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Federal Register / Vol. 86, No. 187 / Thursday, September 30, 2021 / Rules and Regulations
SUMMARY OF ANNUAL ADMINISTRATIVE IMPACTS TO INDUSTRY FROM THE WITHDRAWAL OF 2020 RULEContinued Rule provision
Cost cost savings
Administrative Cost for Allowances for Certain OCS Gathering

3,931,000

Total

2,850,000

SUMMARY OF ONE-TIME ADMINISTRATIVE IMPACTS TO INDUSTRY FROM THE WITHDRAWAL OF 2020 RULE
Rule provision
Cost
Administrative Cost-Savings in lieu of Unbundling related to Index-Based Valuation Method for Arms-Length Gas & NGLs

$243,000

NET PRESENT VALUE OF ADMINISTRATIVE IMPACTS TO INDUSTRY FROM THE WITHDRAWAL OF 2020 RULE
Time horizon Administrative Costs over 10 years
Administrative Costs over 20 years

3% discount rate
7% discount rate
$24,800,000
43,400,000

$21,200,000
32,100,000

ANNUALIZED COSTS OF ADMINISTRATIVE IMPACTS TO INDUSTRY FROM THE WITHDRAWAL OF 2020 RULE
Time horizon Annualized Administrative Costs over 10 years
Annualized Administrative Cost over 20 years

E.O. 13563 reaffirms the principles of E.O. 12866, while calling for improvements in the nations 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 burdens 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 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.

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B. Regulatory Flexibility Act The Regulatory Flexibility Act, 5
U.S.C. 601, et seq., generally requires Federal agencies to prepare a regulatory flexibility analysis for rules that are subject to the notice-and-comment rulemaking requirements under the APA if the rule would have a significant economic impact on a substantial number of small entities. See 5 U.S.C.
601612.
For the changes to 30 CFR part 1206, this final rule would affect lessees of Federal oil and gas leases. For the changes to 30 CFR part 1241, this final rule could affect alleged and actual
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violators of obligations under Federal and Indian mineral leases. Federal and Indian mineral lessees are, generally, companies classified under the North American Industry Classification System NAICS, as follows:
Code 2111, Oil and Gas Extraction;
and Code 21211, Coal Mining.
Under NAICS code classifications, a small company is one with fewer than 500 employees. ONRR estimates that there are approximately 1,208 different lessees that submit royalty reports for Federal oil and gas leases and other Federal mineral leases to ONRR each month. Of these lessees, approximately 106 are not considered small businesses because they exceed the employee count threshold for small businesses. ONRR
estimates that the remaining 1,102
lessees have fewer than 500 employees and are therefore considered small businesses.
As stated in the Summary of Royalty Impacts and Costs Table, shown above, this final rule would impact industry through an increase in royalties of approximately $64.6 million per year if the 2020 Rule had gone into effect. This rule causes no financial impact on industry because it is consistent with the 2016 Valuation Rule which is currently operative. Small businesses account for approximately eight percent of those royalties. Applying that percentage, ONRR estimates that this final rule would increase royalty
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3% discount rate
7% discount rate
$2,820,000
$2,830,000

$2,820,000
$2,830,000

payments made by small-business lessees by approximately $5.2 million per year, or $4,690 per small business, on average. The extent of any royalty impact would vary between lessees due to, for example, differences in the revenues generated by a small business that is subject to royalties.
Also stated above, this final rule would impact industry through a decrease in administrative costs of approximately $2.9 million per year and a first-year increase of $243,000, relative to a baseline in which the 2020 Rule goes into effect. Applying the eight percent small-business share, ONRR
estimates that this final rule would decrease administrative costs to small business lessees by approximately $207
per year and by $189 in the first year.
In 2020, ONRR collected $6.3 billion in royalties from Federal oil and gas leases. Applying the eight-percent share, ONRR estimates that small-business lessees paid $504 million in royalties in 2020. Most Federal oil and gas leases have a 12.5 percent royalty rate, resulting in an estimated $4 billion in total small-business lessee revenue from the production and sale of Federal oil and gas $504 million divided by .125.
Thus, on average, ONRR estimates that small-business lessees earn $3.6 million in revenue per year from the production and sale of Federal oil and gas $4
billion divided by 1,102.
The estimated increase in royalties $4,690 and decrease in administrative
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