Proposed Rule2022-20495
Electronic Provision of Records During an Audit
Primary source
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Published
September 30, 2022
Issuing agencies
Interior DepartmentNatural Resources Revenue Office
Abstract
ONRR proposes to amend its regulations to allow ONRR and other authorized Department of the Interior ("Department") representatives the option to require that an auditee use electronic means to provide records requested during an audit of an auditee's royalty reporting and payment.
Full Text
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<title>Federal Register, Volume 87 Issue 189 (Friday, September 30, 2022)</title>
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[Federal Register Volume 87, Number 189 (Friday, September 30, 2022)]
[Proposed Rules]
[Pages 59350-59353]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-20495]
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DEPARTMENT OF THE INTERIOR
Office of Natural Resources Revenue
30 CFR Parts 1206, 1208, 1217, and 1220
[Docket No. ONRR-2022-0001; DS63644000 DRT000000.CH7000 223D1113RT]
RIN 1012-AA32
Electronic Provision of Records During an Audit
AGENCY: Office of Natural Resources Revenue (ONRR), Department of the
Interior.
ACTION: Proposed rule.
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SUMMARY: ONRR proposes to amend its regulations to allow ONRR and other
authorized Department of the Interior (``Department'') representatives
the option to require that an auditee use electronic means to provide
records requested during an audit of an auditee's royalty reporting and
payment.
DATES: Comment period: To be assured consideration, comments must be
received at one of the addresses provided below by 11:59 p.m. EST on
November 29, 2022.
ADDRESSES: You may submit comments to ONRR using the following method.
Please reference the Regulation Identifier Number (``RIN'') for this
action, ``RIN 1012-AA32,'' in your comment:
<bullet> Electronically via the Federal eRulemaking Portal: Please
visit <a href="https://www.regulations.gov">https://www.regulations.gov</a>. In the Search Box, enter Docket ID
``ONRR-2022-0001'' and click ``search'' to view the publications
associated with the docket folder. Locate the document with an open
comment period and then click ``Comment.'' Follow the instructions to
submit your public comments prior to the close of the comment period.
Instructions: All comments must include the agency name and docket
number or RIN for this rulemaking. All comments, including any personal
identifying information or confidential business information contained
in a comment, will be posted without change to <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
[[Page 59351]]
Docket: For access to the docket to read background documents or
comments received, go to <a href="https://www.regulations.gov">https://www.regulations.gov</a> and locate the
docket folder by searching the Docket ID (ONRR-2022-0001) or RIN number
(RIN 1012-AA32).
FOR FURTHER INFORMATION CONTACT: For questions concerning this proposed
rulemaking, contact Amanda Johnson, Regulatory Specialist, at (303)
231-3171 or by email at <a href="/cdn-cgi/l/email-protection#9bd4d5c9c9c4c9fefceef7faeff2f4f5e8d6faf2f7f9f4e3dbf4f5e9e9b5fcf4ed"><span class="__cf_email__" data-cfemail="541b1a06060b063133213835203d3b3a2719353d38363b2c143b3a26267a333b22">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. Explanation of Proposed Rulemaking
ONRR is responsible for the efficient, timely, and accurate
collection and disbursement of revenue originating from the leasing and
production of natural resources and energy, including oil, gas, coal,
geothermal and solid minerals, from Federal and Indian lands. See 30
U.S.C. 1711; Sec. Order. 3299, as amended; U.S. Department of the
Interior Departmental Manual, 112 DM 34 (Dec. 9, 2020). To verify that
lessees and other persons accurately report and pay royalties and other
amounts due, ONRR audits royalty and other reporting and payment. 30
U.S.C. 1711(c).
Various sections of ONRR's regulations, which were adopted in
accordance with the Congressional directive found in 30 U.S.C. 1711(a),
provide for audits by ONRR and other Department representatives. These
sections include:
(1) 30 CFR 1206.250(d), which addresses audits for Federal coal
leases.
(2) 30 CFR 1206.350(b), which addresses audits for geothermal
leases.
(3) 30 CFR 1206.450(d), which addresses audits for Indian coal
leases.
(4) 30 CFR 1208.15, which addresses audits for royalty oil taken in
kind.
(5) 30 CFR 1217.50, which addresses audits for oil and gas leases.
(6) 30 CFR 1217.300, which addresses audits for geothermal leases.
(7) 30 CFR 1220.033(e), which addresses audits for oil and gas net
profit share leases.
States or Indian Tribes sometimes perform the audits authorized by
these sections under delegations or cooperative agreements with ONRR.
See 30 U.S.C. 1732 and 1735; 30 CFR parts 1227 and 1228.
Congress and the President mandate that Federal agencies use new
technologies to improve Government operations. For example, the
Paperwork Reduction Act of 1995, Public Law 104-13, and the Information
Technology Management Reform Act of 1996, Public Law 104-106, authorize
the use of new technologies to improve the productivity, efficiency,
and effectiveness of Government programs. See 44 U.S.C. 3501(10), 44
U.S.C. 3504(a)(1)(B)(vi) and (h), 40 U.S.C. Parts 11302 and 11303. In
addition, the Office of Management and Budget (``OMB'') issued a
memorandum on June 28, 2019, entitled ``Transition to Electronic
Records'' (M-19-21), directing Federal agencies to ensure that all
Federal records are created, retained, and managed in electronic
formats, with appropriate metadata.
To meet these Federal mandates and to take advantage of rapidly
improving technologies for the electronic transmission and storage of
records, ONRR proposes to amend its regulations to allow ONRR and other
Department representatives the option to require that records be
provided for an audit by secure electronic means. Because this
amendment would apply to all oil, gas, geothermal, coal, and other
solid mineral royalty audits performed by ONRR or other Department
representatives, ONRR proposes to:
(1) Add a new section, 30 CFR 1217.10, under the general provisions
to 30 CFR part 1217--Audits and Inspections, to specify the methods by
which ONRR or other Department representatives can require an auditee
to provide records during an audit.
(2) Add references to part 1217 in Sec. Sec. 1206.250(d),
1206.350(b), 1206.450(d), 1208.15, and 1220.033(e) to clarify that ONRR
or an authorized State or Tribe may require an auditee to provide
records for an audit by one or more of the methods specified in the new
30 CFR 1217.10.
Auditees keep most, if not all, records for natural resources
revenue reporting and payment in electronic format and generally
prefer, when under audit, to provide the records electronically. For
records that an auditee maintains only in electronic form, the
electronic production and transmission of these records for an audit
avoids printing and other costs of submitting records in paper form.
For records an auditee maintains in paper form, technologies exist to
readily allow for the conversion of these records to electronic form
when needed for an audit. Providing records electronically helps avoid
administrative costs and expenses to the Department and auditees for
preparing, submitting, processing, and preserving paper records. ONRR
or other Department representatives will still sometimes need to
inspect paper records or to conduct an entrance or other conference at
an auditee's business location. However, the option to require that
records be produced and transmitted electronically could shorten or
possibly eliminate onsite audit activities in appropriate situations.
It will also help ONRR and auditees to better navigate disruptive
events--such as the recent COVID-19 pandemic--that may make onsite
inspection of records more burdensome, impractical, or unavailable.
ONRR regulations specifically provide that information that
``constitutes trade secrets or commercial or financial information that
is identified as privileged or confidential, or that is exempt from
disclosure under the Freedom of Information Act, 5 U.S.C. 552, shall
not be available for inspection or made public or disclosed without the
consent of the lessee, except as provided by law or regulation.'' 30
CFR 1210.207. To preserve the confidentiality of records produced
electronically for use in an audit, this rule proposes to allow
Department representatives the option to require that records be
provided electronically only by means which are secure. A secure means
of transmission involves the use of password protection, encryption, or
other security measures, to prevent unauthorized access to the
transmission by a third-party. The Department maintains computer
systems and updates or replaces software as technology changes, which
will allow auditees to securely transmit records for an audit. When
requesting electronic production and transmission of records, a
Department representative will specify the format in which the records
are to be transmitted electronically and provide instructions for
submitting the records securely. Factors that would contribute to what
ONRR or a Department representative would consider acceptable would
include the availability and completeness of documentation and the
availability of applications that can interpret it. ONRR is seeking
public comments specific to what it should consider to be acceptable
formats.
This proposed rule is published pursuant to authority delegated to
ONRR by the Secretary of the Interior. See 30 U.S.C. 189; 30 U.S.C.
1751; 43 U.S.C. 1334; 30 U.S.C. 1023; Secretarial Order 3299, sec. 5;
and Secretarial Order 3306, sec. 3-4.
II. Procedural Matters
A. Regulatory Planning and Review (Executive Orders 12866 and 13563)
Executive Order (E.O.) 12866 provides that the Office of
Information and Regulatory Affairs (``OIRA'') in OMB will review all
significant rules. OIRA has determined this rulemaking is not
significant. E.O. 13563 reaffirms the
[[Page 59352]]
principles of E.O. 12866 while calling for improvements in the Nation's
regulatory system to promote predictability, to reduce uncertainty, and
to use the most innovative, and least burdensome tools for achieving
regulatory ends. E.O. 13563 directs agencies to consider regulatory
approaches that reduce burdensome tools and maintain flexibility and
freedom of choice for the public where these approaches are relevant,
feasible, and consistent with regulatory objectives. E.O. 13563 further
emphasizes those regulations must be based on the best available
science and that the rulemaking process must allow for public
participation and an open exchange of ideas. ONRR developed this
proposed rule in a manner consistent with these requirements.
B. Regulatory Flexibility Act
ONRR certifies that promulgation of this rulemaking would not have
a significant economic effect on a substantial number of small entities
under the Regulatory Flexibility Act (RFA), 5 U.S.C. 601 et seq.
because it only requires auditees--when the Department requests--to
provide records and files electronically that they would otherwise be
required to provide in hard copy at their business premises.
C. Small Business Regulatory Enforcement Fairness Act
This rulemaking is not a major rule under 5 U.S.C. 804(2), the
Small Business Regulatory Enforcement Fairness Act.
This rulemaking:
(1) Does not have an annual effect on the economy of $100 million
or more.
(2) Will not cause a major increase in costs or prices for
consumers; individual industries; or geographic regions.
(3) Does not have significant adverse effects on competition,
employment, investment, productivity, innovation, or the ability of
United States-based enterprises to compete with foreign-based
enterprises.
D. Unfunded Mandates Reform Act
This proposed rule does not impose an unfunded mandate on State,
local, or Tribal governments or the private sector of more than $100
million per year. This rulemaking does not have a significant or unique
effect on State, local, or Tribal governments or the private sector.
Therefore, ONRR is not required to provide a statement pursuant to the
Unfunded Mandates Reform Act (2 U.S.C. 1531 et seq.).
E. Takings (E.O. 12630)
Under the criteria in section 2 of E.O. 12630, this proposed rule
does not have any significant takings implications. This proposed rule
does not impose conditions or limitations on the use of any private
property because the rulemaking only amends how a lessee, operator,
payor, and other person must produce and transmit records upon request.
This proposed rule does not require a takings implication assessment.
F. Federalism (E.O. 13132)
Under the criteria in section 1 of E.O. 13132, the proposed rule
does not have sufficient Federalism implications to warrant the
preparation of a federalism summary impact statement. This rulemaking
would not impose administrative costs on States or local governments or
substantially and directly affect the relationship between the Federal
and State governments. Thus, a federalism summary impact statement is
not required.
G. Civil Justice Reform (E.O. 12988)
The proposed rule complies with the requirements of E.O. 12988.
Specifically, the proposed rule:
(1) Meets the criteria of Section 3(a), which requires that ONRR
review all regulations to eliminate errors and ambiguity in order to
minimize litigation.
(2) Meets the criteria of Section 3(b)(2), which requires that all
regulations be written in clear language using clear legal standards.
H. Consultation With Indian Tribal Governments (E.O. 13175)
ONRR strives to strengthen its government-to-government
relationship with Indian Tribes through a commitment to consultation
with Indian Tribes and in recognition of their right to self-governance
and Tribal sovereignty. ONRR evaluated the proposed rule and the
criteria in E.O. 13175 and determined that the proposed rule would not
have substantial direct effects on Federally recognized Indian Tribes.
Thus, consultation under ONRR's Tribal consultation policy is not
required.
I. Paperwork Reduction Act
This proposed rule does not contain any new information collection
requirements or meet the definition of ``collection of information''
under 44 U.S.C. 3502(3). A submission to OMB under the Paperwork
Reduction Act (44 U.S.C. 3501 et seq.) is not required.
J. National Environmental Policy Act
This rulemaking does not constitute a major Federal action
significantly affecting the quality of the human environment. A
detailed statement under the National Environmental Policy Act of 1969
(``NEPA'') is not required because this proposed rule is categorically
excluded. See 43 CFR 46.210(i) and the Department's Departmental
Manual, Part 516, section 15.4.D. ONRR has determined that this
rulemaking is not involved in any of the extraordinary circumstances
under 43 CFR 46.215 that would require further analysis under NEPA. The
procedural changes resulting from these amendments have no consequence
with respect to the physical environment. This rulemaking will not
alter in any material way natural resource exploration, production, or
transportation.
K. Effects on the Energy Supply (E.O. 13211)
This proposed rule is not a significant energy action under the
definition in E.O. 13211 and, therefore does not require a Statement of
Energy Effects.
L. Clarity of This Regulation
ONRR is required by E.O. 12866 (section 1(b)(12)), E.O. 12988
(section 3(b)(1)(B)), and E.O. 13563 (section 1(a)), and by the
Presidential Memorandum of June 1, 1998, to write all rules in plain
language. This means that each rule ONRR publishes must:
(1) Be logically organized.
(2) Use the active voice to address readers directly.
(3) Use common, everyday words and clear language rather than
jargon.
(4) Be divided into short sections and sentences.
(5) Use lists and tables wherever possible.
If you feel that ONRR has not met these requirements, send your
comments to <a href="/cdn-cgi/l/email-protection#5c13120e0e030e393b29303d283533322f113d35303e33241c33322e2e723b332a"><span class="__cf_email__" data-cfemail="460908141419142321332a27322f2928350b272f2a24293e062928343468212930">[email protected]</span></a>. To better help ONRR
revise the proposed rule, your remarks should be as specific as
possible. For example, you should tell ONRR the numbers of the sections
or paragraphs that are not clearly written, which sections or sentences
are too long, the sections where you feel lists or tables would be
useful, etc.
Howard Cantor,
Acting Director, Office of Natural Resources Revenue.
List of Subjects
30 CFR Part 1206
Coal, Continental shelf, Geothermal energy, Government contracts,
Indian
[[Page 59353]]
lands, Mineral royalties, Oil and gas exploration, Public lands--
mineral resources, Reporting and recordkeeping requirements.
30 CFR Part 1208
Continental shelf, Government contracts, Mineral royalties, Public
lands--minerals resources, Reporting and recordkeeping requirements,
Small businesses.
30 CFR Part 1217
Coal, Government contracts, Mineral royalties, Oil and gas
exploration, Public lands--mineral resources, Reporting and
recordkeeping requirements.
30 CFR Part 1220
Accounting, Continental shelf, Government contracts, Mineral
royalties, Oil and gas exploration, Public lands--mineral resources,
Reporting and recordkeeping requirements.
Authority and Issuance
For the reasons discussed in the preamble, ONRR proposes to amend
30 CFR parts 1206, 1208, 1217, and 1220 as set forth below:
PART 1206--PRODUCT VALUATION
0
1. The authority citation for part 1206 continues 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.
Subpart F--Federal Coal
0
2. Amend Sec. 1206.250 by revising paragraph (d) to read as follows:
Sec. 1206.250 What is the purpose and scope of this subpart?
* * * * *
(d) ONRR may audit and order you to adjust all royalty payments.
ONRR or an authorized State may require you to provide records for the
audit by one or more of the methods specified in 30 CFR 1217.10.
Subpart H--Geothermal Resources
0
3. Amend Sec. 1206.350 by revising paragraph (b) to read as follows:
Sec. 1206.350 What is the purpose and scope of this subpart?
* * * * *
(b) ONRR may audit and order you to adjust all royalty and fee
payments. ONRR or an authorized State or Tribe may require you to
provide records for the audit by one or more of the methods specified
in 30 CFR 1217.10.
* * * * *
Subpart J--Indian Coal
0
4. Amend Sec. 1206.450 by revising paragraph (d) to read as follows:
Sec. 1206.450 What is the purpose and scope of this subpart?
* * * * *
(d) ONRR may audit and order you to adjust all royalty payments.
ONRR or an authorized Tribe may require you to provide records for the
audit pursuant to 30 CFR 1217.10.
* * * * *
PART 1208--SALE OF FEDERAL ROYALTY OIL
0
5. The authority citation for part 1208 continues to read as follows:
Authority 5 U.S.C. 301 et seq.; 30 U.S.C. 181 et seq., 351 et
seq., 1701 et seq.; 31 U.S.C. 9701; 41 U.S.C. 601 et seq.; 43 U.S.C.
1301 et seq., 1331 et seq., and 1801 et seq.
Subpart A--General Provisions
0
6. Revise Sec. 1208.15 to read as follows:
Sec. 1208.15 Audits.
Audits of the accounts and books of lessees, operators, payors,
and/or purchasers of royalty oil taken in kind may be made annually or
at such other times as may be directed by ONRR. Such audits will be for
the purpose of determining compliance with applicable statutes,
regulations, and royalty oil contracts. ONRR may require you to provide
records for the audit pursuant to 30 CFR 1217.10.
PART 1217--AUDITS AND INSPECTIONS
0
7. The authority citation for part 1217 continues to read as follows:
Authority: 35 Stat. 312; 35 Stat. 781, as amended; secs. 32, 6,
26, 41 Stat. 450, 753, 1248; secs. 1, 2, 3, 44 Stat. 301, as
amended; secs. 6, 3, 44 Stat. 659, 710; secs. 1, 2, 3, 44 Stat.
1057; 47 Stat. 1487; 49 Stat. 1482, 1250, 1967, 2026; 52 Stat. 347;
sec. 10, 53 Stat. 1196, as amended; 56 Stat. 273; sec. 10, 61 Stat.
915; sec. 3, 63 Stat. 683; 64 Stat. 311; 25 U.S.C. 396, 396a-f, 30
U.S.C. 189, 271, 281, 293, 359. Interpret or apply secs. 5, 5, 44
Stat. 302, 1058, as amended; 58 Stat. 483-485; 5 U.S.C. 301, 16
U.S.C. 508b, 30 U.S.C. 189, 192c, 271, 281, 293, 359, 43 U.S.C. 387,
unless otherwise noted.
0
8. Add subpart A, consisting of Sec. 1217.10, to read as follows:
Subpart A--General Provisions
Sec. 1217.10 Providing records during an audit.
(a) The Office of Natural Resources Revenue (ONRR) or an authorized
State or Tribe may specify the method an auditee must use to provide
records for all audits conducted under this chapter, statute, or
agreement. The methods may include one or more of the following:
(1) Inspect records at an auditee's place of business during normal
business hours;
(2) Send records using secure electronic means. When requesting
that records be provided electronically, ONRR or the authorized State
or Tribe will specify the format in which the records shall be
produced, directions for electronic transmission, and instructions to
ensure secure transmission; or
(3) Deliver hard copy records using the U.S. Postal Service,
special courier, overnight mail, or other delivery service to an
address specified by ONRR or an authorized State or Tribe.
(b) [Reserved]
PART 1220--ACCOUNTING PROCEDURES FOR DETERMINING NET PROFIT SHARE
PAYMENT FOR OUTER CONTINENTAL SHELF OIL AND GAS LEASE
0
9. The authority citation for part 1220 continues to read as follows:
Authority: Sec. 205, Pub. L. 95-372, 92 Stat. 643 (43 U.S.C.
1337).
0
10. Amend Sec. 1220.033 by revising paragraph (e) to read as follows:
Sec. 1220.033 Audits.
* * * * *
(e) ONRR or its authorized agent may require you to provide records
for the audit by one or more of the methods specified in 30 CFR
1217.10.
[FR Doc. 2022-20495 Filed 9-29-22; 8:45 am]
BILLING CODE 4335-30-P
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