USDA donated approximately $68 million worth
of chicken to the Child Nutrition Program, about a third of which
underwent State processing. Chicken purchased by USDA for further
processing is typically bulk chill packed. In
[[Page 5273]]
FY 1994, USDA donated 9.5 million pounds valued at $5.3 million.
Processors must schedule production around deliveries of the donated
chicken since it is a very highly perishable product. Some of the
processors must schedule production around deliveries of donated
chicken for up to 30 individual States. Vendors do not always
deliver donated chicken to the processors as scheduled, causing
delays in production of end products. These delays may be eliminated
if the processors can substitute commercial chicken for donated
chicken. Any substituted commercial chicken must be at least as high
in quality as USDA chicken in terms of grade, condition, and other
attributes.
The demonstration project will enable FCS to evaluate whether to
amend program regulations to provide for the substitution of donated
chicken with commercial chicken in the State processing program.
Particular attention will be paid to whether such an amendment of
the regulations would be likely to increase the number of processors
participating, and whether it would probably increase the quantity
of donated chicken that each processor accepts for processing. Also,
FCS will attempt to determine whether the expected increase in
competition and the expected increase in the quantity of donated
chicken accepted for processing in fact enable processors to
function more efficiently, producing a greater variety of processed
chicken end products in a more timely manner at lower costs.
Further, FCS must determine whether USDA and the States have the
practical capability to ensure that substitutions are, in fact, for
comparable or better quality product.
4. Justification of Alternative: This final rule would authorize
the Department to conduct demonstration projects to study the effect
of waiving certain expensive and burdensome requirements in the
State processing program. For example, Agricultural Marketing
Service (AMS) acceptance service grading certificates may be used in
lieu of company generated production and quality control records.
Through these demonstration projects, the Department hopes to
determine if the cost of compliance for food manufacturers, as well
as the record-keeping burden associated with the administration of
the program, can be reduced. The Department's goal is to attract
more manufacturers to participate in the State processing program.
We are aware of three major poultry processors who sell commodity
product to USDA but do not participate in the State processing
program. We are not able to determine at this time exactly how many
additional processors will decide to participate in the State
processing program but AMS is optimistic that more processors will
be interested in participating. This increased competition should
ultimately lead to lower prices to recipient agencies. By conducting
the demonstration projects, the Department can determine if relaxing
certain requirements will adversely affect program accountability.
It is important to note that all remaining controls and requirements
of the State processing regulations and the State processing
contracts will remain in effect. We are only considering reductions
or waivers which are feasible because other program controls can
perform the function of the changed or waived requirements. If the
results of the demonstration projects indicate that certain
requirements can be modified or waived without compromising program
integrity, the Department can consider amending certain current
State processing program requirements. The Department expects this
rule will support efforts to streamline the administration of the
State processing program and improve customer service to recipient
agencies (primarily schools).
Two other alternatives were considered: (1) doing nothing and
(2) eliminating the audit and substitution regulations entirely. The
option of selected waivers for demonstration projects was the
preferred alternative.
5. Effects:
a. Effects on food manufacturers: Through conducting
demonstration projects, FCS can determine if it is possible to
eliminate or reduce reporting and recordkeeping requirements for
processors. Some of the more burdensome requirements include
inventory records, production records, quality control records,
sales records, monthly performance reports, grading and inspection
requirements, performance, supply, and surety bonding requirements,
and the certified public accountant audit requirement. For example,
processors which receive donated food valued at $250,000 or more
each year are required to submit an annual independent certified
public accountant audit report. This requirement may be relaxed to
require an audit every two or three years for those processors with
a history of good performance. The Department is interested in
determining whether any of the above requirements can be eliminated
or reduced while still maintaining program accountability for the
donated food. Also, the Department intends to determine how much
costs can be reduced for processors as a result of participation in
the demonstration projects. Since program controls may not be as
strong as under current rules, FCS would seek to determine the
extent to which the benefits of burden reduction are worth potential
costs due to less control.
b. Effects on State distributing agencies: Through the
demonstrations projects, the Department will determine if it is
possible to streamline the administration of the processing program
at the State level. Currently, States must enter into agreements or
renew them annually. Additionally, States must review end product
data schedules, performance, supply, and surety bonds, performance
reports and grading certificates on a monthly basis, and certified
public accountant audit reports as submitted. During the
demonstration projects, the Department hopes to review the current
responsibilities of the State agencies and determine areas where
there is duplication of effort and where reductions in reporting may
be possible.
c. Effects on Recipient agencies: Currently the processors'
costs of all the record-keeping and reporting requirements (e.g.,
acceptance service grading, performance, supply, and surety bond,
and certified public accountant audit reports) are being passed on
to the recipient agencies via higher prices for end products. Also,
fewer processors are participating in the program, claiming that
certain requirements are too burdensome and expensive. FCS has been
informed that the typical cost of an independent certified public
accountant audit report can run from $10,000 to $25,000 depending on
the volume of food processed by a manufacturer. If we could require
the audits less frequently for processors with a history of good
performance, their costs could be significantly reduced. Since
processors pass their costs on to recipient agencies, this should
enable them to reduce the prices of the products they sell to
schools. By conducting demonstration projects to study the
possibility of removing or reducing some of the requirements, the
Department hopes that more processors will participate in the State
processing program, thereby increasing the competitive base. By
reducing costs for the processors and increasing competition, it
should be possible to reduce prices of end products to the schools.
Processing adds about $0.78 to $1.09 per pound to the value of the
end product. For example, coarse ground beef costing USDA $1.08 per
pound would be worth $1.86 to $2.17 per pound to the State after
processing. In other words, processing roughly doubles the value of
donated beef.
As with beef, processing typically adds about $0.78 to $1.09 per
pound in value to chicken, roughly the same per pound as beef
processing. It is hoped that the flexibilities offered through the
demonstrations under this rule could reduce this by perhaps 5 to 10
percent. If the demonstrations prove these savings out, and the
flexibilities had been available and fully used in 1994, States
would have saved about $1 to $2 million of their processing costs
(i.e., 25 million pounds times $0.93 per pound processing (the
midpoint) equals $23 million minus 5 percent to 10 percent equals
$1.2 to $2.3 million). If a comparable savings rate were achieved in
all processed meat and poultry in 1994, the States would have saved
perhaps $7 to $14 million total. The demonstration projects will
allow FCS to quantify potential savings more accurately. See
attached tables for more detailed illustration.
d. Effects on program costs and integrity: As demonstration
projects are conducted, the Department hopes to determine if certain
administrative costs associated with the State processing program
can be reduced. The Department is also concerned that program
integrity be maintained. If elimination of audit requirements or
allowance of substitution should result in an increase in fraudulent
behavior, the potential savings desirable could be completely
eliminated.
e. Effects on small entities: This rule would not have a
significant economic impact on a substantial number of small
entities. Commercial food processors participating in the
demonstration projects will be most affected to the extent that they
have the greatest record-keeping and reporting requirements in the
State processing program.
[[Page 5274]]
Table 1.--Child Nutrition Programs, Commodity Donations
--------------------------------------------------------------------------------------------------------------------------------------------------------
Dollars in thousands Pounds in thousands
-------------------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1990 1991 1992 1993 1994
--------------------------------------------------------------------------------------------------------------------------------------------------------
Child nutrition commodities:
Entitlement........................... $520,845 $533,188 $558,154 $573,281 $574,598 952,311 1,009,384 842,193 887,012 894,648
Bonus................................. 110,601 84,306 122,162 90,163 92,226 139,820 109,105 315,727 163,940 147,851
-------------------------------------------------------------------------------------------------------------
Total commodities................... 631,446 617,494 680,316 663,444 666,824 1,092,131 1,118,489 1,157,920 1,050,952 1,042,499
=============================================================================================================
of which:
Beef patties, frz..................... 10,484 11,545 12,732 14,335 6,801 7,748 8,426 9,262 10,597 4,986
Beef patties, frz w/vpp............... 12,350 19,004 25,193 25,067 20,749 11,428 16,909 22,177 22,514 19,068
Beef patties, extra lean.............. ......... ......... 6,810 10,736 8,931 ......... ......... 3,830 6,771 5,563
Beef frozen ground.................... 103,661 110,964 115,473 116,522 94,796 80,778 84,581 88,938 92,698 74,104
Beef roasts, choice................... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
Beef, canned W/J...................... 942 ......... 906 753 72 612 ......... 612 504 47
Beef, frz grd course process.......... 7,014 8,880 11,759 16,035 21,039 5,437 6,930 9,072 12,390 16,422
-------------------------------------------------------------------------------------------------------------
Subtotal, beef...................... 134,451 150,393 172,873 183,448 152,388 106,003 116,846 133,891 145,474 120,190
=============================================================================================================
Chicken, canned boned................. ......... ......... ......... ......... 2,103 ......... ......... ......... ......... 1,083
Chickens, chilled bulk................ 6,260 5,844 7,274 5,594 5,343 10,908 11,232 14,611 10,188 9,496
Chickens, chill leg................... ......... ......... ......... 4,807 5,377 ......... ......... ......... 9,108 9,830
Chickens, drums....................... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
Chickens, frozen, cut up.............. 36,732 32,187 33,257 19,869 20,536 55,506 53,946 60,454 31,737 31,753
Chickens, frozen breaded.............. 3,235 ......... 4,596 12,544 13,646 2,611 ......... 3,988 11,424 12,762
Chickens, leg qtrs.................... ......... ......... ......... ......... 1,133 ......... ......... ......... ......... 3,080
Chickens, nuggets frz soc............. ......... ......... 241 4,183 1,370 ......... ......... 468 2,652 2,028
Chickens, diced frz................... ......... ......... 22,107 12,074 18,066 ......... ......... 9,921 5,271 8,133
Chickens, patties, soc................ ......... ......... ......... 121 474 ......... ......... ......... 78 702
Chickens, thighs...................... ......... ......... ......... ......... 1 ......... ......... ......... ......... .........
-------------------------------------------------------------------------------------------------------------
Subtotal, chicken................... 46,227 38,031 67,475 59,192 68,048 69,025 65,178 89,442 70,458 78,867
=============================================================================================================
Pork, canned W/NJ..................... 336 2,045 923 680 1,572 252 1,369 720 540 1,269
Pork, frz ground...................... 17,481 23,833 15,349 20,217 15,794 16,252 20,744 16,947 19,744 15,579
Pork, frz grd coarse process.......... ......... ......... 1,986 3,170 3,733 ......... ......... 2,020 3,247 3,841
Pork, frz patties..................... ......... ......... ......... ......... 291 ......... ......... ......... ......... 277
Pork, ham, frz cooked................. 19,618 114 9,641 ......... 25,513 12,915 72 6,652 ......... 16,011
-------------------------------------------------------------------------------------------------------------
Subtotal, pork...................... 37,435 25,992 27,899 24,067 46,903 29,419 22,185 26,339 23,531 36,977
=============================================================================================================
Turkey roasts, frozen................. 26,122 26,769 18,637 34,166 27,634 18,747 20,071 13,221 24,874 19,962
Turkey, commercial pack............... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
Turkey, frozen ground................. 5,957 5,928 5,978 11,012 9,858 9,098 8,189 7,847 18,817 16,926
Turkey, frozen whole.................. 11,700 12,191 7,551 7,612 9,364 17,352 17,754 10,949 12,406 15,043
Turkey, chilled, bulk................. 3,832 3,613 5,870 8,212 7,287 5,976 5,544 9,821 13,752 11,720
Turkey, frz ground burgers............ ......... ......... 809 3,166 1,648 ......... ......... 756 3,348 1,872
Turkey, sausage chubbs................ ......... ......... ......... ......... 371 ......... ......... ......... ......... 468
Turkey, sausage patties............... ......... ......... ......... ......... 606 ......... ......... ......... ......... 540
Turkey, sausage links................. ......... ......... ......... ......... 409 ......... ......... ......... ......... 320
-------------------------------------------------------------------------------------------------------------
Subtotal, turkey.................... 47,611 48,501 38,845 64,168 57,177 51,173 51,558 42,594 73,197 66,851
=============================================================================================================
Total, meat and poultry............. 265,724 262,917 307,092 330,875 324,516 255,620 255,767 292,266 312,660 302,885
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 2.--Child Nutrition Programs, Commodity Donations
--------------------------------------------------------------------------------------------------------------------------------------------------------
Dollars in thousands Pounds in thousands
-------------------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1990 1991 1992 1993 1994
--------------------------------------------------------------------------------------------------------------------------------------------------------
Likely to be further processed by States:
Beef, frozen ground................... $103,661 $110,964 $115,473 $116,522 $94,796 80,778 84,581 88,938 92,698 74,104
Beef, frz grd coarse process.......... 7,014 8,880 11,759 16,035 21,039 5,437 6,930 9,072 12,390 16,422
-------------------------------------------------------------------------------------------------------------
Subtotal, beef...................... 110,675 119,844 127,232 132,557 115,835 86,215 91,511 98,010 105,088 90,526
=============================================================================================================
Additional processing costs at $0.93 per
pound.................................... ......... ......... ......... ......... 84,189 ......... ......... ......... ......... 90,526
Chicken, chilled bulk................. 6,260 5,844 7,274 5,594 5,343 10,908 11,232 14,611 10,188 9,496
-------------------------------------------------------------------------------------------------------------
Subtotal, chicken................... 6,260 5,844 7,274 5,594 5,343 10,908 11,232 14,611 10,188 9,496
=============================================================================================================
Additional processing costs at $0.93 per
pound.................................... ......... ......... ......... ......... 8,831 ......... ......... ......... ......... 9,496
Pork, frz ground...................... 17,481 23,833 15,349 20,217 15,794 16,252 20,744 16,947 19,744 15,579
Pork, frz grd course process.......... ......... ......... 1,986 3,170 3,733 ......... ......... 2,020 3,247 3,841
-------------------------------------------------------------------------------------------------------------
Subtotal, pork...................... 17,481 23,833 17,335 23,387 19,527 16,252 20,744 18,967 22,991 19,420
=============================================================================================================
[[Page 5275]]
Additional processing costs at $0.93 per
pound.................................... ......... ......... ......... ......... 18,061 ......... ......... ......... ......... 19,420
Turkey, frozen ground................. 5,957 5,928 5,978 11,012 9,858 9,098 8,189 7,847 18,817 16,926
Turkey, chilled bulk.................. 3,832 3,613 5,870 8,212 7,287 5,976 5,544 9,821 13,752 11,720
-------------------------------------------------------------------------------------------------------------
Subtotal, turkey.................... 9,789 9,541 11,848 19,224 17,145 15,074 13,733 17,668 32,569 28,646
=============================================================================================================
Additional processing costs at $0.93 per
pound.................................... ......... ......... ......... ......... 26,641 ......... ......... ......... ......... 28,646
-------------------------------------------------------------------------------------------------------------
Total, meat and poultry............. 144,205 159,062 163,689 180,762 157,850 128,449 137,220 149,256 170,836 148,088
=============================================================================================================
Additional processing costs at $0.93 per
pound.................................... ......... ......... ......... ......... 137,722 ......... ......... ......... ......... 148,088
Potential State processing savings at:
1 percent............................. ......... ......... ......... ......... 1,377 ......... ......... ......... ......... .........
5 percent............................. ......... ......... ......... ......... 6,886 ......... ......... ......... ......... .........
10 percent............................ ......... ......... ......... ......... 13,772 ......... ......... ......... ......... .........
--------------------------------------------------------------------------------------------------------------------------------------------------------
Approved:
Dated: June 28, 1995.
William E. Ludwig,
Administrator, Food and Consumer Service.
Dated: August 29, 1995.
Stephen B. Dewhurst,
Director, Office of Budget and Program Analysis.
Dated: August 4, 1995.
Keith Collins,
Acting Chief Economist.
Dated: September 11, 1995.
Ellen Haas,
Assistant Secretary for Food, Nutrition and Consumer Services.
[FR Doc. 96-2177 Filed 2-9-96; 8:45 am]
BILLING CODE 3410-30-U
Complete official Federal Register PDF
FR Doc. 96-1574 Airworthiness Directives; Fairchild Aircraft SA226 and SA227 Series Airplanes
[Federal Register Volume 61, Number 29 (Monday, February 12, 1996)]
[Rules and Regulations]
[Pages 5279-5280]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1574]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
14 CFR Part 39
[Docket No. 95-CE-17-AD; Amendment 39-9499; AD 96-03-03]
Airworthiness Directives; Fairchild Aircraft SA226 and SA227
Series Airplanes
AGENCY: Federal Aviation Administration, DOT.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This amendment adopts a new airworthiness directive (AD) that
applies to certain Fairchild Aircraft SA226 and SA227 series airplanes.
This action requires replacing the nuts that attach the power control
cable to the lever attach point clevis with nuts that have safety wire
holes, safety-wiring the power control cable to the lever attach point
clevis, inspecting to assure that the power cable is securely attached
to the power control cable bracket, and correcting any attachment
problems. Reports of power control cable attaching hardware failure on
two of the affected airplanes prompted this action. In one of these
instances, the power control cable disconnected from the lever attach
point clevis, resulting in engine shutdown. The actions specified by
this AD are intended to prevent such power control cable disconnection,
which could result in engine shutdown and subsequent loss of control of
the airplane.
DATES: Effective March 15, 1996.
The incorporation by reference of certain publications listed in
the regulations is approved by the Director of the Federal Register as
of March 15, 1996.
ADDRESSES: Service information that applies to this AD may be obtained
from Fairchild Aircraft, P.O. Box 790490, San Antonio, Texas 78279-
0490; telephone (210) 824-9421. This information may also be examined
at the Federal Aviation Administration (FAA), Central Region, Office of
the Assistant Chief Counsel, Attention: Rules Docket 95-CE-17-AD, Room
1558, 601 E. 12th Street, Kansas City, Missouri 64106; or at the Office
of the Federal Register, 800 North Capitol Street NW., suite 700,
Washington, DC.
FOR FURTHER INFORMATION CONTACT: Alma Ramirez-Hodge, Aerospace
Engineer, FAA, Airplane Certification Office, 2601 Meacham Boulevard,
Fort Worth, Texas 76193-0150; telephone (817) 222-5147; facsimile (817)
222-5959.
SUPPLEMENTARY INFORMATION: A proposal to amend part 39 of the Federal
Aviation Regulations (14 CFR part 39) to include an AD that would apply
to certain Fairchild Aircraft SA226 and SA227 series airplanes was
published in the Federal Register on July 19, 1995 (60 FR 37037). The
action proposed to require replacing the nuts that attach the power
control cable to the lever attach point clevis with nuts that have
safety wire holes, safety-wiring the power control cable to the lever
attach point clevis, inspecting to assure that the power cable is
securely attached to the power control cable bracket, and correcting
any attachment problems. Accomplishment of the proposed actions would
be in accordance with Fairchild Service Bulletin (SB) 226-76-009;
Fairchild SB 227-76-004; or Fairchild SB CC7-76-001, all Issued:
January 6, 1995, as applicable.
Interested persons have been afforded an opportunity to participate
in the making of this amendment. No comments were received on the
proposed rule or the FAA's determination of the cost to the public.
After careful review of all available information related to the
subject presented above, the FAA has determined that air safety and the
public interest require the adoption of the rule as proposed except for
minor editorial corrections. The FAA has determined that these
corrections will not change the meaning of the AD and will not add any
additional burden upon the public than was already proposed.
The FAA estimates that 779 airplanes in the U.S. registry will be
affected by this AD, that it will take approximately 4 workhours per
airplane to accomplish the required action, and that the average labor
rate is approximately $60 an hour. Parts would consist of common
hardware and the cost would vary; however, for the purposes of this AD,
a figure of $20 is used. Based on these figures, the total cost impact
of this AD on U.S. operators is estimated to be $202,540. This figure
is based on the assumption that no owner/operator of the affected
airplanes has accomplished the required actions. Since parts are
obtained locally, the FAA has no readily available means of determining
how many owners/operators have incorporated the required actions.
The regulations adopted herein will not have substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government. Therefore, in
accordance with Executive Order 12612, it is determined that this final
rule does not have sufficient federalism implications to warrant the
preparation of a Federalism Assessment.
For the reasons discussed above, I certify that this action (1) is
not a ``significant regulatory action'' under Executive Order 12866;
(2) is not a ``significant rule'' under DOT Regulatory Policies and
Procedures (44 FR 11034, February 26, 1979); and (3) will not have a
significant economic impact, positive or negative, on a substantial
number of small entities under the criteria of the Regulatory
Flexibility Act. A copy of the final evaluation prepared for this
action is contained in the Rules Docket. A copy of it may be obtained
by contacting the Rules Docket at the location provided under the
caption ADDRESSES.
List of Subjects in 14 CFR Part 39
Air transportation, Aircraft, Aviation safety, Incorporation by
reference, Safety.
Adoption of the Amendment
Accordingly, pursuant to the authority delegated to me by the
Administrator, the Federal Aviation Administration amends part 39 of
the Federal Aviation Regulations (14 CFR part 39) as follows:
[[Page 5280]]
PART 39--AIRWORTHINESS DIRECTIVES
1. The authority citation for part 39 continues to read as follows:
Authority: 49 USC 106(g), 40113, 44701.
Sec. 39.13 [Amended]
2. Section 39.13 is amended by adding a new airworthiness directive
(AD) to read as follows:
96-03-03 Fairchild Aircraft: Amendment 39-9499; Docket No. 95-CE-
17-AD.
Applicability: Models SA226-T, SA226-T(B), SA226-AT, SA226-TC,
SA227-TT, SA227-AT, SA227-AC, SA227-BC, SA227-CC, and SA227-DC
airplanes (all serial numbers), certificated in any category.
Note 1: This AD applies to each airplane identified in the
preceding applicability provision, regardless of whether it has been
modified, altered, or repaired in the area subject to the
requirements of this AD. For airplanes that have been modified,
altered, or repaired so that the performance of the requirements of
this AD is affected, the owner/operator must request approval for an
alternative method of compliance in accordance with paragraph (c) of
this AD. The request should include an assessment of the effect of
the modification, alteration, or repair on the unsafe condition
addressed by this AD; and, if the unsafe condition has not been
eliminated, the request should include specific proposed actions to
address it.
Compliance: Required within the next 100 hours time-in-service
after the effective date of this AD, unless already accomplished.
To prevent the power control cable from disconnecting from the
lever attach point clevis, which could result in engine shutdown and
subsequent loss of control of the airplane, accomplish the
following:
(a) Replace the nuts that attach the power control cable to the
lever attach point clevis with nuts that have safety wire holes,
safety-wire the power control cable to the lever attach clevis,
inspect to assure that the power cable is securely attached to the
power control cable bracket, and correct any attachment problems.
Accomplish these actions in accordance with the following service
bulletins, as applicable:
(1) Fairchild Service Bulletin (SB) 226-76-009, dated January 6,
1995;
(2) Fairchild SB 227-76-004, dated January 6, 1995; or
(3) Fairchild SB CC7-76-001, dated January 6, 1995.
(b) Special flight permits may be issued in accordance with
sections 21.197 and 21.199 of the Federal Aviation Regulations (14
CFR 21.197 and 21.199) to operate the airplane to a location where
the requirements of this AD can be accomplished.
(c) An alternative method of compliance or adjustment of the
compliance time that provides an equivalent level of safety may be
approved by the Manager, Fort Worth Airplane Certification Office
(ACO), FAA, 2601 Meacham Boulevard, Fort Worth, Texas 76137-0150.
The request shall be forwarded through an appropriate FAA
Maintenance Inspector, who may add comments and then send it to the
Manager, Fort Worth ACO.
Note 2: Information concerning the existence of approved
alternative methods of compliance with this AD, if any, may be
obtained from the Fort Worth ACO.
(d) The replacement required by this AD shall be done in
accordance with Fairchild Service Bulletin 226-76-009; Fairchild
Service Bulletin 227-76-004; or Fairchild Service Bulletin CC7-76-
001, all Issued: January 6, 1995, as applicable. This incorporation
by reference was approved by the Director of the Federal Register in
accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies may be
obtained from Fairchild Aircraft, P.O. Box 790490, San Antonio,
Texas 78279-0490. Copies may be inspected at the FAA, Central
Region, Office of the Assistant Chief Counsel, Room 1558, 601 E.
12th Street, Kansas City, Missouri, or at the Office of the Federal
Register, 800 North Capitol Street NW., 7th Floor, suite 700,
Washington, DC.
(e) This amendment (39-9499) becomes effective on March 15,
1996.
Issued in Kansas City, Missouri, on January 23, 1996.
John R. Colomy,
Acting Manager, Small Airplane Directorate, Aircraft Certification
Service.
[FR Doc. 96-1574 Filed 2-9-96;8:45am]
BILLING CODE 4910-13-U
Complete official Federal Register PDF
FR Doc. 96-1521 Airworthiness Directives; Beech Model 400, 400A, and MU-300-10 Airplanes
[Federal Register Volume 61, Number 29 (Monday, February 12, 1996)]
[Rules and Regulations]
[Pages 5275-5277]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1521]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. 94-NM-162-AD; Amendment 39-9504; AD 96-03-07]
Airworthiness Directives; Beech Model 400, 400A, and MU-300-10
Airplanes
AGENCY: Federal Aviation Administration, DOT.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This amendment adopts a new airworthiness directive (AD),
applicable to certain Beech Model 400, 400A, and MU-300-10 airplanes,
that requires installation of an improved adjustment mechanism on the
flightcrew seats and replacement of the existing aluminum seat
reinforcement assemblies with steel assemblies. This amendment is
prompted by reports of incomplete latching of the existing adjustment
mechanism and cracked reinforcement assemblies, which could result in
sudden shifting of a flightcrew seat. The actions specified by this AD
are intended to prevent such shifting of a flightcrew seat, which could
impair the flightcrew's ability to control the airplane.
DATES: Effective March 13, 1996.
The incorporation by reference of certain publications listed in
the regulations is approved by the Director of the Federal Register as
of March 13, 1996.
ADDRESSES: The service information referenced in this AD may be
obtained from Raytheon Aircraft Company, P.O. Box 85, Wichita, Kansas
67201-0085. This information may be examined at the Federal Aviation
Administration (FAA), Transport Airplane Directorate, Rules Docket,
1601 Lind Avenue SW., Renton, Washington; or at the FAA, Small Airplane
Directorate, Wichita Aircraft Certification Office, 1801 Airport Road,
Room 100, Mid-Continent Airport, Wichita, Kansas; or at the Office of
the Federal Register, 800 North Capitol Street NW., suite 700,
Washington, DC.
FOR FURTHER INFORMATION CONTACT: Larry Engler, Aerospace Engineer,
Airframe Branch, ACE-118W, FAA, Small Airplane Directorate, Wichita
Aircraft Certification Office, 1801 Airport Road, Room 100, Mid-
Continent Airport, Wichita, Kansas 67209; telephone (316) 946-4122; fax
(316) 946-4407.
SUPPLEMENTARY INFORMATION: A proposal to amend part 39 of the Federal
Aviation Regulations (14 CFR part 39) to include an airworthiness
directive (AD) that is applicable to certain Beech Model 400, 400A, and
MU-300-10 airplanes was published in the Federal Register on May 25,
1995 (60 FR 27705). That action proposed to require installing an
improved adjustment mechanism on the flightcrew seats, and replacing
the existing aluminum seat reinforcement assemblies with steel
assemblies.
Interested persons have been afforded an opportunity to participate
in the making of this amendment. Due consideration has been given to
the single comment received.
The commenter suggests that the corrective action for this proposed
AD is much simpler than that specified in the proposal. The commenter
perceives the problem to be that some pilots may not carefully check
the security and locking of their seats after making an adjustment.
Therefore, the seat can slide during taxi, climb out, or turning. The
commenter believes the corrective action involves flightcrew awareness;
the flightcrew should be responsible in determining if the seat is
locked into position by attempting to make the seat slide out of
position by rocking the seat fore and aft. The commenter suggests that,
if this method were employed, the costs associated with the
accomplishment of the actions specified in this proposed AD would not
be necessary. The commenter agrees that if the seat locking pins are
worn or the mechanism bent, those parts should be repaired.
The FAA does not concur with the commenter's suggestion that
attempting to make the seat slide out of position by rocking the seat
fore and aft sufficiently addresses the unsafe condition. In this case,
the FAA has received several reports of incomplete latching of the
existing adjustment mechanism, and cracking of the aluminum seat
reinforcement assemblies. Cracking of the aluminum seat reinforcement
assemblies is an indicator of a
[[Page 5276]]
structurally weak design, and this is the unsafe condition the FAA is
addressing in this AD action. The FAA has the authority to issue an AD
when it is found that an unsafe condition is likely to exist or develop
on other products of the same type design. The FAA finds that
installing an improved seat tracking adjustment mechanism and replacing
the aluminum seat reinforcement assemblies with steel assemblies
adequately, and appropriately, addresses this unsafe condition.
This same commenter also questions the FAA's original certification
basis of the subject airplane relative to the seat mechanism. The
commenter asks whether the FAA ``made a mistake'' by certifying the
airplane with these seat mechanisms installed.
In response to this, the FAA points out that an airplane's type
design is approved only after the FAA makes a determination that it
complies with all applicable airworthiness requirements. In adopting
and maintaining those requirements, the FAA has made the determination
that they establish an appropriate level of safety. However, actual in-
service experience (as well as other factors, such as manufacturers'
fatigue testing, etc.) may reveal problems in an airplane or its
components that were not envisioned or predictable at the time of its
type certification. When these problems create an unsafe condition,
this means that the original level of safety is no longer being
achieved. When actions or procedures are identified that will
positively correct the unsafe condition and restore the airplane to its
original level of safety, an AD is the appropriate vehicle for
mandating that such actions be accomplished.
After careful review of the available data, including the comments
noted above, the FAA has determined that air safety and the public
interest require the adoption of the rule as proposed.
There are approximately 169 Beech Model 400, 400A, and MU-300-10
airplanes of the affected design in the worldwide fleet. The FAA
estimates that 121 airplanes of U.S. registry will be affected by this
AD, that it will take approximately 24 work hours per airplane to
accomplish the required actions, and that the average labor rate is $60
per work hour. Required parts will cost approximately $700 per
airplane. Based on these figures, the cost impact of the AD on U.S.
operators is estimated to be $258,940, or $2,140 per airplane.
The cost impact figure discussed above is based on assumptions that
no operator has yet accomplished any of the requirements of this AD
action, and that no operator would accomplish those actions in the
future if this AD were not adopted.
The regulations adopted herein will not have substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government. Therefore, in
accordance with Executive Order 12612, it is determined that this final
rule does not have sufficient federalism implications to warrant the
preparation of a Federalism Assessment.
For the reasons discussed above, I certify that this action (1) is
not a ``significant regulatory action'' under Executive Order 12866;
(2) is not a ``significant rule'' under DOT Regulatory Policies and
Procedures (44 FR 11034, February 26, 1979); and (3) will not have a
significant economic impact, positive or negative, on a substantial
number of small entities under the criteria of the Regulatory
Flexibility Act. A final evaluation has been prepared for this action
and it is contained in the Rules Docket. A copy of it may be obtained
from the Rules Docket at the location provided under the caption
ADDRESSES.
List of Subjects in 14 CFR Part 39
Air transportation, Aircraft, Aviation safety, Incorporation by
reference, Safety.
Adoption of the Amendment
Accordingly, pursuant to the authority delegated to me by the
Administrator, the Federal Aviation Administration amends part 39 of
the Federal Aviation Regulations (14 CFR part 39) as follows:
PART 39--AIRWORTHINESS DIRECTIVES
1. The authority citation for part 39 continues to read as follows:
Authority: 49 USC 106(g), 40113, 44701.
Sec. 39.13 [Amended]
2. Section 39.13 is amended by adding the following new
airworthiness directive:
96-03-07 Beech Aircraft Corporation: Amendment 39-9504. Docket 94-
NM-162-AD.
Applicability: Model 400 airplanes, serial numbers RJ-1 through
RJ-65 inclusive; Model 400A airplanes, serial numbers RK-1 through
RK-93 inclusive; and Model MU-300-10 airplanes, serial numbers
A1001SA through A1011SA inclusive; certificated in any category.
Note 1: This AD applies to each airplane identified in the
preceding applicability provision, regardless of whether it has been
modified, altered, or repaired in the area subject to the
requirements of this AD. For airplanes that have been modified,
altered, or repaired so that the performance of the requirements of
this AD is affected, the owner/operator must use the authority
provided in paragraph (b) of this AD to request approval from the
FAA. This approval may address either no action, if the current
configuration eliminates the unsafe condition; or different actions
necessary to address the unsafe condition described in this AD. Such
a request should include an assessment of the effect of the changed
configuration on the unsafe condition addressed by this AD. In no
case does the presence of any modification, alteration, or repair
remove any airplane from the applicability of this AD.
Compliance: Required as indicated, unless accomplished
previously.
To prevent reduced controllability of the airplane due to a
shifting of the flightcrew seat during flight, accomplish the
following:
(a) Within 200 hours time-in-service after the effective date of
this AD, install an improved adjustment mechanism on the flightcrew
seat, and replace the existing aluminum seat reinforcement
assemblies with steel assemblies, in accordance with Beechcraft
Service Bulletin No. 2536, Revision 1, dated April 1995.
(b) An alternative method of compliance or adjustment of the
compliance time that provides an acceptable level of safety may be
used if approved by the Manager, Wichita Aircraft Certification
Office (ACO), FAA, Small Airplane Directorate. Operators shall
submit their requests through an appropriate FAA Principal
Maintenance Inspector, who may add comments and then send it to the
Manager, Wichita ACO.
Note 2: Information concerning the existence of approved
alternative methods of compliance with this AD, if any, may be
obtained from the Wichita ACO.
(c) Special flight permits may be issued in accordance with
sections 21.197 and 21.199 of the Federal Aviation Regulations (14
CFR 21.197 and 21.199) to operate the airplane to a location where
the requirements of this AD can be accomplished.
(d) The installation and replacement shall be done in accordance
with Beechcraft Service Bulletin No. 2536, Revision 1, dated April
1995. (NOTE: The issue date of Service Bulletin No. 2536 is
indicated only on page 1; no other page of the document is dated.)
This incorporation by reference was approved by the Director of the
Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part
51. Copies may be obtained from Raytheon Aircraft Company, P. O. Box
85, Wichita, Kansas 67201-0085. Copies may be inspected at the FAA,
Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton,
Washington; or at the FAA, Small Airplane Directorate, Wichita
Aircraft Certification Office, 1801 Airport Road, Room 100, Mid-
Continent Airport, Wichita, Kansas; or at the Office of the Federal
Register, 800 North Capitol Street NW., suite 700, Washington, DC.
(e) This amendment becomes effective on March 13, 1996.
[[Page 5277]]
Issued in Renton, Washington, on January 23, 1996.
Darrell M. Pederson,
Acting Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. 96-1521 Filed 2-9-96; 8:45am]
BILLING CODE 4910-13-U
Complete official Federal Register PDF
FR Doc. 96-1520 Airworthiness Directives; Saab Model SAAB SF340A and SAAB 340B Series Airplanes
[Federal Register Volume 61, Number 29 (Monday, February 12, 1996)]
[Rules and Regulations]
[Pages 5284-5285]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1520]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
14 CFR Part 39
[Docket No. 95-NM-79-AD; Amendment 39-9505; AD 96-03-08]
Airworthiness Directives; Saab Model SAAB SF340A and SAAB 340B
Series Airplanes
AGENCY: Federal Aviation Administration, DOT.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This amendment adopts a new airworthiness directive (AD),
applicable to certain Saab Model SAAB SF340A and SAAB 340B series
airplanes, that requires repetitive operational tests of the valve
limit switch of the propeller brake. This amendment also provides for
an optional terminating action for the repetitive tests. This amendment
is prompted by a report that when the propeller brake was not properly
engaged the crew did not receive a ``PROP BRAKE'' warning due to a
faulty valve limit switch. The actions specified by this AD are
intended to prevent a valve limit switch from failing to send input to
the warning system; absence of a ``PROP BRAKE'' warning could result in
the crew being unaware that the propeller brake is not properly engaged
and the propeller may turn without warning.
DATES: Effective March 13, 1996.
The incorporation by reference of certain publications listed in
the regulations is approved by the Director of the Federal Register as
of March 13, 1996.
ADDRESSES: The service information referenced in this AD may be
obtained from SAAB Aircraft AB, SAAB Aircraft Product Support, S-
581.88, Linkoping, Sweden. This information may be examined at the
Federal Aviation Administration (FAA), Transport Airplane Directorate,
Rules Docket, 1601 Lind Avenue SW., Renton, Washington; or at the
Office of the Federal Register, 800 North Capitol Street NW., suite
700, Washington, DC.
FOR FURTHER INFORMATION CONTACT: Ruth Harder, Aerospace Engineer,
Standardization Branch, ANM-113, FAA, Transport Airplane Directorate,
1601 Lind Avenue, SW., Renton, Washington 98055-4056; telephone (206)
227-1721; fax (206) 227-1149.
SUPPLEMENTARY INFORMATION: A proposal to amend part 39 of the Federal
Aviation Regulations (14 CFR part 39) to include an airworthiness
directive (AD) that is applicable to certain Saab Model SAAB SF340A and
SAAB 340B series airplanes was published in the Federal Register on
November 8, 1995 (60 FR 56274). That action proposed to require
repetitive operational tests of the valve limit switch of the propeller
brake. That action also proposed to provide for the optional
replacement of certain propeller brake control units with a new unit,
which would constitute terminating action for the repetitive test
requirements.
Interested persons have been afforded an opportunity to participate
in the making of this amendment. No comments were submitted in response
to the proposal or the FAA's determination of the cost to the public.
The FAA has determined that air safety and the public interest require
the adoption of the rule as proposed.
The FAA estimates that 23 airplanes of U.S. registry will be
affected by this AD, that it will take approximately 1 work hour per
airplane to accomplish the required operational tests, at an average
labor rate of $60 per work hour. Based on these figures, the cost
impact of the AD on U.S. operators is estimated to be $1,380, or $60
per airplane, per test cycle.
The cost impact figure discussed above is based on assumptions that
no operator has yet accomplished any of the requirements of this AD
action, and that no operator would accomplish those actions in the
future if this AD were not adopted.
The regulations adopted herein will not have substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government. Therefore, in
accordance with Executive Order 12612, it is determined that this final
rule does not have sufficient federalism implications to warrant the
preparation of a Federalism Assessment.
For the reasons discussed above, I certify that this action (1) is
not a ``significant regulatory action'' under Executive Order 12866;
(2) is not a ``significant rule'' under DOT Regulatory Policies and
Procedures (44 FR 11034, February 26, 1979); and (3) will not have a
significant economic impact, positive or negative, on a substantial
number of small entities under the criteria of the Regulatory
Flexibility Act. A final evaluation has been prepared for this action
and it is contained in the Rules Docket. A copy of it may be obtained
from the Rules Docket at the location provided under the caption
ADDRESSES.
List of Subjects in 14 CFR Part 39
Air transportation, Aircraft, Aviation safety, Incorporation by
reference, Safety.
[[Page 5285]]
Adoption of the Amendment
Accordingly, pursuant to the authority delegated to me by the
Administrator, the Federal Aviation Administration amends part 39 of
the Federal Aviation Regulations (14 CFR part 39) as follows:
PART 39--AIRWORTHINESS DIRECTIVES
1. The authority citation for part 39 continues to read as follows:
Authority: 49 USC 106(g), 40113, 44701.
Sec. 39.13 [Amended]
2. Section 39.13 is amended by adding the following new
airworthiness directive:
96-03-08 SAAB Aircraft AB: Amendment 39-9505. Docket 95-NM-79-AD.
Applicability: Model SAAB SF340A series airplanes, having serial
numbers 004 through 159 inclusive; and Model SAAB 340B series
airplanes, having serial numbers 160 through 369 inclusive; on which
the propeller brake system is connected; certificated in any
category.
Note 1: This AD applies to each airplane identified in the
preceding applicability provision, regardless of whether it has been
modified, altered, or repaired in the area subject to the
requirements of this AD. For airplanes that have been modified,
altered, or repaired so that the performance of the requirements of
this AD is affected, the owner/operator must use the authority
provided in paragraph (d) of this AD to request approval from the
FAA. This approval may address either no action, if the current
configuration eliminates the unsafe condition; or different actions
necessary to address the unsafe condition described in this AD. Such
a request should include an assessment of the effect of the changed
configuration on the unsafe condition addressed by this AD. In no
case does the presence of any modification, alteration, or repair
remove any airplane from the applicability of this AD.
Compliance: Required as indicated, unless accomplished
previously.
To prevent a valve limit switch from failing to send input to
the ``PROP BRAKE'' warning system, which could result in the crew
being unaware that the propeller brake is not properly engaged and
the propeller may turn without warning, accomplish the following:
(a) Within 100 flight hours after the effective date of this AD,
perform an operational test of the valve limit switch of the
propeller brake in accordance with Saab Service Bulletin SAAB 340-
61-032, Revision 1, dated June 30, 1995. Repeat the test thereafter
at intervals not to exceed 100 flight hours.
(b) Replacement of a propeller brake control unit having part
number (P/N) HP1410100-3, -5, or -7 with a new propeller brake
control unit having P/N HP1410100-10, and performance of an
operational test, in accordance with Saab Service Bulletin SAAB 340-
61-033, dated March 6, 1995, constitutes terminating action for the
repetitive inspections required by paragraph (a) of this AD.
(c) As of the effective date of this AD, no person shall install
on any airplane a propeller brake control unit having P/N HP1410100-
3; or any unit having P/N HP1410100-5 or -7 unless that unit has
been modified in accordance with Saab Service Bulletin SAAB 340-61-
033, dated March 6, 1995.
(d) An alternative method of compliance or adjustment of the
compliance time that provides an acceptable level of safety may be
used if approved by the Manager, Standardization Branch, ANM-113,
FAA, Transport Airplane Directorate. Operators shall submit their
requests through an appropriate FAA Principal Maintenance Inspector,
who may add comments and then send it to the Manager,
Standardization Branch, ANM-113.
Note 2: Information concerning the existence of approved
alternative methods of compliance with this AD, if any, may be
obtained from the Standardization Branch, ANM-113.
(e) Special flight permits may be issued in accordance with
sections 21.197 and 21.199 of the Federal Aviation Regulations (14
CFR 21.197 and 21.199) to operate the airplane to a location where
the requirements of this AD can be accomplished.
(f) The tests shall be done in accordance with Saab Service
Bulletin SAAB 340-61-033, dated March 6, 1995. The replacement shall
be done in accordance with Saab Service Bulletin SAAB 340-61-032,
Revision 1, dated June 30, 1995. This incorporation by reference was
approved by the Director of the Federal Register in accordance with
5 U.S.C. 552(a) and 1 CFR part 51. Copies may be obtained from SAAB
Aircraft AB, SAAB Aircraft Product Support, S-581.88, Linkoping,
Sweden. Copies may be inspected at the FAA, Transport Airplane
Directorate, 1601 Lind Avenue, SW., Renton, Washington; or at the
Office of the Federal Register, 800 North Capitol Street, NW., suite
700, Washington, DC.
(g) This amendment becomes effective on March 13, 1996.
Issued in Renton, Washington, on January 23, 1996.
Darrell M. Pederson,
Acting Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. 96-1520 Filed 2-9-96; 8:45am]
BILLING CODE 4910-13-U
Complete official Federal Register PDF
FR Doc. 96-1519 Airworthiness Directives; Jetstream ATP Airplanes
[Federal Register Volume 61, Number 29 (Monday, February 12, 1996)]
[Rules and Regulations]
[Pages 5280-5281]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1519]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
14 CFR Part 39
[Docket No. 94-NM-238-AD; Amendment 39-9503; AD 96-03-06]
Airworthiness Directives; Jetstream ATP Airplanes
AGENCY: Federal Aviation Administration, DOT.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This amendment adopts a new airworthiness directive (AD),
applicable to certain Jetstream ATP airplanes, that requires
inspections to detect fatigue cracking and corrosion in the gussets of
the rear passenger door and rear baggage door apertures, and
replacement of the gussets, if necessary. This amendment is prompted by
fatigue tests which indicated that fatigue cracking and corrosion can
occur in these gussets. The actions specified by this AD are intended
to prevent degradation of the structural integrity of the fuselage
pressure vessel due to the problems associated with cracking and
corrosion in the gussets of the rear passenger door and rear baggage
door apertures.
DATES: Effective March 13, 1996.
The incorporation by reference of certain publications listed in
the regulations is approved by the Director of the Federal Register as
of March 13, 1996.
ADDRESSES: The service information referenced in this AD may be
obtained from Jetstream Aircraft, Inc., P.O. Box 16029, Dulles
International Airport, Washington, DC 20041-6029. This information may
be examined at the Federal Aviation Administration (FAA), Transport
Airplane Directorate, Rules Docket, 1601 Lind Avenue, SW., Renton,
Washington; or at the Office of the Federal Register, 800 North Capitol
Street, NW., suite 700, Washington, DC.
FOR FURTHER INFORMATION CONTACT: Tim Backman, Aerospace Engineer,
Standardization Branch, ANM-113, FAA, Transport Airplane Directorate,
1601 Lind Avenue, SW., Renton, Washington 98055-4056; telephone (206)
227-2747; fax (206) 227-1149.
SUPPLEMENTARY INFORMATION: A proposal to amend part 39 of the Federal
Aviation Regulations (14 CFR part 39) to include an airworthiness
directive (AD) that is applicable to certain Jetstream ATP airplanes
was published in the Federal Register on October 13, 1995 (60 FR
53312). That action proposed to require a one-time detailed visual
inspection for fatigue cracking and corrosion in the gussets of the
rear passenger door and the rear baggage door apertures. That action
also proposed replacement of cracked gussets, and either replacement or
repair of corroded gussets.
Interested persons have been afforded an opportunity to participate
in the making of this amendment. Due consideration has been given to
the single comment received.
The commenter supports the proposed rule.
After careful review of the available data, including the comment
noted above, the FAA has determined that air safety and the public
interest require the adoption of the rule as proposed.
The FAA estimates that 10 airplanes of U.S. registry will be
affected by this AD, that it will take approximately 8 work hours per
airplane to accomplish the required inspection actions, and that the
average labor rate is $60 per work hour. Based on these figures, the
cost impact of the AD on U.S. operators is estimated to be $4,800, or
$480 per airplane.
The cost impact figure discussed above is based on assumptions that
no operator has yet accomplished any of the requirements of this AD
action, and that no operator would accomplish those actions in the
future if this AD were not adopted.
The regulations adopted herein will not have substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various
[[Page 5281]]
levels of government. Therefore, in accordance with Executive Order
12612, it is determined that this final rule does not have sufficient
federalism implications to warrant the preparation of a Federalism
Assessment.
For the reasons discussed above, I certify that this action (1) is
not a ``significant regulatory action'' under Executive Order 12866;
(2) is not a ``significant rule'' under DOT Regulatory Policies and
Procedures (44 FR 11034, February 26, 1979); and (3) will not have a
significant economic impact, positive or negative, on a substantial
number of small entities under the criteria of the Regulatory
Flexibility Act. A final evaluation has been prepared for this action
and it is contained in the Rules Docket. A copy of it may be obtained
from the Rules Docket at the location provided under the caption
ADDRESSES.
List of Subjects in 14 CFR Part 39
Air transportation, Aircraft, Aviation safety, Incorporation by
reference, Safety.
Adoption of the Amendment
Accordingly, pursuant to the authority delegated to me by the
Administrator, the Federal Aviation Administration amends part 39 of
the Federal Aviation Regulations (14 CFR part 39) as follows:
PART 39--AIRWORTHINESS DIRECTIVES
1. The authority citation for part 39 continues to read as follows:
Authority: 49 USC 106(g), 40113, 44701.
Sec. 39.13 [Amended]
2. Section 39.13 is amended by adding the following new
airworthiness directive:
96-03-06 Jetstream Aircraft Limited (Formerly British Aerospace
Commercial Aircraft, Ltd.): Amendment 39-9503. Docket 94-NM-238-AD.
Applicability: Model ATP airplanes; having serial numbers 2002
through 2012 inclusive; and 2019 through 2022 inclusive,
certificated in any category.
Note 1: This AD applies to each airplane identified in the
preceding applicability provision, regardless of whether it has been
otherwise modified, altered, or repaired in the area subject to the
requirements of this AD. For airplanes that have been modified,
altered, or repaired so that the performance of the requirements of
this AD is affected, the owner/operator must use the authority
provided in paragraph (c) of this AD to request approval from the
FAA. This approval may address either no action, if the current
configuration eliminates the unsafe condition; or different actions
necessary to address the unsafe condition described in this AD. Such
a request should include an assessment of the effect of the changed
configuration on the unsafe condition addressed by this AD. In no
case does the presence of any modification, alteration, or repair
remove any airplane from the applicability of this AD.
Compliance: Required as indicated, unless accomplished
previously.
To prevent degradation of the structural integrity of the
fuselage pressure vessel due to the problems associated with
cracking and corrosion in the gussets of the rear passenger door and
rear baggage door apertures, accomplish the following:
(a) Prior to the accumulation of 12,000 total landings or within
1,500 landings after the effective date of this AD, whichever occurs
later, perform a detailed visual inspection to detect cracks and
corrosion of the gussets of the rear passenger door aperture, in
accordance with Jetstream Service Bulletin ATP-53-29, dated October
31, 1994.
(1) If any crack is found, prior to further flight, replace the
gusset in accordance with the service bulletin.
(2) If any corrosion is found, prior to further flight, either
replace the gusset in accordance with the service bulletin, or
repair the gusset in accordance with the Structural Repair Manual,
chapter 53-10-12.
(b) Prior to the accumulation of 15,000 total landings or within
1,500 landings after the effective date of this AD, whichever occurs
later, perform a detailed visual inspection to detect cracks and
corrosion of the gussets of the rear baggage door aperture, in
accordance with Jetstream Service Bulletin ATP-53-29, dated October
31, 1994.
(1) If any crack is found, prior to further flight, replace the
gusset in accordance with the service bulletin.
(2) If any corrosion is found, prior to further flight, either
replace the gusset in accordance with the service bulletin, or
repair the gusset in accordance with the Structural Repair Manual,
chapter 53-10-12.
(c) An alternative method of compliance or adjustment of the
compliance time that provides an acceptable level of safety may be
used if approved by the Manager, Standardization Branch, ANM-113,
FAA, Transport Airplane Directorate. Operators shall submit their
requests through an appropriate FAA Principal Maintenance Inspector,
who may add comments and then send it to the Manager,
Standardization Branch, ANM-113.
Note 2: Information concerning the existence of approved
alternative methods of compliance with this AD, if any, may be
obtained from the Standardization Branch, ANM-113.
(d) Special flight permits may be issued in accordance with
sections 21.197 and 21.199 of the Federal Aviation Regulations (14
CFR 21.197 and 21.199) to operate the airplane to a location where
the requirements of this AD can be accomplished.
(e) The actions shall be done in accordance with Jetstream
Service Bulletin ATP-53-29, dated October 31, 1994. This
incorporation by reference was approved by the Director of the
Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part
51. Copies may be obtained from Jetstream Aircraft, Inc., P.O. Box
16029, Dulles International Airport, Washington, DC 20041-6029.
Copies may be inspected at the FAA, Transport Airplane Directorate,
1601 Lind Avenue, SW., Renton, Washington; or at the Office of the
Federal Register, 800 North Capitol Street, NW., suite 700,
Washington, DC.
(f) This amendment becomes effective on March 13, 1996.
Issued in Renton, Washington, on January 23, 1996.
Darrell M. Pederson,
Acting Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. 96-1519 Filed 2-9-96; 8:45am]
BILLING CODE 4910-13-U
Complete official Federal Register PDF
FR Doc. 96-1518 Airworthiness Directives; McDonnell Douglas Model MD-11 Series Airplanes and Model DC-10-30, DC-10-40, and KC-10A (Military) Airplanes
[Federal Register Volume 61, Number 29 (Monday, February 12, 1996)]
[Rules and Regulations]
[Pages 5281-5284]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1518]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
14 CFR Part 39
[Docket No. 95-NM-39-AD; Amendment 39-9502; AD 96-03-05]
Airworthiness Directives; McDonnell Douglas Model MD-11 Series
Airplanes and Model DC-10-30, DC-10-40, and KC-10A (Military) Airplanes
AGENCY: Federal Aviation Administration, DOT.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This amendment adopts a new airworthiness directive (AD),
applicable to certain McDonnell Douglas Model MD-11 series airplanes
and Model DC-10-30, DC-10-40, and KC-10A (military) airplanes. For
Model MD-11 series airplanes, the AD requires an inspection to
determine the serial number of the forward trunnion bolts on the main
landing gear (MLG), and rework or replacement of the bolts, if
necessary. For Model DC-10-30, DC-10-40, and KC-10A (military)
airplanes, the AD requires an inspection for evidence of missing chrome
and for corrosion on the chrome surfaces, or verification that the
forward trunnion bolts have been chrome plated in a specific manner;
and rework or replacement of the bolts, if necessary. This amendment is
prompted by reports of chrome flaking on the bearing surface of the
trunnion bolts due to improper cleaning of the base material prior to
chrome plating. The actions specified by this AD are intended to
prevent premature failure of the trunnion bolts and subsequent collapse
of the MLG as a result of severe corrosion on the bearing surface and
in the mechanical fuse due to chrome flaking.
DATES: Effective March 13, 1996.
The incorporation by reference of certain publications listed in
the regulations is approved by the Director of the Federal Register as
of March 13, 1996.
ADDRESSES: The service information referenced in this AD may be
obtained
[[Page 5282]]
from McDonnell Douglas Corporation, 3855 Lakewood Boulevard, Long
Beach, California 90846, Attention: Technical Publications Business
Administration, Department C1-L51 (2-60). This information may be
examined at the Federal Aviation Administration (FAA), Transport
Airplane Directorate, Rules Docket, 1601 Lind Avenue SW., Renton,
Washington; or at the FAA, Los Angeles Aircraft Certification Office,
Transport Airplane Directorate, 3960 Paramount Boulevard, Lakewood,
California; or at the Office of the Federal Register, 800 North Capitol
Street NW., suite 700, Washington, DC.
FOR FURTHER INFORMATION CONTACT: Maureen Moreland, Aerospace Engineer,
Airframe Branch, ANM-120L, FAA, Transport Airplane Directorate, Los
Angeles Aircraft Certification Office, 3960 Paramount Boulevard,
Lakewood, California 90712; telephone (310) 627-5238; fax (310) 627-
5210.
SUPPLEMENTARY INFORMATION: A proposal to amend part 39 of the Federal
Aviation Regulations (14 CFR part 39) to include an airworthiness
directive (AD) that is applicable to certain McDonnell Douglas Model
MD-11 series airplanes and Model DC-10-30, DC-10-40, and KC-10A
(military) airplanes was published in the Federal Register on August
21, 1995 (60 FR 43417). For Model MD-11 series airplanes, that action
proposed to require an inspection to determine the serial number of the
forward trunnion bolts on the main landing gear (MLG), and rework or
replacement of the bolts, if necessary. For Model DC-10-30, DC-10-40,
and KC-10A (military) airplanes, that action proposed to require an
inspection for evidence of missing chrome and for corrosion on the
chrome surfaces, or verification that the forward trunnion bolts have
been chrome plated in a specific manner; and rework or replacement of
the bolts, if necessary.
Interested persons have been afforded an opportunity to participate
in the making of this amendment. Due consideration has been given to
the comments received.
One commenter supports the proposed rule.
Three commenters request that the proposed rule be revised to
specify that unmodified parts may not be installed as of 18 months
after the effective date of the AD. [Paragraphs (b) and (d) of the
proposed rule specify currently that unmodified parts may not be
installed as of the effective date of the AD.] The commenters point out
that, although these parts that are currently installed on an airplane
would be allowed to continued in service for 18 months prior to
modification, those same parts currently in stock as spares would not
be permitted to be installed prior to modification, regardless of the
cumulative time on the spare part or the circumstances under which an
operator may need temporary use of unmodified spare parts. The
commenters indicate that the availability of adequate numbers of
replacement or modified parts is an issue in meeting the compliance
date; in such cases, there is often a need to take low-time or zero-
time spare parts and rotate them temporarily into installed positions
so that the intent of the AD can be accomplished without disrupting
service to the traveling and shipping public. Along this same line, one
commenter asks whether the manufacturer has ensured that adequate
quantities of the ARG7558 bolts are available for procurement in order
to support ``on condition'' replacements necessary as a result of
accomplishing the intent of the proposed rule. This commenter suggests
that, if such bolts are not available, the FAA should delay
implementation of the rule until an adequate stock exists.
The FAA concurs with the commenters' request. At the time the
proposed rule was issued, the FAA had obtained information indicating
that sufficient spare parts would be available to support a requirement
that trunnion bolts not meeting the requirements of the AD not be
installed on an airplane. However, since the issuance of the proposed
rule, the manufacturer has advised the FAA that, due to delays in the
manufacture of new trunnion bolts, only a limited number of replacement
trunnion bolts would be available for use as spares at the time the AD
becomes effective. The manufacturer has advised further that sufficient
trunnion bolts will be available to support an 18-month compliance
time. Accordingly, the FAA has removed paragraphs (b) and (d) from the
final rule.
One commenter requests that installation of a trunnion bolt having
part number ARG7558-507 be considered terminating action for the
requirements of paragraph (c) of the proposed rule. The FAA concurs.
Subsequent to the issuance of the proposed rule, the FAA determined
that trunnion bolts having part numbers ARG7558-507 (for Model DC-10
series airplanes), ARG7558-509 (for Model MD-11 series airplanes), and
ARG7008-511 (for Model MD-11 series airplanes) are superseding parts
that have been manufactured using an improved process that eliminates
the problem of severe corrosion on the bearing surface and mechanical
fuse due to chrome flaking. These parts have been plated with nickel
prior to being plated with chrome. In light of this information, the
FAA has added new paragraphs (b) and (d) to this final rule to specify
that installation of a trunnion bolt having part number ARG7558-507 on
the MLG of Model DC-10 series airplanes, or part number ARG7558-509 or
ARG7008-511 on the MLG of Model MD-11 series airplanes, constitutes
terminating action for the requirements of this AD for that MLG.
One commenter asks if the FAA is considering including a provision
in the AD to specify that visual inspections accomplished prior to the
effective date of the final rule satisfy the requirement of paragraph
(c) of the proposed AD. The FAA finds that no change to the final rule
is necessary to provide such a provision. The AD contains a statement
that reads, ``Compliance: Required as indicated, unless accomplished
previously.'' That statement provides credit for actions accomplished
in accordance with the requirements of the AD prior to the effective
date of the final rule.
One commenter requests that the economic impact information that
was presented in the preamble to the notice be revised to increase the
number of estimated necessary work hours from 1 to 33.5. The commenter
states that when defective bolts are found the time required to
accomplish the action proposed by this AD is approximately 33.5 work
hours. The FAA does not concur with the commenter's request. The
economic impact information presented is limited only to the cost of
actions actually required by the rule (e.g., the inspection of the
trunnion bolts). It does not consider the costs of ``on condition''
actions, e.g., ``rework or replacement of the bolts, if necessary,''
since those actions would be required to be accomplished, regardless of
AD direction, in order to correct an unsafe condition identified in an
airplane and to ensure operation of that airplane in an airworthy
condition, as required by the Federal Aviation Regulations.
Subsequent to issuance of the proposal, McDonnell Douglas issued
DC-10 Service Bulletin DC10-32-239, Revision 2, dated January 8, 1996.
This revision is essentially identical to Revision 1, which was cited
in the proposal as the appropriate source of service information;
Revision 2 differs only in that it clarifies certain work instructions.
The FAA has revised the final rule to include Revision 2 of the service
bulletin as an additional source of service information.
[[Page 5283]]
After careful review of the available data, including the comments
noted above, the FAA has determined that air safety and the public
interest require the adoption of the rule with the changes previously
described. The FAA has determined that these changes will neither
increase the economic burden on any operator nor increase the scope of
the AD.
There are approximately 414 Model MD-11 series airplanes and Model
DC-10-30, DC-10-40, and KC-10A (military) airplanes of the affected
design in the worldwide fleet. The FAA estimates that 196 airplanes of
U.S. registry will be affected by this AD, that it will take
approximately 1 work hour per airplane to accomplish the required
actions, and that the average labor rate is $60 per work hour. Based on
these figures, the cost impact of the AD on U.S. operators is estimated
to be $11,760, or $60 per airplane.
The cost impact figure discussed above is based on assumptions that
no operator has yet accomplished any of the requirements of this AD
action, and that no operator would accomplish those actions in the
future if this AD were not adopted.
The regulations adopted herein will not have substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government. Therefore, in
accordance with Executive Order 12612, it is determined that this final
rule does not have sufficient federalism implications to warrant the
preparation of a Federalism Assessment.
For the reasons discussed above, I certify that this action (1) is
not a ``significant regulatory action'' under Executive Order 12866;
(2) is not a ``significant rule'' under DOT Regulatory Policies and
Procedures (44 FR 11034, February 26, 1979); and (3) will not have a
significant economic impact, positive or negative, on a substantial
number of small entities under the criteria of the Regulatory
Flexibility Act. A final evaluation has been prepared for this action
and it is contained in the Rules Docket. A copy of it may be obtained
from the Rules Docket at the location provided under the caption
ADDRESSES.
List of Subjects in 14 CFR Part 39
Air transportation, Aircraft, Aviation safety, Incorporation by
reference, Safety.
Adoption of the Amendment
Accordingly, pursuant to the authority delegated to me by the
Administrator, the Federal Aviation Administration amends part 39 of
the Federal Aviation Regulations (14 CFR part 39) as follows:
PART 39--AIRWORTHINESS DIRECTIVES
1. The authority citation for part 39 continues to read as follows:
Authority: 49 USC 106(g), 40113, 44701.
Sec. 39.13 [Amended]
2. Section 39.13 is amended by adding the following new
airworthiness directive:
96-03-05 McDonnell Douglas: Amendment 39-9502. Docket 95-NM-39-AD.
Applicability: Model MD-11 series airplanes, as listed in
McDonnell Douglas MD-11 Service Bulletin 32-45, Revision 1, dated
May 1, 1995; and Model DC-10-30, DC-10-40, and KC-10A (military)
airplanes, as listed in McDonnell Douglas DC-10 Service Bulletin
DC10-32-239, Revision 1, dated June 6, 1995, and Revision 2, dated
January 8, 1996; certificated in any category.
Note 1: This AD applies to each airplane identified in the
preceding applicability provision, regardless of whether it has been
otherwise modified, altered, or repaired in the area subject to the
requirements of this AD. For airplanes that have been modified,
altered, or repaired so that the performance of the requirements of
this AD is affected, the owner/operator must use the authority
provided in paragraph (e) of this AD to request approval from the
FAA. This approval may address either no action, if the current
configuration eliminates the unsafe condition; or different actions
necessary to address the unsafe condition described in this AD. Such
a request should include an assessment of the effect of the changed
configuration on the unsafe condition addressed by this AD. In no
case does the presence of any modification, alteration, or repair
remove any airplane from the applicability of this AD.
Compliance: Required as indicated, unless accomplished
previously.
To prevent premature failure of the trunnion bolts and
subsequent collapse of the main landing gear (MLG), accomplish the
following:
(a) For Model MD-11 series airplanes: Within 18 months after the
effective date of this AD, perform a visual inspection to determine
the serial number of the forward trunnion bolts, part number (P/N)
ARG7558-503 or ARG7558-505, on the right and left MLG's, in
accordance with McDonnell Douglas MD-11 Service Bulletin 32-45,
Revision 1, dated May 1, 1995.
(1) If the serial number of the trunnion bolt is STR0217,
STR0232, STR0237 through STR0242 inclusive, or STR0244 through
STR0284 inclusive; or if the trunnion bolt has been chrome plated in
accordance with the Component Maintenance Manual (CMM), Chapter 20-
10-02, Revision 31, dated September 1, 1991, since original
manufacture: No further action is required by this AD.
(2) For trunnion bolts other than those identified in paragraph
(a)(1) of this AD: Prior to further flight, remove the chrome
plating on the trunnion bolt, replace the plating, and reinstall the
reworked trunnion bolt; or replace the trunnion bolt with a
serviceable part; in accordance with McDonnell Douglas MD-11 Service
Bulletin 32-45, Revision 1, dated May 1, 1995.
(b) For Model MD-11 series airplanes: Installation of a trunnion
bolt having P/N ARG7558-509 or ARG7008-511 on the MLG constitutes
terminating action for the requirements of this AD for that MLG.
(c) For Model DC-10-30, DC-10-40, and KC-10A (military)
airplanes: Within 18 months after the effective date of this AD,
accomplish either paragraph (c)(1) or (c)(2) of this AD, as
applicable, in accordance with McDonnell Douglas DC-10 Service
Bulletin DC10-32-239, Revision 1, dated June 6, 1995, or Revision 2,
dated January 8, 1996.
(1) For airplanes on which the forward trunnion bolts, P/N
ARG7558-501, installed on the left and right MLG's, have accumulated
6,000 or more total flight hours or 2,000 or more total flight
cycles as of the date of the inspection: Remove the bolts and
perform a visual inspection for evidence of missing chrome and for
corrosion on the chrome surfaces, in accordance with the service
bulletin.
(i) If no evidence of missing chrome and no corrosion on the
chrome surfaces are found, no further action is required by this AD.
(ii) If any evidence of missing chrome or any corrosion on the
chrome surfaces is found, prior to further flight, accomplish either
paragraph (c)(1)(ii)(A) or (c)(1)(ii)(B) of this AD.
(A) Remove the chrome plating on the trunnion bolt in accordance
with the service bulletin; replace the plating in accordance with
the CMM, Chapter 20-10-02, Revision 31, dated September 1, 1991, or
in accordance with a method approved by a McDonnell Douglas
Designated Engineering Representative (DER) who has been given a
special delegation by the Manager, Los Angeles Aircraft
Certification Office (ACO), FAA, Transport Airplane Directorate, to
make such a finding; and reinstall the reworked bolt in accordance
with the service bulletin. Or
(B) Replace the trunnion bolt with a serviceable part in
accordance with the service bulletin.
(2) For airplanes other than those identified in paragraph
(c)(1) of this AD: Verify whether the forward trunnion bolts, P/N
ARG7558-501, installed on the left and right MLG's, have been chrome
plated since original manufacture, in accordance with the CMM,
Chapter 20-10-02, Revision 31, dated September 1, 1991, or in
accordance with a method approved by a McDonnell Douglas DER who has
been given a special delegation by the Manager, Los Angeles ACO, to
make such a finding.
(i) If the bolts have been chrome plated since original
manufacture, in accordance with the CMM, Chapter 20-10-02, Revision
31, dated September 1, 1991, or in accordance with a method approved
by a McDonnell Douglas DER who has been given
[[Page 5284]]
a special delegation by the Manager, Los Angeles ACO, to make such a
finding: No further action is required by this AD.
(ii) If any bolt has not been chrome plated since original
manufacture, in accordance with the CMM, Chapter 20-10-02, Revision
31, dated September 1, 1991, or in accordance with a method approved
by a McDonnell Douglas DER who has been given a special delegation
by the Manager, Los Angeles ACO, to make such a finding: Prior to
further flight, accomplish the requirements of either paragraph
(c)(1)(ii)(A) or (c)(1)(ii)(B) of this AD in accordance with the
service bulletin.
(d) For Model DC-10-30, DC-10-40, and KC-10A (military)
airplanes: Installation of a trunnion bolt having P/N ARG7558-507 on
the MLG constitutes terminating action for the requirements of this
AD for that MLG.
(e) An alternative method of compliance or adjustment of the
compliance time that provides an acceptable level of safety may be
used if approved by the Manager, Los Angeles ACO. Operators shall
submit their requests through an appropriate FAA Principal
Maintenance Inspector, who may add comments and then send it to the
Manager, Los Angeles ACO.
Note 2: Information concerning the existence of approved
alternative methods of compliance with this AD, if any, may be
obtained from the Los Angeles ACO.
(f) Special flight permits may be issued in accordance with
sections 21.197 and 21.199 of the Federal Aviation Regulations (14
CFR 21.197 and 21.199) to operate the airplane to a location where
the requirements of this AD can be accomplished.
(g) The actions shall be done in accordance with McDonnell
Douglas MD-11 Service Bulletin 32-45, Revision 1, dated May 1, 1995;
McDonnell Douglas DC-10 Service Bulletin DC10-32-239, Revision 1,
dated June 6, 1995; and McDonnell Douglas DC-10 Service Bulletin
DC10-32-239, Revision 2, dated January 8, 1996. This incorporation
by reference was approved by the Director of the Federal Register in
accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies may be
obtained from McDonnell Douglas Corporation, 3855 Lakewood
Boulevard, Long Beach, California 90846, Attention: Technical
Publications Business Administration, Department C1-L51 (2-60).
Copies may be inspected at the FAA, Transport Airplane Directorate,
1601 Lind Avenue, SW., Renton, Washington; or at the FAA, Los
Angeles Aircraft Certification Office, Transport Airplane
Directorate, 3960 Paramount Boulevard, Lakewood, California; or at
the Office of the Federal Register, 800 North Capitol Street, NW.,
suite 700, Washington, DC.
(h) This amendment becomes effective on March 13, 1996.
Issued in Renton, Washington, on January 23, 1996.
Darrell M. Pederson,
Acting Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. 96-1518 Filed 2-9-96;8:45am]
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