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(ii) Unless the violation is corrected within 40 days (or such longer time as specified in the notice) from the date that the notice is served, the person upon whom the notice is served shall be liable for a penalty of up to $5,000 per violation for each day such violation continues;

(iii) If the person upon whom the notice is served does not correct the violation within 20 days (or such longer time as specified in the notice) from the date that the notice is served, such person may, by that date, request a hearing on the record by filing a written request with the Hearings Division (Departmental), Office of Hearings and Appeals, U.S. Department of the Interior, 4015 Wilson Boulevard, Arlington, Virginia 22203.

(4) If the person upon whom a notice of noncompliance has been served pursuant to paragraph (a)(3) of this section corrects the violations within 20 days (or such longer time as specified in the notice) from the date that the notice is served, no penalties shall be assessed by the MMS under this section and the person shall not be entitled to a hearing on the record provided for in paragraph (a)(3)(iii) of this section. The person may appeal the notice of noncompliance or other disputed MMS decision or order in accordance with the appeals procedures in 30 CFR part 243.

(b)(1) Notice of noncompliance for intentional violations. In addition to the provisions of paragraph (a) of this section, the MMS may issue a notice of noncompliance for intentional violations, which shall set forth the nature of the violation and the remedial action required, to any person who

(i) Knowingly or willfully fails to make any payment due by the date as specified by statute, regulation, order, or terms of the lease;

(ii) Knowingly or willfully fails to submit or submits false, inaccurate, or misleading data to the MMS in support of a royalty, rental, bonus, or other payment; or

(iii) Knowingly or willfully prepares, maintains, or submits false, inaccurate, or misleading reports, notices, affidavits, records, data, or other written information.

(2) A person served with a notice of noncompliance for an intentional violation under this paragraph shall be liable for a penalty of up to $10,000 per violation for each day such violation continues.

(3) The notice of noncompliance for intentional violation shall be served in accordance with paragraph (a)(2) of this section.

(4) A person who has been served with a notice of noncompliance for intentional violation issued pursuant to this subsection shall have 20 days from the date of service to file a written request for a hearing on the record with the Hearings Division (Departmental), Office of Hearings and Appeals, U.S. Department of the Inte. rior, 4015 Wilson Boulevard, Arlington, Virginia 22203.

(c) Penalty notice. The MMS shall issue a penalty notice to any person subject to penalties under this section. The penalty notice shall set forth the amount of the penalty applicable for each day that the violation continues. The penalty amount shall be determined by MMS taking into account the severity of the violation and the person's history of noncompliance. The penalty for each day that a violation continues shall not exceed the amounts specified in paragraphs (a) and (b), of this section as applicable.

(d) Penalties imposed under this section shall be in addition to interest assessed on payments not received by the MMS by the due date and assessments for later or incorrect reporting pursuant to part 218 of this chapter.

(e) If the person served with a notice of noncompliance requests a hearing on the record pursuant to paragraph (a)(3)(iii) or paragraph (b)(4) of this section, penalties shall accrue each day until the person corrects the violations set forth in the notice of noncompliance. The Director, MMS, may suspend the requirement to correct the violations pending completion of the hearings provided by this section, but only if the Director, MMS, suspends the obligation in writing, and then only upon a determination, at the discretion of the Director, that such suspension will not be detrimental to the lessor and upon submission and acceptance of a bond deemed adein which the violation allegedly took place. Review by the District Court shall be only on the administrative record and not de novo. Such action shall be barred unless filed within 90 days after the final order.

(j) If any person fails to pay an assessment of a civil penalty under this section after the order making the assessment has become a final order, and if such person has not filed a peti. tion for judicial review in accordance with paragraph (i) of this section, or, after a court, in an action brought under this section, has entered a final judgment in favor of the Secretary, the Court shall have jurisdiction to award the amount assessed plus interest assessed from the date of the expiration of the 90-day period referred to in paragraph (i) of this section. The amount of any penalty, as finally determined, may be deducted from any sum owing by the United States to the person charged. (49 FR 37352, Sept. 21, 1984)

quate to indemnify the lessor from loss or damage. The amount of the bond must be sufficient to cover any disputed amounts plus accrued penalties and interest. The MMS may require, at any time, adjustment in the amount of the bond for increases in the amount of the underlying obligations determined by MMS to be due, for penalties or for interest.

(f) Hearing. If a person served with a notice of noncompliance has requested a hearing on the record in accordance with paragraph (a)(3)(iii) or (b)(4) of this section, the hearing shall be conducted by an Administrative Law Judge (Departmental), Office of Hearings and Appeals. After the hearing, the Administrative Law Judge shall issue a decision in accordance with the evidence presented and applicable law. Any party to a case adversely affected by a decision of the Admin. istrative Law Judge may appeal that decision to the Interior Board of Land Appeals in accordance with the procedures set forth in 43 CFR part 4. A decision by the Interior Board of Land Appeals shall be a final order which may be appealed in accordance with paragraph (i) of this section.

(g) The Director of the MMS shall issue an order assessing the penalty, in accordance with the penalty notice, against any person subject to penalties under paragraph (a) or (b) of this section who does not request a hearing on the record as provided in paragraph (a)(3)(iii) or (b)(4) of this section. The penalty assessment must be paid within 30 days of its issuance and shall be a final order subject to collection pursuant to the provisions of paragraph (j) of this section.

(h) On a case-by-case basis the Secretary, or his/her authorized representative, may compromise or reduce civil penalties under this section. The amount of any penalty under this section, as finally determined, may be deducted from any sums owing by the United States to the person charged.

(i) Any person who has requested a hearing in accordance with paragraph (a) or (b) of this section within the time prescribed for such a hearing and who is aggrieved by a final order may seek review of such order in the U.S. District Court for the judicial district

§ 241.52 Criminal penalties.

Any person who commits an act for which a civil penalty is provided at 30 U.S.C. 1719 shall be subject to crimi. nal penalties as provided at 30 U.S.C. 1720.

(49 FR 37352, Sept. 21, 1984)

be

8 241.53 Assessments for nonperformance.

Administrative costs arising out of certain defaults or violations of orders requiring the performance of certain duties by lessees, as set forth in the regulations in this part, constitute loss or damage to the United States the amount of which is difficult or impracticable of ascertainment. Therefore, the following amounts shall deemed to cover such loss or damage and shall be payable upon receipt of notice from the Associate Director of such loss or damage.

(a) For failure to comply with a written order or instructions of the Associate Director, $250 if compliance is not obtained within the time specified.

(b) For failure to file sales contracts or division orders as required by lease terms, $25 for each violation, and for failure to submit pipeline run tickets,

the provisions of part 290 of this chapter.

or other proper evidence of disposal as required by these regulations, $10 for each violation. [47 FR 47775, Oct. 27, 1982. Redesignated at 48 FR 35641, Aug. 5, 1983, further redesignated and amended at 53 FR 1226, Jan. 15, 1988]

(49 FR 37353, Sept. 21, 1984)

Subpart C-Federal and Indian Oil —

[Reserved]

Subpart D-Federal and Indian Gas

[Reserved]

Subpart E-Solid Minerals, General

[Reserved]

Subpart F—Coal-[Reserved]

Subpart G-Other Solid Minerals

[Reserved)

Subpart H-Geothermal—[Reserved)

Subpart 1-OCS Sulfur-[Reserved]

PART 242-NOTICES AND ORDERS

(RESERVED]

PART 243—APPEALS-ROYALTY

MANAGEMENT PROGRAM

8 243.2 Suspension of orders or decisions

pending appeal. (a) Compliance with any orders or decisions issued by the Royalty Management Program (RMP) of the Minerals Management Service (MMS), including orders for payments of royalty deficiencies (other than orders to pay additional royalties for the difference between a cents-per-ton royalty clause and an ad volorem royalty clause pursuant to the terms of coal leases following readjustment by the Bureau of Land Management (BLM)), rentals, interest, penalties (other than civil penalties provided for under section 109 of the Federal Oil and Gas Royalty Management Act of 1982, 30 U.S.C. 1719, and implemented in 30 CFR 241.51), royalty-in-kind contract payments, or other assessments, shall be suspended by reason of an appeal having been taken pursuant to 30 CFR part 290 unless the Director, MMS, notifies the appellant in writing that the decision or order shall not be suspended pending appeal. Unless the amount under appeal is $1,000 or less, suspension of an order or decision requiring the payment of a specified amount of money shall be contingent upon the appellant's submission within a time period prescribed by MMS of an MMS-specified surety instrument deemed ade. quate to indemnify the lessor from loss or damage. Nothing in this paragraph shall be construed to prohibit an appellant from paying any demanded amount pending appeal. If the appeal is granted in whole or in part, the appellant will be entitled to a refund of the amount paid, without interest, in accordance with MMS refund procedures.

(b)(1) For purposes of this section, an MMS-specified surety instrument" for fluids (oil, gas, and geothermal) leases means either: An MMS-specified administrative appeal bond; an MMS. specified irrevocable letter of credit; Treasury book-entry bond or note; or financial institution book-entry certificate of deposit. The "MMS-specified surety instrument” shall be in a form

Subpart A-General Provisions

Sec. 243.1 Procedure. 243.2 Suspension of orders or decisions

nding appeal. 243.3 Exhaustion of administrative reme

dies. 243.4 Service of official correspondence.

AUTHORITY: 5 U.S.C. 301 et seq.; 25 U.S.C. 396 et seq.; 25 U.S.C. 396a et seq.; 25 U.S.C. 2101 et seq.; 30 U.S.C. 181 et seq.; 30 U.S.C. 351 et seq.; 30 U.S.C. 1001 et seq.; 30 U.S.C. 1701 et seq.; 31 U.S.C. 9701; 43 U.S.C. 1301 et seq.; 43 U.S.C. 1331 et seq.; and 43 U.S.C. 1801 et seg.

Subpart A-General Provisions 8 243.1 Procedure.

Except as may otherwise be provided in part 241 hereof, an order or decision issued under regulations administered by the Royalty Management Program may be appealed in accordance with

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specified by MMS instructions or approved by MMS. A bond must be issued by a qualified surety company which has been approved by the De. partment of the Treasury. An irrevocable letter of credit or a certificate of deposit must be from a financial insti. tution acceptable to MMS with a minimum 1-year period of coverage subject to automatic renewal up to 5 years. The MMS will use a bankrating service to determine whether a financial institution has an acceptable rating to provide a surety instrument deemed adequate to indemnify the lessor from loss or damage. The MMS will accept only an “MMS-specified surety instrument” as qualified in this paragraph and in paragraph (c) this section. The MMS will accept a single surety instrument that covers multiple amounts under appeal. The single surety instrument must be amended annually to either add new amounts or remove amounts that have been adjudicated. New amounts under appeal each year require a separate surety instrument until covered by the single surety instrument during the annual amendment.

(2) For purposes of this section, an "MMS-specified surety instrument" for other than fluids (oil, gas, and geothermal) leases, is the BLM lease surety instrument which must be increased at the request of MMS to cover royalty and interest obligations. However, if BLM has no lease surety instrument coverage, or the appellant chooses to provide a separate surety instrument to MMS, or the appellant is not the lessee of record, then an MMS-specified surety instrument” in accordance with paragraph (b)(1) of this section is required.

(3) The “MMS-specified surety instrument" for RMP is subject to approval by a bond-approving officer. The designated bond-approving officer for RMP is the Associate Director for Royalty Management or delegated of

icials. The MMS will provide in writing to the appellant information and standard forms on “MMS-specified surety instrument” requirements.

(c)(1) The amount of the bond, letter of credit, Treasury book-entry bond or note, or financial institution book-entry certificate of deposit will

be determined by MMS and will include the principal amount owed plus any accrued interest owed and projected interest for a 1-year period. In the case of Treasury book-entry bonds or notes, the amount must be equal to 120 percent of the required surety amount.

(2) If a decision on the appeal is not made within 1 year from the date the appeal is filed, appellants who submitted a bond shall amend the bond amount to cover additional estimated interest for another 1-year period. Appellants who submitted a letter of credit, a Treasury book-entry bond or note, or a financial institution bookentry certificate of deposit shall submit, at least 10 calendar days prior to the expiration date, a new surety instrument or an amendment to the existing surety instrument for an additional 1-year period of time with an increase in the amount to cover estimated interest for a 1-year period. In all cases, MMS will determine the additional estimated interest and amended surety instrument amount. If a surety instrument is not amended to include the additional nterest coverage at least 10 calendar days prior to the expiration date of the surety instrument, MMS may make a demand against and collect from the surety. The collection against the surety will include the principal amount owed plus accrued interest.

(d)(1) An MMS decision or order that is appealed to the Interior Board of Land Appeals pursuant to 30 CFR part 290 and 43 CFR part 4, shall be suspended pending appeal if the appellant submits or maintains a surety instrument in accordance with the provisions of this section, unless the Director or the Deputy Commissioner of Indian Affairs (when Indian lands are involved) notifies the appellant in writing at the time the decision or order is issued that it will not be suspended pending appeal. The Director or the Deputy Commissioner of Indian Affairs may deny suspension of an appeal to avoid irreparable harm to the lessor.

(2) In any case where the Director of the Office of Hearings and Appeals or the Secretary takes jurisdiction of an administrative appeal involving a Roy(57 FR 44997, Sept. 30, 1992)

8 243.3 Exhaustion of administrative rem

edies. In order to exhaust administrative remedies, a decision or order of MMS' Royalty Management Program must be appealed pursuant to 30 CFR part 290 to the Director (or the Deputy Commissioner of Indian Affairs when Indian lands are involved), and subsequently to the Interior Board of Land Appeals under 30 CFR part 290.7 and 43 CFR part 4 unless the order has been made effective by the Director, or by the Assistant Secretary for Land and Minerals Management, or by the Assistant Secretary for Indian Affairs, or by the Interior Board of Land Appeals pursuant to 43 CFR part 4, as applicable.

or

(57 FR 44998, Sept. 30, 1992)

alty Management Program decision or order pursuant to 43 CFR part 4.5 and grants a suspension of effectiveness of the decision or order subject to the submission of an adequate surety instrument, the appellant must maintain that surety instrument in accordance with the requirements of this section.

(e) An Interior Board of Land Appeals decision, other final action of the Department of the Interior regarding a Royalty Management Program decision or order, or a Royalty Management Program decision order which is made effective pending appeal under paragraph (a), which is the subject of an action for judicial review in a United States District Court of competent jurisdiction will be suspended pending judicial review pursuant to 5 U.S.C. 705 if the plaintiff seeking review submits or maintains a surety instrument in accordance with the provisions of this section, unless the Government notifies the court that it will not agree to a suspension of the effectiveness of the decision or order pending judicial review.

(f) The MMS may initiate collection against a surety instrument if: (1) The MMS Director decides an administrative appeal adversely to the appellant, and the appellant fails either to pay the disputed amount or pursue a further administrative appeal and maintain an adequate surety instrument pending such appeal;

(2) The Interior Board of Land Appeals, the Director of the Office of Hearings and Appeals, an Assistant Secretary, or the Secretary decides an administrative appeal adversely to the appellant, and the appellant fails either to pay the disputed amount or pursue judicial review and maintain an adequate surety instrument pending such judicial review, in accordance with paragraph (e);

(3) A court of competent jurisdiction issues a final nonappealable decision adverse to the appellant/plaintiff and the appellant/plaintiff fails to pay the disputed amount; or

(4) The appellant fails to increase the amount of the surety instrument as required under paragraph (c) or otherwise fails to maintain an adequate surety instrument in effect.

8 243.4 Service of official correspondence.

(a) Method of service: Official correspondence issued by the Royalty Management Program (RMP) will be served by sending the document certified or registered mail, return receipt requested, to the addressee of record established in paragraph (b) of this section. Instead of certified or registered mail, RMP may deliver the document personally to the addressee of record and obtain a signature acknowledging the addressee's receipt of the document. Official correspondence includes all RMP orders that are appealable in accordance with the provisions of this part and 30 CFR part 290.

(b) Addressee of record. (1) The addressee of record for administrative correspondence for refiners participating in the government's Royalty-inKind (RIK) Program is the position title, department name and address, or individual name and address identified in the executed royalty oil sale contract. A different position title, department name and address, or individual name and address may be identified, in writing, by the refiner/purchaser for billing purposes. The refiner must notify the Minerals Management Service (MMS), in writing, of all addressee changes.

(2) The addressee of record for Form MMS-4071 (Semiannual Report of

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