Electronic Provision of Records During an Audit
| Court | Natural Resources Revenue Office |
| Citation | 88 FR 53790 |
| Published date | 09 August 2023 |
| Record Number | 2023-17059 |
| Section | Rules and Regulations |
Federal Register, Volume 88 Issue 152 (Wednesday, August 9, 2023)
[Federal Register Volume 88, Number 152 (Wednesday, August 9, 2023)]
[Rules and Regulations]
[Pages 53790-53793]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-17059]
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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''), Interior.
ACTION: Final rule.
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SUMMARY: ONRR is amending 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: This final rule is effective 30 days from the date of
publication in the Federal Register.
FOR FURTHER INFORMATION CONTACT: For questions concerning this final
rulemaking, contact Ginger Hensley, Regulatory Specialist, by phone at
303-231-3171, or by email at [email protected].
SUPPLEMENTARY INFORMATION:
I. Explanation of Final 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 other 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(c), which addresses audits for Federal coal
leases.
(2) 30 CFR 1206.350(b), which addresses audits for Federal
geothermal leases.
(3) 30 CFR 1206.450(c), which addresses audits for Indian coal
leases.
(4) 30 CFR 1208.15, which addresses audits for Federal royalty oil
taken in kind.
(5) 30 CFR 1217.50, which addresses audits for Federal and Indian
oil and gas leases.
(6) 30 CFR 1217.300, which addresses audits for Federal 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 is amending 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 applies to all oil, gas, geothermal, coal, and other solid
mineral royalty audits performed by ONRR or other Department
representatives, this final rule:
[[Page 53791]]
(1) Adds 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) Adds references to Part 1217 in Sec. Sec. 1206.250(c),
1206.350(b), 1206.450(c), 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 should shorten or
possibly eliminate onsite audit activities in appropriate situations.
It will also help ONRR and auditees to better navigate disruptive
events 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 final rule allows 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
allows 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 contribute to what ONRR
or a Department representative consider acceptable include the
availability and completeness of documentation and the availability of
applications that can interpret it.
ONRR published the Electronic Provision of Records During an Audit
proposed rule on September 16, 2022 (87 FR 59350). During the proposed
rule's 60-day comment period, ONRR received one comment. The commentor
stated support for initiatives and technologies to improve government
operations. ONRR appreciates the commentor's support for this
rulemaking. ONRR received no other comments on the proposed rule.
Following the proposed rule's publication, ONRR published a final
rule to amend its regulations pertaining to Federal and Indian coal
valuation. (88 FR 47003). Because that final rule amended the paragraph
structure in two sections covered by this rulemaking, ONRR revised the
amendatory instructions in this final rule from what it had provided in
the proposed rule. Specifically, this final rule revises Sec. Sec.
1206.250(c) and 1206.450(c) in the same manner ONRR's proposed rule had
proposed to revise Sec. Sec. 1206.250(d) and 1206.450(d).
This final 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; Secretary's Order 3299, sec. 5;
and Secretary's Order 3306, sec. 3-4.
II. Procedural Matters
A. Regulatory Planning and Review (Executive Orders 12866, 13563 and
14094)
Executive Order 14094 reaffirms the principles of E.O. 12866 and
E.O. 13563 and states that regulatory analysis should facilitate agency
efforts to develop regulations that serve the public interest, advance
statutory objectives, and are consistent with E.O. 12866, E.O. 13563,
and the Presidential Memorandum of January 20, 2021 (Modernizing
Regulatory Review). Regulatory analysis, as practicable and
appropriate, shall recognize distributive impacts and equity, to the
extent permitted by law. E.O. 13563 emphasizes further that 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 final rule in a manner consistent with these
requirements.
E.O. 12866, as reaffirmed by E.O. 13563 and E.O. 14094, provides
that the Office of Information and Regulatory Affairs (OIRA) in the
Office of Management and Budget (OMB) will review all significant
rules. OIRA has determined that this rule is not significant.
B. Regulatory Flexibility Act
ONRR certifies that promulgation of this final rule will 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 are otherwise
required to provide in hard copy at their business premises.
C. Congressional Review Act
This final rule is not a major rule under 5 U.S.C. 804(2), the
Congressional Review Act.
This final rule:
(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 final 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 final rule 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 final rule does
not have any significant takings implications. This final rule does not
impose conditions or limitations on the use of any private
[[Page 53792]]
property because the rule only amends how a lessee, operator, payor,
and other person must produce and transmit records upon request. This
final rule does not require a takings implication assessment.
F. Federalism (E.O. 13132)
Under the criteria in section 1 of E.O. 13132, this final rule does
not have sufficient federalism implications to warrant the preparation
of a federalism summary impact statement. This final rule does 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)
This final rule complies with the requirements of E.O. 12988.
Specifically, the final 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 this final rule and the criteria
in E.O. 13175 and determined that the final rule will 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 final 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 final rule 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 the final 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 final
rule is not involved in any of the extraordinary circumstances under 43
CFR 46.215 that require further analysis under NEPA. The procedural
changes resulting from these amendments have no consequence with
respect to the physical environment. This final rule will not alter in
any material way natural resource exploration, production, or
transportation.
K. Effects on the Energy Supply (E.O. 13211)
This final 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 [email protected]. To better help ONRR
revise this final 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.
List of Subjects
30 CFR Part 1206
Coal, Continental shelf, Geothermal energy, Government contracts,
Indian 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.
Howard Cantor,
Acting Director, Office of Natural Resources Revenue.
Authority and Issuance
For the reasons discussed in the preamble, ONRR is amending 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, 396a et seq.,
398, 398a et seq., 2101 et seq.; 30 U.S.C. 181 et seq., 351 et seq.,
1001 et seq., 1701 et seq.; 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 (c) to read as follows:
Sec. 1206.250 What is the purpose and scope of this subpart?
* * * * *
(c) 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(b) by revising the text 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 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 the section heading and paragraph
(c) to read as follows:
[[Page 53793]]
Sec. 1206.450 What is the purpose and scope of this subpart?
* * * * *
(c) 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 by one or more of the methods specified in 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 by one or more of the methods specified in 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.
Subpart A--General Provisions
0
8. Add Sec. 1217.10 to subpart A to read as follows:
Sec. 1217.10 Providing Records During an Audit.
(a) ONRR or an authorized State or Tribe may specify the method an
auditee must use to provide records for all audits conducted under
Chapter XII, 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. 2023-17059 Filed 8-8-23; 8:45 am]
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